Del Taco sales resume, especially at night

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Image courtesy of Del Taco

Del Taco has seen its sales largely recover from the pandemic and more.

The Mexican fast food chain based in Lake Forest, Calif., Said its same-store sales increased 9.1% system-wide in the quarter ended March 23 – or about 6% on a two years. The result was improved earnings and margins – but not enough to satisfy Wall Street, which lowered its shares on Friday.

But some parts of the day are seeing a stronger recovery than others, with a somewhat surprising improvement late at night.

“Our cemetery business has accelerated to one of the best daylight hours on a comparable basis compared to 2019, with double-digit growth,” CEO John Cappasola told investors on Thursday, according to a transcript on the Sentieo financial services site.

Nighttime activities had been among the most difficult times of day during the pandemic, hurting some chains that do a lot of after-hours activities like Del Taco.

With less crowded bars and non-existent concerts, this activity was a challenge. The “graveyard” part of the Del Taco system started the year in the “mid single-digit negative range and turned positive as the first quarter progressed,” said CFO Steve Brake.

Much of this business goes through delivery. “Our late night and cemetery activities were really influenced by the delivery channel,” Cappasola said. He noted that the company made more deliveries in the first quarter than in the last three months of 2020.

That “extra momentum,” Cappasola said, “definitely translates into those last hours of the day.”

Breakfast, meanwhile, remains negative compared to 2019, he said. But Del Taco is finalizing plans to launch a new breakfast platform this summer.

Cappasola said the company plans to standardize morning routines as vaccination rates improve. “We expect this to put us in a position to take advantage of the strong seasonality of breakfast in the fall,” he said.

“I think we have a great platform to roll out that represents value in the midrange very well, and consumers are going to love it,” he added.

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