Del Taco Restaurants, Inc. (NASDAQ:TACO) Q3 2019 Earnings Conference Call - Final Transcript

Oct 21, 2019 • 04:30 pm ET

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Del Taco Restaurants, Inc. (NASDAQ:TACO) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Greg Badishkanian with Citi. Please proceed.

Analyst
Spencer Hanus

Hi, this is actually Spencer Hanus on for Greg. I'm just wondering if you could just provide a little additional color on the comp deceleration in the third quarter? And then could you quantify Q4 to date trends that you're seeing?

Executive
John D. Cappasola

See, let me give you a little bit more color. Obviously, what we said was the initiatives that we've added in the last couple of months, specifically address the key areas that drove for the softer traffic in July and August, and we've performed similar to Q4 -- or Q2 traffic sense. So let me walk you through that a bit. We really saw a tipping point in some key markets with third-party delivery this summer and launching Postmates, as I said nearly tripled our delivery incidents and we should further improve in that area with the launch of DoorDash late this year as well.

We also saw a breakfast lagging the other -- the other dayparts, as we had more of the focus on lunch and dinner driven initiatives with Beyond in Fresh Faves and the launch of the Breakfast Toasted Wrap along with an intense operational focus really turned the breakfast into the top performing daypart. So as we've seen historically breakfast can be a strong performer for the brand when value and innovation are aligned. And then obviously we follow these initiatives with our carnitas LTO in mid September and then the 2 for $3 Del Taco promotion and that one in particular was deployed to shore up the low price end of the value spectrum, which we felt was not as strong as it could have been over the summer as we cycled over the launch of the Dollar Chicken Snacker and we were more focused on premium with Beyond Burritos and mid-tier initiatives of Fresh Faves. So there is a little more color on the -- on the Q3 traffic softness and kind of why we are seeing traffic improvements in Q4 so far, that's really returning to the type of traffic that we saw in Q2.

Analyst
Spencer Hanus

Make sense. And then can you just talk a little bit of more about the Beyond platform. I think you mentioned in the prepared remarks that you are now mixing at 4% in Q4 to date versus 6% in 3Q. Can you just talk about why that you're seeing a little bit of a slowdown there?

Executive
John D. Cappasola

Yes, I mean, mainly we've taken it off of the main marquee of merchandising, so it's gone from a primary message down to a secondary message and it's got some diminished in merchandising. So we traditionally and typically see that happen with programs once we start to diminish the merchandising, we still think the 4% is actually really healthy sales mix relative to other programs that we've done in the past when that not similar type