taco-20200915
FALSE000158558300015855832020-09-152020-09-15

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549 
____________________________________________________________________

FORM 8-K
____________________________________________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 15, 2020
____________________________________________________________________ 
Del Taco Restaurants, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________________
 
Delaware001-3619746-3340980
(State or other jurisdiction
of incorporation)		(Commission
File Number)		(I.R.S. Employer
Identification No.)
25521 Commercentre Drive
Lake Forest,California92630
(Address of Principal executive offices, including Zip Code)
(949)
462-9300
(Registrant’s telephone number, including area code)
 
__________________________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, 00015855832020-09-152020-09-15

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549 
____________________________________________________________________

FORM 8-K
____________________________________________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 15, 2020
____________________________________________________________________ 
Del Taco Restaurants, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________________
 
Delaware001-3619746-3340980
(State or other jurisdiction
of incorporation)		(Commission
File Number)		(I.R.S. Employer
Identification No.)
25521 Commercentre Drive
Lake Forest,California92630
(Address of Principal executive offices, including Zip Code)
(949)
462-9300
(Registrant’s telephone number, including area code)
 
__________________________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value
per share		TACOThe Nasdaq Stock Market


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02    Results of Operations and Financial Condition

On September 15, 2020, Del Taco Restaurants, Inc. (the “Company” or “Del Taco”) issued a press release announcing preliminary unaudited sales results for the fiscal third quarter ended September 8, 2020. A copy of the press release is attached hereto as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure

Attached as Exhibit 99.2 to this Current Report on Form 8-K is the investor presentation dated September 15, 2020 that will be used by Del Taco in making a presentation at the CL King & Associates' 18th Annual Best Ideas Conference on September 16, 2020 beginning at 3:30pm Eastern Time.

The information in Item 2.02 and in this Item 7.01 and Exhibits 99.1 and 99.2 attached hereto are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01    Financial Statements and Exhibits

(d) Exhibits




SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                        
DEL TACO RESTAURANTS, INC.
  
By:/s/ Steven L. Brake
Name:Steven L. Brake
Title:Executive Vice President and Chief Financial Officer


Date: September 15, 2020

per share
TACOThe Nasdaq Stock Market


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02    Results of Operations and Financial Condition

On September 15, 2020, Del Taco Restaurants, Inc. (the “Company” or “Del Taco”) issued a press release announcing preliminary unaudited sales results for the fiscal third quarter ended September 8, 2020. A copy of the press release is attached hereto as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure

Attached as Exhibit 99.2 to this Current Report on Form 8-K is the investor presentation dated September 15, 2020 that will be used by Del Taco in making a presentation at the CL King & Associates' 18th Annual Best Ideas Conference on September 16, 2020 beginning at 3:30pm Eastern Time.

The information in Item 2.02 and in this Item 7.01 and Exhibits 99.1 and 99.2 attached hereto are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01    Financial Statements and Exhibits

(d) Exhibits

Exhibit No.Description of Exhibit
Exhibit 99.1
Exhibit 99.2



SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                        
DEL TACO RESTAURANTS, INC.
  
By:/s/ Steven L. Brake
Name:Steven L. Brake
Title:Executive Vice President and Chief Financial Officer


Date: September 15, 2020


Document
Exhibit 99.1
dtlogoa201.jpg


For Immediate Release

Del Taco Restaurants, Inc. Reports Preliminary Unaudited
Fiscal Third Quarter 2020 Sales Results
System-Wide Comparable Restaurant Sales Grew 4.1%; Positive Trends at Both Company-operated and Franchised Restaurants
Reduced Outstanding Revolver Balance by dtlogoa201.jpg" style="height:126px;width:230px;">


For Immediate Release

Del Taco Restaurants, Inc. Reports Preliminary Unaudited
Fiscal Third Quarter 2020 Sales Results
System-Wide Comparable Restaurant Sales Grew 4.1%; Positive Trends at Both Company-operated and Franchised Restaurants
Reduced Outstanding Revolver Balance by $21 Million
Presenting at CL King & Associates’ 18th Annual Best Ideas Conference Tomorrow

Lake Forest, CA. September 15, 2020 – Del Taco Restaurants, Inc. (“Del Taco” or the “Company”), (NASDAQ: TACO), the second largest Mexican-American quick service restaurant chain by units in the United States, today reported preliminary unaudited sales results for the 12-week period ending September 8, 2020 and provided a liquidity update.

John D. Cappasola, Jr., President and Chief Executive Officer of Del Taco, commented, “Our unique value-oriented QSR+ positioning combined with our expanding off-premise convenience is proving resilient and resonating with guests through our contactless or limited contact channels. I am pleased our nimble and focused approach resulted in comparable restaurant sales that sequentially improved from the fiscal second quarter and turned positive at both company-operated and franchised restaurants during the fiscal third quarter. This momentum enabled us to reduce our outstanding revolver balance by $21 million during the fiscal third quarter.”

Cappasola continued, “We are thankful for our restaurant teams, franchisees and support center employees who are continuing to excel in this challenging environment while delivering a great guest experience. We recently became the first national Mexican QSR to launch a new Crispy Chicken menu featuring unique flavors and products across our barbell menu for an unbeatable value. Outstanding training and consistent execution are driving high overall guest satisfaction scores for Crispy Chicken and helping to accelerate comparable restaurant sales trends.”

Fiscal Third Quarter 2020 Sales Highlights

•System-wide comparable restaurant sales increased 4.1%;
◦Company-operated comparable restaurant sales increased 2.0%;
◦Franchised comparable restaurant sales increased 6.5%;
•Total revenue of $120.7 million, representing a 0.4% increase from the fiscal third quarter 2019;
•Company-operated restaurant sales of $109.5 million, representing a 1.4% decrease from the fiscal third quarter 2019 primarily due to fewer company-operated restaurants open during 2020 compared to 2019 due to our refranchising activity; and
•One company-operated and four franchise restaurants opened and two franchise restaurants closed.

The expected sales results are preliminary and unaudited, have not been reviewed by the Company’s independent registered public accountants, and remain subject to the completion of normal quarter-end accounting procedures and adjustments and are subject to change.





1

Liquidity

During the fiscal third quarter, the Company reduced its outstanding revolving credit facility borrowing by $21 million to $124 million from $145 million at the end of both the fiscal second quarter and last year’s fiscal fourth quarter. The Company currently has $108.7 million available under its revolving credit facility.

Investor Conference Participation

As a reminder, John D. Cappasola, Jr., President and Chief Executive Officer, and Steven L. Brake, Executive Vice President and Chief Financial Officer, will present at CL King & Associates’ 18th Annual Best Ideas Conference tomorrow at 3:30 PM ET and hold investor meetings throughout the day.

The presentation will be webcast live and later archived at www.deltaco.com under the investors section. The Company has posted an investor deck to its investors website that will accompany the presentation.

Key Financial Definitions

Comparable restaurant sales growth reflects the change in year-over-year sales for the comparable company, franchise and total system restaurant base. Restaurants are included in the comparable store base in the accounting period following its 18th full month of operations and excludes restaurant closures.

About Del Taco Restaurants, Inc.

Del Taco (NASDAQ: TACO) offers a unique variety of both Mexican and American favorites such as burritos and fries, prepared fresh in every restaurant's working kitchen with the value and convenience of a drive-thru. Del Taco's menu items taste better because they are made with quality ingredients like fresh grilled chicken and carne asada steak, hand-sliced avocado, hand-grated cheddar cheese, slow-cooked beans made from scratch, and creamy Queso Blanco. The brand's campaign further communicates Del Taco's commitment to providing guests with the best quality and value for their money through cooking, chopping, shredding and grilling menu items from scratch. Founded in 1964, today Del Taco serves more than three million guests each week at its approximately 600 restaurants across 15 states. For more information, visit www.deltaco.com.

Forward-Looking Statements

In addition to historical information, this release may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, information concerning Del Taco’s possible or assumed future results of operations, business strategies, competitive position, industry environment, potential growth opportunities and the effects of regulation. These statements are based on Del Taco’s management’s current expectations and beliefs, as well as a number of assumptions concerning future events. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “target,” “may,” “will,” “should,” “future,” “propose,” “preliminary,” “guidance,” “on track” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Del Taco’s management’s control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks include, without limitation, the impact of the COVID-19 pandemic, consumer demand, our inability to successfully open company-operated or franchised restaurants or establish new markets, competition in our markets, our inability to grow and manage growth profitably, adverse changes in food and supply costs, our inability to access additional capital, changes in applicable laws or regulations (including minimum wage regulations), food safety and foodborne illness concerns, our inability to manage existing and to obtain additional franchisees, our inability to successfully execute our portfolio optimization strategy, our inability to attract and retain qualified personnel, our inability to profitably expand into new markets, changes in, or the discontinuation of, the Company’s repurchase program, and the possibility that we may be adversely affected by other economic, business, and/or competitive factors. Additional risks and uncertainties are identified and discussed in Del Taco’s reports filed with the SEC, including under Part I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019 and Part II., Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the period ended June 16, 2020, and available at the SEC’s website at www.sec.gov and the Company’s website at www.deltaco.com.

Forward-looking statements included in this release speak only as of the date of this release. Del Taco undertakes no obligation to update its forward-looking statements to reflect events or circumstances after the date of this release or otherwise.

### #### ###
### #### ###
2


Investor Relations Contact:
Raphael Gross
(203) 682-8253
investor@deltaco.com
Presenting at CL King & Associates’ 18th Annual Best Ideas Conference Tomorrow

Lake Forest, CA. September 15, 2020 – Del Taco Restaurants, Inc. (“Del Taco” or the “Company”), (NASDAQ: TACO), the second largest Mexican-American quick service restaurant chain by units in the United States, today reported preliminary unaudited sales results for the 12-week period ending September 8, 2020 and provided a liquidity update.

John D. Cappasola, Jr., President and Chief Executive Officer of Del Taco, commented, “Our unique value-oriented QSR+ positioning combined with our expanding off-premise convenience is proving resilient and resonating with guests through our contactless or limited contact channels. I am pleased our nimble and focused approach resulted in comparable restaurant sales that sequentially improved from the fiscal second quarter and turned positive at both company-operated and franchised restaurants during the fiscal third quarter. This momentum enabled us to reduce our outstanding revolver balance by dtlogoa201.jpg" style="height:126px;width:230px;">


For Immediate Release

Del Taco Restaurants, Inc. Reports Preliminary Unaudited
Fiscal Third Quarter 2020 Sales Results
System-Wide Comparable Restaurant Sales Grew 4.1%; Positive Trends at Both Company-operated and Franchised Restaurants
Reduced Outstanding Revolver Balance by $21 Million
Presenting at CL King & Associates’ 18th Annual Best Ideas Conference Tomorrow

Lake Forest, CA. September 15, 2020 – Del Taco Restaurants, Inc. (“Del Taco” or the “Company”), (NASDAQ: TACO), the second largest Mexican-American quick service restaurant chain by units in the United States, today reported preliminary unaudited sales results for the 12-week period ending September 8, 2020 and provided a liquidity update.

John D. Cappasola, Jr., President and Chief Executive Officer of Del Taco, commented, “Our unique value-oriented QSR+ positioning combined with our expanding off-premise convenience is proving resilient and resonating with guests through our contactless or limited contact channels. I am pleased our nimble and focused approach resulted in comparable restaurant sales that sequentially improved from the fiscal second quarter and turned positive at both company-operated and franchised restaurants during the fiscal third quarter. This momentum enabled us to reduce our outstanding revolver balance by $21 million during the fiscal third quarter.”

Cappasola continued, “We are thankful for our restaurant teams, franchisees and support center employees who are continuing to excel in this challenging environment while delivering a great guest experience. We recently became the first national Mexican QSR to launch a new Crispy Chicken menu featuring unique flavors and products across our barbell menu for an unbeatable value. Outstanding training and consistent execution are driving high overall guest satisfaction scores for Crispy Chicken and helping to accelerate comparable restaurant sales trends.”

Fiscal Third Quarter 2020 Sales Highlights

•System-wide comparable restaurant sales increased 4.1%;
◦Company-operated comparable restaurant sales increased 2.0%;
◦Franchised comparable restaurant sales increased 6.5%;
•Total revenue of $120.7 million, representing a 0.4% increase from the fiscal third quarter 2019;
•Company-operated restaurant sales of $109.5 million, representing a 1.4% decrease from the fiscal third quarter 2019 primarily due to fewer company-operated restaurants open during 2020 compared to 2019 due to our refranchising activity; and
•One company-operated and four franchise restaurants opened and two franchise restaurants closed.

The expected sales results are preliminary and unaudited, have not been reviewed by the Company’s independent registered public accountants, and remain subject to the completion of normal quarter-end accounting procedures and adjustments and are subject to change.





1

Liquidity

During the fiscal third quarter, the Company reduced its outstanding revolving credit facility borrowing by $21 million to $124 million from $145 million at the end of both the fiscal second quarter and last year’s fiscal fourth quarter. The Company currently has $108.7 million available under its revolving credit facility.

Investor Conference Participation

As a reminder, John D. Cappasola, Jr., President and Chief Executive Officer, and Steven L. Brake, Executive Vice President and Chief Financial Officer, will present at CL King & Associates’ 18th Annual Best Ideas Conference tomorrow at 3:30 PM ET and hold investor meetings throughout the day.

The presentation will be webcast live and later archived at www.deltaco.com under the investors section. The Company has posted an investor deck to its investors website that will accompany the presentation.

Key Financial Definitions

Comparable restaurant sales growth reflects the change in year-over-year sales for the comparable company, franchise and total system restaurant base. Restaurants are included in the comparable store base in the accounting period following its 18th full month of operations and excludes restaurant closures.

About Del Taco Restaurants, Inc.

Del Taco (NASDAQ: TACO) offers a unique variety of both Mexican and American favorites such as burritos and fries, prepared fresh in every restaurant's working kitchen with the value and convenience of a drive-thru. Del Taco's menu items taste better because they are made with quality ingredients like fresh grilled chicken and carne asada steak, hand-sliced avocado, hand-grated cheddar cheese, slow-cooked beans made from scratch, and creamy Queso Blanco. The brand's campaign further communicates Del Taco's commitment to providing guests with the best quality and value for their money through cooking, chopping, shredding and grilling menu items from scratch. Founded in 1964, today Del Taco serves more than three million guests each week at its approximately 600 restaurants across 15 states. For more information, visit www.deltaco.com.

Forward-Looking Statements

In addition to historical information, this release may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, information concerning Del Taco’s possible or assumed future results of operations, business strategies, competitive position, industry environment, potential growth opportunities and the effects of regulation. These statements are based on Del Taco’s management’s current expectations and beliefs, as well as a number of assumptions concerning future events. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “target,” “may,” “will,” “should,” “future,” “propose,” “preliminary,” “guidance,” “on track” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Del Taco’s management’s control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks include, without limitation, the impact of the COVID-19 pandemic, consumer demand, our inability to successfully open company-operated or franchised restaurants or establish new markets, competition in our markets, our inability to grow and manage growth profitably, adverse changes in food and supply costs, our inability to access additional capital, changes in applicable laws or regulations (including minimum wage regulations), food safety and foodborne illness concerns, our inability to manage existing and to obtain additional franchisees, our inability to successfully execute our portfolio optimization strategy, our inability to attract and retain qualified personnel, our inability to profitably expand into new markets, changes in, or the discontinuation of, the Company’s repurchase program, and the possibility that we may be adversely affected by other economic, business, and/or competitive factors. Additional risks and uncertainties are identified and discussed in Del Taco’s reports filed with the SEC, including under Part I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019 and Part II., Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the period ended June 16, 2020, and available at the SEC’s website at www.sec.gov and the Company’s website at www.deltaco.com.

Forward-looking statements included in this release speak only as of the date of this release. Del Taco undertakes no obligation to update its forward-looking statements to reflect events or circumstances after the date of this release or otherwise.

### #### ###
### #### ###
2


Investor Relations Contact:
Raphael Gross
(203) 682-8253
investor@deltaco.com
Cappasola continued, “We are thankful for our restaurant teams, franchisees and support center employees who are continuing to excel in this challenging environment while delivering a great guest experience. We recently became the first national Mexican QSR to launch a new Crispy Chicken menu featuring unique flavors and products across our barbell menu for an unbeatable value. Outstanding training and consistent execution are driving high overall guest satisfaction scores for Crispy Chicken and helping to accelerate comparable restaurant sales trends.”

Fiscal Third Quarter 2020 Sales Highlights

•System-wide comparable restaurant sales increased 4.1%;
◦Company-operated comparable restaurant sales increased 2.0%;
◦Franchised comparable restaurant sales increased 6.5%;
•Total revenue of alt="dtlogoa201.jpg" 20.7 million, representing a 0.4% increase from the fiscal third quarter 2019;
•Company-operated restaurant sales of alt="dtlogoa201.jpg" 09.5 million, representing a 1.4% decrease from the fiscal third quarter 2019 primarily due to fewer company-operated restaurants open during 2020 compared to 2019 due to our refranchising activity; and
•One company-operated and four franchise restaurants opened and two franchise restaurants closed.

The expected sales results are preliminary and unaudited, have not been reviewed by the Company’s independent registered public accountants, and remain subject to the completion of normal quarter-end accounting procedures and adjustments and are subject to change.





1

Liquidity

During the fiscal third quarter, the Company reduced its outstanding revolving credit facility borrowing by dtlogoa201.jpg" style="height:126px;width:230px;">


For Immediate Release

Del Taco Restaurants, Inc. Reports Preliminary Unaudited
Fiscal Third Quarter 2020 Sales Results
System-Wide Comparable Restaurant Sales Grew 4.1%; Positive Trends at Both Company-operated and Franchised Restaurants
Reduced Outstanding Revolver Balance by $21 Million
Presenting at CL King & Associates’ 18th Annual Best Ideas Conference Tomorrow

Lake Forest, CA. September 15, 2020 – Del Taco Restaurants, Inc. (“Del Taco” or the “Company”), (NASDAQ: TACO), the second largest Mexican-American quick service restaurant chain by units in the United States, today reported preliminary unaudited sales results for the 12-week period ending September 8, 2020 and provided a liquidity update.

John D. Cappasola, Jr., President and Chief Executive Officer of Del Taco, commented, “Our unique value-oriented QSR+ positioning combined with our expanding off-premise convenience is proving resilient and resonating with guests through our contactless or limited contact channels. I am pleased our nimble and focused approach resulted in comparable restaurant sales that sequentially improved from the fiscal second quarter and turned positive at both company-operated and franchised restaurants during the fiscal third quarter. This momentum enabled us to reduce our outstanding revolver balance by $21 million during the fiscal third quarter.”

Cappasola continued, “We are thankful for our restaurant teams, franchisees and support center employees who are continuing to excel in this challenging environment while delivering a great guest experience. We recently became the first national Mexican QSR to launch a new Crispy Chicken menu featuring unique flavors and products across our barbell menu for an unbeatable value. Outstanding training and consistent execution are driving high overall guest satisfaction scores for Crispy Chicken and helping to accelerate comparable restaurant sales trends.”

Fiscal Third Quarter 2020 Sales Highlights

•System-wide comparable restaurant sales increased 4.1%;
◦Company-operated comparable restaurant sales increased 2.0%;
◦Franchised comparable restaurant sales increased 6.5%;
•Total revenue of $120.7 million, representing a 0.4% increase from the fiscal third quarter 2019;
•Company-operated restaurant sales of $109.5 million, representing a 1.4% decrease from the fiscal third quarter 2019 primarily due to fewer company-operated restaurants open during 2020 compared to 2019 due to our refranchising activity; and
•One company-operated and four franchise restaurants opened and two franchise restaurants closed.

The expected sales results are preliminary and unaudited, have not been reviewed by the Company’s independent registered public accountants, and remain subject to the completion of normal quarter-end accounting procedures and adjustments and are subject to change.





1

Liquidity

During the fiscal third quarter, the Company reduced its outstanding revolving credit facility borrowing by $21 million to $124 million from $145 million at the end of both the fiscal second quarter and last year’s fiscal fourth quarter. The Company currently has $108.7 million available under its revolving credit facility.

Investor Conference Participation

As a reminder, John D. Cappasola, Jr., President and Chief Executive Officer, and Steven L. Brake, Executive Vice President and Chief Financial Officer, will present at CL King & Associates’ 18th Annual Best Ideas Conference tomorrow at 3:30 PM ET and hold investor meetings throughout the day.

The presentation will be webcast live and later archived at www.deltaco.com under the investors section. The Company has posted an investor deck to its investors website that will accompany the presentation.

Key Financial Definitions

Comparable restaurant sales growth reflects the change in year-over-year sales for the comparable company, franchise and total system restaurant base. Restaurants are included in the comparable store base in the accounting period following its 18th full month of operations and excludes restaurant closures.

About Del Taco Restaurants, Inc.

Del Taco (NASDAQ: TACO) offers a unique variety of both Mexican and American favorites such as burritos and fries, prepared fresh in every restaurant's working kitchen with the value and convenience of a drive-thru. Del Taco's menu items taste better because they are made with quality ingredients like fresh grilled chicken and carne asada steak, hand-sliced avocado, hand-grated cheddar cheese, slow-cooked beans made from scratch, and creamy Queso Blanco. The brand's campaign further communicates Del Taco's commitment to providing guests with the best quality and value for their money through cooking, chopping, shredding and grilling menu items from scratch. Founded in 1964, today Del Taco serves more than three million guests each week at its approximately 600 restaurants across 15 states. For more information, visit www.deltaco.com.

Forward-Looking Statements

In addition to historical information, this release may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, information concerning Del Taco’s possible or assumed future results of operations, business strategies, competitive position, industry environment, potential growth opportunities and the effects of regulation. These statements are based on Del Taco’s management’s current expectations and beliefs, as well as a number of assumptions concerning future events. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “target,” “may,” “will,” “should,” “future,” “propose,” “preliminary,” “guidance,” “on track” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Del Taco’s management’s control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks include, without limitation, the impact of the COVID-19 pandemic, consumer demand, our inability to successfully open company-operated or franchised restaurants or establish new markets, competition in our markets, our inability to grow and manage growth profitably, adverse changes in food and supply costs, our inability to access additional capital, changes in applicable laws or regulations (including minimum wage regulations), food safety and foodborne illness concerns, our inability to manage existing and to obtain additional franchisees, our inability to successfully execute our portfolio optimization strategy, our inability to attract and retain qualified personnel, our inability to profitably expand into new markets, changes in, or the discontinuation of, the Company’s repurchase program, and the possibility that we may be adversely affected by other economic, business, and/or competitive factors. Additional risks and uncertainties are identified and discussed in Del Taco’s reports filed with the SEC, including under Part I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019 and Part II., Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the period ended June 16, 2020, and available at the SEC’s website at www.sec.gov and the Company’s website at www.deltaco.com.

Forward-looking statements included in this release speak only as of the date of this release. Del Taco undertakes no obligation to update its forward-looking statements to reflect events or circumstances after the date of this release or otherwise.

### #### ###
### #### ###
2


Investor Relations Contact:
Raphael Gross
(203) 682-8253
investor@deltaco.com

Investor Conference Participation

As a reminder, John D. Cappasola, Jr., President and Chief Executive Officer, and Steven L. Brake, Executive Vice President and Chief Financial Officer, will present at CL King & Associates’ 18th Annual Best Ideas Conference tomorrow at 3:30 PM ET and hold investor meetings throughout the day.

The presentation will be webcast live and later archived at www.deltaco.com under the investors section. The Company has posted an investor deck to its investors website that will accompany the presentation.

Key Financial Definitions

Comparable restaurant sales growth reflects the change in year-over-year sales for the comparable company, franchise and total system restaurant base. Restaurants are included in the comparable store base in the accounting period following its 18th full month of operations and excludes restaurant closures.

About Del Taco Restaurants, Inc.

Del Taco (NASDAQ: TACO) offers a unique variety of both Mexican and American favorites such as burritos and fries, prepared fresh in every restaurant's working kitchen with the value and convenience of a drive-thru. Del Taco's menu items taste better because they are made with quality ingredients like fresh grilled chicken and carne asada steak, hand-sliced avocado, hand-grated cheddar cheese, slow-cooked beans made from scratch, and creamy Queso Blanco. The brand's campaign further communicates Del Taco's commitment to providing guests with the best quality and value for their money through cooking, chopping, shredding and grilling menu items from scratch. Founded in 1964, today Del Taco serves more than three million guests each week at its approximately 600 restaurants across 15 states. For more information, visit www.deltaco.com.

Forward-Looking Statements

In addition to historical information, this release may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, information concerning Del Taco’s possible or assumed future results of operations, business strategies, competitive position, industry environment, potential growth opportunities and the effects of regulation. These statements are based on Del Taco’s management’s current expectations and beliefs, as well as a number of assumptions concerning future events. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “target,” “may,” “will,” “should,” “future,” “propose,” “preliminary,” “guidance,” “on track” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Del Taco’s management’s control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks include, without limitation, the impact of the COVID-19 pandemic, consumer demand, our inability to successfully open company-operated or franchised restaurants or establish new markets, competition in our markets, our inability to grow and manage growth profitably, adverse changes in food and supply costs, our inability to access additional capital, changes in applicable laws or regulations (including minimum wage regulations), food safety and foodborne illness concerns, our inability to manage existing and to obtain additional franchisees, our inability to successfully execute our portfolio optimization strategy, our inability to attract and retain qualified personnel, our inability to profitably expand into new markets, changes in, or the discontinuation of, the Company’s repurchase program, and the possibility that we may be adversely affected by other economic, business, and/or competitive factors. Additional risks and uncertainties are identified and discussed in Del Taco’s reports filed with the SEC, including under Part I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019 and Part II., Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the period ended June 16, 2020, and available at the SEC’s website at www.sec.gov and the Company’s website at www.deltaco.com.

Forward-looking statements included in this release speak only as of the date of this release. Del Taco undertakes no obligation to update its forward-looking statements to reflect events or circumstances after the date of this release or otherwise.

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Investor Relations Contact:
Raphael Gross
(203) 682-8253
investor@deltaco.com
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tacoex99220200915

 
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(1) Based on unit count (2) Represents FY2019 sales data and unit counts as of Q3-2020 (3) Represents system-wide sales for fiscal 2019 and unit count as of December 31st, 2019. Mexican QSR competitive unit counts / system-wide sales are from the Restaurant Business Online Top 500 Chain Restaurant Report reflecting 2019 results 5

 
(1) VALUE /AFFORDABILITY VALUE QUALITY (1) Source: The NPD Group/CREST®, December 2019 for total food visits (excluding beverage only occasions) 6

 
February 2020 Launch of June 2020 Launch of Updated Value Strategy Fresh Guacamole Platform Carne Asada Steak and Marinated Chicken Whole Pinto Beans Freshly Grilled in Our Restaurants Slow Cooked In Our Kitchens 100% Real Cheddar Cheese Salsa Made From Scratch Grated Fresh Daily With Fresh Tomatoes 7

 
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(1) https://www.gallup.com/workplace/268349/restaurant-general-managers-brand.aspx VS. Del Taco 2019 Internal Employee Survey (2) Del Taco Q1 and Q2 2020 Turnover 9

 
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(1) Based on company restaurant sales 13

 
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 (1) Represents third party delivery sales through the Grub Hub, Postmates, Door Dash and Uber Eats marketplaces, as well as third party delivery sourced through our Del App as a percentage of company or franchised restaurant sales 14

 
(1) Inmoment Del Taco Guest Experience Measurement Surveys 15

 
10.0% 5.0% 0.0% (5.0%) (10.0%) (15.0%) Fiscal Q1 Fiscal Q2 Fiscal Q3 16

 

 
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< $ 1 $ 5 > WIDE SPECTRUM OF OCCASIONS 20

 
New Variety · New Flavors · New Products 21

 
TV · Streaming Service · Social Terrestrial & Digital PR & Social 22

 
37% Increase In Registered App Users Since 2019 1,500,000 1,000,000 500,000 0 2019 2020 To Date 5X Increase In System Delivery Sales % (1) 8.0% 6.4% 6.0% 4.0% 2.0% 1.2% 0.0% Q4 2019 Q3 2020 (1) Represents third party delivery sales through the Grub Hub, Postmates, Door Dash and Uber Eats marketplaces, as well as third party delivery sourced through our Del App as a percentage of system restaurant sales 23

 
Paid 1:1 Owned Media Messaging On Demand Loyalty & Sales Delivery Digital Menu Rewards CRM Attribution Ordering Payment 24

 
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(1) Represents unit counts as of Q3-2020 (2) Based on internal analysis and a study prepared by a leading national consulting firm. 27

 
(1) Restaurant contribution is defined as company restaurant sales less company restaurant expenses. Restaurant contribution margin is defined as restaurant contribution as a percentage of company restaurant sales (2) Build to Suit and Conversion investment net of landlord contributions or planned sale leaseback proceeds (3) Annualized Average Unit Volume based on fiscal third quarter 2020 results annualized on a 52 week basis for system-wide restaurants open at the beginning and end of the fiscal third quarter of 2020 (4) Comparable restaurant sales for the fiscal third quarter 2020 for system restaurants who were in the comparable restaurant sales base, including 366, 31, 19 and 149 system restaurants in California, Emerging Markets, Pacific Northwest and Southwest, respectively (5) Emerging Markets includes system restaurants in Oklahoma, Georgia, Florida, Alabama, South Carolina and Michigan (6) Pacific Northwest includes system restaurants in Washington, Oregon and Idaho (7) Southwest includes system restaurants in Nevada, Utah, Arizona, Colorado and New Mexico 28

 
Strategic Refranchise Opportunistic Refranchise Opportunistic Acquisition Strategic Closures 29

 
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(1) (1) (1) Fiscal 2016 results exclude the estimated contribution from the additional operating week including $8.3 million of total revenue and $8.0 million of company restaurant sales. . 33

 
(3) (3) Company SSS 0.1% 1.8% 5.3% 6.4% 4.7% 4.0% 1.5% 0.5% CA Min Wage $8.00 $8.00 $9.00 $9.00 $10.00 $10.50 $11.00 $12.00 Food Inflation 3.7% 1.7% 1.0% 1.1% -2.2% 1.6% 0.8% 3.3% Lease Accounting (4) 0.7% (1)Restaurant contribution is defined as company restaurant sales less company restaurant expenses. Restaurant contribution margin is defined as restaurant contribution as a percentage of company restaurant sales. (2)Adjusted EBITDA represents a non-GAAP measure of financial results and reflects net income (loss) before interest expense, provision for income taxes, depreciation, amortization and items that we do not consider representative of our ongoing operating performance. (3)Fiscal 2016 results exclude the estimated contribution from the additional operating week including $8.3 million of total revenue, $8.0 million of company restaurant sales, $1.4 million of restaurant contribution and $1.1 million of Adjusted EBITDA. (4) Occupancy and other operating expenses as a percent of company restaurant sales increased approximately 70 basis points from the adoption of the new lease accounting standard 34

 
(1) Total Debt Leverage Ratio(1) (1) Leverage ratio represents total debt, less cash, divided by Adjusted EBITDA on a rolling four fiscal quarter basis 35

 

 
(IN THOUSANDS) 2019 2018 2017 2016 2015 2014 2013 2012 Net income (loss) $(118,285) $18,959 $49,871 $20,913 $4,757 $(9,255) $(6,539) $(8,222) : Provision (benefit) for income taxes 4,371 6,659 (15,824) 15,329 852 1,098 80 1,939 Interest expense 7,235 9,075 7,200 6,327 15,143 30,895 35,613 38,291 Depreciation and amortization 25,488 25,794 23,362 23,129 19,525 18,608 19,472 17,082 (81,191) 60,487 64,609 65,698 40,277 41,346 48,626 49,090 Stock-based compensation expense(a) 6,293 6,079 4,876 4,096 2,030 954 1,290 3,087 Loss (gain) on disposal of assets and adjustments 9,448 1,012 1,075 312 102 (151) 209 35 to assets held for sale, net(b) Impairment of goodwill(c) 118,250 -- -- -- -- -- -- -- Impairment of long-lived assets(d) 7,159 3,861 -- -- -- 9,617 -- -- Restaurant closure charges, net(e) 2,961 394 191 435 2,109 82 298 716 Amortization of favorable and unfavorable -- (767) (809) (607) (361) 144 378 617 lease assets and liabilities, net(f) Debt modification costs(g) -- -- -- -- 217 1,241 4,178 -- Transaction-related costs(h) -- -- -- 731 20,227 1,936 -- -- Change in fair value of warrant liability(i) -- -- -- -- (35) 1,417 33 (2,634) Executive transition costs(j) 438 -- -- -- -- -- -- -- Pre-opening costs(k) 1,650 1,584 1,591 731 642 462 596 1,080 Insurance reserves adjustment(l) -- -- -- -- -- 1,800 -- -- Other income(m) (364) (660) -- -- (220) -- -- -- Sublease income for closed restaurants (871) -- -- -- -- -- -- -- $63,773 $71,990 $71,533 $71,396 $64,988 $58,848 $55,608 $51,991 Pro-rata Adjustment to 52 Weeks(n) -- -- -- (1,122) -- -- -- -- $63,773 $71,990 $71,533 $70,274 $64,988 $58,848 $55,608 $51,991 a) Includes non-cash, stock-based compensation. b) Loss (gain) on disposal of assets and adjustments to assets held for sale, net includes adjustments to reduce the carrying amount for assets held for sale to estimated fair value less cost to sell, loss or gain on disposal of assets related to sales, retirements and replacement or write-off of leasehold improvements or equipment in the ordinary course of business, net gains or losses recorded associated with the sale of company-operated restaurants to franchisees, gains from the write-off of right-of-use assets and operating lease liabilities related to the terminations of leases and net gains or losses recorded associated with sale-leaseback transactions. c) Includes costs related to impairment of goodwill. d) Includes costs related to impairment of long-lived assets. e) During 2019, restaurant closure costs include rent expense, non-lease executory costs, other direct costs associated with previously closed restaurants and future obligations associated with the closure or net sublease shortfall of a restaurant. Prior to 2019, restaurant closure costs include costs related to future obligations associated with the closure or net sublease shortfall of a restaurant and lease termination costs, partially offset by sublease income from leases which are treated as deemed landlord financing. f) Includes amortization of favorable lease assets and unfavorable lease liabilities. g) Includes costs associated with debt refinancing transactions in April 2013, April 2014, March 2015 and August 2015. h) Includes costs related to the offer to exchange the Company's common stock for each outstanding warrant in August 2016, the strategic sale process which commenced during 2014 and resulted in the March 2015 Stock Purchase Agreement with LAC and Levy Merger Sub and the June 2015 Business Combination consummated pursuant to the Merger Agreement, as well as costs related to the secondary offering of common stock completed in October 2015. i) Relates to fair value adjustments to the warrants to purchase shares of common stock of Del Taco Holdings (“DTH”) that had been issued to certain of DTH’s equity shareholders, all of which were exchanged for shares of common stock of DTH on March 20, 2015. j) Includes costs associated with the transition of former Company executives, such as severance expense. k) Pre-opening costs consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including restaurant labor, supplies, rent expense and other related pre-opening costs. These are generally incurred over the three to five months prior to opening. l) Includes a $1.8 million increase in fiscal 2014 in workers’ compensation expense due to higher payments and reserves related to underlying claims activity. m) During 2019, other income consists of insurance proceeds related to a fire at a company-operated restaurant. During 2018, other income consists of a gain related to the write-off of unfavorable lease liabilities related to franchise subleases which were terminated in connection with the Company's 37 acquisition of the related franchise-operated restaurants and insurance proceeds related to a fire at a company-operated restaurant. During 2015, other income consists of a gain based on the amount of the liquidating distribution received in excess of our investment in four public partnerships. n) Estimated contribution from the additional operating week during fiscal 2016.

 
(IN THOUSANDS) 2019 2018 2017 2016 2015 2014 2013 2012 (Loss) income from operations $ (107,043) $ 34,033 $ 41,247 $ 43,300 $ 40,941 $ 27,332 $ 33,365 $ 29,374 Less: Franchise revenue (19,002) (17,569) (16,464) (15,676) (14,021) (12,973) (12,515) (12,409) Franchise advertising contributions (14,516) (13,300) - - - - - - Franchise sublease income and other (5,442) (3,428) (2,844) (2,343) (2,366) (2,251) (2,167) (2,142) Plus: General and administrative 43,877 43,773 38,154 37,220 32,351 28,136 23,112 23,184 Franchise advertising expenses 14,516 13,300 - - - - - - Depreciation and amortization 25,488 25,794 23,362 23,129 19,528 18,752 19,850 17,699 Occupancy and other - franchise subleases and other 4,463 3,167 2,608 2,207 2,249 2,145 2,073 2,060 Pre-opening costs 1,650 1,584 1,591 731 642 462 596 1,080 Impairment of goodwill 118,250 - - - - - - - Impairment of long-lived assets 7,159 3,861 - - - 9,617 - - Restaurant closure charges, net 2,961 394 191 435 2,109 82 298 716 Loss (gain) on disposal of assets and adjustments to assets 9,448 1,012 1,075 312 102 (151) 209 35 held for sale, net $81,809 $92,621 $88,920 $89,315 $81,535 $71,151 $64,821 $59,597 Company restaurant sales $ 473,991 $ 471,193 $ 452,148 $ 434,064 $ 407,615 $ 380,800 $ 356,306 $ 345,590 17.3% 19.7% 19.7% 20.6% 20.0% 18.7% 18.2% 17.2% 38

 
v3.20.2
Cover
Sep. 15, 2020
Cover [Abstract]  
Document Type 8-K
Document Period End Date Sep. 15, 2020
Entity Registrant Name Del Taco Restaurants, Inc.
Entity Emerging Growth Company false
Entity File Number 001-36197
Soliciting Material false
Written Communications false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Amendment Flag false
Entity Central Index Key 0001585583
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 46-3340980
Entity Address, Postal Zip Code 92630
Entity Address, State or Province CA
Entity Address, City or Town Lake Forest,
Entity Address, Address Line One 25521 Commercentre Drive
Local Phone Number 462-9300
City Area Code (949)
Title of 12(b) Security Common Stock, $0.001 par value per share
Trading Symbol TACO
Security Exchange Name NASDAQ