Dive Brief:
- Del Taco has reopened five Colorado locations as company-owned units since June 21, and will reopen 12 more in the coming months, the company said in an emailed press release.
- Each restaurant will have a “refreshed in-store experience” with digital ordering kiosks.
- Del Taco took over these locations when franchisee Newport Ventures closed 18 of its Colorado locations in February, months after the operator declared bankruptcy.
Dive Insight:
With another franchisee declaring bankruptcy this month, Del Taco’s difficulties with franchised units will likely continue through the rest of the year. The chain has struggled to grow same-store sales for several quarters, with fiscal Q2 comparable sales down 3.6% companywide and franchisee sales down 4.2%, Jack in the Box CFO Dawn Hooper said during parent company Jack in the Box’s May earnings call.
This lack of sales growth could disrupt Del Taco’s plans to refranchise its company-owned stores — a strategy established under Jack in the Box’s ownership. Jack in the Box said earlier this year that it is considering selling Del Taco as part of a turnaround strategy.
Despite the struggles, Del Taco continues to open new locations. Six restaurants opened during the past quarter, Hooper said. Franchisees expected to open 18 new units during fiscal 2025, according to a franchise disclosure document filed in May.
The chain has seen positive momentum from a menu optimization strategy, which the company rolled out during the first half of fiscal Q1, Hooper said. That initiative helped improve product mix and average check.
The company is continuing to leverage menu changes to drive sales this quarter, and brought back its popular Macho Burrito, according to the emailed press release. The menu item is an oversized burrito with seasoned beef, marinated chicken or carne asada steak with beans, cheddar cheese, lettuce, diced tomatoes, onions, two sauces and sour cream. The company also recently added El Big Boxes, tiered meal bundles starting at $5.
“We’re thrilled to reestablish our presence in the Denver and Colorado Springs communities that have supported Del Taco for more than two decades,” Sarah McAloon, interim president of Del Taco, said in a statement. “We’re already seeing an incredible response at the locations that have reopened.”
