Del Taco Restaurants — Q3 2020 Earnings Presentation
38 slides from Del Taco Restaurants's earnings presentation, Sep 15, 2020
Slide 1: Presentation
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Slide 2: Disclaimer: Forward-Looking Statements
ee DISCLAIMER Det Taco FORWARD-LOOKING STATEMENTS This presentation includes statements that are, or may deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “estimates,” “projected,” “expects,” “a
Slide 3: Del Taco Participants
DEL TACO PARTICIPANTS JOHN D. CAPPASOLA, JR. PRESIDENT & CEO & Joined Del Taco in 2008, was promoted to Chief Brand Officer in 2011, President and CEO in 2017 & Previously spent 16 years with Blockbuster in strategic marketing and concept development, field marketing and various operational roles oS
Slide 4: Brand Differentiation
BRAND DIFFERENTIATION i a DetTaco
Slide 5: (1) Based on unit count (2) Represents FY2019 sales data and unit counts as
(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 R
Slide 6: Value / Affordability and Quality
(1) VALUE /AFFORDABILITY VALUE QUALITY (1) Source: The NPD Group/CREST®, December 2019 for total food visits (excluding beverage only occasions) 6
Slide 7: Updated Value Strategy and Fresh Guacamole Platform
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
Slide 8: Highly relevant convenience to our guests
...wAND WE OFFER HIGHLY RELEVANT CONVENIENCE TO OUR GUESTS THAT WE CONTINUE TO EXPAND CORE DRIVE-THRU STRENGTH FULLY DEPLOYED DELIVERY UBER ms CALS POSTMATES MOBILE ORDERING & PAYMENT Drive Thru Ordering Take Out Ordering Delivery Ordering 1:1 In-App Marketing Apple & Google Pay For Non-Contact Paym
Slide 9: Employee survey and turnover versus industry
(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
Slide 10: Combined Solutions to deliver the brand promise
WE BRING IT ALL TOGETHER WITH COMBINED SOLUTIONS TO DELIVER THE BRAND PROMISE AND ENHANCE THE GUEST EXPERIENCE COMBINED SOLUTIONS STRATEGY OVERVIEW LEADERSHIP——> OPTIMIZE DEVELOPMENT OPERATIONS Pal OBJECTIVE: RETAIN GUESTS \ Create a Dramatically OUR Better Guest Experience GUEST SERVICE ENHANCEMENT
Slide 11: Brand Resilience
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Slide 12: COVID-19 Key Actions
i COVID-19 KEY ACTIONS ve Jaco =) —) —) & We maintained operations through our drive-thru, take-out and delivery channels without laying-off any restaurant employees. & We revised our operating procedures to promote social distancing, close dining rooms, provide gloves and facemasks to all employees
Slide 13: Brand Acceleration
(1) Based on company restaurant sales 13
Slide 14: Third-party delivery sales by quarter
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
Slide 15: Guest experience measurement surveys
(1) Inmoment Del Taco Guest Experience Measurement Surveys 15
Slide 16: Comparable sales by fiscal quarter
10.0% 5.0% 0.0% (5.0%) (10.0%) (15.0%) Fiscal Q1 Fiscal Q2 Fiscal Q3 16
Slide 17: Slide 17
Slide 18: Drivers of Acceleration
| 5 DRIVERS OF ACCELERATION ve Taco ULTIMATE CONVENIENCE DIGITAL TRANSFORMATION BRAND ENGAGEMENT VALUE LEADERSHIP MENU INNOVATION
Slide 19: Menu innovation continues to build signature products and platforms
OUR MENU INNOVATION CONTINUES TO BUILD SIGNATURE PRODUCTS & PLATFORMS THAT DIFFERENTIATE THE BRAND STATE OF THE ART R&D CAPABILITIES & TEST KITCHEN CONTINUOUS | N N OVATI 0 N HANDCRAFTED — GUACAMOLE miGRISPY, MADE FRESH DAILY CHICKEN TACOS § Co eee EACH he) 1, ry pt)
Slide 20: Wide spectrum of occasions
< $ 1 $ 5 > WIDE SPECTRUM OF OCCASIONS 20
Slide 21: New Variety, New Flavors, New Products
New Variety · New Flavors · New Products 21
Slide 22: Brand engagement and media
TV · Streaming Service · Social Terrestrial & Digital PR & Social 22
Slide 23: App users and delivery sales growth
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 marketplace
Slide 24: Digital ecosystem
Paid 1:1 Owned Media Messaging On Demand Loyalty & Sales Delivery Digital Menu Rewards CRM Attribution Ordering Payment 24
Slide 25: Ultimate Convenience initiative
OUR “ULTIMATE CONVENIENCE” INITIATIVE MAXIMIZES OPPORTUNITIES TO ADDRESS CHANGING CONSUMER NEEDS DetTaco GROWTH IN OFF-PREMISE DEMAND DELIVERY IN-CAR EXPERIENCE LARGE PARTY WITHOUT LOTS OF CA’
Slide 26: Brand Growth & Investment
Slide 27: Unit growth opportunity
(1) Represents unit counts as of Q3-2020 (2) Based on internal analysis and a study prepared by a leading national consulting firm. 27
Slide 28: New restaurant unit economics
(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 s
Slide 29: Refranchising, acquisition and closure strategy
Strategic Refranchise Opportunistic Refranchise Opportunistic Acquisition Strategic Closures 29
Slide 30: New prototype design and functionality
NEW PROTOTYPE DESIGN & FUNCTIONALITY WILL SUPPORT MENU OF VENUES STRATEGY & POSITIONS US FOR THE FUTURE NEW RESTAURANT PROTOTYPE & Modernized Design & On & Off-Premise Functionality Enhancements & Scalable Kitchen MENU OF VENUES & Improves Real Estate Access PICK-UP ro) Ra Ly & Lower Net Investment
Slide 31: Remodel test in progress
REMODEL TEST IN PROGRESS BEFORE & Contemporize Aged Assets in Core Markets & Strong Initial Results @ Test Designed to Maximize Brand Impact and ROI 31
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Slide 33: Historical financial results
(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
Slide 34: Restaurant contribution margin and Adjusted EBITDA trends
(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 expe
Slide 35: Total debt and leverage ratio
(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
Slide 36: Appendix
APPENDIX
Slide 37: Adjusted EBITDA reconciliation
(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 Dep
Slide 38: Restaurant contribution reconciliation
(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)