Del Taco Restaurants — Investor Presentation (January 2019)
36 slides from Del Taco Restaurants's investor presentation, Jan 14, 2019
Slide 1: Investor Presentation January 2019
INVESTOR PRESENTATION January 2019 DetTaco
Slide 2: Disclaimer: Forward-Looking Statements
DISCLAIMER Det face FORWARD-LOOKING STATEMENTS seramnsconng rareeenrs or xm era ‘gala aber meet iy eae rasan eapaeigeaes aee Sane cutter cael etter pearoesaht men tat reece epee ea ee ey EY mt “the forwardiogking st eae ofa {citer naar Conger see surat teehee Scone cr st Isic ntl lea ics foil eon fo
Slide 3: Del Taco Attendees
DEL TACO ATTENDEES JOHN D. CAPPASOLA, JR. PRESIDENT & CEO © Joined Del Taco in 2008, was promoted to Chief Brand Officer in 2011, President and CEO in © Previously spent 16 years with Blockbuster in strategic marketing and concept development, field marketing and various operational roles eerie STEV
Slide 4: 44
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Slide 5: Del Taco at a glance versus Mexican QSR competitors
(1) Based on unit count (2) Represents FY2018 sales data and unit counts as of FY2018 st (3) Represents system-wide sales for fiscal 2018 and unit count as of January 1 , 2019. Mexican QSR competitive unit counts / system-wide sales are from the 5 Technomic Top 500 2018 report reflecting 2017 result
Slide 6: Quality and value / affordability
( (1 1) ) QUALITY 6 VALUE / AFFORDABILITY( (1 1) ) QUALITY 6 VALUE / AFFORDABILITY
Slide 7: We're passionate about our fresh preparation and cooking
WE'RE PASSIONATE ABOUT OUR Bonn FRESH PREPARATION AND COOKING Det aco WORKING KITCHENS SUPPORT FRESH PREP AND ENABLE QSR+ ee and Freshly Grilled In Our Restaurants cd Grated Fresh Daily 7 Slow Cooked In Our itchens 2 Hand Sliced cod With Fresh Tomatoes ‘eld By
Slide 8: Our balanced menu strategy provides multiple levers for sales and profit growth
OUR BALANCED MENU STRATEGY PROVIDES MULTIPLE LEVERS ee FOR SALES AND PROFIT GROWTH ACROSS DAYPARTS Det face ee FAST CASUAL New mena © Core menu BEATOS targets QSR © Innovation 5 Baers Peril MidTier innovation a ‘Enhancing © Add-on quality and opportunity, freshness perceptions 2018 SALES BY DAYPART
Slide 9: We're proud of our award winning innovation capabilities
WE'RE PROUD OF OUR AWARD WINNING E INNOVATION CAPABILITIES Det Taco STATE OF THE ART R&D CAPABILITIES & TEST KITCHEN My, —— a PROVEN PIPELINE OF MENU INNOVATION we LS og PLATOS ; ne =, WS a Ss 2018 MENU MASTERS BEST NEW PRODUCT INTRODUCTION Piha By 1'(Mid awe
Slide 10: Less general manager turnover and a culture driven by pride
ea Det Taco WE HAVE LESS GENERAL MANAGER TURNOVER AND THEY ARE MORE LIKELY TO RECOMMEND US THAN THE AND A CULTURE THAT IS DRIVEN BY PRIDE AGE ad GM TURNOVER 21% 41% GMRECOMMEND” 54% 31% GM FEELS CO. CARES” 59% 27% BOTTOMS UP CULTURE INSTILLED WITH PRIDE... People Driven Results Focused E RE Innovati
Slide 11: Combined solutions to enhance guest experience and deliver brand promise
WE BRING IT ALL TOGETHER WITH COMBINED SOLUTIONS TO Coan ENHANCE THE GUEST EXPERIENCE & DELIVER THE BRAND PROMISE Device COMBINED SOLUTIONS STRATEGY OVERVIEW DRAMATICALLY IMPROVING GUEST EXPERIENCES LEADERSHIP——> OPTIMIZE aie” DEVELOPMENT OPERATIONS: 61 7 csncscnncusss a Create a Dramatically PEOPLE
Slide 12: Driving AUV
varie DRIVING AUV
Slide 13: Quarterly same-store sales growth
3.5% 2.6% 2.6% 2.4% 2.3% 2.2% 2.0% 1.9% 1.8% 1.6% 1.5% 1.3% 1.2% 0.1% 1.1% 1.0% 0.8% 0.7% 0.6% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 (1) 133.5% 2.6% 2.6% 2.4% 2.3% 2.2% 2.0% 1.9%
Slide 14: Driving incremental traffic through a series of strategic initiatives
WE'RE FOCUSED ON DRIVING INCREMENTAL TRAFFIC THROUGH cs A SERIES OF STRATEGIC INITIATIVES Det face Ps Puase! DIGITAL (te TRANSFORMATION i) grubHub = “DooorvasH Hf rostuares PHASE 2 VALUE PLATFORM EVOLUTION PRODUCT INNOVATION PiMid wh “MIE BY
Slide 15: Our digital transformation is underway
E OUR DIGITAL TRANSFORMATION IS UNDERWAY Det Taco “SD DOORDASH ff rosrues grubHub DEL TACO APP DELIVERY © LA Market Live With Grub Hub Delivery © Grub Hub Expansion to System in Q1 Launched in November 2018 © 250,000 App Users Registered © Build CRM Database to Drive ® Two Additional osrs qaveeted f
Slide 16: Enhancing our value platform
AND WE’RE ENHANCING OUR VALUE PLATFORM TO DRIVE OUR CORE STRENGTH MIX 2 DRIVES PROFT MIGRATION TO BY PAIRING HIGH BUCK & CHANGE MENU TO ENABLE PRICE FLEXIBILITY MARGIN ITEMS BUCK RCHANGE aa ji ie, Qo varie BOX MEALS DELIVER BETTER VALUE THAN COMPETITORS WITHOUT SACRACIFING MARGINS TivMid BRAwre Piha
Slide 17: Bringing innovation to market in 2019
AND FINALLY, WE’LL BRING INNOVATION TO MARKET IN 2019 & THAT IS DESIGNED TO DRIVE INCREMENTAL OCCASIONS Detjaco EAT BEYOND Piha By Tithil ower
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Slide 19: Unit counts and positioning versus competitors
(1) Technomic Top 500 2018 report reflecting 2017 results (2) Represents FY2018 unit counts 19 (3) Based on internal analysis and a study prepared by a leading national consulting firm.(1) Technomic Top 500 2018 report reflecting 2017 results (2) Represents FY2018 unit counts 19 (3) Based on interna
Slide 20: Contemporary restaurant prototype aligns guest experience with QSR+ positioning
CONTEMPORARY RESTAURANT PROTOTYPE ALIGNS GUEST EXPERIENCE WITH DIFFERENTIATED QSR+ POSITIONING Fa DetTaco FRESHNESS COOLERS QUALITY CUES 1'(Mid awe
Slide 21: 2125 6 6 13 12 5 8 6 5 0 21
25 20 12 8 15 5 10 6 6 13 12 5 8 6 5 0 2125 20 12 8 15 5 10 6 6 13 12 5 8 6 5 0 21
Slide 22: 2018 restaurant growth: new units in states
2018 RESTAURANT GROWTH 25 NEW UNITS IN 10 STATES (@ COMPANY-OWNED: 13 (@ FRANCHISED: 12 ‘eld By Piha By DeTeo Tithld owe
Slide 23: Expected 2019 restaurant growth
EXPECTED 2019 RESTAURANT GROWTH WE EXPECT AT LEAST 25 NEW UNITS IN 14 STATES ONE OR MORE TARGETED OPENINGS © COMPANY-OWNED @ FRANCHISED ‘eld By Piha By e% em Tithld owe
Slide 24: New strategies to accelerate franchise growth
E NEW STRATEGIES TO ACCELERATE FRANCHISE GROWTH Detjaco STRATEGIC REFRANCHISE OF COMPANY DEVELOPMENT OF NON-CORE WESTERN STORES FUTURE NEW “SEED” MARKETS © Attracts Franchisees Who Want to “Buy Then Build” © Strategic Use of Company apital © Stimulates New Development cod New Company “Seed” Markets
Slide 25: Financial Update
vei FINANCIAL UPDATE
Slide 26: Portfolio optimization expected to drive growth, financial and operational benefits
PORTFOLIO OPTIMIZATION EXPECTED TO DRIVE GROWTH, Coan FINANCIAL AND OPERATIONAL BENEFITS Det Taco REFRANCHISE REFRANCHISE STRATEGIC ACQUISITIONS STORES MARKETS CLOSURES Refranchise (13) Refranchise Non-Core Western Markets to Restaurants in LA New or Existing Area to Franchisees Franc! Who Have Impr
Slide 27: (3) $75.0 $70.0 $65.0 $60.0 $55.0 $50.0 $45.0 $40.0 (3) 27(3) $75.0 $70.0 $65.0
(3) $75.0 $70.0 $65.0 $60.0 $55.0 $50.0 $45.0 $40.0 (3) 27(3) $75.0 $70.0 $65.0 $60.0 $55.0 $50.0 $45.0 $40.0 (3) 27
Slide 28: Holistic margin management plan
HOLISTIC MARGIN MANAGEMENT PLAN +, Porta Optimization \ced Scheduling eerie ~~ a CAPITAL _SUPPLY CHAIN INVESTMENT tion Optimization + Eaipment + Forward Coverage s& 1 Retomustion a jet Taco MARGIN MANAGEMENT MENU STRATEGY + New Products Menu Merchandising ‘ i ibaa / DISCOUNTS metric Analysis + Disco
Slide 29: Restaurant contribution margin
$1.60 22% $1.40 21% $1.20 20% 19.5% $1.00 $0.80 19% $0.60 17.2% 18% $0.40 17% $0.20 $0.00 16% 29$1.60 22% $1.40 21% $1.20 20% 19.5% $1.00 $0.80 19% $0.60 17.2% 18% $0.40 17% $0.20 $0.00 16% 29
Slide 30: Share and warrant repurchase program optimizes equity capital structure
SHARE AND WARRANT REPURCHASE PROGRAM HAS HELPED cs OPTIMIZE OUR EQUITY CAPITAL STRUCTURE Detjaco SHARE AND WARRANT REPURCHASE $'S AND DRAWN REVOLVER (milions) (rlions) “ $159.0 $153.0 $159.0 band 85 $150 g FH $13.8 2 sio si00 A A = $5 $50 6 %0 $0 2016 2017 2018, SHARES AND WARRANTS OUTSTANDING (rill
Slide 31: Fiscal 2018 preliminary sales results and updated guidance
FISCAL 2018 PRELIMINARY SALES RESULTS Se 10 AND UPDATED GUIDANCE Det fae PRELIMINARY FISCAL FOURTH QUARTER RESULTS System-wide SSS of 1.9%, with 1.0% company-operated and 3.2% franchise; © Total revenue of ~$157.1 million, representing 7.2% growth; and © Company restaurant sales of ~$146.7 million,
Slide 32: Initial fiscal year 2019 guidance
E INITIAL FISCAL YEAR 2019 GUIDANCE Det face Del Taco is furnishing the plowing ini ending December 31, 2019. guidance for the 52-week year © System-wide SSS growth of low-single digits; © Revenue between $517 million and $527 mil mn; © Company restaurant sales between $481 million and $491 million;
Slide 33: Appendix
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Slide 34: Fiscal 2018 sales by day-part, top ingredients and channel
(1) FISCAL 2018 SALES BY DAY-PART BUCK & UNDER FISCAL 2018 TOP INGREDIENTS FISCAL 2018 SALES BY CHANNEL 34(1) FISCAL 2018 SALES BY DAY-PART BUCK & UNDER FISCAL 2018 TOP INGREDIENTS FISCAL 2018 SALES BY CHANNEL 34
Slide 35: Adjusted EBITDA reconciliation
Q3 YTD 2018 Q3 YTD 2017 2017 2016 2015 2014 2013 2012 Net income (loss) $13,313 $14,669 $49,871 $20,913 $4,757 $(9,255) $(6,539) $(8,222) : Provision (benefit) for income taxes 4,563 8,955 (15,824) 15,329 852 1,098 80 1,939 Interest expense 5,984 4,798 7,200 6,327 15,143 30,895 35,613 38,291 Depreci
Slide 36: Restaurant contribution margin reconciliation
(IN THOUSANDS) Q3 YTD Q3 YTD 2017 2016 2015 2014 2013 2012 2018 2017 Company restaurant sales $324,468 $311,542 $452,148 $434,064 $407,615 $380,800 $356,306 $345,590 Restaurant operating expenses 261,654 250,620 363,228 344,749 326,080 309,649 291,485 285,993 $62,814 $60,922 $88,920 $89,315 $81,535
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