Del Taco Restaurants — Investor Presentation (January 2021)
41 slides from Del Taco Restaurants's investor presentation, Jan 12, 2021
Slide 1: Investor Presentation
rn a FESS INVESTO PRESENTATION an
Slide 2: Disclaimer: Forward-Looking Statements
e— 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 pe
Slide 4: Brand Differentiation
BRAND DIFFERENTIATION pet taco
Slide 5: (1) Based on unit count (2) Represents preliminary FY2020 sales data and unit counts
(1) Based on unit count (2) Represents preliminary FY2020 sales data and unit counts as of Q4-2020 (3) Represents preliminary system-wide sales for fiscal 2020 and unit count as of December 29th, 2020. Mexican QSR competitive unit counts / system-wide sales are from the Restaurant Business Online To
Slide 6: Quality and value/affordability positioning
(1) Source: The NPD Group/CREST®, December 2019 for total food visits (excluding beverage only occasions) QUALITY V A LU E / A F F O R D A B IL IT Y (1)) 6
Slide 7: Fresh Guacamole platform and updated value strategy
June 2020 Launch of Fresh Guacamole Platform February 2020 Launch of Updated Value Strategy Carne Asada Steak and Marinated Chicken Freshly Grilled in Our Restaurants 100% Real Cheddar Cheese Grated Fresh Daily Whole Pinto Beans Slow Cooked In Our Kitchens Salsa Made From Scratch With Fresh Tomatoes
Slide 8: Highly relevant convenience to our guests
... AND WE OFFER HIGHLY RELEVANT CONVENIENCE TO OUR GUESTS THAT WE CONTINUE TO EXPAND CORE DRIVE-THRU STRENGTH FULLY DEPLOYED DELIVERY =%. eats MOBILE ORDERING & PAYMENT Drive-Thru Ordering Take Out Ordering Delivery Ordering 1:1 In-App Marketing Apple & Google Pay For Non-Contact Payment
Slide 9: Employee turnover versus industry
9 (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-Q4 2020 Avg. Turnover
Slide 10: Combined solutions to deliver the brand promise
WE BRING IT ALL TOGETHER WITH COMBINED SOLUTIONS TO DELIVER THE 9! =~ BRAND PROMISE AND ENHANCE THE GUEST EXPERIENCE COMBINED SOLUTIONS STRATEGY OVERVIEW LEADERSHIP———}> OPTIMIZE DEVELOPMENT OPERATIONS Pa OBJECTIVE: RETAIN GUESTS \ Create a Dramatically eeu Better Guest Experience GUEST SERVICE ENHA
Slide 11: Slide 11
Slide 12: COVID-19 Key Actions
)) covip-19 Key AcTiONs Daiico & 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, increas
Slide 13: (1) Based on company restaurant sales (2) Excludes dining room test during fiscal Q4
(1) Based on company restaurant sales (2) Excludes dining room test during fiscal Q4 13
Slide 14: Delivery sales as percentage of restaurant sales
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 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 (2) R
Slide 15: Guest experience measurement surveys
15 (1) 2020 Inmoment Del Taco Guest Experience Measurement Surveys
Slide 16: Comparable sales by fiscal quarter
(15.0%) (10.0%) (5.0%) 0.0% 5.0% 10.0% Fiscal Q1 Fiscal Q2 Fiscal Q3 Fiscal Q4 16 (1) Represents preliminary results
Slide 17: Brand Acceleration
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 builds 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 HANDCRAFTED GUACAMOLE MADE FRESH DAILY NEW CHICKEN TACOS 1g
Slide 20: Wide spectrum of occasions
WIDE SPECTRUM OF OCCASIONS 1$ 5$< > 20
Slide 21: New Variety, New Flavors, New Products
New Variety · New Flavors · New Products 21
Slide 22: Brand engagement across media channels
TV · Streaming Service · Social Terrestrial & Digital PR & Social 22
Slide 23: App users and delivery sales growth
23 0 500,000 1,000,000 1,500,000 2019 2020 48% Increase In Registered App Users Since 2019 1.2% 6.3% 0.0% 2.0% 4.0% 6.0% 8.0% Q4 2019 Q4 2020 5X Increase In System Delivery Sales % (1) (1) Represents third party delivery sales through the Grub Hub, Postmates, Door Dash and Uber Eats marketplaces, as
Slide 24: Ultimate Convenience initiative
OUR “ULTIMATE CONVENIENCE” INITIATIVE MAXIMIZES OPPORTUNITIES TO ADDRESS CHANGING CONSUMER NEEDS Det Taco GROWTH IN OFF-PREMISE DEMAND DELIVERY IN-CAR EXPERIENCE LARGE PARTY
Slide 25: Holistic CRM platform launch
WE PLAN TO LAUNCH A HOLISTIC CRM PLATFORM THIS FALL TO DRIVE sw PERSONALIZED & VALUED EXPERIENCES FOR OUR GUESTS DetTaco PB Lae Gan} vesenng EF sea a= M od Tiktok — s Engagement : Analysis ae Frequency CS: = 22 Cj Attribution ULTIMATE Rewards CONVENIENCE ©. GS Off Premise Delivery ee i « Drive Thru
Slide 26: Brand Growth & Investment
Slide 27: Unit counts and growth opportunity
(1) Represents unit counts as of Q4-2020 (2) Based on internal analysis and a study prepared by a leading national consulting firm. 27
Slide 28: Restaurant contribution and new 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 (1) Represents unit counts as of Q4 2020.
Slide 30: Fresh Flex new store design
“FRESH FLEX” NEW STORE DESIGN FLEXIBLE - SCALABLE - DESIGNED FOR THE FUTURE Det Taco “FRESH FLEX” NEW STORE DESIGN & Contemporized, Best on Block QSR+ Design & On & Off-Prem Functionality & Service Enhancements & Highly Efficient, Scalable Kitchen Brings “Fresh as Del” to life MENU OF VENUES < Expan
Slide 31: Fresh Flex drive-thru only prototype
“FRESH FLEX” DRIVE-THRU ONLY PROTOTYPE Det Taco FEATURES @ Dual Entry “Y” Drive-Thru Lanes for Maximum Capacity Order Taking & Enhanced Drive-Thru Consumer Branding Experience & Iconic Nighttime Illuminated Green Tower & Signage & Covered Park & Eat on Premise Dining Stalls & Optional — Dedicated Mo
Slide 32: Expanding remodel test to incorporate Fresh Flex design
“a ” ¢& EXPANDING REMODEL TEST TO INCORPORATE “FRESH FLEX” DESIGN =p. ry Se BEFORE AFTER — FRESH FLEX © Leverage “Fresh Flex” to Contemporize Aged Assets in Core Markets & Strong Initial Results With Limited Downtime & Test Designed to Maximize Brand Impact and ROI 32
Slide 33: S Se BENS Shes |
S Se BENS Shes |
Slide 34: (2) (2) (1) Fiscal 2020 represents preliminary results (2) Fiscal 2016 results exclude the
34 (2) (2) (1) Fiscal 2020 represents preliminary results (2) 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. . (1) (1) (1) (1)
Slide 35: Financial summary
(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
Slide 36: Net Debt Leverage Ratio
Net Debt Leverage Ratio (1) Net Debt is defined as Total Debt minus Cash and Cash Equivalents (2) Leverage ratio represents net debt, divided by Adjusted EBITDA on a rolling four fiscal quarter basis (2) 36 (1) (2) (1) (1)
Slide 37: Capital allocation priorities
(1) 37 Drive Core Business Disciplined Investment Return Excess Capital • •
Slide 38: Appendix
APPENDIX
Slide 39: Adjusted EBITDA reconciliation
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 a
Slide 40: 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)
Slide 41: Net debt reconciliation
(IN THOUSANDS) 2020 2019 2018 2017 2016 Total debt, net $114,610 $144,801 $ 179,697 $ 172,054 $ 175,331 Less: Cash and cash equivalents (7,911) (1,421) (7,153) (6,559) (8,795) $106,699 $143,380 $172,544 $165,495 $166,536 41
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