Dive Brief:

• Del Taco released a new "Fresh Flex" restaurant design on Tuesday that will improve restaurant accessibility, speed of service and brand transparency, according to a press release.
• The prototype, which was created in partnership with hospitality design firm MY Studio ID, includes third-party delivery pickup stations, double drive-thru lanes for mobile orders or delivery driver pickups and a parking lot area for guests that want to park, eat and go. 
• Del Taco joins a growing list of QSRs, which include Burger King, Taco Bell, KFC, Arby's and McDonald's, that are exploring new restaurant designs that emphasize off-premise channels.

Dive Insight:

In addition to the new prototype, Del Taco is exploring drive-thru-only locations that can accommodate smaller real estate sites. Its redesign strategy, which it calls "Menu of Venues," allows franchise developers to choose from different buildout options, varying in size from 1,200 to 2,400 square feet. This gives them greater flexibility to pursue different real estate opportunities, whether that be a small drive-thru-only model, drive-thru endcaps, conversions or freestanding sites. 

"These efforts are expected to help enhance our targeted new unit return profile and expand our real estate access," Del Taco CEO John Cappasola said during the company’s Q3 earnings call. For example, the new options could open up opportunities for smaller parcels and infill locations that Del Taco couldn’t penetrate with its standard drive-thru model, Cappasola said.

Outside of new locations, the exterior and interior will get a fresh design, which will be applied to existing restaurants as a remodeling opportunity. The exterior changes include additional outdoor lighting like back-lit towers and a bright color palette, while interiors include built-in coolers that display ingredients and greater visibility for the diner into the kitchen, according to the press release. 

While design updates are typical in the QSR segment, the pandemic accelerated the pace of rollouts, especially among larger chains like Del Taco, which has seen increased franchise opportunities following a return to positive same-store sales during the pandemic. The company grew comparable sales by 4.1% during Q3 2020 after posting a decline of 10.1% in comparable sales in Q2 2020, according to earnings statements

The company and its franchisees initially paused growth during the height of the pandemic, but many franchisees resumed their plans during Q3, Cappasola said. Del Taco also resumed company development, with a particular focus on infill locations in its core Western markets, and plans to enter Orlando this year, he said. The closures of over 110,000 restaurants across the country have also presented additional opportunities for chains like Del Taco to consider different types of real estate that were previously not available. 

"We believe the combination of expanded real estate and prototype opportunities, alongside a comprehensive future remodel program will benefit future company and franchise development including attracting new franchisees," Cappasola said.