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Del Taco Flexes Smaller Restaurant Model

Del Taco debuted a new, smaller restaurant model in late August, using the pickup and delivery-focused “Fresh Flex” design the company initially introduced in 2021.

The Lake Forest-based restaurant chain opened its first drive-thru only location in New Mexico, which marks the latest installation of Del Taco restaurants designed with more technology and a smaller physical footprint.

The model also creates more real estate flexibility and could reduce buildout costs, according to Chief Development Officer Tim Linderman.

The Albuquerque restaurant runs 1,200 square feet, compared to the typical 2,000 to 2,400 square footage of freestanding locations. The latest design includes a walk-up window and pickup lockers for online orders and delivery drivers alongside the drive-thru lane.

“With so many pickup options, it caters to what today’s tech-savvy and ‘on the go’ consumer expects,” Brand President Chad Gretzema, who was promoted from chief operating officer to the top role in 2022, said in a statement.

The drive-thru only model is also the newest venue option for Del Taco franchisees to choose from with the Fresh Flex design.

Refranchising

San Diego-based Jack in the Box Inc. (Nasdaq: JACK), which bought Del Taco in 2022 for $585 million, began selling company-owned Del Taco restaurants to new and existing franchisees last November.

Fifty locations were refranchised during Jack’s third quarter, bringing the total amount to 73. Compared to the fourth quarter of 2022, Del Taco’s franchise count has grown 24%.

New development agreements have been made for locations in Las Vegas, Orlando, Houston, Montana, Wyoming and California.

“We are also making progress on the integration and refranchising of Del Taco, which is delivering incremental development commitments, as well as further progress toward net new unit growth and an asset-light company,” Jack in the Box CEO Darin Harris said in a statement.

Jack in the Box expects to refranchise between 90 and 120 locations over the course of 2023. The average initial investment for buying a Del Taco franchise ranges from $812,700 to $2.5 million.

Del Taco counts almost 600 restaurants and roughly half are company owned. Up to 250 locations could be refranchised, according to reports.

Del Taco’s systemwide sales increased 1.6% to $231 million for the 12 weeks ended early July.

More Drive-Thrus

Del Taco’s most recent opening is another sign of the acceleration of digital-focused restaurants in the quick-service industry.

Newport Beach-based Chipotle Mexican Grill Inc. (NYSE: CMG) has been developing its Chipotlane locations since 2018 and out of the 236 new openings from last year, 202 included a drive-thru.

The chain currently has around 600 Chipotlanes with plans for the concept to take over the majority of its portfolio.

Irvine’s Taco Bell introduced a two-story location with a four-lane drive-thru last year as part of its “Taco Bell Defy” program. Along with its Go Mobile concept from 2020, these digital-focused restaurant models aim to decrease the taco chain’s drive-thru times.

Taco Bell and Chipotle are Orange County’s two largest locally based restaurant chains with 2022 sales of $14.7 billion and $8.6 billion, respectively.

Del Taco ranked No. 6 on the Business Journal’s list of largest restaurant chains in May with $957 million in annual sales.

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Sonia Chung
Sonia Chung
Sonia Chung joined the Orange County Business Journal in 2021 as their Marketing Creative Director. In her role she creates all visual content as it relates to the marketing needs for the sales and events teams. Her responsibilities include the creation of marketing materials for six annual corporate events, weekly print advertisements, sales flyers in correspondence to the editorial calendar, social media graphics, PowerPoint presentation decks, e-blasts, and maintains the online presence for Orange County Business Journal’s corporate events.
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