Report: Del Taco parent exploring sale

Del Taco Holdings Inc., parent to the quick-service Del Taco chain, is exploring a sale, according to a Reuters report Wednesday that cited unnamed sources.

Known for its hybrid menu of Mexican items like Epic Burritos, plus burgers, fries and milkshakes, Lake Forest, Calif.-based Del Taco Holdings declined to comment on the report.

The 546-unit chain, which celebrated its 50th anniversary this year, is owned primarily by private equity firms Goldman Sachs Mezzanine Partners, Charlesbank Capital Partners and Leonard Green & Partners.

Reuters said the company is working with Piper Jaffray and Goldman Sachs Group Inc. on the sale process.

In April, Del Taco Holdings completed a debt refinancing led by GE Capital that featured an amended senior credit facility with a $220 million term loan and a $40 million revolving line of credit.

The transaction significantly lowered the company’s effective interest rate and increased its financial flexibility, said Steven Brake, executive vice president and chief financial officer, in a statement at the time.

“We will continue to invest in new and existing markets, focus on our quality and value proposition, and introduce product innovations,” he said.

Over the past two years, Del Taco has been reworking its brand identity, focusing its marketing efforts on its from-scratch cooking and value platforms, like the Buck & Under menu.

In line with fast-casual Mexican competitors, Del Taco freshly grates its cheese in house, makes salsas and beans from scratch, and marinates and grills its chicken in restaurants. Its marketing tagline is “UnFreshingBelievable.”

Del Taco also serves breakfast, with a full line of burritos and tacos.

The brand is known for indulgent menu items, too, like the Cali Steak & Guac burrito, which is stuffed with carne asada, guacamole and crinkle-cut fries.

This year, Del Taco rolled out seasoned ground turkey as a reduced-calorie alternative in dishes where ground beef is available, such as tacos and CrunchTada tostadas.

The menu revamp follows a remodeling program that began in late 2011 to refresh restaurants, along with operational upgrades to improve the customer experience.

In April, when announcing the debt refinance deal, the company said its systemwide sales were more than $622 million in 2013. Of the 546 locations, 302 are company owned.

Del Taco operates units in 17 states. The chain has been seeking expansion opportunities on the East Coast.

Contact Lisa Jennings at [email protected].
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