Del Taco Restaurants Inc. (NASDAQ: TACO) reported higher earnings for 2Q2016 than what Wall Street predicted and the management believes that the best moments for the company are still ahead.
What do the results look like?
Del Taco Restaurants Inc. (NASDAQ: TACO) posted EPS of $0.13, beating the consensus estimate of $0.12 for 2Q2016. The bottom-line figure also increased from the comparable quarter last year.
Coming to topline, Del Taco generated revenue of $100 million, a pullback from the year-ago quarter but a decent increase over $97.4 million in the prior quarter. However, Del Taco’s topline figure in the latest quarter fell slightly below the consensus estimate of $100.6 million.
What about other performance metrics?
Looking at the companywide sales, you notice that comparable sales rose 3.3%. Del Taco Restaurants Inc. (NASDAQ: TACO)’s restaurant margins also improved 0.8% to 20.6% compared to the year-ago quarter.
What aided the gains?
According to Del Taco, lower costs and menu price increases were at the center of the gains registered in the latest quarter. The company said that the cost of the commodities it uses at its restaurants decreased, thus helping to offset the increase of minimum wage to $10/hour in California.
Del Taco Restaurants Inc. (NASDAQ: TACO) has got the opportunity to charge higher prices for its menu items, which expanded margins and ultimately helped to ease the impact from minimum wage raise.
Del Taco’s CEO, Paul J.B. Murphy, III, credited the positive results in 2Q2016 to effective execution. The CEO added that as part of their Combined Solutions strategy, the company rolled out Fresh Combined Solutions last month. The aim of the strategy is to help differential Del Taco from the competition.
Looking at the financial results for 2Q2016, CEO Murphy expressed confidence that Del Taco would achieve its annual guidance.
What’s the guidance for Del Taco Restaurants Inc. (NASDAQ: TACO)?
Del Taco Restaurants Inc. (NASDAQ: TACO) is looking for revenue in the band of $439 to $449 million. EPS for the year is guided in the range of $0.53 to $0.56, which is in line with the consensus estimate of $0.55.