Higher prices and lower commodity costs offset California’s $10 minimum wage, leading to better margins at Del Taco Restaurants Inc. in the second quarter ended June 14, the company said Wednesday.
Same-store sales at the Lake Forest, Calif.-based Mexican chain rose 3.3 percent in the quarter.
“Effective execution resulted in solid second quarter performance that was in line with our expectations,” CEO Paul Murphy said in a statement. “We are delighted with how 2016 is shaping up for our business.”
Revenue rose 2.5 percent in the quarter to $100 million from $97.6 million. Net income rose 6.5 percent to $4.9 million from $4.6 million.
Del Taco said that restaurant margin was 20.6 percent, up 80 basis points from the same quarter a year ago. The company said that “effective menu price increases” and the sale of more expensive items, along with “modest” commodity deflation, offset the higher minimum wage in California to generate the improved margins.