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Del Taco exterior Courtesy of Del Taco

Del Taco to introduce a premium queso — Queso Blanco

New ingredient will further chain’s move into elevated products

A limited-service Mexican chain is planning to add queso to its menu. But it’s not who you think it is.

Del Taco Restaurants Inc. executives said on the company’s second quarter earnings call that they plan to add Queso Blanco — with no artificial preservatives, flavors or colors.

The company doesn’t have a firm launch date for the product, but expects queso to impact sales and traffic in the fourth quarter.

“We believe queso is a highly relevant and elevated ingredient,” CEO John Cappasola said on the call. “And it may be positioned to drive both traffic and check.”

Del Taco’s same-store sales have increased for 15 straight quarters, and its recent performances have been among the restaurant industry’s best. That is almost certain to include the second quarter ended June 20, when its same-store sales increased 7.1 percent systemwide.

A big reason for Del Taco’s performance has been its bold foray into more premium ingredients — what it calls its “QSR Plus” positioning.

Del Taco has long been known for its low-cost menu items, and continues to highlight that with its “Buck and Under Menu.” Yet it’s been the premium items that have driven its same-store sales performance, helping with both traffic and average check.

The chain recently launched a limited time offer with carnitas, for instance, as well as Jumbo Shrimp. It has worked to bolster its dinner business with plated offerings called Platos. And it even looked to offer more premium breakfast items with its Epic Huevos Rancheros Burrito.

Courtesy of Del Taco

Del Taco recently launched a limited-time offer with carnitas.

Queso would pit the chain against fast-casual players, notably Qdoba Mexican Eats, which has many locations in Western markets where Del Taco is strongest. The introduction could also spark something of a queso battle this fall, with Chipotle Mexican Grill Inc. potentially introducing the ingredient in September and backing it with a national ad campaign.

But Del Taco has been working on queso for a while. The company began working on the product more than a year ago. It began restaurant level tests earlier the year to “commercialize the program to meet consumer expectations around quality, pricing and packaging,” Cappasola said.

“We’ve had proven success with premium ingredient innovation in the past, including fresh sliced avocados and fresh-grilled Carne Asada steak,” Cappasola said. “And we believe queso can play a similar role in our fourth quarter.”

CFO Steve Brake said queso could be used “across multiple platforms” and could “feed our new product development pipeline for years ago come.”

“We think about it beyond just chips and dips and nachos,” Brake said. “Those are certainly part of the mix as well, but there are a lot of great innovation opportunities. We are excited about the ingredient.”

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

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