UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549 
____________________________________________________________________

FORM 8-K
____________________________________________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 23, 2020
____________________________________________________________________ 
Del Taco Restaurants, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________________

Delaware	 	001-36197	 	46-3340980	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	

25521 Commercentre Drive
Lake Forest, CA 92630
(Address of Principal executive offices, including Zip Code)

(949) 462-9300
(Registrant’s telephone number, including area code) 
____________________________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered	
Common Stock, $0.001 par value per share		TACO		NASDAQ Capital Market	

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02    Results of Operations and Financial Condition

On July 23, 2020, Del Taco Restaurants, Inc. issued a press release announcing results for the fiscal quarter ended June 16, 2020.

The information in this Current Report on Form 8-K and Exhibit 99.1 attached hereto is being furnished pursuant to Item 2.02 and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise be subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01    Financial Statements and Exhibits

(d) Exhibits
						
Exhibit No.	Description of Exhibit	
Exhibit 99.1	Press Release issued on July 23, 2020 announcing second fiscal quarter ended June 16, 2020 financial results	

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

						

DEL TACO RESTAURANTS, INC.	
 	 	
By:	/s/ Steven L. Brake	
Name:	Steven L. Brake	
Title:	Executive Vice President and Chief Financial Officer	

Date: July 23, 2020

Exhibit 99.1

For Immediate Release

Del Taco Restaurants, Inc. Reports Fiscal Second Quarter 2020 Financial Results
System-wide Comparable Restaurant Sales Turn Positive in the Fiscal Third Quarter to Date Operating Performance Optimized during the Second Quarter 2020
Reduces Outstanding Debt, Net of Cash, by Over $9 Million

Lake Forest, CA. July 23, 2020 – Del Taco Restaurants, Inc. (“Del Taco” or the “Company”), (NASDAQ: TACO), the second largest Mexican-American quick service restaurant chain by units in the United States, today reported fiscal second quarter 2020 financial results for the 12-week period ending June 16, 2020 and provided a business update related to the impact of COVID-19.

Management Commentary

John D. Cappasola, Jr., President and Chief Executive Officer of Del Taco, commented, “Our restaurant teams, franchise partners and support staff are doing exceptional work supporting our people, serving our guests and strengthening our brand as we successfully navigate the business recovery phase of our strategy while preparing for brand acceleration. Despite the pandemic-induced headwind affecting our industry, our system-wide comparable restaurant sales continue to improve sequentially and are slightly positive thus far in the fiscal third quarter, led by our franchise base who is sustaining positive comparable restaurant sales across a broad 14 state geographic footprint.”

Cappasola continued, “Importantly, the sequential company comparable restaurant sales improvement paired with strong cost controls helped optimize restaurant contribution and Adjusted EBITDA performance during the second quarter. This performance, coupled with the deferral of certain non-essential capital expenditures, enabled us to reduce our outstanding debt, net of cash, at the end of the second quarter by over $9 million and maintain a relatively stable net debt to Adjusted EBITDA leverage ratio compared to the end of fiscal 2019. Our financial stability and profitability improvements have allowed us to reinforce our people-centric culture by paying company General Managers healthy second quarter bonuses and introducing an enhanced employee meal program to reward our restaurant teams for their leadership and dedication to serving their communities.”

Cappasola concluded, “As 2020 progresses we will further optimize performance while laying the groundwork for brand acceleration. We plan to leverage our QSR+ strengths with innovation across our powerful barbell menu, expand our engagement in social and digital channels, and further our strategy to be a trusted and safe brand for our guests and employees. Next week, we will launch New Crispy Chicken, a unique protein within the Mexican QSR category, which will debut on the Del’s Dollar Deals menu as a new $1 Crispy Chicken Taco and in a New $5 Epic Burrito with Fresh Guacamole. We are excited to bring this new protein to market on the heels of a recent successful launch of Fresh Guacamole.”

Fiscal Second Quarter 2020 Comparable Restaurant Sales

	Twelve weeks ended
June 16, 2020	Four weeks ended
April 21, 2020	Four weeks ended
May 19, 2020	Four weeks ended
June 16, 2020	
Company-operated	-12.6%	-23.9%	-10.4%	-3.7%	
Franchised	-7.2%	-22.7%	-2.9%	3.5%	
System-wide	-10.1%	-23.4%	-6.9%	-0.3%	

1

The results in the table above are compared to the comparable prior year period.

Fiscal Second Quarter 2020 Highlights

•System-wide comparable restaurant sales decreased 10.1%;
◦Company-operated comparable restaurant sales decreased 12.6%;
◦Franchised comparable restaurant sales decreased 7.2%;
•Total revenue of $104.6 million, representing a 13.9% decline from the fiscal second quarter 2019;
•Company-operated restaurant sales of $95.3 million, representing a 15.1% decline from the fiscal second quarter 2019;
•Net loss of $0.6 million, or $0.02 per diluted share, compared to net income of $2.1 million, or $0.06 per diluted share, in the fiscal second quarter 2019;
•Adjusted net loss* of $0.1 million, or $0.00 per diluted share, compared to adjusted net income* of $5.4 million, or $0.15 per diluted share, in the fiscal second quarter 2019;
•Restaurant contribution* margin of 16.4% compared to 19.0% in the fiscal second quarter 2019;
•Adjusted EBITDA* of $12.1 million compared to $16.7 million in the fiscal second quarter 2019; and
•One company-operated and two franchise restaurant closures. Del Taco also refranchised one restaurant to an existing franchisee.

* Adjusted net income/loss, restaurant contribution, and adjusted EBITDA are non-GAAP measures and defined below under “Key Financial Definitions”. Please see the reconciliation of non-GAAP measures accompanying this release.

Cash and Liquidity

During the fiscal second quarter 2020, Del Taco reduced its outstanding borrowing on its revolving credit facility to $145 million, consistent with its revolving credit facility balance at the end of fiscal year 2019. At the end of the second fiscal quarter the Company’s debt, net of cash, totaled $133.8 million compared to $143.4 million at the end of fiscal year 2019, representing a reduction of approximately $9.6 million and a relatively stable net debt to Adjusted EBITDA* leverage ratio. This performance has allowed us to maintain meaningful financial cushion with respect to our lease adjusted leverage and fixed charge coverage covenants which the Company currently expects to maintain.

As of July 23, Del Taco had over $12 million in cash on hand and $87.7 million of remaining availability under its revolving credit facility.

Review of Fiscal Second Quarter 2020 Financial Results

Total revenue decreased 13.9% to $104.6 million compared to $121.5 million in the fiscal second quarter 2019. Comparable restaurant sales decreased 10.1% system-wide, decreased 12.6% at company-operated restaurants, and decreased 7.2% at franchised restaurants.

Net loss was $0.6 million, or $0.02 per diluted share, compared to net income of $2.1 million, or $0.06 per diluted share, last year.

Adjusted net income/loss*, which excludes sublease income for closed restaurants, impairment of long-lived assets, restaurant closure charges, loss on disposal of assets and adjustments to assets held for sale, and other income, was an adjusted net loss* of $0.1 million or $0.00 per diluted share compared to adjusted net income* of $5.4 million or $0.15 per diluted share last year.

Restaurant contribution* was $15.6 million compared to $21.3 million in the fiscal second quarter 2019. As a percentage of company-operated restaurant sales, restaurant contribution margin decreased 260 basis points year-over-year to 16.4%. The decrease was the result of approximately an approximately 80 basis point increase in labor and related expenses and an approximately 240 basis point increase in occupancy and other operating expenses, partially offset by a 60 basis point decrease in food and paper costs.

Adjusted EBITDA* was $12.1 million compared to $16.7 million in the fiscal second quarter 2019.

Portfolio Optimization and Restaurant Development

During the fiscal second quarter 2020, there were one company-operated and two franchise restaurant closures. Del Taco also refranchised one restaurant to an existing franchisee.

One new company-operated restaurant and two new franchised restaurants have already opened in the fiscal third quarter 2020 and there are up to three planned franchised restaurant openings later this year.
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Fiscal Year 2020 Guidance Withdrawn

As a reminder, Del Taco previously withdrew guidance for the 52-week fiscal year 2020 ending December 29, 2020. However, the Company expects to demonstrate sequential improvement in year over year restaurant contribution* margin trends during the third and fourth fiscal quarters due to our comparable restaurant sales recovery coupled with sequentially less commodity inflation and a continued focus on managing our other restaurant expenses.

Conference Call and Webcast

A conference call and webcast is scheduled for 4:30 p.m. ET today. Hosting the conference call and webcast will be John D. Cappasola, Jr., President and Chief Executive Officer; and Steven L. Brake, Executive Vice President and Chief Financial Officer.

Interested parties may listen to the conference call via telephone by dialing 201-689-8471. A telephone replay will be available shortly after the call has concluded and can be accessed by dialing 412-317-6671; the passcode is 13706145.

The webcast will be available at www.deltaco.com under the investors section and will be archived on the site shortly after the call has concluded.

Key Financial Definitions

Comparable restaurant sales growth reflects the change in year-over-year sales for the comparable company, franchise and total system restaurant base. Restaurants are included in the comparable store base in the accounting period following its 18th full month of operations and excludes restaurant closures.

Restaurant contribution* is defined as company restaurant sales less restaurant operating expenses, which are food and paper costs, labor and related expenses and occupancy and other operating expenses. Restaurant contribution margin is defined as restaurant contribution as a percentage of company restaurant sales. Restaurant contribution and restaurant contribution margin are neither required by, nor presented in accordance with, GAAP. Restaurant contribution and restaurant contribution margin are supplemental measures of operating performance of restaurants and the calculations thereof may not be comparable to those reported by other companies. Restaurant contribution and restaurant contribution margin have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of results as reported under GAAP. Management believes that restaurant contribution and restaurant contribution margin are important tools for investors because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency and performance. Management uses restaurant contribution and restaurant contribution margin as key performance indicators to evaluate the profitability of incremental sales at Del Taco restaurants, to evaluate restaurant performance across periods and to evaluate restaurant financial performance compared with competitors.

Adjusted EBITDA* is defined as net income/loss prior to interest expense, income taxes, and depreciation and amortization, as adjusted to add back certain charges, such as impairment of goodwill, trademark and long-lived assets, stock-based compensation expense and restaurant closure charges, as these expenses are not considered an indicator of ongoing company performance. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to operating income or net income/loss as a measure of operating performance or cash flows or as measures of liquidity. Non-GAAP financial measures are not necessarily calculated the same way by different companies and should not be considered a substitute for or superior to GAAP results. We believe Adjusted EBITDA facilitates operating performance comparisons from period to period by isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. These potential differences may be caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense). We also present Adjusted EBITDA because (i) we believe this measure is frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry and (ii) we use Adjusted EBITDA internally as a benchmark to compare performance to that of competitors.

Adjusted net income/loss* represents company net income before impairment of goodwill, trademark and long-lived assets, restaurant closure charges, sublease income related to closed restaurants, other income, executive transition costs and loss on disposal of assets and adjustments to assets held for sale, net of tax. Adjusted diluted net income/loss per share* represents company diluted net income per share before impairment of goodwill, trademark and long-lived assets, restaurant closure charges, sublease income related to closed restaurants, other income, executive transition costs and loss on disposal of assets and adjustments to assets held for sale, net of tax.

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About Del Taco Restaurants, Inc.

Del Taco (NASDAQ: TACO) offers a unique variety of both Mexican and American favorites such as burritos and fries, prepared fresh in every restaurant's working kitchen with the value and convenience of a drive-thru. Del Taco's menu items taste better because they are made with quality ingredients like fresh grilled chicken and carne asada steak, hand-sliced avocado, hand-grated cheddar cheese, slow-cooked beans made from scratch, and creamy Queso Blanco. The brand's campaign further communicates Del Taco's commitment to providing guests with the best quality and value for their money through cooking, chopping, shredding and grilling menu items from scratch. Founded in 1964, today Del Taco serves more than three million guests each week at its approximately 600 restaurants across 15 states. For more information, visit www.deltaco.com.

Forward-Looking Statements

In addition to historical information, this release may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, information concerning Del Taco’s possible or assumed future results of operations, business strategies, competitive position, industry environment, potential growth opportunities and the effects of regulation. These statements are based on Del Taco’s management’s current expectations and beliefs, as well as a number of assumptions concerning future events. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “target,” “may,” “will,” “should,” “future,” “propose,” “preliminary,” “guidance,” “on track” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Del Taco’s management’s control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks include, without limitation, the impact of the COVID-19 pandemic, consumer demand, our inability to successfully open company-operated or franchised restaurants or establish new markets, competition in our markets, our inability to grow and manage growth profitably, adverse changes in food and supply costs, our inability to access additional capital, changes in applicable laws or regulations (including minimum wage regulations), food safety and foodborne illness concerns, our inability to manage existing and to obtain additional franchisees, our inability to successfully execute our portfolio optimization strategy, our inability to attract and retain qualified personnel, our inability to profitably expand into new markets, changes in, or the discontinuation of, the Company’s repurchase program, and the possibility that we may be adversely affected by other economic, business, and/or competitive factors. Additional risks and uncertainties are identified and discussed in Del Taco’s reports filed with the SEC, including under Part I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019 and Part II., Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the period ended March 24, 2020, and available at the SEC’s website at www.sec.gov and the Company’s website at www.deltaco.com.

Forward-looking statements included in this release speak only as of the date of this release. Del Taco undertakes no obligation to update its forward-looking statements to reflect events or circumstances after the date of this release or otherwise.

### #### ###
### #### ###

Investor Relations Contact:
Raphael Gross
(203) 682-8253
investor@deltaco.com
4

															
Del Taco Restaurants, Inc.	
Consolidated Balance Sheets	
(In thousands, except share and per share data)	
					
		June 16, 2020		December 31, 2019	
Assets		(Unaudited)			
Current assets:					
Cash and cash equivalents		$	10,749 	 		$	1,421 	 	
Accounts and other receivables, net		5,301 	 		3,580 	 	
Inventories		2,471 	 		3,123 	 	
Prepaid expenses and other current assets		1,776 	 		2,289 	 	
Assets held for sale		1,495 	 		8,411 	 	
Total current assets		21,792 	 		18,824 	 	
Property and equipment, net		150,245 	 		156,921 	 	
Operating lease right-of-use assets		253,180 	 		258,278 	 	
Goodwill		108,979 	 		192,739 	 	
Trademarks		208,400 	 		220,300 	 	
Intangible assets, net		10,543 	 		10,827 	 	
Other assets, net		4,705 	 		4,568 	 	
Total assets		$	757,844 	 		$	862,457 	 	
Liabilities and shareholders’ equity					
Current liabilities:					
Accounts payable		$	17,818 	 		$	19,652 	 	
Other accrued liabilities		41,700 	 		34,577 	 	
Current portion of finance lease obligations and other debt		198 	 		220 	 	
Current portion of operating lease liabilities		20,667 	 		17,848 	 	
Total current liabilities		80,383 	 		72,297 	 	
Long-term debt, finance lease obligations and other debt, excluding current portion, net		144,368 	 		144,581 	 	
Operating lease liabilities, excluding current portion		256,277 	 		257,361 	 	
Deferred income taxes		59,148 	 		69,510 	 	
Other non-current liabilities		16,020 	 		16,601 	 	
Total liabilities		556,196 	 		560,350 	 	
Shareholders’ equity:					
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding		— 	 		— 	 	
Common stock, $0.0001 par value; 400,000,000 shares authorized; 37,122,976 shares issued and outstanding at June 16, 2020; 37,059,202 shares issued and outstanding at December 31, 2019		4 	 		4 	 	
Additional paid-in capital		335,912 	 		333,379 	 	
Accumulated other comprehensive loss		— 	 		(52)	 	
Accumulated deficit		(134,268)	 		(31,224)	 	
Total shareholders’ equity		201,648 	 		302,107 	 	
Total liabilities and shareholders’ equity		$	757,844 	 		$	862,457 	 	

5

																											
Del Taco Restaurants, Inc.	
Consolidated Statements of Comprehensive (Loss) Income	
(Unaudited)	
(In thousands, except share and per share data)	
									
		12 Weeks Ended		24 Weeks Ended	
		June 16, 2020		June 18, 2019		June 16, 2020		June 18, 2019	
Revenue:									
Company restaurant sales		$	95,261 	 		$	112,180 	 		$	195,594 	 		$	218,083 	 	
Franchise revenue		4,520 	 		4,638 	 		8,911 	 		8,703 	 	
Franchise advertising contributions		2,783 	 		3,459 	 		5,994 	 		6,590 	 	
Franchise sublease and other income		2,006 	 		1,183 	 		3,881 	 		2,281 	 	
Total revenue		104,570 	 		121,460 	 		214,380 	 		235,657 	 	
Operating expenses:									
Restaurant operating expenses:									
Food and paper costs		25,642 	 		30,855 	 		53,937 	 		59,673 	 	
Labor and related expenses		31,609 	 		36,338 	 		66,545 	 		72,238 	 	
Occupancy and other operating expenses		22,389 	 		23,703 	 		46,797 	 		48,136 	 	
General and administrative		9,432 	 		10,849 	 		19,298 	 		21,314 	 	
Franchise advertising expenses		2,783 	 		3,459 	 		5,994 	 		6,590 	 	
Depreciation and amortization		6,285 	 		5,813 	 		12,422 	 		11,720 	 	
Occupancy and other - franchise subleases and other		1,727 	 		993 	 		3,322 	 		1,847 	 	
Pre-opening costs		63 	 		155 	 		296 	 		255 	 	
Impairment of goodwill		— 	 		— 	 		87,277 	 		— 	 	
Impairment of trademarks		— 	 		— 	 		11,900 	 		— 	 	
Impairment of long-lived assets		— 	 		3,694 	 		8,287 	 		3,694 	 	
Restaurant closure charges, net		499 	 		490 	 		993 	 		1,130 	 	
Loss on disposal of assets and adjustments to assets held for sale, net		435 	 		594 	 		557 	 		884 	 	
Total operating expenses		100,864 	 		116,943 	 		317,625 	 		227,481 	 	
Income (loss) from operations		3,706 	 		4,517 	 		(103,245)	 		8,176 	 	
Other expense (income), net:									
Interest expense		1,281 	 		1,722 	 		2,789 	 		3,506 	 	
Other income		— 	 		(97)	 		— 	 		(201)	 	
Total other expense, net		1,281 	 		1,625 	 		2,789 	 		3,305 	 	
Income (loss) from operations before provision (benefit) for income taxes		2,425 	 		2,892 	 		(106,034)	 		4,871 	 	
Provision (benefit) for income taxes		3,001 	 		800 	 		(2,990)	 		1,354 	 	
Net (loss) income		(576)	 		2,092 	 		(103,044)	 		3,517 	 	
Other comprehensive income (loss):									
Change in fair value of interest rate cap, net of tax		— 	 		(131)	 		— 	 		(270)	 	
Reclassification of interest rate cap amortization included in net income, net of tax		7 	 		26 	 		52 	 		47 	 	
Total other comprehensive income (loss), net		7 	 		(105)	 		52 	 		(223)	 	
Comprehensive (loss) income		$	(569)	 		$	1,987 	 		$	(102,992)	 		$	3,294 	 	
(Loss) earnings per share:									
Basic		$	(0.02)	 		$	0.06 	 		$	(2.78)	 		$	0.10 	 	
Diluted		$	(0.02)	 		$	0.06 	 		$	(2.78)	 		$	0.09 	 	
Weighted average shares outstanding									
Basic		37,086,962 	 		36,821,728 	 		37,081,511 	 		36,988,853 	 	
Diluted		37,086,962 	 		37,083,799 	 		37,081,511 	 		37,215,059 	 	

6

																											
Del Taco Restaurants, Inc.	
Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA	
(Unaudited)	
(In thousands)	
									
		12 Weeks Ended		24 Weeks Ended	
		June 16, 2020		June 18, 2019		June 16, 2020		June 18, 2019	
Net (loss) income		$	(576)	 		$	2,092 	 		$	(103,044)	 		$	3,517 	 	
Non-GAAP adjustments:									
Provision (benefit) for income taxes		3,001 	 		800 	 		(2,990)	 		1,354 	 	
Interest expense		1,281 	 		1,722 	 		2,789 	 		3,506 	 	
Depreciation and amortization		6,285 	 		5,813 	 		12,422 	 		11,720 	 	
EBITDA		9,991 	 		10,427 	 		(90,823)	 		20,097 	 	
Stock-based compensation expense (a)		1,413 	 		1,676 	 		2,638 	 		3,253 	 	
Loss on disposal of assets and adjustments to assets held for sale, net (b)		435 	 		594 	 		557 	 		884 	 	
Impairment of goodwill (c)		— 	 		— 	 		87,277 	 		— 	 	
Impairment of trademarks (d)		— 	 		— 	 		11,900 	 		— 	 	
Impairment of long-lived assets (e)		— 	 		3,694 	 		8,287 	 		3,694 	 	
Restaurant closure charges, net (f)		499 	 		490 	 		993 	 		1,130 	 	
Amortization of favorable and unfavorable lease assets and liabilities, net (g)		(66)	 		(23)	 		(115)	 		63 	 	
Pre-opening costs (h)		63 	 		155 	 		296 	 		255 	 	
Sublease income for closed restaurants (i)		(248)	 		(180)	 		(498)	 		(381)	 	
Executive transition costs (j)		— 	 		— 	 		287 	 		— 	 	
Other income (k)		— 	 		(97)	 		— 	 		(201)	 	
Adjusted EBITDA		$	12,087 	 		$	16,736 	 		$	20,799 	 		$	28,794 	 	

(a)Includes non-cash, stock-based compensation.
(b)Loss on disposal of assets and adjustments to assets held for sale, net includes adjustments to reduce the carrying amount for assets held for sale to estimated fair value less cost to sell, loss or gain on disposal of assets related to sales, retirements and replacement or write-off of leasehold improvements or equipment in the ordinary course of business, net gains or losses recorded associated with the sale of company-operated restaurants to franchisees, gains from the write-off of right-of-use assets and operating lease liabilities related to the termination of leases and net gains or losses recorded associated with sale-leaseback transactions.
(c)Includes non-cash charges related to impairment of goodwill.
(d)Includes non-cash charges related to impairment of trademarks.
(e)Includes non-cash charges related to impairment of long-lived assets.
(f)Restaurant closure costs include rent expense, non-lease executory costs, other direct costs associated with previously closed restaurants and future obligations associated with the closure or net sublease shortfall of a restaurant.
(g)Includes amortization of favorable lease assets and unfavorable lease liabilities.
(h)Pre-opening costs consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including restaurant labor, supplies, cash and non-cash rent expense and other related pre-opening costs. These are generally incurred over the three to five months prior to opening.
(i)Includes other sublease income related to closed restaurants that have been subleased to third parties.
(j)Includes costs associated with the transition of former Company executives, such as severance expense.
(k)During 2019, other income consists of insurance proceeds related to a fire at a company-operated restaurant.

7

																														
Del Taco Restaurants, Inc.		
Reconciliation of Company Restaurant Sales to Restaurant Contribution		
(Unaudited)		
(In thousands)		
										
		12 Weeks Ended		24 Weeks Ended		
		June 16, 2020		June 18, 2019		June 16, 2020		June 18, 2019		
Company restaurant sales		$	95,261 	 		$	112,180 	 		$	195,594 	 		$	218,083 	 		
Restaurant operating expenses		79,640 	 		90,896 	 		167,279 	 		180,047 	 		
Restaurant contribution		$	15,621 	 		$	21,284 	 		$	28,315 	 		$	38,036 	 		
Restaurant contribution margin		16.4 	%		19.0 	%		14.5 	%		17.4 	%		

										
Del Taco Restaurants, Inc.		
Reconciliation of Income (Loss) from Operations to Restaurant Contribution		
(Unaudited)		
(In thousands)		
										
		12 Weeks Ended		24 Weeks Ended		
		June 16, 2020		June 18, 2019		June 16, 2020		June 18, 2019		
Income (loss) from operations		$	3,706 	 		$	4,517 	 		$	(103,245)	 		$	8,176 	 		
Less:										
Franchise revenue		(4,520)	 		(4,638)	 		(8,911)	 		(8,703)	 		
Franchise advertising contributions		(2,783)	 		(3,459)	 		(5,994)	 		(6,590)	 		
Franchise sublease income and other		(2,006)	 		(1,183)	 		(3,881)	 		(2,281)	 		
Plus:										
General and administrative		9,432 	 		10,849 	 		19,298 	 		21,314 	 		
Franchise advertising expenses		2,783 	 		3,459 	 		5,994 	 		6,590 	 		
Depreciation and amortization		6,285 	 		5,813 	 		12,422 	 		11,720 	 		
Occupancy and other - franchise subleases and other		1,727 	 		993 	 		3,322 	 		1,847 	 		
Pre-opening costs		63 	 		155 	 		296 	 		255 	 		
Impairment of goodwill		— 	 		— 	 		87,277 	 		— 	 		
 Impairment of trademarks		— 	 		— 	 		11,900 	 		— 	 		
Impairment of long-lived assets		— 	 		3,694 	 		8,287 	 		3,694 	 		
Restaurant closure charges, net		499 	 		490 	 		993 	 		1,130 	 		
Loss on disposal of assets and adjustments to assets held for sale, net		435 	 		594 	 		557 	 		884 	 		
Restaurant contribution		$	15,621 	 		$	21,284 	 		$	28,315 	 		$	38,036 	 		
Company restaurant sales		$	95,261 	 		$	112,180 	 		$	195,594 	 		$	218,083 	 		
Restaurant contribution margin		16.4 	%		19.0 	%		14.5 	%		17.4 	%		

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Del Taco Restaurants, Inc.	
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income	
(Unaudited)	
(In thousands, except per share data)	
									
		12 Weeks Ended		24 Weeks Ended	
		June 16, 2020		June 18, 2019		June 16, 2020		June 18, 2019	
Net (loss) income, as reported		$	(576)	 		$	2,092 	 		$	(103,044)	 		$	3,517 	 	
Sublease income for closed restaurants (a)		(248)	 		(180)	 		(498)	 		(381)	 	
Impairment of goodwill (b)		— 	 		— 	 		87,277 	 		— 	 	
Impairment of trademarks (c)		— 	 		— 	 		11,900 	 		— 	 	
Impairment of long-lived assets (d)		— 	 		3,694 	 		8,287 	 		3,694 	 	
Restaurant closure charges, net (e)		499 	 		490 	 		993 	 		1,130 	 	
Loss on disposal of assets and adjustments to assets held for sale, net (f)		435 	 		594 	 		557 	 		884 	 	
Other income (g)		— 	 		(97)	 		— 	 		(201)	 	
Executive transition costs (h)		— 	 		— 	 		287 	 		— 	 	
Tax impact of adjustments (i)		(185)	 		(1,215)	 		(5,809)	 		(1,384)	 	
Non-GAAP adjusted net (loss) income		$	(75)	 		$	5,378 	 		$	(50)	 		$	7,259 	 	
									
(Loss) Earnings per share (as reported):									
Basic		$	(0.02)	 		$	0.06 	 		$	(2.78)	 		$	0.10 	 	
Diluted		$	(0.02)	 		$	0.06 	 		$	(2.78)	 		$	0.09 	 	
Weighted average shares outstanding (as reported):									
Basic		37,086,962 	 		36,821,728 	 		37,081,511 	 		36,988,853 	 	
Diluted		37,086,962 	 		37,083,799 	 		37,081,511 	 		37,215,059 	 	
									
Adjusted earnings per share:									
Basic		$	— 	 		$	0.15 	 		$	— 	 		$	0.20 	 	
Diluted		$	— 	 		$	0.15 	 		$	— 	 		$	0.20 	 	
Shares used in computing adjusted earnings per share:									
Basic		37,086,962 	 		36,821,728 	 		37,081,511 	 		36,988,853 	 	
Diluted		37,086,962 	 		37,083,799 	 		37,081,511 	 		37,215,059 	 	
									
(a)Includes other sublease income related to closed restaurants that have been subleased to third parties.
(b)Includes non-cash charges related to impairment of goodwill.
(c)Includes non-cash charges related to impairment of trademarks.
(d)Includes non-cash charges related to impairment of long-lived assets.
(e)Restaurant closure costs include rent expense, non-lease executory costs, other direct costs associated with previously closed restaurants and future obligations associated with the closure or net sublease shortfall of a restaurant.
(f)Loss on disposal of assets and adjustments to assets held for sale, net includes adjustments to reduce the carrying amount for assets held for sale to estimated fair value less cost to sell, loss or gain on disposal of assets related to sales, retirements and replacement or write-off of leasehold improvements or equipment in the ordinary course of business, net gains or losses recorded associated with the sale of company-operated restaurants to franchisees, gains from the write-off of right-of-use assets and operating lease liabilities related to the termination of leases and net gains or losses recorded associated with sale-leaseback transactions.
(g)During 2019, other income consists of insurance proceeds related to a fire at a company-operated restaurant.
(h)Includes costs associated with the transition of former Company executives, such as severance expense.
(i)Represents the income tax associated with the adjustments in (a) through (h) that are deductible for income tax purposes.

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Del Taco Restaurants, Inc.	
Restaurant Development	
									
 		12 Weeks Ended		24 Weeks Ended	
 		June 16, 2020		June 18, 2019		June 16, 2020		June 18, 2019	
Company-operated restaurant activity:									
Beginning of period		296 	 		312 	 		300 	 		322 	 	
Openings		— 	 		1 	 		2 	 		1 	 	
Closures		(1)	 		(3)	 		(2)	 		(3)	 	
Purchased from franchisees		— 	 		— 	 		— 	 		3 	 	
Sold to franchisees		(1)	 		— 	 		(6)	 		(13)	 	
Restaurants at end of period		294 	 		310 	 		294 	 		310 	 	
Franchise-operated restaurant activity:									
Beginning of period		300 	 		271 	 		296 	 		258 	 	
Openings		— 	 		2 	 		1 	 		6 	 	
Closures		(2)	 		— 	 		(4)	 		(1)	 	
Purchased from Company		1 	 		— 	 		6 	 		13 	 	
Sold to Company		— 	 		— 	 		— 	 		(3)	 	
Restaurants at end of period		299 	 		273 	 		299 	 		273 	 	
Total restaurant activity:									
Beginning of period		596 	 		583 	 		596 	 		580 	 	
Openings		— 	 		3 	 		3 	 		7 	 	
Closures		(3)	 		(3)	 		(6)	 		(4)	 	
Restaurants at end of period		593 	 		583 	 		593 	 		583 	 	

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