Del Taco’s Beefing Up to Crunch Competition

Its financial underpinnings and menu both beefed up, Del Taco Inc. is launching an expansion drive that will combine internal growth with an aggressive acquisition plan.

To make it work, Chairman Kevin K. Moriarty said Tuesday he has hired longtime industry executive C. Ronald Petty to take over daily operations of the Laguna Hills chain, a move that frees Moriarty to pursue takeover targets.

Petty, 54, who worked with Moriarty at Burger King Corp., will be Del Taco’s first president in almost five years. Moriarty had handled both daily and long-range management chores since pulling Del Taco out of bankruptcy in 1993.

Industry analysts say that the two men--who helped Burger King grow from 1,700 outlets to more than 4,000--are a formidable team.

Moriarty said he wants privately owned Del Taco to double in size over the next two years. “This brand is ready to go into national development,” he said.

The chain now has about 325 locations in 12 states, with most of the operations in Southern California.

Hiring Petty “is a big move” that signals the start of Moriarty’s growth push, says Carlsbad-based restaurant industry consultant Hal Sieling. “Petty is one of the best there is at increasing same-store sales and opening new franchise and company-owned locations.”

And that is just what Moriarty wants him to do, Petty said in an interview.

“I see huge potential,” Petty said. “Unlike the burger business, there is no national competition except Taco Bell. All the other Mexican food chains are regional and small.”

Under Moriarty, Del Taco has grown from a shabby, almost derelict operation into one of the stars of the fast-food industry. In recent years, Del Taco’s sales have outpaced the fast-food industry average by a wide margin, industry analysts say.

Moriarty said the company now has $25 million cash in the bank, a $15 million credit line “and $30 million more in commitments [from banks] for our expansion.”