Tacala LLC

Overview Key strengths Key risks Participation in the attractive Mexican quick service restaurant (QSR) segment. Small operating scale in the intensely competitive QSR segment. Value-focused menu with less cyclical demand. Primarily single brand exposure (Taco Bell). Consistent record of same-store sales growth. Geographic concentration in the South and Southeast U.S. Exposure to fluctuation in commodity prices. An aggressive financial policy with a track record of periodic debt-funded dividends. Tacala LLC reported mid-single-digit percent same-store sales growth through the first three quarters of 2023. Same-store sales for the quarter ended Sept. 5, 2023, grew 7.3% year over year, and total year-to-date revenues grew nearly 9% year over year as the company continued and introduced new menu items. The higher sales also

...We expect stable revenue growth over the next year. Tacala LLC reported mid-single-digit percent same-store sales growth through the first three quarters of 2023. Same-store sales for the quarter ended Sept. 5, 2023, grew 7.3% year over year, and total year-to-date revenues grew nearly 9% year over year as the company continued and introduced new menu items. The higher sales also reflect the addition of seven new stores year to date. We forecast Tacala's revenues will grow nearly 9% in 2023 and steady unit growth along with improved sales per unit metrics in 2024 will grow sales in the mid-single-digit percent area next year. Tacala's year-to-date costs as a percent of revenue have been relatively unchanged, and we expect costs to continue to normalize in 2024. We expect Tacala's EBITDA to narrowly fall in 2023 due to one-time costs related to its 2023 dividend. We forecast lower EBITDA and expect the company's S&P Global Ratings-adjusted EBITDA margins to compress to the low- to mid- 20%...

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