In 2024, what did the amount relate to regarding Del Taco?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
| 202 | 4 | 2023 | 2022 | |
|---|---|---|---|---|
| Restaurants sold to Jack in the Box franchisees | _ | 5 | 15 | |
| Restaurants sold to Del Taco franchisees | 47 | 111 | ||
| Proceeds from the sale of company-operated restaurants (1) | $ 19 | 9,400 | $ 85,221 | $ 6,391 |
| Broker commissions | _ | (1,614) | _ | |
| Net assets sold (primarily property and equipment) | (: | 5,310) | (17,101) | (1,565) |
| Goodwill related to the sale of company-operated restaurants | (6 | 5,835) | (35,544) | (948) |
| Franchise fees | ( | 1,266) | (3,086) | |
| Sublease liabilities, net | (140) | (8,559) | ||
| Lease termination | (225) | (393) | _ | |
| Other (2) | (2 | 2,369) | (926) | _ |
| Gains on the sale of company-operated restaurants | $ 3 | 3,255 | $ 17,998 | $ 3,878 |
(1) Amounts in 2024, 2023, and 2022 include additional proceeds of $1.5 million, $0.9 million, and $1.4 million, respectively, related to the extension of the underlying franchise and lease agreements from the sale of restaurants in prior years.
Franchise acquisitions — In 2024, Del Taco purchased 10 franchise-operated restaurants for $86 thousand as part of three separate transactions, and recognized related gains of $2.7 million. In 2022, Jack in the Box acquired 13 franchise restaurants for total consideration of $0.3 million, comprised of franchise receivables owed to the Company as of the acquisition date. There were no such acquisitions in 2023. We account for the acquisition of franchised restaurants using the acquisition method of accounting for business combinations. The purchase price allocations were based on fair value estimates determined using significant unobservable inputs (Level 3).
(2) Amount in 2024 is primarily comprised of a $2.2 million loss on sale of assets related to a Del Taco refranchising transaction that closed in the second quarter of 2024. Amount in 2023 is primarily related to charges for a restaurant that was closed due to refranchising the related market.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, several financial activities occurred in 2024. In 2024, amounts included additional proceeds of $1.5 million related to the extension of the underlying franchise and lease agreements from the sale of restaurants in prior years. Del Taco purchased 10 franchise-operated restaurants for $86 thousand and recognized related gains of $2.7 million. Additionally, an amount in 2024 is primarily comprised of a $2.2 million loss on the sale of assets related to a Del Taco refranchising transaction that closed in the second quarter of 2024.
During the first quarter of 2024, Del Taco acquired 9 franchise restaurants for $0.1 million as part of two separate transactions, recognizing gains of $2.4 million. The company also identified triggering events that indicated the goodwill allocated to the Del Taco reporting unit might be impaired, resulting in an impairment of goodwill of $162.6 million.
These figures provide insight into Del Taco's financial transactions during 2024, including franchise acquisitions, refranchising activities, and adjustments to asset values. A prospective franchisee should be aware of these types of transactions as they can impact the overall financial health and strategy of the company. Understanding the context behind these numbers is crucial for assessing the stability and growth potential of the Del Taco franchise system.