What accounting method was used for the acquisition of Del Taco?

According to Del Taco's 2025 Franchise Disclosure Document, the acquisition of Del Taco by the Company on March 8, 2022, was accounted for using the acquisition method of accounting, in accordance with ASC 805, Business Combinations. This method requires that the assets acquired and liabilities assumed are recognized at their acquisition date fair value. The document specifies that Jack in the Box acquired Del Taco as part of its strategy to increase scale and accelerate growth. The total purchase consideration for Del Taco was $593.3 million, with each share of Del Taco common stock being converted into the right to receive $12.51 in cash.

In simpler terms, when Jack in the Box bought Del Taco, they used a standard accounting practice called the 'acquisition method.' This means they had to list all the things Del Taco owned (assets) and owed (liabilities) at their current market value on the day of the purchase. This process helps provide a clear financial picture of what was bought and what it was worth at the time. The goal of Jack in the Box was to become a bigger company and grow faster by adding Del Taco to their portfolio.

For a potential Del Taco franchisee, this information provides insight into how the parent company, Jack in the Box, handles acquisitions and financial reporting. Understanding the accounting methods used can help franchisees assess the financial stability and strategic direction of the company. It also shows the scale of investment Jack in the Box was willing to make to acquire Del Taco, indicating the potential value they see in the brand. Knowing that the acquisition was made to accelerate growth may also suggest future opportunities for franchisees as the company expands.

It's important to note that the FDD also mentions unaudited pro forma financial information, which includes adjustments to reflect additional amortization expense from acquired intangibles, incremental depreciation expense from the fair value property and equipment, elimination of historical interest expense associated with both Del Taco's and the Company's historical indebtedness, additional interest expense associated with the new Del Taco revolving credit facility and the Company's new borrowings as part of the refinancing to fund the acquisition, adjusted rent expense reflecting the acquired right-of-use assets and liabilities to their estimated acquisition-date values based upon valuation of related lease intangibles and remaining payments, as well as the fair value adjustments made to leasehold improvements, certain material non-recurring adjustments and the tax-related effects as though Del Taco was combined as of the beginning of fiscal 2021. This information is for informational purposes only and is not necessarily indicative of future results.