What was the amount of goodwill impairment reported for Del Taco in 2024?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
------------------------------------------------------------------------| | $ 323,833 | | (162,624) | | $ 161,209 | | 135 | | 323,968 | | (162,624) | | $ 161,344 | | 188,006 | | (162,624) | | 25,382 | | (52) | | 187,954 | | (162,624) | | 25,330 |
During the third quarter of 2024, the Company had identified triggering events that indicated the goodwill allocated to the Del Taco reporting unit might be impaired. As a result, the Company performed a quantitative test over the Del Taco reporting unit, noting that th
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the company recorded a goodwill impairment of $162.6 million during the third quarter of 2024. This impairment was identified after the company noted triggering events that suggested the goodwill allocated to the Del Taco reporting unit might be impaired. Consequently, a quantitative test was performed, which revealed that the fair value of the reporting unit was less than its carrying value, leading to the recognition of the impairment.
Goodwill, as defined in the FDD, represents the excess of the purchase price over the fair value of identifiable net assets acquired. Del Taco typically records goodwill when acquiring restaurants from franchisees or acquiring another business. Conversely, goodwill is reduced upon the sale of restaurants to franchisees. The company assesses goodwill for impairment annually during the third quarter, or more frequently if circumstances warrant, to determine if the fair value of its reporting units exceeds their carrying values.
For a prospective Del Taco franchisee, this goodwill impairment indicates a potential decline in the perceived value of the Del Taco brand or its assets. While this accounting adjustment doesn't directly impact day-to-day operations, it reflects broader financial performance and market conditions that could influence the long-term health and stability of the franchise system. Franchisees should consider these factors when evaluating the overall investment opportunity and potential risks associated with the Del Taco franchise.