What assets are used to determine if Del Taco's ongoing concerns are reasonably assured?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's non-financial instruments, which primarily consist of property and equipment, operating lease right-of-use assets, goodwill and intangible assets, are reported at carrying value and are not required to be measured at fair value on a recurring basis. However, on an annual basis, or whenever events or changes in circumstances indicate that their carrying value may not be recoverable, non-financial instruments are assessed for impairment. If applicable, the carrying values are written down to fair value.
In connection with our impairment reviews performed during 2025 and 2024, the Company impaired certain Del Taco assets. For further information, see Note 3, Summary of Refranchisings and Assets Held For Sale, Note 5, Goodwill and Intangible Assets, Net, and Note 8, Other Operating Expenses, Net in the notes to the condensed consolidated financial statements.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to the 2025 Del Taco Franchise Disclosure Document, the company's non-financial instruments, including property and equipment, operating lease right-of-use assets, goodwill, and intangible assets, are assessed for impairment to determine if their carrying value is recoverable. These assets are reported at carrying value and are not required to be measured at fair value on a recurring basis. However, Del Taco assesses these assets annually or when events or changes in circumstances indicate that their carrying value may not be recoverable. If applicable, the carrying values are written down to fair value.
In 2025 and 2024, Del Taco performed impairment reviews and impaired certain assets. Details about these impairments can be found in the notes to the condensed consolidated financial statements, specifically Note 3, Summary of Refranchisings and Assets Held For Sale, Note 5, Goodwill and Intangible Assets, Net, and Note 8, Other Operating Expenses, Net. These notes provide further information on the specific assets that were impaired and the reasons for the impairments.
For a potential Del Taco franchisee, understanding how these assets are valued and assessed for impairment is crucial. Impairments can affect the financial health of the company and, consequently, the support and resources available to franchisees. Reviewing the referenced notes in the financial statements will provide a more detailed understanding of the specific assets involved and the financial implications of any impairments. Additionally, it would be prudent for a prospective franchisee to discuss these asset valuations and impairment reviews with Del Taco's management team to gain further clarity on the company's financial stability and future prospects.