Are conversion and remodel costs of existing buildings included in the estimated initial investment for a new Del Taco restaurant development project?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Construction costs can vary
significantly based upon the size of the building, materials and methods specified in the construction documents, as well as other geographical, regional, and municipal influences. New restaurant development projects that will include the conversion and remodel of an existing building will likely have their own site-specific scope of work and cost structure necessary to successfully adapt the existing building designs so they conform the brand image and operational standards, and as such, are not included. If we or our affiliates provide site development services, you will be required to pay us a fee of up to $50,000 for work we complete toward developing the site, in addition to our out-of-pocket and internal overhead costs.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 21–28)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the estimated initial investment for new restaurant development projects does not include costs associated with the conversion and remodel of existing buildings. The FDD specifies that new restaurant development projects involving the conversion and remodel of an existing building will likely have their own site-specific scope of work and cost structure necessary to successfully adapt the existing building designs so they conform to the brand image and operational standards. As such, these costs are excluded from the standard initial investment estimates.
This exclusion means that prospective Del Taco franchisees considering converting an existing building should anticipate additional, potentially significant, costs beyond the standard initial investment figures. These costs will depend heavily on the specific condition of the existing building, the extent of required renovations, and local construction costs. Del Taco franchisees should conduct a thorough assessment of any existing building they plan to convert, obtaining detailed cost estimates from qualified contractors to accurately project their total investment.
Furthermore, the FDD indicates that if Del Taco or its affiliates provide site development services, the franchisee will be required to pay a fee of up to $50,000 for the work completed toward developing the site, in addition to out-of-pocket and internal overhead costs. This fee would be in addition to the costs of converting or remodeling an existing building. Therefore, franchisees should clarify with Del Taco the scope of site development services offered, the associated fees, and whether these services are necessary for their specific project.
In summary, while the initial investment figures provided by Del Taco are based on new restaurant development, franchisees need to be aware that converting an existing building will incur separate and additional costs. These costs are highly variable and site-specific, requiring careful evaluation and planning. Consulting with Del Taco, experienced contractors, and business advisors is crucial to accurately estimate the total investment required for a conversion project.