What is the explanation for how the goodwill was recorded in the acquisition of Del Taco?

According to Del Taco's 2025 Franchise Disclosure Document, the goodwill from the acquisition was recorded based on the excess of the total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities. The recorded goodwill was $319.7 million. This goodwill is primarily attributed to Del Taco's market position and its potential for future growth, which includes company-operated and franchised restaurants, future store openings, expansion into new markets, and expected synergies.

For a prospective Del Taco franchisee, this means that a significant portion of the acquisition cost was based on the anticipated future benefits and growth opportunities associated with the Del Taco brand. The franchisor sees value in the existing market presence and expects to leverage this for further expansion. This could translate into increased brand recognition and potentially easier access to financing or prime real estate locations for new franchisees.

It is important to note that none of the goodwill resulting from the acquisition is deductible for tax purposes. This has no direct impact on franchisees, but it is relevant to the overall financial structure of the acquisition from the franchisor's perspective. The goodwill arising from the Del Taco acquisition was allocated to the Company's reporting units.

Goodwill is not amortized and is assigned to reporting units for purposes of impairment testing. The company’s two restaurant brands, Jack in the Box and Del Taco, are both operating segments and reporting units. Goodwill is evaluated for impairment by determining whether the fair value of our reporting units exceed their carrying values.