What were the gains on acquisition of restaurants for Del Taco in 2024?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
l proceeds of $1.5 million, $0.9 million, and $1.4 million, respectively, related to the extension of the underlying franchise and lease agreements from the sale of restaurants in prior years.
Franchise acquisitions — In 2024, Del Taco purchased 10 franchise-operated restaurants for $86 thousand as part of three separate transactions, and recognized related gains of $2.7 million. In 2022, Jack in the Box acquired 13 franchise restaurants for total consideration of $0.3 million, comprised of franchise receivables owed to the Company as of the acquisition date. There were no such acquisitions in 2023. We account for the acquisition of franchised restaurants using the acquisition method of accounting for business combinations. The purchase price allocations were based on fair value estimates determined using significant unobservable inputs (Level 3).
(2) Amount in 2024 is primarily comprised of a $2.2 million loss on sale of assets related to a Del Taco refranchising transaction that closed in the second quarter of 2024.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, in 2024, Del Taco purchased 10 franchise-operated restaurants for $86,000 as part of three separate transactions and recognized related gains of $2.7 million. Additionally, during the first quarter of 2024, the company acquired 9 Del Taco franchise restaurants for $0.1 million as part of two separate transactions, and recognized related gains of $2.4 million. This amount is recorded in "Other operating expenses, net" in the accompanying condensed consolidated statements of earnings.
In a separate transaction, restaurants were acquired from Del Taco franchisees for a purchase price of $86,000. After accounting for closing and acquisition costs of $43,000, property and equipment valued at $3,612,000, intangible assets of $167,000, operating lease right-of-use assets of $3,211,000, and operating lease liabilities of $4,505,000, the gain on the acquisition of franchise-operated restaurants was $2,357,000.
These figures reflect the gains Del Taco recognized when it acquired franchise-operated restaurants. Such acquisitions can be part of a strategy to consolidate operations, increase company-owned restaurant revenue, or optimize market presence. For a prospective franchisee, this indicates Del Taco's activity in acquiring existing franchise locations, which could present opportunities for franchisees looking to sell their restaurants back to the company or expand their operations through acquisition.