What is the nature of operations for Del Taco restaurants?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operations — Jack in the Box Inc. (the "Company"), together with its consolidated subsidiaries, develops, operates, and franchises quick-service restaurants under the Jack in the Box® and Del Taco® restaurant brands.
On March 8, 2022, the Company acquired Del Taco Restaurants, Inc. ("Del Taco") for cash according to the terms and conditions of the Agreement and Plan of Merger, dated as of December 5, 2021. Del Taco is a nationwide operator and franchisor of restaurants featuring fresh and fast Mexican and American inspired cuisines. Refer to Note 3, Business Combination, for further details.
As of September 29, 2024, there were 150 company-operated and 2,041 franchise-operated Jack in the Box restaurants and 133 company-operated and 461 franchise-operated Del Taco restaurants.
References to the Company throughout these notes to the consolidated financial statements are made using the first-person notations of "we," "us," and "our."
Basis of presentation — The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC").
Fiscal year — The Company's fiscal year is the 52 or 53 weeks ending the Sunday closest to September 30. In fiscal 2023, Del Taco operated on a fiscal year ending the Tuesday closest to September 30. Beginning fiscal 2024, Del Taco's fiscal year shifted to align with Jack in the Box. As a result, Del Taco's fiscal 2024 results include two fewer days. Comparisons throughout these notes to the consolidated financial statements refer to the 52-week periods ended September 29, 2024, October 1, 2023, and October 2, 2022 for fiscal years 2024, 2023, and 2022.
Principles of consolidation — The accompanying consolidated financial statements include the accounts of Jack in the Box Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to the 2025 FDD, Del Taco, along with its parent company Jack in the Box Inc., engages in developing, operating, and franchising quick-service restaurants. Del Taco specializes in offering fresh and fast Mexican and American-inspired cuisines. As of January 19, 2025, Del Taco's operations included 119 company-operated restaurants and 470 franchise-operated restaurants.
Del Taco generates revenue through retail sales at company-operated restaurants. Additionally, it secures revenue through rental income, royalties, advertising fees, and franchise fees from franchise-operated restaurants. Typically, franchise arrangements involve an initial franchise fee for a 20-year term. Franchisees are also obligated to pay ongoing royalty and marketing fees, calculated as a percentage of their gross sales.
These operational activities reflect a dual approach where Del Taco directly manages some restaurants while also expanding its brand presence through franchising. For a prospective franchisee, this indicates that Del Taco provides a structured franchise system with established revenue streams and support mechanisms, including marketing and supply chain agreements. The blend of company-operated and franchise-operated restaurants allows Del Taco to maintain brand consistency while leveraging the capital and operational expertise of its franchisees.