What are the primary sources of revenue for Del Taco franchise-operated restaurants?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
ued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements.
2. REVENUE
Nature of products and services — We derive revenue from retail sales at Jack in the Box and Del Taco company-operated restaurants and rental revenue, royalties, advertising, and franchise and other fees from franchise-operated restaurants.
Our franchise arrangements generally provide for an initial franchise fee per restaurant for a 20-year term, and generally require that franchisees pay royalty and marketing fees based upon a percentage of gross sales. The agreements also require franchisees to pay technology fees, as well as sourcing fees for Jack in the Box franchise agreements.
Disaggregation of revenue — The following table disaggregates revenue by segment and primary source for the fiscal year ended September 29, 2024 (in thousands):
| J | ack in the Box | Del Taco | Total | |
|---|---|---|---|---|
| Company restaurant sales | $ | 427,057 | $ 281,978 | $ 709,035 |
| Franchise rental revenues | 347,227 | 28,201 | 375,428 | |
| Franchise royalties | 198,377 | 31,714 | 230,091 | |
| Marketing fees | 197,900 | 26,258 | 224,158 | |
| Technology and sourcing fees | 19,857 | 4,658 | 24,515 | |
| Franchise fees and other services | 7,002 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the company generates revenue from various sources related to both company-operated and franchise-operated restaurants. For franchise-operated restaurants, the primary revenue streams include rental revenue, royalties, advertising fees, franchise fees, and other fees. Franchisees are typically required to pay an initial franchise fee for a 20-year term. They also pay ongoing royalty and marketing fees, which are calculated as a percentage of their gross sales. In addition to these, franchisees also pay technology and sourcing fees.
For the fiscal year ended September 29, 2024, the revenue sources for Del Taco were disaggregated. The data shows that franchise rental revenues contributed $10.765 million, franchise royalties amounted to $10.025 million, marketing fees totaled $8.480 million, technology and sourcing fees reached $1.059 million, and franchise fees and other services accounted for $394 thousand. These figures provide a detailed breakdown of how Del Taco generates revenue from its franchise operations.
These revenue streams are critical for Del Taco as they reflect the ongoing support and brand usage provided to franchisees. Royalties and marketing fees, being a percentage of gross sales, align the franchisor's success with that of its franchisees. Technology and sourcing fees likely cover the costs of providing essential systems and supply chain benefits to the franchise network. The initial and ongoing fees are standard in the franchise industry, ensuring that the franchisor can maintain and grow the brand while supporting its franchisees.