What were the proceeds from the sale of company-operated restaurants for Del Taco in 2022?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
NGS AND FRANCHISE ACQUISITIONS
Refranchisings — The following table summarizes the number of restaurants sold to franchisees and gains recognized in each fiscal year (dollars in thousands):
| 202 | 4 | 2023 | 2022 | |
|---|---|---|---|---|
| Restaurants sold to Jack in the Box franchisees | _ | 5 | 15 | |
| Restaurants sold to Del Taco franchisees | 47 | 111 | ||
| Proceeds from the sale of company-operated restaurants (1) | $ 19 | 9,400 | $ 85,221 | $ 6,391 |
| Broker commissions | _ | (1,614) | _ | |
| Net assets sold (primarily property and equipment) | (: | 5,310) | (17,101) | (1,565) |
| Goodwill related to the sale of company-operated restaurants | (6 | 5,835) | (35,544) | (948) |
| Franchise fees | ( | 1,266) | (3,086) | |
| Sublease liabilities, net |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the proceeds from the sale of company-operated restaurants in 2022 were $6,391,000. This figure represents the gross amount Del Taco received from selling company-owned locations to franchisees. It's important to note that this number does not reflect any deductions for expenses related to the sale, such as broker commissions or the value of net assets sold.
For a prospective Del Taco franchisee, this information provides insight into the brand's refranchising activities. Refranchising is a common strategy in the franchise industry where a franchisor sells company-owned stores to franchisees. This allows the franchisor to focus on brand management and support services, while franchisees operate the restaurants directly. The proceeds from these sales can be reinvested into the business for further growth and development.
However, it's crucial to understand that the gain on the sale of company-operated restaurants, which was $3,878,000 in 2022, is different from the proceeds. The gain represents the profit Del Taco made after deducting the net assets sold, goodwill, franchise fees, sublease liabilities, lease termination costs, and other expenses from the proceeds. Therefore, while the proceeds indicate the total inflow of cash from these sales, the gain reflects the actual profitability for Del Taco.
When evaluating a franchise opportunity, it's beneficial for potential franchisees to understand the franchisor's refranchising strategy and its financial implications. Reviewing the proceeds and gains from restaurant sales can provide a clearer picture of the franchisor's financial health and its approach to managing its company-owned and franchised locations. Additionally, understanding the number of restaurants sold to franchisees can indicate the level of interest and investment in the Del Taco brand.