What was the reported value of goodwill associated with Del Taco as of September 29, 2024?

According to Del Taco's 2025 Franchise Disclosure Document, during the third quarter of 2024, the company identified events that suggested the goodwill allocated to the Del Taco reporting unit might be impaired. As a result, a quantitative test was performed, which indicated that the fair value of the reporting unit was less than its carrying value. This led to an impairment of goodwill of $162.6 million at that time.

Goodwill, as defined in the FDD, represents the excess of the purchase price over the fair value of identifiable net assets acquired. It is typically recorded when Del Taco acquires restaurants from franchisees or acquires another business. Conversely, goodwill is reduced upon the sale of restaurants to franchisees. The amount written off is determined by the fair value of the disposed business as a percentage of the reporting unit's fair value before disposal. If the disposed business was not fully integrated after acquisition, the current carrying amount of the acquired goodwill is written off.

Del Taco evaluates goodwill for impairment by comparing the fair value of its reporting units to their carrying values. The two restaurant brands, Jack in the Box and Del Taco, are considered separate operating segments and reporting units for this purpose. The impairment analysis includes a qualitative assessment of factors such as macro-economic conditions, market and industry conditions, cost considerations, the competitive environment, share price fluctuations, and overall financial performance. If these factors suggest that the fair value is less than the carrying value, a quantitative impairment test is performed.