www.southwestfoodservice.com | June - July 2022 2022

Jack in the Box

Jack in the Box to buy Del Taco for $575 million

The two quick-service chains expect synergy and economies of scale

Jack in the Box said on last week that it would acquire fellow quick-service chain Del Taco for $12.51 per share, or around $575 million.

The move by the two chains, both based in San Diego, will give the brands greater economies of scale and reinforce their strategies for growth, the companies said in a statement Monday, adding that 2,200-unit Jack in the Box and 600-unit Del Taco have “complementary cultures, guest profiles, operating models and market opportunities.”

Jack in the Box said it would finance the acquisition by issuing additional securitization notes with financing from BofA Securities. The purchase is expected to be completed by the first quarter of 2022, pending approval from regulators and Del Taco Shareholders.

Del Taco is the nation’s second largest chain in the growing Mexican food segment, after Taco Bell.

“We are thrilled to welcome Del Taco, a beloved brand and proven regional winner, to the Jack in the Box family,” Jack in the Box CEO Darin Harris said. “This is a natural combination of two like-minded, challenger brands with outstanding growth opportunities. Together, Jack in the Box and Del Taco will benefit from a stronger financial model, gaining greater scale to invest in digital and technology capabilities, and unit growth for both brands. This acquisition fits squarely in our strategic pillars and helps us create new opportunities for the franchisees, team members and guests of both brands.”

He added, “Del Taco has a loyal, passionate guest base and a strong operating model, and we believe that we can leverage our infrastructure, experience refranchising, and development strategy to support Del Taco’s growth plans and expand Del Taco’s footprint. We can’t wait to welcome the Del Taco team members and franchisees to the Jack family!”

Jack in the Box also noted the opportunity to franchisees to open both concepts, quoting one of its franchisees David Beshay, who has more than 210 restaurants, as saying, “I couldn’t be happier about the opportunity that this transaction offers to the franchisees of these two amazing brands. I believe the Del Taco brand will fit hand in glove with ours, and further enhance the strong franchise and guest-focused culture we have worked so hard to develop at Jack in the Box. We are excited about the potential to open Del Taco restaurants, helping the company expand these two beloved brands.”

Del Taco president and CEO John Cappasola said, “We are excited to have found a partner in Jack in the Box that shares our vision for the future and has the QSR expertise to further accelerate Del Taco’s growth. In recent years, we have uniquely positioned Del Taco as a leader in the growing Mexican QSR category, expanded our digital capabilities to enhance consumer convenience and focused on growing the brand through franchising, resulting in eight consecutive years of franchise same store sales growth and an accelerating new unit pipeline.

“We expect this transaction will provide Del Taco with the scale, complementary capabilities and opportunity to become even stronger partners to our franchisees and support their ability to drive substantial growth in our core and emerging markets. On behalf of Del Taco Restaurants, Inc. Board of Directors, we’re confident the agreement delivers immediate value to Del Taco shareholders and will greatly benefit our brand, team members, franchisees and loyal guests for many years to come.”

In terms of shareholder value, Jack in the Box said it expected the transaction to result in an increase of earnings per share in the mid-single digits in the first year, increasing in the second year as the brands synergize their operations.

This is not Jack in the Box’s first foray into owning Mexican restaurants. It owned fast-casual concept Qdoba Mexican Eats for 15 years before its sale in 2018.

Jack in the Box itself has a diverse menu that includes tacos. In fact, its introduction last year of “Tiny Tacos” has helped contribute to growing sales.

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