Jack in the Box sells its entire stake in Del Taco at huge loss

"Jack in the Box management said the deal will bolster its bottom line by retiring debt and move the company "to a simpler, asset-light business model" as part of its "Jack on Track" plan that it rolled out to investors in April, aimed at improving long-term financial performance. "This divestiture is an important step in returning to simplicity, and we look forward to focusing on our core Jack in the Box brand," company CEO Lance Tucker said in a news release announcing the sale."

"Founded in 1964, Del Taco is the second-largest Mexican American quick-service food chain in the U.S., with more than 550 restaurants in 18 states. Yadav Enterprises operates more than 310 franchise restaurants, including Jack in the Box, Denny's and TGI Friday's. The Fremont-based company also owns the Tex-Mex casual Taco Cabana chain in 150 locations and Nick the Greek restaurants in 90 locations."

""Jack in the Box made a very, very bad decision to buy Del Taco in 2022," said John Gordon, head of the San Diego-based restaurant industry research firm Pacific Management Consulting Group. "We all kind of said at time, wow, that's a lot of money they're paying for Del Taco." Quick-service restaurants have faced recent financial headwinds, Gordon said, including increases in minimum-wage laws across California - $20 per hour for fast-food workers - plus an overall slowdown in the restaurant industry that contributed"

Jack in the Box is selling its entire Del Taco chain to Yadav Enterprises for $115 million in cash. The company plans to use proceeds to retire debt and transition to a simpler, asset-light business model under its Jack on Track plan. The transaction is expected to be completed by January. Del Taco, founded in 1964, operates more than 550 restaurants across 18 states and is the second-largest Mexican American quick-service chain in the U.S. Yadav Enterprises operates over 310 franchise restaurants and owns Taco Cabana and Nick the Greek locations. Jack in the Box acquired Del Taco three years earlier for $575 million amid rising wage and industry headwinds.

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