Del Taco Has ‘Strong Buyer Interest’ Ahead of Formal Jack in the Box Sale
Del Taco will soon be offloaded by its parent company.
After months of “strategic review,” Jack in the Box has confirmed what many observers suspected: Del Taco is for sale — and buyers are already circling, according to QSR Magazine.
Speaking on the company’s fiscal Q2 earnings call, CEO Lance Tucker said the Mexican quick-service brand has received “significant reach out and interest,” even though a formal marketing process is still a few weeks away. With that disclosure, the divestiture moves from possibility to near-certainty, marking the latest chapter in Jack in the Box’s multi-step “JACK on Track” turnaround plan.
Why Jack in the Box Is Moving on From Del Taco
Jack in the Box acquired Del Taco for roughly $585 million in 2022. Two years later, the burger giant is prioritizing debt reduction and operational focus over portfolio diversity. Under “JACK on Track,” management intends to:
- Close 150 to 200 mostly franchised Jack in the Box restaurants
- Monetize real estate
- Pay down at least $300 million in debt within 12 to 18 months
Selling Del Taco is the single largest lever available to hit that debt target quickly, hence the accelerated timeline. Tucker told analysts that, given early buyer enthusiasm, a sale “would be the option we would go down” unless something unexpected materializes.
Del Taco’s Current Performance Snapshot
The urgency is understandable. According to Restaurant Business Magazine, Del Taco’s same-store sales declined 3.6% in Q2, driven by a 4.2% drop at franchised locations and a 1.7% decrease at company restaurants. Traffic fell, and while menu pricing offset some of the volume loss, restaurant-level margin still contracted by 400 basis points to 12.8%. Commodity costs and wage inflation did the most damage.
Notably, Del Taco is far from alone; several quick-service peers are also contending with consumer pullback. But the brand’s metrics provide little wiggle room: any new owner will need to stabilize transactions quickly to protect margin.
Early Green Shoots: Menu and Tech Upgrades
Despite the top-line slide, Del Taco isn’t standing still. A menu optimization initiative launched in early Q1 has improved the product mix and increased the average check. Meanwhile, the chain’s push into digital ordering continues to gain traction, with kiosks, third-party delivery, and mobile now accounting for more than 18% of sales. All corporate stores are fully kiosk-enabled, and franchisees are steadily adopting the technology.
Marketing is also on deck for a reboot later this year. Tucker hinted at a refreshed tone — “looking backwards to some things we may have done in the past that I think are going to be exciting for the brand” — alongside new menu items designed to drive traffic. For prospective buyers, these initiatives offer a roadmap for near-term growth with minimal capital requirements.
Footprint: Smaller, Leaner, Mostly Franchised
At quarter-end, Del Taco operated 591 restaurants after six openings and four closures. The brand’s refranchising journey has been swift, with a reduction from 297 corporate stores at the 2022 acquisition to just 117 today. The 80% franchise mix offers royalty-rich cash flow and lower capital intensity — an attractive profile for private equity investors and multi-brand operators seeking bolt-on growth.
Buyer Pool: What “Strong Interest” Likely Means
With the sales book still in draft, Jack in the Box hasn’t named suitors. Yet Tucker’s comment about “significant reach out” signals a deep field:
- Private-equity restaurant platforms are eager for franchise-heavy assets.
- Strategic restaurant groups are looking to diversify into Mexican QSR at scale.
- Family offices that already control regional franchise networks.
The compressed timeline — marketing in weeks, not months — suggests that Jack in the Box wants to maximize competitive tension and enterprise value, despite recent margin pressure.
What the Sale Unlocks for Jack in the Box
Divesting Del Taco will free management to concentrate on its core burger business, where challenges abound. Same-store sales at Jack in the Box fell 4.4% in Q2, squeezed by traffic declines and a difficult transition to a new POS platform across nearly 1,500 restaurants. Tucker acknowledged technology “challenges” tied to legacy systems, estimating a 1- to 2-point drag on comps.
Proceeds from Del Taco’s sale, coupled with store closures and real-estate monetization, feed directly into debt pay-down. Reducing leverage grants Jack in the Box the balance-sheet flexibility to:
- Modernize outdated technology more rapidly
- Fund remodels for aging units (many older than three decades)
- Support franchisees in new-market development agreements that already total 400 commitments since 2021
Risks and Unknowns
- Valuation Gap: Del Taco’s recent EBITDAR compression could weigh on multiples; Jack in the Box may accept a haircut relative to its 2022 purchase price.
- Execution Bandwidth: Jack in the Box must close restaurants, modernize tech, and shepherd new builds while negotiating a multifaceted sale.
- Franchisee Impact: With 150 to 200 Jack in the Box units shuttering, maintaining franchisee confidence during the transition will be crucial.
Timeline To Watch
- Late June/Early July 2025: Formal sale memorandum circulates; management begins management presentations.
- Q3 2025: First-round bids and site visits; selection of a preferred buyer.
- Fiscal 2026 Kickoff: Transaction close, subject to customary approvals.
Del Taco might soon have a new parent, but its brand story is just beginning. A buyer who can harness the chain’s digital momentum, optimize the menu, and reignite marketing could turn today’s sales dip into tomorrow’s growth curve. For Jack in the Box, the divestiture is less about abandonment and more about strategic focus — paring down to shore up the balance sheet, modernize core operations, and reignite franchise-led expansion.
If both objectives land as planned, the sale will be viewed as a disciplined pivot rather than a retreat. Either way, the fast-moving auction underscores one truth of the QSR landscape in 2025: Even legacy brands must stay nimble — and sometimes lighter — to win.
