Jack in the Box is selling quick-service restaurant chain Del Taco as part of a strategy to free up capital and focus on its core brand.
San Diego-based Jack in the Box acquired Del Taco three years ago for $575 million; it is now selling it for $115 million in cash. The buyer is one of its franchisees, Yadav Enterprises. Del Taco has more than 550 restaurants that focus on Mexican and American cuisine, selling tacos alongside cheeseburgers.
Jack in the Box on Thursday said it had entered into a definitive agreement that is expected to close by January.
The restaurant industry’s headwinds have increased since 2022, when Jack in the Box bought Del Taco. There are higher food and labor costs and pushback on menu price increases from cost-conscious Americans.
The quick-service sector — commonly known as fast food — has been severely affected, according to Jack in the Box officials. In April, the company unveiled a plan, “Jack on Track,” to improve its financial performance and address lagging sales at its namesake chain and Del Taco.
Around that time, Jack in the Box was exploring strategic alternatives for Del Taco, including a possible divestiture of the business. In addition, Jack in the Box said it would close roughly 150 to 200 underperforming restaurants, with 80 to 120 of those closings slated to take place by the end of this year.
The Del Taco sale aims to strengthen Jack in the Box’s balance sheet and launch its return to an asset-light business model, according to the company.
“This divestiture is an important step in returning to simplicity, and we look forward to focusing on our core Jack in the Box brand,” Lance Tucker, Jack in the Box CEO, said in a statement. “After a robust process, we are confident we have entered into a transaction with the right steward for Del Taco in its next chapter of evolution.”
Fremont, California-based Yadav Enterprises operates more than 310 franchise restaurants including Jack in the Box, Denny’s and TGI Friday’s. It also owns Taco Cabana — a Tex-Mex restaurant chain with 150 locations that it acquired in 2021 for $85 million — and Nick the Greek, a fast-casual Greek restaurant chain with 90 locations.
Lake Forest, California-based Del Taco is the second-largest Mexican-American quick-service chain by units in the U.S., with over 550 restaurants across 18 states, according to Jack in the Box. It ranks behind No. 1 Taco Bell.
Jack in the Box said it will provide guidance for fiscal year 2026 and updates to its “Jack on Track” when it releases its earnings on Nov. 19.
For the record
BofA Securities is serving as exclusive financial adviser to Jack in the Box, and Sullivan & Cromwell is serving as its legal counsel. Yadav Enterprises is represented in the transaction by its general counsel Steven Kries and advised by Baker Tilly.