Jack in the Box has agreed to sell its Del Taco business to Yadav Enterprises for $115 million.
The sale includes the operations of Del Taco Holdings, a wholly owned subsidiary of the company that operates and franchises more than 550 Del Taco restaurants across 18 states.
Jack in the Box plans to use the proceeds from the deal to retire debt within its securitization structure and strengthen its balance sheet.
The divestiture will also help the company return to a simpler, asset-light business model and focus on growing the Jack in the Box burger chain, which has approximately 2160 restaurants across 22 states.
“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,” said Lance Tucker, CEO of Jack in the Box.
The sale comes about four years after Jack in the Box bought the Mexican fast-food chain for $12.51 per share, equivalent to approximately $575 million. The acquisition was announced in December 2021 and finalized in March 2022.
For the third quarter ended July 6, Jack in the Box reported a 7.1 per cent decline in same-store sales. Del Taco’s same-restaurant sales fell 2.6 per cent during the period, marking its sixth consecutive quarter of decline.
Yadav Enterprises is a franchisee of the Jack in the Box chain, as well as Denny’s and TGI Friday’s. It also owns the Tex-Mex chain Taco Cabana and Greek restaurant chain Nick the Greek.
The all-cash transaction is expected to close by January, subject to the satisfaction or waiver of customary closing conditions.
BofA Securities serves as the exclusive financial advisor to Jack in the Box, and Sullivan & Cromwell serves as its legal counsel.
