Del Taco

The franchise fee is $35,000 ($1,750 for non-traditional locations like airports or food courts). Add a $10,000 promotional fee required upfront, a $4,500 trade area survey fee if you're within competitive proximity to an existing location, and $1,700 in technical support expenses. Before construction starts, you're out $51K in fees.

The total investment range of $1.50M to $3.32M breaks down primarily as building improvements ($490K–$1.2M) and on-site improvements ($186K–$650K). Furnishings, fixtures and equipment add $400K–$750K. IT and POS systems are $59K–$100K — above average for QSR, reflecting Del Taco's investment in digital ordering infrastructure. Training costs are unusually high in the FDD: initial training expenses of $194K–$253K and crew training of $48K–$68K suggest a significant pre-opening commitment.

Ongoing fees: 5% royalty on net sales plus 4% advertising fund — 9% total, plus a $174/month technology fee. The renewal fee is $35,000 — the full franchise fee again, every 20 years. That's materially different from competitors like Bojangles ($17,500 renewal) or Hardee's ($5,000 renewal). Over a 40-year operating career with two renewals, you'll pay an additional $70,000 in renewal fees at today's rates.

Del Taco discloses Item 19 data from 387 franchised restaurants. Median annual net sales are $1,541,335; average is $1,613,899. The near-$73K gap between average and median is modest, indicating relatively even distribution.

At median revenue of $1.54M and 9% fee burden, annual payments to the franchisor total approximately $138,600. QSR operating margins at this volume typically run 12–18%, generating $185K–$277K in operating income before debt. On a $2M midpoint investment, payback runs 7–11 years depending on debt structure and location performance.

Del Taco's value positioning (value tacos + fresh ingredients messaging) gives it a price point that holds through economic softness, but the brand competes directly with Taco Bell (8,000+ locations) in most of its core markets. Taco Bell's scale advantage in marketing, app development, and supplier leverage is significant. Del Taco's differentiation is the 'fresh' ingredient story — burgers and American breakfast items alongside Mexican — but that positioning requires marketing investment Del Taco can't match at Taco Bell's scale.

Del Taco's system count has been essentially flat: 591 units in 2022, 592 in 2023, 594 in 2024. Within that stability, there's meaningful churn — the 2023 data shows 125 openings against 124 closures, and 2024 shows 61 openings against 60 closures. This level of turnover (roughly 10% of the system per year changing hands or closing) is higher than it appears from the net change figure.

Jack in the Box, Inc. acquired Del Taco in 2022 for approximately $575 million. The acquisition gave Del Taco access to Jack in the Box's franchising infrastructure and development resources, but it also put a PE-influenced acquisition cost of $575M on the parent company's books. How that debt service affects Del Taco franchisee relationships (fee increases, required system investments) is worth monitoring.

Geographic concentration is significant: approximately 60% of Del Taco's locations are in California. This creates natural expansion constraints — California has high labor costs (minimum wage $20/hour for fast food as of 2024), high real estate costs, and an increasingly competitive QSR market. Buyers in California are entering the core market with all these cost pressures baked in.

California labor law exposure is the most immediate risk for any Del Taco prospective franchisee. AB 1228 set California fast food workers' minimum wage at $20/hour starting April 2024, with annual inflation adjustments. A Del Taco with 25 employees averaging 30 hours/week now has a labor floor of $780,000 annually before benefits, supervisory staff, or overtime. At median revenue of $1.54M, that's 50% of gross sales going to labor alone — before food cost, rent, or franchisor fees. The unit economics outside California look very different from the Item 19 median, which is California-heavy.

The renewal fee structure deserves a second look. Del Taco's $35,000 renewal fee is the full franchise fee, triggered every 20 years. If you sign a 20-year agreement with one renewal option, you're paying the franchise fee twice. Unlike Bojangles ($17,500) or Hardee's ($5,000), Del Taco treats renewal as a new franchise sale rather than an administrative fee. Negotiate this before signing.

The store audit reinspection fee ('per reinspection') creates financial risk tied to quality control failures. In high-labor-cost markets, maintaining consistent operational standards is harder, which increases audit failure rates, which triggers reinspection fees. Buyers in markets with tight labor markets should budget for at least a few reinspection cycles annually in the early years.