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Jack in the Box Buys Del Taco

Jack in the Box Buys Del Taco $575 milllion is the purchase price that Jack In The Box is forking over for Del Taco. The 600 unit hip and casual taco chain seems to make sense for a growing burger chain. Moreover, one looking to diversify its offerings while offering scale to purchase raw goods at a cheaper rate. Furthermore, the two chains will offer a greater and more efficient distribution network.

However, these arguments are not new!

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Jack in the Box spent years owning Qdoba with little success. Furthermore, the reasons for owning Qdoba back in 2003 seem to mirror those of today. As a result, Jack In The Box made a statement addressing this concern:

“Jack in the Box purchased Qdoba as a growth vehicle to supplement what was then a mature brand. In purchasing Del Taco, the company is opportunistically purchasing a well-regarded but underappreciated regional quick service chain with similar brand attributes, a heavy off-premise mix, and solid fundamentals/unit growth prospects at a time when the foundation for Jack in the Box’s accelerated growth has already been set.”

Credit Suisse covers Jack in the Box and had the following to say regading the acquisition:

“While Jack in the Box has been cited as a potential acquisition target in the past, we believe this deal signals it is more likely Jack in the Box could look to build a multi-concept portfolio.” .

“We note this deal is reminiscent of the strategy previously pursued by Jack in the Box with Qdoba, and comes at a time when Jack in the Box is looking to drive meaningful inflection in unit growth, which could pose some distraction risk.”

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Jack in the Box Buys Del Taco

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