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Del Taco Franchise ProfileRestaurant Franchises > Quick-Service Restaurants |
What Are the Initial Investment Requirements for a Del Taco Franchise?
To open a Del Taco franchise, you should prepare for an initial investment ranging from $813,700 to $1,900,500. This includes a franchise fee of $35,000. Additionally, you will need to have liquid cash available between $400,000 and $750,000, along with a net worth ranging from $500,000 to $1,000,000. Understanding these financial commitments is crucial for potential franchisees as they assess their readiness to invest in this opportunity.
What Are the Financial Performance Metrics for Del Taco Franchisees?
Del Taco franchisees can expect an average annual revenue of approximately $1,745,657 per unit, with a median revenue of $1,515,241. The lowest annual revenue reported is $1,407,877, while some units have achieved as much as $6,100,496. The breakeven time is typically around 12 months, and the investment payback period averages 21 months. These figures provide valuable insights into the potential profitability and financial health of a Del Taco franchise.
What Are the Ongoing Fees Associated with a Del Taco Franchise?
Franchisees of Del Taco are responsible for ongoing fees, including a royalty fee of 5% of gross sales and a marketing fee of 4%. These fees are essential for maintaining brand presence and support. Franchisees should factor these costs into their financial planning to ensure they can sustain operations while benefiting from the brand's marketing efforts and operational support.
How Has Del Taco's Franchise Growth Evolved Recently?
Del Taco has shown a notable growth trend in its franchised units, increasing from 306 in 2021 to 421 in 2023. However, the number of corporate-owned units has decreased from 294 in 2021 to 171 in 2023. This shift indicates a strategic focus on expanding the franchise model, which may present exciting opportunities for new franchisees looking to join a growing brand in the fast-food sector.
Del Taco Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
Del Taco Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2021 | 2022 | 2023 |
|---|---|---|---|
| Total Units | 600 | 591 | 592 |
| Net Change YoY | -9 | 1 | |
| Franchised Units | 306 | 301 | 421 |
| Net Change YoY | -5 | 120 | |
| Corporate Units | 294 | 290 | 171 |
| Net Change YoY | -4 | -119 |
Investment Overview
The initial investment required to open a Del Taco franchise ranges from $813,700 to $1,900,500. This includes a franchise fee of $35,000. Potential franchisees should have liquid cash available between $400,000 and $750,000 and a net worth of $500,000 to $1,000,000 to qualify for ownership.
Financial Performance
Del Taco units average annual revenue of approximately $1,630,406, with a median revenue of $1,515,241. The breakeven time for new units is around 12 months, and the investment payback period is estimated at 21 months. These figures indicate a strong potential for profitability within the first two years of operation.
Royalty and Marketing Fees
Franchisees are required to pay a royalty fee of 5% of gross sales along with a marketing fee of 4%. These fees contribute to the overall support and promotion of the Del Taco brand, ensuring franchisees benefit from national marketing campaigns and brand recognition.
Operational Insights
The average operating expenses for a Del Taco franchise amount to $889,053 annually, which includes labor costs, benefits, utilities, and repairs. Understanding these expenses is crucial for managing cash flow and maximizing profitability in daily operations.
Franchise Growth
As of 2023, Del Taco has seen a significant increase in franchised units, with 421 locations compared to 301 in 2022. This growth trend reflects the brand's expanding market presence and the increasing interest from franchisees looking to capitalize on the fast-casual dining segment.
Company Background
Del Taco, founded in 1964, is a fast-food chain specializing in Mexican-American cuisine. With a diverse menu that includes tacos, burritos, and fries, Del Taco aims to provide fresh, quality food at affordable prices. The brand has established a strong foothold in the industry, appealing to a broad customer base across the United States.
Frequently Asked Questions
The initial investment for a Del Taco franchise ranges from $813,700 to $1,900,500. This includes the franchise fee, equipment, and other startup costs.