Mexican food is one of the most popular dishes in the United States, and there are many restaurants offering Mexican food.
Del Taco is one of the biggest Mexican food franchises in the United States, with a presence in other countries. The strong brand name makes Del Taco an attractive choice for entrepreneurs.
Is it an excellent choice to own a Del Taco franchise? We will try to answer this question by talking about Del Taco, its franchise system, costs, and fees.
About Del Taco and Del Taco History
Del Taco is an American-Mexican fast food restaurant franchise chain that offers both American specialties like burgers and hot dogs and Mexican specialties like tacos.
They were founded in 1964 in California, and they grew to close to 600 stores in the United States through franchising.
The company started offering franchises in 1966 in the hopes of growing the brand quickly. With over five decades of experience in the franchising business, they have an established business model that they have developed over the years.
Franchise Model Table
| Initial Investment | $812,700 – $2.4 million |
| Franchise | YES |
| Franchising Since | 1966 |
| Franchise-Fee | $35,000 |
| Royalty-Fee | 5% |
| Liquidity | $500,000 |
| Estimated Outlets | 594 |
How Much Does it Cost to Open a Del Taco Franchise?
On average, the total cost to open a Del Taco is between $812,700 and $2.4 million, including all the related start-up costs such as equipment, employees, formation costs, marketing, and franchise fees.
Depending on your location, the size of the store, and other factors, the costs could vary a lot.
Franchise Requirements
There are main requirements you need to follow to be considered as a potential Del Taco franchisee. The first one is financial, where you need to have a liquidity of at least $500,000 and a minimum net worth of $1 million. This is the most crucial requirement to complete.
They also look for some personal requirements that are not mandatory but increase your chances of approval. You need to have strong business knowledge and experience, know the local area and its real estate market, and know how to develop a business.
Profit & Revenue
Del Taco generated $316.9 million in revenue in 2022 as a company, a massive decrease from the previous year, which was $527.6 million. Per Del Taco franchise store, the average unit volume is about $1.5 million annually.
In 2022, the $316.9 million revenue turned into $25.82 million in net profit once you remove all the expenses. For each Del Taco store, the expected average annual net profit is around $289,000.
Overall Sales
Overall sales of a Del Taco franchise store is $1.5 million annually. This is the average unit volume of a store, which means the overall sales a store makes on average in a year. Based on several factors, this number might vary and be higher or lower.
Franchise Owner Salary
According to the FDD of Del Taco, there is about a 17% profit margin on the overall sales a store makes.
This equals to around $289,000 annually in profit. If the owner of the franchised store is the sole owner, this is also the salary of the franchise owner.
Payback Period
Considering that the average annual store profit is $289,000 and the initial investment is between $812,700 and $2.4 million, the payback period could be anywhere between 4 to 13 years.
Training and Support
Del Taco has an extensive franchise program designed to help franchisees. They have a powerful training and support system.
They provide 400 hours of on-the-job training, 40 hours of classroom training, and 24 hours of technical training per day. They provide training both to the management and the crew.
They also provide marketing and management support continuously to manage the store well, grow it, and get the name out there.
Obligations and Restrictions
The franchisee is obligated to be present at the franchise store and oversee the operations of the store continuously.
They have to be part of the decision-making process and keep the restaurant open as specified by the working hours in the franchise agreement.
In addition, the franchisee is restricted to using the store’s site only for Del Taco operations and nothing else. The franchisee also can’t sell any products or services that Del Taco didn’t approve beforehand.
Financial Assistance
The brand does not offer direct or indirect financial assistance to franchisees. But they have a list of banks and institutions that have an interest in lending to Del Taco franchisees that they provide you with.
Del Taco Comparison
| Name | Franchise Fee | Royalty Fee | Initial Investment |
| Taco Bell | $25,000-$45,000 | 5.5% | $530,000-$3 million |
| Taco John’s | $25,000 | 5% | $942,000-$1.3 million |
| Del Taco | $35,000 | 5% | $812,700 – $2.4 million |
Del Taco Franchise Cost: Conclusion
Mexican fast-food restaurants are in abundance, and there are both big and small names operating in the United States.
It’s a big market, and if you are interested in owning a Mexican fast-food restaurant through franchising, Del Taco is one of the good options. The brand has been operating since 1964 and has a strong franchise business model thanks to its years of experience.
The average annual sales for a Del Taco store is around $1.5 million and a net profit of $280,000. With a payback period of between 4 to 12 years, it presents itself as a good opportunity.
Whether you are a beginner or an experienced entrepreneur, Del Taco is a good choice as they have all the support you need and big opportunities to make money.
FAQ
How much is the Del Taco franchise fee?
The base franchise fee is $35,000 per store for Del Taco.
How can I apply to be a Del Taco franchise?
All you need to do to start your process is to fill in the form at Del Taco’s website for franchisees. Once you submit the form, a member of the Del Taco team will contact you to give you more information and submit your application.
Do I need management experience to be a Del Taco franchise?
It is not completely necessary, but having management experience, especially in the fast food sector, is a huge boost to your chances of getting approved.
Sources
https://www.sec.gov/Archives/edgar/data/1585583/000119312515244221/d44913dex108.htm
https://www.statista.com/statistics/528068/revenue-of-del-taco-restaurants/