Jack in the Box announced Thursday that it will sell Del Taco to franchisee Yadav Enterprises for $115 million.

The burger giant will use money from the transaction to pay off debt. The move, which is expected to close by January 2026, will also allow Jack in the Box to focus on its core business.

The chain paid $585 million to buy Del Taco in 2022.

“This divestiture is an important step in returning to simplicity, and we look forward to focusing on our core Jack in the Box brand, CEO Lance Tucker said in a statement. “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. We wish Del Taco success as they enter this next chapter.”

Yadav Enterprises operates more than 310 franchise restaurants across brands like Jack in the Box, Denny’s, and TGI Fridays. It’s also the owner of 150-unit Taco Cabana, which it bought for $85 million in 2021, and 90-unit fast casual Nick the Greek, which is acquired in 2022.

Jack in the Box first signaled its intention to sell Del Taco in April when it unveiled the “JACK on Track” strategy, which also calls for 150 to 200 store closures, suspending its dividend, and selling real estate. One major goal is to pay down at least $300 million in debt over the next year and a half.

This is the second time in the past decade that Jack in the Box has parted ways with a concept. In 2017, the chain agreed to sell 700-unit QDOBA to Apollo Global Management for $305 million.

Del Taco’s same-store sales decreased 2.6 percent in Q3, comprised of a franchise comps decline of 2.7 percent and a company-operated comps dip of 2.2 percent. The negative sales were the result of a drop in transactions and mix, partially offset by an increase in price. Systemwide sales for Q3 lowered 4.7 percent.

The Mexican chain finished Q3 with 585 restaurants systemwide. There are 132 company-owned and 453 franchised restaurants. A news release on Thursday said there were more than 550 locations.

The transaction marks yet another major M&A move by a franchisee. In July, Friendly’s franchisee Amol Kohli purchased parent company BRIX Holdings, and more recently, large franchisee operator Sun Holdings acquired Bar Louie out of bankruptcy.

Author: Staff Writer | Courtesy of “Forbes” | Edited for WTFwire.com | SOURCE: QSR Magazine.