Del Taco expands into Indiana with 10 new locations

LAKE FOREST, Calif. - Del Taco, recognized as the second-largest Mexican quick-service restaurant chain in the U.S., has announced a 10-unit franchise agreement to expand into the Indiana market. The new development, targeting areas such as Bloomington, Bedford, Columbus (WA:CLC), Greenwood, Plainfield, and Avon, represents the brand’s 12th new market entry in the past three years. Parent company Jack in the Box Inc. (NASDAQ:JACK) shows promising growth potential, with InvestingPro analysts forecasting positive net income for this fiscal year despite recent challenges.

The franchisee group entering the Indianapolis Designated Market Area (DMA) brings a varied set of skills, including real estate, finance, insurance, human resources, sales, and marketing, with a strong background in commercial real estate. Their expertise in land acquisition, deal negotiation, and construction project management was key to their selection as franchise partners with Del Taco. This expansion comes as Jack in the Box maintains a steady 4.3% dividend yield and has consistently paid dividends for 11 consecutive years, according to InvestingPro data.

Van Ingram, Del Taco’s vice president of franchise development, expressed enthusiasm about the new partnership. "Their passion for the brand and business acumen are exactly what we look for when bringing on a new franchisee," Ingram stated, expressing confidence in the group’s potential to succeed in the local market.

Cole Sinclair, a member of the new franchise group, cited Del Taco’s position as a top emerging fast-food brand and its adaptable location requirements as major factors in their decision to franchise. Sinclair highlighted the brand’s strong recognition, unique menu offerings, and loyal customer base as advantages for their venture into southern and central Indiana.

Del Taco has been recognized for its menu that combines Mexican and American favorites, made with quality ingredients like freshly grilled chicken, house-made guacamole, and slow-cooked beans. The brand was also voted Best Fast Food Restaurant in USA Today’s 2024 10 Best Reader’s Choice Awards.

The expansion into Indiana is part of Del Taco’s broader growth strategy, with franchise opportunities available in the Midwest and other regions across the country. Founded in 1964, Del Taco serves over three million guests weekly at nearly 600 locations in 17 states.

This news is based on a press release statement from Del Taco.

In other recent news, Jack in the Box has been the subject of several analyst adjustments following its recent earnings report and strategic developments. Stifel has revised its 12-month price target for the fast-food chain to $52.00, citing concerns about increased expenses and pressure on restaurant margins. In contrast, TD Cowen has maintained its $50.00 target, acknowledging potential challenges such as competitive pressure from other fast-food chains.

RBC Capital Markets has also adjusted its outlook, reducing the price target from $70.00 to $65.00, while maintaining an Outperform rating. Despite lower-than-anticipated financial results, RBC Capital highlighted positive factors such as strong performance in new markets and stable franchisee profitability.

On the downside, Goldman Sachs has reduced its price target to $43.00, keeping a Sell rating due to weak sales and margin pressures. Despite surpassing consensus estimates for its fourth-quarter earnings, Jack in the Box’s total revenue fell short of expectations.

These adjustments come in the wake of Jack in the Box’s earnings call, where the company outlined its strategy amid economic challenges. Despite a decline in same-store sales and consolidated adjusted EBITDA, the company highlighted strides in digital expansion, new market penetration, and restaurant development. The company’s forward-looking strategy includes a focus on digital transformation and operational improvements.

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