Del Taco was falling behind on payments to suppliers, according to Creditsafe. | Photo: Shutterstock.
Del Taco’s sale to the franchisee Yadav Enterprises came as the chain was increasingly falling behind on its bills, according to business credit monitoring company Creditsafe.
The Mexican fast-food chain paid its suppliers an average of 43 to 51 days late, including 51 as of August. By comparison, industry average is 9 to 13 days late.
The data indicates that the chain’s financial condition was growing increasingly precarious this year as its sales declined, pointing to declining liquidity and cash flow. Del Taco’s same-store sales declined each of the past six quarters. That prompted parent company Jack in the Box, which has had mounting sales challenges of its own, to put Del Taco on the market.
The $115 million in cash for which Yadav will pay for Del Taco represents an 80% decline in value since Jack in the Box bought the chain in 2021—though Jack in the Box did derive some value from the sale of company stores to franchisees.
Creditsafe said the late payments suggest that Del Taco has liquidity or cash constraints. But the company in an email denied it had such issues, saying that it has $100 million in free cash flow. The company also said there is “no data to suggest financial instability.”
It also explains the potentially precarious position more chains could find themselves in as the restaurant environment weakens. Restaurant chains are struggling to generate traffic, and more of that traffic is coming on some kind of deal.
In addition, fast-food restaurant chains in California, where many of Del Taco’s restaurants are located, require operators to pay at least $20 an hour, a dramatic increase from previous requirements.
While Del Taco has sold off many of its restaurants to franchisees, it still operates 117 of its nearly 600 locations. That gives it more exposure to the profitability challenges associated with a deal-heavy, high-cost environment.
According to Creditsafe, Del Taco was doing fine paying its bills late last year, but that worsened as the calendar turned to 2025.
In December, for instance, just 0.26% of Del Taco’s bills were 61 to 90 days late. By January, that jumped to 8.11%.
By July, nearly a quarter of the chain’s bills were overdue by 91 or more days. Jack in the Box executives have said that Del Taco would not likely contribute “meaningfully” to its bottom line.
Jack in the Box’s flagship chain has challenges of its own, as same-store sales declined 7.1% last quarter and the company intensified its value offerings in response to competitive pressure from McDonald’s and other chains.
UPDATE: This story has been updated to add Del Taco’s response and to remove a reference to liquidity issues in the deck.
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Restaurant Business Editor-in-Chief Jonathan Maze is a longtime industry journalist who writes about restaurant finance, mergers and acquisitions and the economy, with a particular focus on quick-service restaurants.
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