Jack In The Box Buys Del Taco In A Del Scorcho Deal

Like chocolate and peanut butter, two Southern California fast food brands have decided they taste better together. Jack in the Box announced on Monday it had bought Del Taco for a cool (ranch?) $575 million, reports the Los Angeles Times.

What's next? Popeye's Fried Chicken opening its first U.K. location? Oh, wait. That happened, too.

On the corporate, business-y side, the deal allows the combined companies "to increase profit margins through increased bulk-buying power and deliver $15 million in cost savings over the next two years," writes the L.A. Times. In layperson's shorthand, this new, larger fast food borg should be able to reduce its food costs by striking better deals. Economies of scale and whatnot.

Meanwhile, anecdotal reports say that cannabis lovers everywhere are rejoicing at the possibility of late-night runs to combo Jack in the Box/Del Taco drive-thrus. Why, yes, we would like an extra Del Scorcho packet for those curly fries.

The move comes as Jack in the Box emerges from a rough few years that saw franchisees issue a vote of no confidence in previous CEO Leonard Comma. Since taking over in the spring of 2020, current CEO Darrin Harris has made an effort to mend fences with franchise owners and is a pursuing an aggressive growth strategy for the brand.

Tacos are displayed on a table at a Del Taco restaurant in Fairfield, California on December 6, 2021.

(Justin Sullivan/Getty Images)

The first "Casa Del Taco" was opened in 1964 by Ed Hackbarth and David Jameson in Yermo, a small town in the Mojave Desert of San Bernardino County. The restaurant was a hit and it began expanding throughout Southern California. In 1973, the company shortened its name to Del Taco. Three years later, Hackbarth and Jameson sold their stake in the booming chain to a group of investors.

Del Taco now has approximately 600 locations spread across 15 states. Roughly half of them are franchises while the rest are owned and operated by the company. Most Del Taco restaurants are in California. The rest are spread throughout the western United States. The company is headquartered in Lake Forest in Orange County.

A Jack in the Box restaurant in San Rafael, California on December 6, 2021.

(Justin Sullivan/Getty Images)

Jack in the Box grew out of the Topsy's Drive-In chain, which Robert O. Peterson started in 1941 in San Diego. Topsy's featured circus-themed decor including drawings of a clown. In 1951, he converted the Topsy's on El Cajon Boulevard to a Jack in the Box. It became the first major chain to focus on the two-way intercom system and drive-through. In 1968, Peterson sold the company to Ralston Purina and the chain boomed during the 1970s.

Jack in the Box now has more than 2,200 locations in 21 states, mostly on the West Coast. Almost all of them, 93%, are owned by franchisees. It is still headquartered in San Diego.

Jack in the Box will pay $12.51 per share in cash for Del Taco, a 66% premium over the closing price for the fast-food chain's stock on Friday, reports the L.A. Times. The deal is expected to be completed early next year but must be approved by Del Taco shareholders. If it goes through, the company will have quick service restaurants in 25 states.