Jack in the Box has announced its decision to close between 150 to 200 of its restaurants as a strategy to enhance the company’s financial performance. This was disclosed on Wednesday with the company identifying the targeted establishments as “underperforming” and many being several decades old.
Lance Tucker, CEO of Jack in the Box, outlined the company’s focus on three key areas: improving the balance sheet to boost cash flow and reduce debt while maintaining growth-oriented capital investments in technology and restaurant redesigns, closing underperforming locations to ensure consistent net unit growth and competitive unit economics, and simplifying the Jack in the Box business model and investor narrative.
The plan involves closing approximately 80 to 120 restaurants by the end of the year, while the remaining locations will cease operations following the termination of their franchise agreements. This initiative does not encompass the anticipated 1.5% to 2.0% system unit closures forecasted for the fiscal year 2025, nor the projected ongoing annual closure rate of about 1% from fiscal year 2026 onward. Following the closure of these underperforming units, the company expects a consistent positive net unit growth.
This closure plan is a component of the “JACK on Track” initiative, which Jack in the Box has introduced. The strategy aims to facilitate sustainable growth over the coming years through improvements in financial performance and the balance sheet. Additionally, the company is considering strategic alternatives, including possible divestment, for its Del Taco brand, which it acquired in 2022.
Currently, Jack in the Box operates roughly 2,200 of its namesake restaurants alongside 600 Del Taco establishments. Preliminary reports indicate a 4.4% decline in same-store sales for Jack in the Box during the second quarter, with Del Taco experiencing a 3.6% drop. Final financial results for the second quarter are due for release in mid-May.
Looking ahead to the fiscal year 2025, Jack in the Box has projected operating earnings per share between $5.05 and $5.40, not accounting for the impacts of the JACK on Track initiative. Additionally, the company anticipates a “low-to-mid-single digits” decline in same-store sales for its namesake business compared to the previous fiscal year.
In late March, Lance Tucker assumed the role of permanent CEO of Jack in the Box, having previously served as interim CEO following the departure of former CEO Darin Harris, who left the company in late February for a position outside the restaurant industry.