Dive Brief:
- Jack in the Box will close up to 120 restaurants due to underperformance by year’s end, the brand announced Wednesday. These cuts are part of a turnaround initiative called JACK on Track. The brand will close up to 80 more underperforming units in the coming years as their franchise agreements expire.
- Jack in the Box is also considering strategic alternatives for Del Taco, potentially including a sale. Jack acquired Del Taco for about $575 million in 2021.
- The announcement follows the appointment of former CFO Lance Tucker as CEO after the departure of Darrin Harris. Jack in the Box and Del Taco have struggled to generate same-store sales growth.
Dive Insight:
Jack in the Box said a majority of the impacted stores have been in its system for more than 30 years. The chain framed the closures as a way to help the struggling brand prepare for future unit growth.
“Upon completion of the program, Jack in the Box expects to deliver consistent, positive net unit growth, helped by the strong performance of new markets and tremendous whitespace opportunities,” the company said in an 8-K filed with the Securities and Exchange Commission.
However, the brand will also trim spending on company-owned restaurant development next year. Jack in the Box will continue its planned updates of existing restaurants, however.
This could force Jack in the Box to pull back on its expansion plans. Last year, the chain announced it would open eight company-operated restaurants in Chicago beginning in 2025.
The chain has managed to land major franchisee deals since relaunching its franchising program several years ago. These include a 37-unit, multi-market deal in December 2022, and a 15-store Georgia plan last summer. Jack in the Box has signed agreements for other whitespace markets, including the state of Michigan and Orlando, Florida.
The company is also selling some unspecified real estate holdings to improve its cash flow and pay down debt.
In the 8-K, Jack in the Box said that its fiscal second-quarter performance would include a 4.4% drop in Jack in the Box’s same-store sales, and a 3.6% decrease for Del Taco. Jack in the Box plans to close a net of seven stores in the second quarter.
