Jack in the Box Closing Up to 200 Locations

The company intends to sell some of its real estate and stop issuing dividends.

Jack in the Box restaurant in Antioch, Calif., as seen on April 6, 2024. Travis Gillmore/The Epoch Times

Restaurant chain Jack in the Box Inc. will shut down hundreds of outlets, and is also looking at potentially selling off its Del Taco brand of stores, the company said in an April 23 statement.

“Jack in the Box will implement a block closure program, which is projected to result in the closure of approximately 150–200 underperforming restaurants—a majority of which have been in the [restaurant] system for over three decades,” said the company.

“The program will consist of approximately 80–120 restaurant closures between now and 12/31/2025, with the remaining underperforming restaurants closing thereafter based upon respective franchise agreement termination dates.”

Once the program is completed, the company expects to deliver “consistent, positive net unit growth.”

Jack in the Box, headquartered in San Diego, California, operates around 2,200 restaurants across 22 states under this name and around 600 restaurants in 17 states under the Del Taco brand.

These shutdowns do not include the expected 1.5–2.0 percent restaurant outlet closures for fiscal year 2025 and a 1 percent annual closure rate beginning the following year.

The closure of 150–200 stores is part of the company’s “JACK on Track” plan aimed at boosting the restaurant’s long-term financial performance.

This includes measures such as selling certain real estate holdings to pay down debts, discontinuing dividend payments to use the majority of these funds for debt payments, and “significantly” reducing spending on new restaurant development starting next year.

The measures are expected to strengthen the company’s balance sheet and ensure “sustainable growth in the coming years,” said the restaurant.

The company has hired Bank of America Securities to explore “strategic alternatives” for its Del Taco brand of restaurants, including divesting the business. Del Taco is the second-largest Mexican-American quick-service restaurant chain in the United States in terms of operating units.

“Jack in the Box operates at its best, and maximizes shareholder return potential, within a simplified and asset-light business model,” said Lance Tucker, the recently named CEO of the company. He said the recent actions focus on three main areas.

First is “addressing our balance sheet to accelerate cash flow and pay down debt.” The second is to close “underperforming restaurants to position ourselves for consistent net unit growth and competitive unit economics.” And the third is to ensure an “overall return to simplicity for the Jack in the Box business model and investor story.”

Restaurants Pressured, Positive Outlook

Jack in the Box’s store closures come as multiple restaurants have shut stores or filed for bankruptcy over the past year.

In an Aug. 27, 2024, filing with the Securities and Exchange Commission, burger chain Shake Shack revealed the closure of nine locations, citing underperformance.

Earlier in February last year, the parent company of restaurant chain Outback Steakhouse announced the shuttering of 41 underperforming locations.

Last month, restaurant chain On the Border filed for bankruptcy after labor costs, inflation, and other factors weighed down on the company’s finances. In August 2024, Italian dining brand Buca di Beppo filed for bankruptcy.

In a Feb. 6 statement, the National Restaurant Association said many operators face similar challenges in 2025 as they did last year.

“Rising labor and food costs, along with the ongoing struggle to recruit and retain employees, remain among the top concerns for both full-service and limited-service operators,” said the association, based on various surveys.

Despite these challenges, operators were “cautiously optimistic” about business conditions, with over eight in 10 saying they expect sales this year to be higher or roughly the same as in 2024.

“The majority of operators say increasing traffic on-site and getting diners back in their seats will be more important to their restaurant’s success in 2025.”

The industry is projected to hit $1.5 trillion in sales this year, adding over 200,000 new net jobs, which would bring the country’s total restaurant and foodservice employment to 15.9 million individuals. The restaurant sector is expected to remain the second-largest private-sector employer in the United States.

“The fundamentals of the restaurant industry are strong, and operators are optimistic about the year ahead,” said Michelle Korsmo, president of the association. “Industry sales are expected to grow more than four percent this year.”

“That growth will come from restaurant operators finding the balance of value and experience for consumers, and innovating breakthrough efficiency in their operations.”