Jack in the Box to close 'underperforming' stores; eyes sale of Del Taco
Jack in the Box Inc. has unveiled a new business strategy under its new CEO.
The quick-serve restaurant company has introduced its “Jack on Track” plan, which includes closing 150 to 200 underperforming restaurants, the potential sale of its Del Taco brand, and prioritizing paying down its debt.
The company said the moves would "improve long-term financial performance across its restaurant system, strengthen its balance sheet, and demonstrate its commitment to running an asset-light business model."
"Our actions today focus on three main areas: addressing our balance sheet to accelerate cash flow and pay down debt, while preserving growth-oriented capital investments related to technology and restaurant reimage; closing underperforming restaurants to position ourselves for consistent net unit growth and competitive unit economics; and, an overall return to simplicity for the Jack in the Box business model and investor story," said Lance Tucker, who took the reins as CEO on March 31.
The chain said it will implement a "block closure" under which it will close 80 to 120 restaurants between now and the end of the year, with the remaining locations closing in 2026 based on the respective franchise agreement termination dates.
Beginning in 2026, Jack in the Box plans to "significantly" reduce its spend on company-owned new unit restaurant development, but will continue with planned improvements and reimages of its current restaurant base. For the current year, it expects 35 to 40 gross restaurant openings.
Del Taco
As part of its “Jack on Track” plan, the company has engaged Bank of America Securities to assist in the process of exploring strategic alternatives for the Del Taco brand, including a possible divestiture of the business. The quick-serve Mexican chain, founded in 1964, was acquired by Jack in the Box in March of 2022 for roughly $585 million.
In guidance for its fiscal year, which ends Sept. 28, the company suspended all forecasts for the Del Taco brand.
Additional highlights of the plan include the following:
- Accelerating cash flow by selling a select number of owned real estate holdings, with proceeds being directed towards debt paydown/leverage reduction;
- Discontinuing its dividend effective immediately and directing a majority of those funds toward debt paydown/leverage reduction, with the remainder directed toward share repurchases; and
- Continuing to invest in its evolving technologies and digital capabilities, aiming to enable growth through its digital sales channels.
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Based in San Diego, Jack in the Box operates approximately 2,200 Jack in the Box restaurants across 22 states, and approximately 600 Del Taco restaurants across 17 states.
