Jack in the Box to close up to 200 ‘underperforming’ stores – These are the stores and locations affected by the closure across the U.S.

Jack in the Box announced a few days back that it would close nearly 150 to 200 futuristic restaurants around the country. And the rest would be within the set geographical area. This gets a 74-year-old burger chain yet more of a shakeup. Although its locations huddle around 2,200, mostly located on the U.S. West Coast, such closures could approach 10 percent of its total footprint. According to the company, 80 to 120 of those will shut by 2025.

These closures are part of a complete financial overhaul intended to improve the company’s cash flow. “We’re taking decisive steps to address our balance sheet to accelerate cash flow and pay down debt,” CEO Lance Tucker stated in a press release.

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Closures to hit the West Coast hardest

Although a complete list of affected stores is not available yet, the closures are expected to be more concentrated in markets where Jack in the Box has a presence, that is, in California, Oregon, Washington, Arizona, and Nevada. Long before, these areas had become the main locations where customers could be found. On the other hand, most underperforming units can also be found in these areas.

Franchisees in areas with high rents or low traffic may also be disproportionately affected. Jack in the Box indicates it will work with those franchisees to help them through the process, such as staff reassignment and other available support.

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In addition to store closures, cleared by Del Taco brand

Aside from the store closures, Jack in the Box is also seriously considering disposing of the Del Taco brand, a Mexican-style fast food acquired by the chain in 2021. The CEO is very upfront regarding the troubles that this acquisition is experiencing due to the economic climate and fierce competition from bigger chains such as Taco Bell. 

“I don’t know that Del Taco’s results over the next several years are going to do much to contribute to Jack’s bottom line,” Tucker said on an earnings call. “It makes sense to move them to another owner.” Sales at Del Taco were revealed to have fallen by 3.6 percent during the last quarter, contributing to the decision to stop providing financial guidance on the brand while a possible sale is sought.

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Falling sales and stock prices reflect the downturn in fortunes

For its second quarter, Jack in the Box reported a drop of 4.4% in its own sales. The downward drift in revenues contributed to a 57% fall in the company’s stock since a year ago. On Thursday morning, trading in the premarket saw the stock drop by almost 7%.

In many ways, Jack in the Box and its financial woes shine starkly in the fast-food world, where consumer spending has slowed. Other high-end fast-food establishments, such as McDonald’s and Chipotle, have mentioned weaker demand this year but without resorting to layoffs in the magnitude of the cuts being made by Jack in the Box. According to those who deepen their pockets with Taco Bell dollars, its sales have picked up 8% on strong menu innovation. 

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Future plans

Jack in the Box is trying to pay down $300 million in debt and thus return to growth by closing underperforming stores and considering a sale of Del Taco. Tucker believes that this will set them on the path to “consistent, net positive unit growth” for the future. More detailed guidance regarding store closures is scheduled to be released in the weeks ahead.