Jack in the Box is expected to shutter several restaurants in the coming days, as it works to meet the closure target outlined in its “JACK on Track” strategy earlier this year.
Early this year, the fast-food chain said it would be shutting between 150 and 200 locations under a block closure program, including 80 to 120 by December 31. According to Fox Business, Jack in the Box has closed 72 stores since the April announcement.
Newsweek contacted the company via email outside of regular hours for comment.
Why It Matters
The nearly 75-year-old franchise is one of several major chains that are in the process of shuttering stores, with Wendy’s, Denny’s and others also drastically scaling down their national footprint. This trend has extended beyond the fast-food industry, with brick-and-mortar businesses spanning pharmaceuticals and fashion likewise announcing mass closures amid declining sales, shifting consumer habits and a long-running period of strain for physical retail.
What To Know
In April, Jack in the Box unveiled its “JACK on Track” strategy, a long-term, “multifaceted” attempt to improve its financial performance and demonstrate the benefits of an “asset-light business model.”
In addition to outlet closures, the company said it would be selling off real estate, significantly cutting the amount spent on new restaurant development, and exploring the potential sale of Del Taco—which completed this week in a $119-million deal with multi-brand restaurant franchisee Yadav Enterprises Inc.
The strategy has been necessitated by a prolonged sales slump for Jack in the Box. In its full-year results, released in November, the company said same-store sales dropped 7.4 percent in the fourth quarter compared to a year prior, as annual sales fell 4.2 percent year over year.
Same-store sales show whether a retailer’s existing outlets are selling more or less than before, without counting sales from new or closed locations.
“While performance in the fourth quarter did not meet our expectations, we remain focused on restoring positive momentum for the Jack in the Box brand,” CEO Lance Tucker said in the release.
The company also said it had opened 15 restaurants and closed 47 during the final quarter, 38 of which were part of the “JACK on Track” program. For the full fiscal year, Jack in the Box said 86 restaurants had been closed and 31 opened.
What People Are Saying
CEO Lance Tucker, on announcing the company’s “JACK on Track” plan in April, said: “In my time thus far as CEO, I have worked quickly with our teams to conclude that Jack in the Box operates at its best, and maximizes shareholder return potential, within a simplified and 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.”
What Happens Next
For the current fiscal year, which ends September 27, Jack in the Box expects to open roughly 20 new restaurants, while closing around 50 to 100. Regarding financial performance, the company anticipates current headwinds persisting, but forecasts same-store sales remaining broadly flat compared to last year.
