In a surprising move, Jack in the Box announced this week that it would close 200 restaurant locations in addition to the possibility of dropping off Del Tacos, a chain they bought just three years ago.
The latest initiative by the San Diego-based fast food chain will allow the focus to be on the Jack in the Box brand, allowing the company’s new CEO, Ran Stacker, to lower the restaurant’s performance and ultimately raise cash to pay its $300 million debt.
The closure of dozens of locations is not yet announced, but will take place in stages in the first 80-120 locations to close by the end of the year. The company calls its new strategy: “Jack-on-Track.”
“We expect closing these restaurants will strengthen the overall economics of our franchisees, enhancing the dollar for free for reinvestment and allowing the system to focus on maximizing the performance of more powerful restaurants,” Tucker said in a Wednesday conference call with analysts and investors. “In short, we expect the program to better position Jack in the box in the future to gain more reliable, consistent, positive unit growth.”
Tucker didn’t indicate whether the Deltaco is officially on sale, but he said Jack in the Box is currently working with B’s B’s to explore a potential sale of B.
The decision to sell stores and Deltaco chains comes when fast food restaurants generally face many challenges, including higher wages in California, food inflation, and more recently, withdrawing spending by consumers facing economic uncertainty.
The new strategy effectively brings the jack in the box back to its roots when the focus is solely on the burger chain. I don’t own the Qdoba Fast-Casual Mexican brand I bought over 20 years ago and sold later. And it may soon be no Deltaco. Chain Purchase – $585 million – Closed in 2022.
“The problem is, I bought a Deltaco and paid a lot in the first place,” said John Gordon, a restaurant consultant in San Diego. “They wanted to be able to sell a lot of Deltaco company-owned stores, not just from the franchisees, but also from the Jack in the Box franchisees and from the Box in the Box franchisees who buy Deltacos stores.
Gordon said he and others estimate Jack in the Box overpayments for Deltacos at $200 million to $300 million.
Sales for both brands struggled in the previous quarter, which ended April 13, according to the latest financial figures released by the company this week. They fell 4.4% in box jacks and 3.6% in Deltaco. Overall, the Box Store has 2,191 Jacks, most of which are franchises. The most concentrated locations are in California and Texas, 103 of which are in San Diego County, with two venues at the airport and Petco Park.
There are nearly 600 Deltacos restaurants, with more than half in California.
When explaining the Delta Cos sales movement, Tucker made sure not to take responsibility for the chain itself.
“I think you appreciate the Deltacos brand, and I think it can flourish,” he told analysts. “I think it needs to be in the situation… if we need to focus on our own core business. It makes much more sense to simplify our model, and they can move forward, and on top of that, they don’t know that the outcomes over the next few years will contribute meaningfully to Jack’s final line.
He also admitted that the timing of purchases was not very good, requiring a minimum wage of $20 for fast food workers about a year before the new law was passed. Last year, new hourly wages came into effect.
Gordon noted that the latest decision was undoubtedly driven in part by the looming debt. He said the company faces repayment of its secured notes of over $500 million by February 2027.
“What scares the board is that they’re thinking. “Normally, restaurants don’t like to close units, but now the situation is much more serious. They now need to make system modifications so the system base can be improved later and it can be in better shape.”
Jack in the Box stock closed at $23.96 per share on Thursday, down $1.45 or 5.72%. Stocks have fallen nearly 60% over the past year.
Original issue: April 28, 2025, 4:02 PM EDT
