Jack in the Box to close 200 locations
Jack in the Box has announced plans to close approximately 200 underperforming locations to improve its financial stability. The San Diego-based fast-food chain has experienced consecutive losses over the past three quarters and aims to strengthen its balance sheet while maintaining investments in technology and restaurant renovations. CEO Lance Tucker stated that these actions are part of a broader strategy to achieve net unit growth and improve competitive economics. Alongside the closures, the company is contemplating the divestment of its del Taco brand. If the closure plan is executed, it will effect roughly 9% of Jack in the Box’s restaurants, primarily in California, which currently has the highest number of locations.
Jack in the Box to close 200 locations
Jack in the Box announced it will close as many as 200 “underperforming” restaurants in order to “strengthen its balance sheet.”
The San Diego-based chain has reported consecutive losses over the last three quarters. In addition to these most recently announced closures, the company plans to close an additional 1.5% to 2.0% during this fiscal year and 1% annually after that.
“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 re-image; 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,” Jack in the Box CEO Lance Tucker said in a statement on Wednesday.
Additionally, the company is considering divesting its Del Taco brand, which has 600 restaurants in 17 states.
Should the company decide to close 200 locations, it would represent 9% of the restaurants it operates in 22 states. California has the most with 373 and is likely to face the brunt of the closures.
The Washington Examiner reached out to Jack in the Box for comment.
Last year, California voters rejected Proposition 32, the first time they denied a wage raise in a state election. The state already has a $16 minimum wage and a $20 minimum wage for fast food workers. According to the research firm Employment Policies Institute, it was the effect of fast food workers’ wages that changed Californians’ minds.
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EPI surveyed restaurants following the fast food wage increase and reported that 98% had raised menu prices, 89% reduced employee hours, and 70% reduced staff or consolidated positions. These same respondents projected future increases in menu prices and decreases in employee hours and positions.
Companies including Safeway, Whole Foods, Macy’s, Sephora, Nordstrom, and Adidas closed at least one store in California or moved out entirely.
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