The sixth-largest burger chain in the United States is embarking on a drastic wave of store closures, buckling under the pressure of skyrocketing beef prices and a customer base increasingly alienated by its pricing strategy.
A Turnaround Plan Struggling to Gain Traction
Jack In The Box, the 74-year-old fast-food institution with 2,168 restaurants concentrated in California, Arizona, and Texas, had already signalled deep trouble to its investors. The company warned it would shut between 80 and 120 underperforming locations by the end of this year in a bid to stem significant financial losses.
This closure programme is part of a broader strategy dubbed 'Jack on Track', unveiled by CEO Lance Tucker in April. The ambitious plan called for shuttering 150 to 200 restaurants between April 2025 and mid-2026. However, recent earnings reports indicate the company is far from meeting even its immediate targets. By May, 12 locations had closed, followed by another 13 by August. The company's November earnings revealed a further 47 closures, bringing the total to 72 for the year—still short of the minimum year-end goal with little time left.
Mounting Financial and Consumer Pressures
The famed purveyor of the Sourdough Jack and all-day breakfast is grappling with a perfect storm of challenges. Footfall is declining, core ingredient costs are climbing, and the chain is burdened with debt nearly six times its annual earnings. The last quarter alone saw Jack In The Box report a staggering net loss of $80.7 million.
Executives concede that price perception is a central issue. Customers no longer believe the chain offers good value for money, a sentiment worsened by recent changes to its Jack Pack loyalty scheme. The programme now awards one point for every $10 spent, a stark reduction from the previous rate of one point per dollar. This move sparked outrage online, with one Reddit user summarising the mood: "Nothing there is cheaper or better value. They only have 24h[ours] going for them."
In response, the chain has aggressively promoted value meals, such as a $4.99 burger combo and a $5 Smashed Jack sandwich. "Our value equation was not resonating," admitted CEO Lance Tucker in a November earnings call. "We moved swiftly to address that with more demonstrable value later in the quarter." Despite this, the company simultaneously had to raise prices to cope with a 6.9% increase in beef supplier costs.
The Costly Legacy of the Del Taco Deal
Further compounding the crisis is the fallout from a major acquisition. In 2022, Jack In The Box purchased the Mexican-inspired chain Del Taco for $585 million. The deal has proven disastrous. Last quarter, the brand was sold to a franchisee for a mere $115 million, crystallising a massive loss. This failed venture has left the parent company saddled with $1.7 billion in debt while it continues to burn cash.
Analysts like Nick Setyan of Mizuho Americas describe the chain as being in effective "survival mode." He attributes part of the crisis to aggressive pandemic-era price hikes, which customers tolerated while flush with stimulus money but have since rejected. "That worked for about two to three years," Setyan noted. "They were trying to drive a harder bargain than they probably should have."
With same-store sales falling 7.4% year-on-year—marking a second consecutive quarter of severe decline—the path to recovery for Jack In The Box appears steep. The planned closure of 150 to 200 locations now seems a necessary, if painful, step for the beleaguered burger chain.
