After a difficult year with declining sales, dropping margins, growing expenses, and high debt, the 75-year-old fast-food chain Jack in the Box is hurrying to stabilize its operations. Wanting to avoid further problems, the company has shifted to cash conservation, selling assets, and closing weaker restaurants.
In Q4, sales dropped 7.4%, revenue dropped 6.6%, and restaurant-level margins dropped to 16.1% because of rising wages and inflation.
The company acknowledges that 2026 will be a rebuilding phase. “While we are pleased with our progress on our Jack on Track initiatives, we are clearly not satisfied with our 2025 operating performance, and we are rebuilding our operational discipline to drive growth and shareholder value in 2026 and well beyond.” CEO Lance Tucker stated.
Why spending downturns hurt some chains more
Changing consumer behavior is a big obstacle outside the kitchen. Brands without strong brand loyalty are the first to feel the effects of budget cuts. Ipsos data shows the pressure on diners with lower incomes: According to Wendy Wallner of Ipsos, “over 40% of low-income U.S. adults claim to be visiting quick-service restaurants (QSRs) less often for dinner and lunch than at the start of this year.”
According to the study, “in comparison, just 30% of those earning over $100k say they’re eating less fast food, suggesting that this downturn can be more strongly attributed to flagging consumer confidence than to GLP-1 drugs or shifting tastes — at least for the time being.” Chains are not equally affected by that mood. “2024 will be known in part for price and value wars in both QSR and grocery as these sectors fight over value-seeking customers.” Wallner summarized.
The turnaround playbook: Simplicity, debt, and closures
The company is prioritizing cash flow, debt reduction, and operational focus. One financial—and emotional—reset happened when Del Taco was sold for $115 million, which was far less than the over $575 million paid in 2022. “This divestiture is an important step in returning to simplicity, and we look forward to focusing on our core Jack in the Box brand.” Tucker stated when describing the move. “After a robust process, we are confident we have entered into a transaction with the right steward for Del Taco in its next chapter of evolution.” he continued, following an exhaustive procedure.
“The burger giant will use money from the transaction to pay off debt. The move, which is expected to close by January 2026, will also allow Jack in the Box to focus on its core business.” According to QSR Magazine.
The “Jack on Track” strategy’s key element is a tough love approach to the store base. “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.” Tucker stated. This would mean a block closure program for about 150–200 underperforming restaurants, the majority of which are older than thirty years.
Between now and December 31, 2025, the company expects “approximately 80–120 restaurant closures… with the remaining underperforming restaurants closing thereafter based upon respective franchise agreement termination dates.” This is in addition to the normal yearly loss of units.
Jack in the Box is not giving up
There are still some problems: $1.7 billion in debt, six times leverage, and a paydown emphasis under “Jack on Track.” Cash conservation, debt repayment, closing weak performers, and unit growth are the strategies.
However, it’s not over yet. Jack in the Box will continue on its path to regaining value and confidence with disciplined execution.