Just because you close a business does not mean its expenses end.
In many cases, severance is either legally mandated or agreed upon in contracts with employees. You also have vendor bills, and of course, if you have a long-term lease, that obligation does not terminate just because the business has closed.
To put this in layman’s terms, if you rent an apartment and sign a two-year lease, you can’t move out in a year and stop paying. You still have that bill whether or not you live there.
In the case of Jack in the Box, the struggling restaurant chain announced plans to close 150-200 restaurants in April, 2025, when it introduced its “Jack on Track” plan. The chain has begun those shutdowns, but the closures are not happening as fast as expected, and you can blame lease obligations, according to management.
Jack in the Box explains shutdown plans
CFO Dawn Cooper explained where the company’s shutdown plans stand during its third-quarter earnings call.
“We have closed 40 restaurants year-to-date and expect to close an additional 10 to 20 during the fourth quarter,” she said.
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That’s behind where the company expected to be.
“While closures have occurred a bit slower than we had anticipated, franchisees have increased their willingness to close ahead of franchise agreement expiration to focus on higher-performing restaurants and improve margins of their portfolio,” she added.
Leases, however, have delayed some locations from closing.
“We’ve said that the closures have occurred at a slower pace than we had expected, and that’s due to the lease obligation that remains once the restaurant is closed. Sometimes that burden is more than the loss they incur for operating the restaurant,” she shared.
Jack in the Box, however, is taking steps to speed up the process.
“That being said, we have hired a third-party firm to work with us on exiting the leases. They are currently working through the list of restaurants, prioritizing, and are up and running,” she added. “So we do expect that the closure rate will accelerate.”
Hopper also said more restaurants would likely close, but the company was still evaluating, since Jack in the Box has reported same-store losses for four additional quarters since Jack on Track was announced.
“I think the restaurants that we didn’t close in ’26, you can expect to carry forward into ’27, and I would expect elevated closures to continue into ’28,” she shared.
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Jack in the Box has a perception problem
In college, we went to Jack in the Box as a late-night indulgence. It was a fourth meal or a splurge, much like Taco Bell, and the chain has leaned into that over the years.
Jack in the Box has a problem caused by its menu and marketing history. The restaurant brand has, over the years, leaned into the idea of offering decadent food. It has also emphasized its late-night operating hours.
The chain, for example, offered “Snoop’s Munchie Meal,” a limited-time offer that made a not-so-subtle nod to people eating indulgently after smoking marijuana.
“Late at night, indulgence is key, so we focus on bringing back fan-favorite items at just the right moments — like Monster Tacos during Halloween — to create excitement and give our guests something to look forward to,” former Jack in the Box Chief Customer Officer Ryan Ostrom told QSR Magazine.
That perception may be a drag on the brand in the current GLP-1 era.
“You cannot force a customer to see Jack in the Box as not being a guilty pleasure,” RTMNexus CEO Dominick Miserandino told TheStreet.
He thinks the chain can lean into its reputation and give consumers what they want.
“Today’s consumer wants real food and high protein, even when they are pulling into a drive-thru late at night after a few drinks. They should be launching ultra-premium, high-protein versions of their classic tacos, or adding real, whole-muscle chicken strips to their midnight menu,” he said.
It’s a subtle but meaningful change that celebrates the brand’s history while embracing current trends.
“By making the late-night indulgence feel higher quality and more filling, they give the consumer a reason to justify the trip without alienating the loyal audience that built the brand,” he added.
Related: 66-year-old discount retailer closes hundreds of stores
