Some restaurant chains have reputations that are hard to change.
Waffle House, for example, despite being a 24-hour, 7-days-a-week option for an affordable meal, has been lampooned on “Saturday Night Live” for the fights that sometimes happen there.
That’s not actually typical for the restaurant, but social media amplifies any incident that does happen, and the chain, which offers a classic, All-American menu, has to fight a negative perception.
Jack in the Box has a similar problem, but one caused by its menu. The chain 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,” Jack in the Box Chief Customer Officer Ryan Ostrom told QSR Magazine.
In the age of GLP-1 drugs, and the growing protein trend it has led to, being positioned as an indulgence brand has not helped Jack in the Box.
Still, the chain has been working to reset its brand perception and right-size its portfolio. That has resulted in roughly 70 closures since the chain shared its “Jack on Track” turnaround plan in April 2025. And more closures are coming before the end of 2026.
Jack on Track has not worked yet
Store closures under Jack on Track aim to stop locations from cannibalizing each other’s business. CFO Dawn Cooper talked about that during Jack in the Box’s first-quarter earnings call.
“Based on closures so far, we have generally seen a roughly 30% sales benefit to nearby restaurants,” she said, acknowledging that the company had hoped to have closed more locations. “This element of Jack on Track is moving a little slower than we would have expected as franchisees are evaluating lease dynamics and sales transfer benefits on a case-by-case basis.”
Despite her 30% sales benefit citation, the roughly 70 closures between the end of 2025 and the first half of 2026 have not pushed the chain to positive same-store sales.
“The second quarter same-store sales for Jack in the Box decreased 3.8%, comprised of a franchise restaurant same-store sales decrease of 3.9% and a company-owned same-store sales decrease of 2.8%. This resulted primarily from a decline in transactions, partially offset by menu price increases,” she said during the chain’s second-quarter earnings call.
That same-store number could improve if the chain completes the 150-200 restaurant closures cited in the Jack on Track plan.
“We do expect closures to accelerate in the back half of the year. In particular, as franchisees see the clear path to recapture sales, they have increased their desire to close earlier than their franchise agreement expiration,” Cooper said during the Q2 call.
Jack in the Box has an identity problem
Jack in the Box has struggled because its core offerings, which it describes in an SEC filing as “craveable favorites such as tacos, curly fries, egg rolls, specialty sandwiches and real ice cream shakes,” don’t match current trends.
Jack in the Box was where my college friends went for a second dinner after perhaps some alcohol was consumed. It’s a treat, like White Castle or Krispy Kreme, that may have to change how people perceive the brand in order to rebuild its audience.
That’s something that proven challenging, even for bigger brands.
A key Jack in the Box rival, McDonald’s has learned over the years that while it can change how customers perceive its pricing and its value, it can’t really change the underlying brand.
“McDonald’s added salads to menus across the U.S. in 1987…But despite various revamps, salads did little to drive sales,” Business Insider reported.
They came off the menu in 2021 when the chain also dropped all-day breakfast to simplify operations during the Covid pandemic.
“Even priced at $1, double cheeseburgers bring in more revenue than salads or the chicken sandwiches, which cost $3.19 to $4.29,” The New York Times reported in 2006.
At the 2024 WSJ Global Food Forum, McDonald’s USA President Joe Erlinger addressed the chain’s decision to drop salads, Food & Wine shared.
“You know, our founder famously said in 1970, ‘I don’t know what people are going to be eating in the year 2000, but we’re going to serve more of it than anybody else,’” Erlinger responded. “And so if people really want salads from McDonald’s, we will gladly relaunch salads. But what our experience has proven is, that’s not what the consumer is looking for from McDonald’s.”
Jack in the Box can embrace a key pivot
“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.
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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.
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Jack in the Box faces mounting financial pressure
“Jack in the Box has been in the fast food business for 75 years. Right now, it is fighting to make it to 76,” QSR PRO reported.
Responding to the chain’s second-quarter numbers, the analysts were blunt in their assessment.
“These are not the numbers of a chain managing a difficult cycle. They are the numbers of a chain in structural trouble,” they added.
Jack in the Box shared its debt picture.
“Our total debt outstanding at quarter end was $1.6 billion, and our net debt to adjusted EBITDA leverage ratio was 6.9x,” Cooper said during the Q2 call.
That’s the same as the figure the company cited at the end of Q1, but the leverage ratio was 6.5x in the earlier quarter.
Those levels are high based on traditional lending standards, according to Prencipe, which brokers the sale of privately held businesses.
- A leverage ratio of approximately 2.5x to 3x is viewed as healthy and typically financeable, assuming stable historical performance and no material diligence issues.
- Leverage above 4x is rarely bankable without meaningful structural support, such as additional equity, seller financing, or alternative capital.
“The debt reduction target is urgent. At 6x leverage, the company has almost no room to absorb further revenue deterioration without triggering lender concerns. Real estate sales provide a short-term liquidity injection, but the company does not own a large portion of its real estate relative to some peers, which limits how much capital that strategy can generate,” QSR Pro added.
Jack in the Box does plan to pay off more debt.
“We expect to sell additional real estate with proceeds of approximately $35 million to $45 million by the end of the fiscal year with the expectation that these proceeds, along with cash on hand would be utilized to pay down debt,” the CFO added.
S&P Global Ratings downgraded the company’s business risk profile to “weak” in March, citing ongoing sales declines and pressure on cash flow.
“The downgrades are based on the deteriorating operating conditions of Jack in the Box’s quick service restaurants, a weakening business risk profile (BRP), and decreasing securitization debt service coverage,” the company shared.
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