Jack in the Box Inc. plans to close 40 underperforming corporate stores across seven states, mostly in the Southeast and Texas, by next week.
The restaurants were not meeting acceptable levels of return on investment and other key operating performance metrics, the company said in a statement Wednesday. They are scheduled to close before the end of the company’s fiscal year, which is Oct. 3.
"These restaurant closures are expected to have a positive impact on our future earnings, cash flow and return on invested capital," said Linda Lang, Jack in the Box's chairman, chief executive and president. "The decision to close underperforming restaurants reflects the company’s commitment to disciplined capital allocation and to ensuring we are maximizing both our physical assets and people resources.”
The company said it expects the closures will result in pre-tax impairment charges of $8.5 million to $9.5 million in the fourth quarter, and about $21 million to $25 million in lease-related costs.
Jack in the Box has blamed continuing high unemployment for declining sales at its flagship brand. At corporate stores, same-store sales fell more than 9 percent for the third quarter ended July 4.
The Jack in the Box chain includes more than 2,200 locations in 18 states, and the company has been selling corporate units in an ongoing refranchising program. In the third quarter, Jack in the Box said it had reached a milestone of becoming more than 50 percent franchise owned. The goal is to increase franchise ownership to 70 to 80 percent by the end of fiscal 2013.
San Diego-based Jack in the Box Inc. also operates and franchises more than 500 Qdoba Mexican Grill restaurants in 43 states and the District of Columbia.
Contact Lisa Jennings at [email protected].