Observer Lite: 4/24/2025

Outside the box
Restaurant operator Jack in the Box (NASDAQ: JACK) pre-announced 2QFY2025 earnings and unveiled its new “Jack on Track” plan to improve long-term performance. The stock is down 56% over the trailing twelve months before a nearly 10% drop after hours.

Key points of management’s revised track include:
-Engaging BofA Securities to explore strategic alternatives for the Del Taco brand (which includes ~600 restaurants), including a potential divesture
-Selling a select number of its 170 owned real estate holdings (which are leased to franchisees) with proceeds directed toward leverage reduction; Management noted “cap rates for restaurant properties are in the low 5s [percent]”
-Closing 150-200 underperforming restaurants via a block closure program, most of which are franchised and three-decade-plus locations; 80-120 will close by 12/31/2025
-Separately closing the previously announced 35-40 of units in FY2025 with an ongoing annual closure rate of 1% thereafter (As of January 19, 2025, the company operated and franchised 2,190 Jack in the Box quick service restaurants)
-Discontinuing the dividend immediately
-Meaningfully reducing future development of company-owned restaurants

Adding lanes
Chipotle Mexican Grill (NYSE: CMG) opened 57 new restaurants during the first quarter ended March 31, 2025, of which 84% included a Chipotlane. The company expects to open 315 to 345 new restaurants during the fiscal year with at least 80% having a Chipotlane.

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