Jack in the Box, facing a franchisee revolt after years of changes to its business model, is up for sale after the company said Monday that it is exploring strategic alternatives.
The decision comes just a year after the San Diego-based chain sold off its fast-casual burrito chain, Qdoba Mexican Eats.
Jack in the Box, which operates more than 2,200 fast-food restaurants, said it has had discussions with potential buyers, but “there can be no assurance that the exploration of strategic alternatives will result in a transaction.”
If the company cannot find a buyer, it said it would consider plans to increase its debt levels.
Reports in November had suggested that Jack in the Box was exploring a potential sale. If it does ultimately get sold, it would join a long list of publicly traded restaurant chains that have turned to private buyers recently.
Just this year, Fogo de Chao, Sonic Corp. and Zoes Kitchen have gone private. Bojangles’ Famous Chicken ‘n Biscuits has a deal with a pair of investment firms. Papa Murphy’s is for sale and so is Papa John’s.
Jack in the Box stock was up 5% in premarket trading Monday.
Going into morning trading, the company’s stock had been down nearly 20% year to date following the Qdoba sale and as the chain has struggled to generate sales growth.
Same-store sales rose just 0.5% in the company’s fiscal fourth quarter, and Jack in the Box turned to more discounts to win over customers.
Franchisees, meanwhile, are staging an open revolt. They filed a lawsuit against the company and have called upon Jack in the Box to replace CEO Lenny Comma. And they asked for seats on the company’s board of directors.
“Franchisees are essentially looking for performance to improve,” Comma said last month. “That’s the driving force behind what you see publicly.”
The company, which at one point was 80% company owned, is now mostly franchised after years of selling its restaurants to operators.