First Jack in the Box, now Starbucks: what is even happening to fast food sector?

NEW YORK: Two major American food and beverage brands, Starbucks and Jack in the Box, are significantly scaling back their physical footprints, highlighting broader pressures facing the retail and restaurant industry amid shifting consumer habits and rising costs.

Starbucks has announced plans to close roughly 400 US stores by 2026 as part of a sweeping restructuring effort. The coffee giant is pulling back from its earlier strategy of dense expansion in major urban centers such as New York, Los Angeles, and Chicago. The closures are part of a $1 billion overhaul that also includes the layoff of about 900 corporate employees.

Company officials said the shuttered outlets were either underperforming or unable to meet brand standards, while the company continues to invest in select new locations. Media reports indicate that dozens of stores have already closed in large cities, including New York City, Los Angeles, San Francisco, and Chicago. Analysts point to increased competition from independent cafés, the growth of drive-through-focused chains, and population shifts away from city centers since the Covid-19 pandemic. Starbucks’ stock has fallen this year, and same-store sales have shown a sustained decline.

The retrenchment comes amid similar turbulence in the fast-food sector. Jack in the Box, a burger chain with a 75-year history, has closed 72 locations in recent months as it struggles with falling sales, rising costs, and heavy debt. The company operates about 2,200 restaurants nationwide but has acknowledged that many are no longer financially viable.

Earlier this year, Jack in the Box unveiled a cost-cutting plan to shut down 150 to 200 underperforming outlets by 2026, with most closures targeted before the end of 2025. Locations in states such as California, Texas, and Arizona have been among the hardest hit. Financial disclosures show the company posted a net loss of $80.7 million for the fiscal year ending in September, while fourth-quarter sales dropped 7.4 per cent, marking a second straight quarterly decline.

CEO Lance Tucker said the closures are part of a broader effort to simplify operations, reduce debt, and refocus on long-term growth. As part of that strategy, the company recently sold Del Taco for $119 million, aiming to streamline its business and concentrate on reviving its core brand.

The parallel downsising by Starbucks and Jack in the Box underscores the challenges facing even well-established brands as consumers change where, and how, they spend. With more closures expected in the coming months, industry watchers say the shake-up may signal a longer-term reset for US retail and dining chains.

Web Desk