Jack in the Box plans to close approximately 10% of its locations and is exploring a sale of its Del Taco brand amid a broader overhaul of the fast food chain that is struggling as customers cut back on spending.

The 74-year-old chain announced Wednesday that it’s planning to close 150 to 200 “underperforming” locations, with 80 to 120 restaurants closing by the end of the year. Jack in the Box has about 2,200 restaurants, which are primarily located on the US West Coast.

The closures are aimed at “addressing our balance sheet to accelerate cash flow and pay down debt,” said Jack in the Box CEO Lance Tucker in a statement, with the chain hoping the pay off $300 million in debt over the next two years. He hopes the closures will lead to “consistent, net positive unit growth.”

It’s also exploring “strategic alternatives” for Del Taco, a Mexican-inspired chain that it bought just three years ago. However, the purchase has been beset with problems, Tucker revealed on a call with analysts, including rising inflation and tough competition from entrenched competitors, like Taco Bell.

“I don’t know that (Del Taco’s) results over the next several years are going to meaningfully contribute to Jack’s bottom line,” Tucker said, adding that it “makes sense to move them to another owner.”

Jack in the Box pre-announced its earnings, revealing that sales at Del Taco dropped 3.6% and it will no longer provide financial guidance as it explores a sale. Meanwhile, Jack in the Box sales dipped 4.4% in the second quarter of 2025.

Jack in the Box’s (JACK) struggles are reflected in its stock price, which has plunged 57% over the past year and is nearly 7% lower in premarket trading Thursday.

Other fast food chains are struggling, too, but not to the extent of Jack in the Box. Rivals like McDonald’s have reported a sluggish start to the year and Chipotle said this week it’s noticed a slowdown in spending. However, Taco Bell is forecasting an 8% surge in sales boosted by trending new menu items.