Serial investor Sardar Biglari—who has attempted to take control of Cracker Barrel and El Pollo Loco within the past year—has a new target: Jack in the Box.
Biglari Capital Corp., the owner of Steak ‘n Shake and Western Sizzlin’, privately informed Jack that it owns 9.9 percent of shares and that it plans to increase its stake.
In response, the Jack in the Box Board of Directors unanimously adopted a limited-duration stockholder rights plan, effective immediately.
The move, often referred to as a poison pill, is a defense mechanism used to prevent or discourage a hostile takeover. If an unwanted party (like an activist investor or potential acquirer, i.e. Biglari in this case) accumulates a large percentage of shares, the plan triggers, allowing other shareholders to buy more shares at a discount. This dilutes the ownership of the acquiring party, making a takeover more expensive or impractical. In Jack’s case, the plan triggers when someone reaches share ownership of 12.5 percent or more.
Biglari’s move comes amid the burger giant’s “JACK on Track” plan, which involves the closure of 150 to 200 underperforming restaurants, moving on from Del Taco, and selling real estate and suspending its dividend to pay down debt.
“Jack in the Box’s Board is committed to protecting our stockholders and remains confident in management’s ability to execute the Company’s “JACK on Track” plan to improve long-term financial performance across its restaurant system, strengthen its balance sheet and transition to an asset-light business model,” David L. Goebel, Jack’s independent chairman, said in a statement. “The adoption of this Rights Plan is intended to provide the Company with adequate time to execute this plan and ensure stockholders are able to realize the full potential of their investment in the Company.”
Jack’s same-store sales declined 4.4 percent in Q2, comprising a 4.5 percent decrease for franchises and a 4.4 percent dip for corporate restaurants. The result included a decrease in transactions and negative mix, partially offset by increases in menu price. Restaurant-level margin decreased to 19.6 percent, down from 23.6 percent a year ago, driven primarily by lower sales, continued inflation for commodities, wages, and utilities, as well as higher operating costs, partially offset by price increases and favorable beverage funding.
Biglari is no stranger to controversy. Three months ago, Biglari Capital Corp.—which owned 15.1 percent of El Pollo Loco at the time—sent an unsolicited, non-binding indication of interest to buy the company. But that’s not where the relationship started. In 2023, similar to Jack in the Box, El Pollo Loco’s board unanimously adopted a limited-duration shareholder rights plan in direct response to Biglari’s growing stake in the company. At the time, Biglari Capital had acquired more than 12 percent of El Pollo Loco’s outstanding shares.
Independent of Biglari, CapitalSpring announced a $14.7 million investment in El Pollo Loco in June, signaling that the fast casual may go in a different direction.
Biglari has most notably fought for more influence with Cracker Barrel. He lost another attempt to gain a seat on the board last year. It was his seventh proxy contest in 13 years.
Meanwhile, Biglari’s own restaurant concepts have struggled. Steak ‘n Shake has shed 200 units since its peak of 626 restaurants in 2018. Although same-store sales were positive in Q1, customer traffic was negative at company-operated stores. Western Sizzlin’s revenue fell 7.9 percent in the first quarter.
