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Jack in the Box Posts Upbeat Earnings

RESTAURANTS: QSR Leader to Open 25-30 New Outlets in 2023

San Diego-based Jack in the Box Inc. is cooking up a positive forecast for 2023.

As part of its fourth quarter earnings report, released Nov. 22, the company announced plans to open 25 to 30 new restaurants in 2023 – the first new locations since 2019.

Company officials also expect positive net unit growth next year, a sign that Jack’s growth strategies are beginning to take shape and drive results.

Darin Harris
CEO
Jack in the Box

“We are thrilled that, in just a short couple of years, Jack in the Box is expected to take its first major step in recognizing our growth potential by turning net unit growth positive for the first time in four years,” said CEO Darin Harris, who took the helm at the company in June 2020.

“Through rebuilding franchisee relationships, and pairing franchise and company resources to enter new markets in a position of strength, we are starting to see results – and I couldn’t be more excited about our future as a growth brand,” Harris said. “This is only the beginning.”

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Jack in the Box’s fiscal fourth-quarter earnings were mostly in line with analysts’ expectations, but the company did warn that higher commodity costs could weigh on profits in 2023.

In Q4, Jack in the Box’s same-store sales increased 4%. The company reported higher average check prices at both company-operated stores and franchise locations. Traffic also picked up at company-operated outlets while franchise locations logged a small decrease in customer traffic in the fourth quarter.

A total of 2,207 Jack in the Box restaurants were in operation in Q4 – 171 company-owned and 2,036 run by franchisees.

The company’s sister brand, Del Taco, which Jack in the Box formally purchased for $585 million in March 2022, had 594 locations operating in the fourth quarter of 2022 – 291 company-owned and 303 operated by franchisees.

Del Taco’s system-wide sales increased 4.2% in the fourth quarter while the brand saw a Q4 net decrease of three restaurants, with one company-operated store and two franchise locations closing.

Harris is upbeat about the fast casual restaurant company’s current positioning and future prospects. “I am very pleased with the momentum of our top line performance to close 2022, which we have seen continue into the first several weeks of Q1 and the consistency we showed throughout the year in driving sales and improving traffic, as we continue to remain careful on the price we are taking to maintain a consistent value equation for our guests,” he said.

“We continue to navigate operational headwinds,” Harris cautioned. “But Jack and Del Taco franchisees and operators showed their ability to be resilient and manage through them effectively all throughout 2022. While we continue to attack inflationary margins, our top line fundamentals, operational focus and expectations for positive net unit growth for Jack all demonstrate that 2023 will be a big year for our company – and another positive step in the transformation of the Jack brand.”

Along with the release of its Q4 earnings, the company also declared a cash dividend of 44 cents per share, to be paid to shareholders on Dec. 22.

Brand New Markets

In addition to restaurant growth within current core territories, Harris said Jack in the Box will also introduce the brand to customers in two brand new markets in 2023. Salt Lake City, an example of a market with strong familiarity and demand for the brand, will open in early 2023 with both franchise and company-owned locations. And Louisville, Kentucky, which the company called a “true ‘whitespace’ territory in a part of the country with less proximity to existing core territories,” will open later in the year.

Tim Linderman
Chief Development Officer
Jack in the Box

The expansion in 2023 will be key to Jack in the Box’s sustained growth, something that has eluded the brand in its recent history. Company officials hope the expansion will also “energize” franchisees to take similar models into more untapped territories in the future.

“We are very focused on ensuring the two new market openings in 2023 are successful for our brand, our franchisees, and most importantly, the guests we will be now serving in Salt Lake City and Louisville,” said Tim Linderman, Jack in the Box chief development officer. “Success in new markets will be key to building further excitement and momentum within our system, while gaining on our objective of having Jack in the Box operating in 40 states by 2030.”

Single-Year Record

Jack in the Box has signed 68 development agreements for a total of 267 new restaurants since officially launching its development program just over a year ago. One hundred and fifty five of those commitments were signed within the last 12 months – setting a single-year record.

In addition, Jack in the Box welcomed the first new franchisee in over a decade into its system, who recently signed development agreements to build 37 new restaurants in Baton Rouge, the Carolinas and Nashville.

David Beshay
Franchisee
Jack in the Box

“The long-term economic proposition of a Jack in the Box restaurant is creating a resurgence of demand for growth, and current and potential franchisees are taking notice,” stated a release issued by the company along with the Q4 report.

David Beshay, a longtime franchisee in the Jack in the Box system who is based in Temecula and operates 225 restaurants, shares the company’s optimistic outlook for 2023. “Jack in the Box franchisees are feeling as energized to grow as we have in many years,” Beshay said last week.

Founded and headquartered in San Diego, Jack in the Box (NASDAQ: JACK) operates across 21 states while Del Taco, the second largest Mexican-American QSR (quick-service restaurant) chain by units in the U.S., has locations in 15 states.

Jack in the Box

FOUNDED: 1951
CEO: Darin Harris
EMPLOYEES: 5,300
HEADQUARTERS: San Diego
REVENUE: $1.46 billion (FY 2022)
LOCATIONS: 2,200+
STOCK: JACK (NASDAQ)
WEBSITE: jackinthebox.com
NOTABLE: Jack in the Box has locations in 21 states. Its subsidiary, Del Taco, which Jack in the Box formally acquired in 2022 for $585 million has locations in 15 states.

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