Revenue at Jack in the Box Touches $1.7B

Jack in the Box Inc. (NASDAQ: JACK), the San Diego-based operator and franchisor of quick service restaurants, finished its fiscal year on Oct. 1 with nearly $1.7 billion in revenue, up from $1.47 billion the previous year. The company, which added the Del Taco chain to its business nearly two years ago, released its financial results on Nov. 21.

The earnings report brought positive news from its expansion efforts. Four Jack in the Box restaurants opened within the past few months in new territories – Salt Lake City and Louisville, Kentucky – averaged more than $100,000 in weekly sales per restaurant, the company said.

Sustained performance at that level would put the stores at $5.2 million per year, far ahead of the $1.8 million in average unit volume for a Jack in the Box store.

“We have developed a strong playbook for how to best open and sustain new market entry,” Tim Linderman, chief development officer, said in a prepared statement.

The executive said Jack in the Box was looking for “whitespace growth” as well as backfilling its current markets. Jack in the Box has a presence in 22 states. Del Taco is in 16 states.

CEO Darin Harris told analysts on a conference call that the expansion playbook includes how to build awareness, both before and after arrival in a market. Also covered is how to ramp up digital sales and one of Jack in the Box’s specialties: late-night sales.

The company noted that all new Jack in the Box restaurants opened in fiscal 2023, aside from Salt Lake City and Louisville, averaged $2 million in average unit volume throughout the year.

New Store Commitments

More stores are on their way. The corporation said on Nov. 21 that during the just completed fiscal year, it signed 123 new commitments for Jack in the Box restaurants and 138 new commitments for Del Taco restaurants.

“We’ve been on an incredible roll since our development program started in 2021, and our 2023 results demonstrated that our momentum has continued,” Linderman said.

During an investor call, Harris told an analyst that 15 locations should be open in Salt Lake City by the end of fiscal 2025, and five in Louisville.

The company’s expansion plans for 2024 include opening stores in northern Mexico; those plans were previously announced. There are also plans to enter the markets in Florida, Arkansas, Montana and Wyoming.

Jack in the Box also highlighted its updated store architecture, dubbed CRAVE.

If anything, the company seems to be delivering sentimental value to relocated Californians. “Takes me back to CA,” wrote one reviewer on Yelp after visiting the Louisville store at 10070 Dixie Highway. “Same great taste.”

Earnings of $1.09 Per Share

The corporation’s net earnings for fiscal 2023 were $130.8 million, up from $115.8 million in fiscal 2022.

Revenue for the fourth quarter of 2023 was $372.5 million, off 8% from the previous fourth quarter, when revenue was $402.8 million.

Fourth quarter net earnings amounted to $21.9 million or $1.09 per share – a result that fell slightly short of the $1.15 that analysts polled by Yahoo Finance expected.

At the end of 2022, fourth quarter net earnings were $45.9 million, or $2.17 per share.

Over the last 52 weeks, Jack in the Box stock has ranged between $60.43 and $99.56. Shares closed at $68.45 on Nov. 28.

During the fourth quarter, same store sales at Jack in the Box restaurants amounted to 3.9%; at Del Taco, same store sales decreased 1.5%. For the prior 52 weeks, same store sales at Jack in the Box restaurants were 7.3%; at Del Taco, same store sales increased 1.7%.

Menu price increases drove restaurant level margin. The restaurants faced inflationary increases in wages, food and packaging costs and utilities.

One issue on the horizon for the corporation’s California restaurants is AB1228, the law that will set the minimum wage for quick service restaurants at $20 per hour. The law goes into effect on April 1. As of Oct. 1, there were 943 Jack in the Box stores in California and 358 Del Taco stores.

“We are confident in our ability to manage through this,” Harris told analysts when asked about AB1228, noting the corporation’s long experience working in the state.

Menu pricing is expected to rise 6% to 8%, said CFO Brian Scott during the conference call. Scott took the CFO’s job in August.

In 2024, the corporation said it expects same store sales growth in the low- to mid-single digits for both its Jack in the Box and Del Taco stores.

Jack in the Box is trying to appeal to people with different amounts of money to spend.

“The lower income guest is under pressure, with lower combo and drink attach contributing to negative mix. Management noted continued strength amongst higher income guests,” wrote Nick Setyan, an analyst with Wedbush.

Something for the Shareholder

The company repurchased 400,000 shares of common stock in the fourth quarter. For the full year, the company repurchased 1.1 million shares, for an aggregate cost of $90.7 million, including excise tax.

The company’s board on Nov. 16 approved a new program to repurchase up to $250 million in shares. It also declared a cash dividend of 44 cents per share, to be paid on Dec. 28 to shareholders of record as of Dec. 14.

In addition to a new CFO in Brian Scott, the corporation introduced Tom Rose as new president of Del Taco in September. Rose is a 30-plus-year veteran in the restaurant business with a proven track record in various corporate and franchise leadership roles.

The company said it will hold an investor day webcast at noon Eastern time on Jan. 24.

Jack in the Box Inc.

FOUNDED: 1951
CEO: Darin Harris
EMPLOYEES: 9,523
HEADQUARTERS: Kearny Mesa
REVENUE: $1.69 billion (2023)
STOCK: JACK (NASDAQ)
LOCATIONS: 2,200 Jack in the Box stores in 22 states; 600 Del Taco stores in 16 states
WEBSITE: jackinthebox.com
CONTACT: 858-571-2121
SOCIAL IMPACT: As part of Jack’s Community Grants, franchise operators support nonprofits that feed, educate and empower youth in their communities.
NOTABLE: New-style stores carry the slogan, “The Best Burger Joint Famous for its Tacos.”