One of the nation’s largest restaurant companies is pursuing an innovative growth strategy to expand into new markets. Jack in the Box Inc., which operates or franchises more than 2,200 Jack in the Box restaurants in the U.S., is developing its namesake locations in select new markets and simultaneously offering those restaurants for sale to franchisees along with development rights for the entire market.
This strategy to seed new markets with company locations benefits both Jack in the Box, which is seeking to expand its under-penetrated brand beyond its current footprint, and franchise operators looking for a cost-effective way to enter a market.
“We’re able to leverage our brand strengths and resources to secure prime locations and then open those restaurants with the full support of our experienced operations and marketing teams,” says Grant Kreutzer, director of franchise licensing and recruitment for Jack in the Box. “Rather than speculate on customer traffic that an undeveloped site could generate, prospective franchisees and their financing partners can review actual sales trends and cash flows from multiple locations. It’s really an effective growth strategy for Jack in the Box and our franchisees.”
Jack in the Box is currently seeding restaurants in Oklahoma City, Tulsa, Kansas City, Indianapolis, and Cincinnati, and is searching for multiunit restaurant groups in those areas looking for a growth opportunity in the quick-serve category of the restaurant industry. Qualified candidates usually operate other non-competing quick-serve brands or casual-dining concepts. But Kreutzer says operations and restaurant development professionals are forming new franchising groups by partnering with investors looking to get into the quick-serve industry.
“We’re seeing a trend among restaurant industry professionals who form new franchise groups by partnering with individual investors,” he says. “In our seed markets, they can use their acquisition of existing restaurants, along with their local knowledge and development expertise, as a platform for continued growth.”
To encourage expansion in new markets, Jack in the Box is currently offering an incentive program, in which it will reduce royalties by up to 50 percent for five years and waive the $50,000 franchise fee it typically charges for each new restaurant opened. And in select new markets, franchisees have up to 75 percent of their advertising fee allocated into local marketing efforts.
These incentives are also available to franchisees developing restaurants in non-seed, new markets, as they have recently done in Albuquerque, Colorado Springs, and Lubbock. Other new, non-seed markets approved for franchise development include Amarillo, Little Rock, Louisville, Salt Lake City, and Champaign, Illinois.
Jack in the Box experienced substantial growth in recent years, increasing its unit count by nearly 10 percent since 2005. Still, the brand has a relatively small franchise community, with 102 franchisees operating about 1600 restaurants.
“Our size gives us a strategic advantage over larger, more complex franchise systems,” Kreutzer says. “We can react to changing market conditions, expedite menu enhancements, and deploy new processes and procedures more quickly than a lot of our competitors.”
This agility enabled Jack in the Box to develop one of the industry’s most varied and innovative menus. Founded in 1951 and a pioneer of the concept of drive-thru dining, Jack in the Box offers a variety of hamburgers, chicken sandwiches, and real ice cream shakes, as well as non-traditional quick-serve items such as entrée salads, chicken fajita pitas, teriyaki chicken bowls, egg rolls, and jalapeño poppers. “When it comes to our menu, Jack in the Box has something for just about everyone,” Kreutzer says.
The same could be said about investment opportunities for growth-minded franchisees.
For more information about franchising opportunities with Jack in the Box, visit www.jackinthebox.com.
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