One of the nation’s largest restaurant companies is pursuing an innovative growth strategy to expand into new markets. Jack in the Box Inc., with more than 2,200 Jack in the Box restaurants in the U.S., is developing its namesake locations in select new markets while 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, as well as franchise operators looking for a cost-effective way to enter and develop a market.
“We’re able to leverage our brand strengths and resources to secure desirable locations and open restaurants with the full support of our operations and marketing teams,” says Grant Kreutzer, director of franchise licensing and recruitment for Jack in the Box. “Potential buyers and their financing partners can review actual sales trends and cash flows from multiple locations. It’s an effective growth strategy for Jack in the Box and our franchisees.”
One of the company’s seed markets, Oklahoma City, comprised seven restaurants, all of which were recently sold to franchisee Mike Salous. Salous, who lives in Oklahoma City and has been an IHOP franchisee for 15 years, was looking for other brands to add to his franchise group’s portfolio, and Jack in the Box was at the top of their list.
“Potential buyers and their financing partners can review actual sales trends and cash flows from multiple locations. It's an effective growth strategy.”
“I’ve always admired the Jack in the Box brand, and both of my partners worked at Jack in the Box restaurants during college,” Salous says. “As a long-time operator in family dining, I know that consumers want great-tasting food that they can get fast and for a good value. Jack in the Box understands how people are thinking about food and delivers on these expectations.”
Kreutzer says, “We’re seeing more multiunit restaurant-industry professionals like Mike Salous partnering with individual investors to form franchise groups. In our seed markets, investors can use their acquisition of existing restaurants, along with local knowledge and development expertise, as a platform for continued growth.”
Jack in the Box continues to expand in seed markets such as Tulsa, Kansas City, Indianapolis and Cincinnati. And to further encourage franchise expansion in these and other new markets, the company is offering an incentive program which reduces royalties by up to 50 percent for five years and waives the $50,000 franchise fee charged for each new restaurant opened. In select new markets, franchisees can have up to 75 percent of their advertising fee invested into local marketing efforts.
Jack in the Box has experienced substantial growth in recent years, increasing its system-wide unit count by nearly 10 percent since 2005. Still, the brand is under-penetrated, with a presence in only 21 states, and Jack in the Box has a relatively small franchise community, with 105 franchisees operating approximately 1,700 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 has enabled Jack in the Box to develop one of the industry’s most varied and innovative menus. And unlike many of its competitors, Jack in the Box offers that full menu, breakfast included, all day.
Founded in 1951 and a pioneer of the concept of drive-thru dining, Jack in the Box serves 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.
For more information about franchising opportunities with Jack in the Box, visit www.jackinthebox.com
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