When Darin Harris started as Jack in the Box’s CEO in June 2020, the top question asked by the investment community concerned new restaurant growth potential.
The second was how quickly the 70-year-old brand could make it happen.
The answer, according to Harris, is that Jack in the Box is capable of soaring past 6,000 restaurants nationwide by growing in new and existing markets. And that doesn't include nontraditional stores and ghost kitchens. As for how fast, the brand plans to ramp up to 4 percent annual restaurant growth by 2025.
To put into perspective how much of a shift that is, in the past 10 years, Jack in the Box opened an average of 21 restaurants per year, or a 0.9 percent average unit growth rate. In the same window, the sandwich segment (McDonald’s, Wendy’s, Taco Bell, Burger King, Sonic, etc.) grew by an average of 2 percent. Also, Jack in the Box’s 10-year average net opening rate is 0.2 percent, compared to 0.6 percent for competitors.
Harris attributed Jack’s below average growth rate in the past decade to selling restaurants to undercapitalized franchisees faced with intensive cash requirements for remodels and new restaurant development. This led to delays in many new build and remodel commitments, and a number of these stores never actually came to be.
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Jack is now focused on reigniting expansion with a clear development strategy, marketing and resources dedicated toward franchise and site lead generation, store prototype development, unrestrictive policies and procedures, an updated restaurant image, and franchisee alignment.
“New restaurant growth underperformed for way too long,” Harris said during Jack’s Investor Day on Tuesday. “That’s behind us. By focusing on fundamentals, many of which have already seen meaningful improvement, it puts us in a better position than we have ever been. Our franchisees are now well-capitalized, our relationship with our franchisees is strong, and our business is extremely healthy, leading to franchisees wanting to put capital back into the brand.”
Harris said that mapping and data analytics—which help franchisees make informed growth decisions—will play a major role in reaching the 6,000-unit benchmark. Jack used sophisticated real estate models for market screening and potential expansion across 210 DMAs in the U.S., prioritizing where to grow based on market attractiveness and overall expansion potential.
Currently, the chain has 2,228 U.S. venues across 21 states and Guam, with California (943), Texas (596), Arizona (173), and Washington (148) serving as the largest markets. However, ample whitespace remains, especially for a brand with this much equity and awareness among guests. In 13 of the 21 states in which Jack resides, the brand has built out less than 35 percent of the market.
Jack believes its capable of adding another 1,500 stores in its existing 21 states and more than 2,250 locations in the 29 states where it doesn’t have a presence, including all of the Northeast and Mid-Atlantic markets, and much of the Southeast.