Of the 150 units in need of full refreshes, 75 are complete. Comma said Jack in the Box is seeing mid- to high single-digit sales lifts. Most of which, unsurprisingly, can be credited to drive-thru changes. This led Jack in the Box to a clear conclusion, CFO Lance Tucker said. By focusing on the drive thru instead of the full design, the brand could still capture the bigger part of those returns but do so with a smaller capital investment.
“When you look at what's happening with delivery and order ahead and pick-up trends, it sort of begs the question: what's the appropriate level of investment in dining rooms?” Comma asked.
He added that today’s quick-serve consumers, at least those who frequent Jack in the Box, are convenience driven and want to participate in digital innovation, like order ahead and delivery. “What they’re not telling us specifically for our brand,” Comma said, “is that they want to spend a lot of time in our dining rooms and particularly don’t spend a lot of time in our dining rooms in groups. They typically do that as individuals.”
“So from that standpoint, I just think that I'm hard-pressed to ask our franchisees to make an investment in something that isn't necessarily going to drive the type of returns that they're going to need,” he continued. “And I would rather take a safer bet, which is essentially to align our investments in where the consumer is going.”
Results to build on, off the market, and refining value
Jack in the Box completed its strategic review process, the company said. It spoke to potential buyers, domestic and international. In the end, the company chose not to explore a sale and instead implement a new capital structure in the form of a securitization. It will replace its existing senior credit facility, which includes a term loan and revolving credit facility, with a securitization.
Comma said the process forced Jack in the Box to flip the mirror and take a deep look at its business. “One of the silver linings of just spending that much time on our business, evaluating our business in conjunction with other folks we're looking at is, you just start to find opportunities through other people's lenses that maybe you hadn't thought of along the way,” he said.
Comma said the team is “committing our full attention” on moving the brand forward.
Jack in the Box’s company-run same-store sales inched 0.6 percent in Q2 compared to last year’s 0.9 percent growth. Average check upped 2.8 percent, partially offset by a 2.2 percent decline in transactions.