In an era where fast-food chains are furiously competing for wallet share of low-income guests, Jack in the Box is feeling some stringent headwinds.
Same-store sales fell 2.1 percent in Q4—negative 2 percent for franchises and 2.2 percent for company-operated restaurants. This included a decrease in transactions and negative mix, partially offset by a 4.8 percent lift in price. Restaurant-level margin decreased 220 basis points year-over-year to 18.5 percent. This drop was driven by lower comps and then also higher costs from California’s fast-food wage law and other expense increases. For the full fiscal 2024, same-store sales dropped 1.3 percent, consisting of negative 1.5 percent for franchises and flat for company-operated restaurants.
California’s fast-food wage law had about a $15 million annualized impact on company-operated units.
“It’s a large number,” said CEO Darin Harris during Jack’s Q4 earnings call. “So, franchisees in California will definitely feel some of that unless we offset it with more top-line growth and then some of the things we’re doing from a cost standpoint.”
However, recent sales and transaction momentum have Jack running 1 percent positive comps in Q1 quarter-to-date.
CFO Brian Scott also noted that many of Jack’s franchisees are multi-unit owners that have a good level of profitability.
“So they are able to absorb some of this near-term pressure,” He said. “And again, we’ve driven improvement in the margin through a lot of the financial fundamentals. And so we’ll navigate through this. They’re aligned with us. And overall, again, since they own multiple locations, they’re performing well overall. Again, obviously, everybody is happier when you have top-line sales growth and we’re set up for that to flow straight through the bottom line. But overall, the system is very healthy.”
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Jack in the Box is basing its strategy on three funnels—value, innovation, and digital.
The Munchies Under $4 platform was used to drive everyday value messaging. Customers who used this platform added more items to their orders and spent more money overall on average. The offer worked so well that it will remain a permanent part of the menu and continue to evolve and expand, Harris said. The chain also promoted value through its Bonus Jack and two for $3 Monster Tacos LTO offers.
Early into Q4, Jack saw strong average check thanks to its Spicy Chicken Strips and found success with its Mini Chimi Bang Bangs (mini chimichangas). The LTO was available on the website and the app from July 15 to September 15 and served as a tie-in with the blockbuster movie “Deadpool and Wolverine.” Breakfast improved in the quarter, fueled by French Toast Sticks and LTOs like Chicken and Waffle Sticks and Scrambler Sandwiches. Jack will keep featuring breakfast value in every marketing window, led by its $5 breakfast meals and two for $3 Breakfast Jacks.
“What we found is that the deals that are in the marketplace are important to keep your guest base, but we also have to answer both sides of it with the premium and the value at the same time, making sure we’re thinking about different offers by daypart and then also leaning into digital aggressively because it is now a channel that is become a regular kind of weekly occasion for most guests,” Harris said. “And so we need to make sure we’re communicating all the right areas at the right times.”
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The late-night daypart was the best performer, followed closely by the much-improved dinner daypart.
Jack continues to execute with its Biscoff milkshakes, Donut Holes, Birria Tiny Tacos, and the new Sourdough Smashed Jack. It also plans to bring back fan favorites, like its Potato Wedges LTO.
“I think what we’ve seen is our calendar has been aligned to both innovation and value during this time and we’ve seen, as we said, meaningful improvement coming out of quarter four and into quarter one, and we’re running at approximately 1 percent same-store sales growth at Jack,” Harris said. “A lot of that has also been innovation and premium has been paired, with us continuing to lean into digital.”
In terms of digital growth, Jack’s goal is to increase its 14 percent digital mix to 20 percent by 2027. First-party sales were 83 percent higher in Q4 year-over-year and saw record sales over the past eight weeks. Meanwhile, third-party delivery accounts for nearly 70 percent of total digital business and keeps growing; it was up high-single digits in the fourth quarter.
Jack launched a new iOS app in Q4 that led to an improved user experience, speed of ordering, incremental sales, and accelerated acquisition of loyalty members. A new Android app and mobile web ordering platform is coming too. Additionally, nearly 550 units will have a new POS system by December 2025. The entire system will be on the new POS system by the end of fiscal 2025 (September 2025). The brand is starting to test freestanding kiosks to drive additional sales and labor efficiencies as well.
“With digital now at over 14 percent, the combination of the new POS and app for Jack will allow us to dramatically improve our loyalty program to deliver personalized offers and promotions to our growing loyalty guest base,” Harris said. ” … Our digital investments are leading to incremental sales and a growing loyalty membership, which makes reaching guests more efficient and gives us confidence that digital can make a strong contribution in growing total sales this year.”
CFO Brian Scott said prices will be 3 percent to 4 percent higher in fiscal 2025, including rollover of about 2 percent from fiscal 2024 and another 1 percent to 2 percent price hike later in the year. Same-store sales in fiscal 2025 are expected to be flat to 1 percent positive versus fiscal 2024. Company margins are projected to be 20 percent to 22 percent. These figures reflect the impact of a full year of wage increases from California’s fast-food wage law, higher utility costs, and a low-single-digit commodity inflation.
Jack finished Q4 with 2,191 stores (2,041 franchise and 150 company-owned). It opened 30 units and closed 25 in fiscal 2024. The brand has seen net positive unit growth for back-to-back years after having not done so from 2020 to 2022.
The brand has signed 101 development agreements for 464 restaurant commitments since launching a new franchise program in mid-2021. Jack inked its first franchise deal for Chicago in Q4; the first unit is scheduled to open in Q2. The company will enter Florida later in fiscal 2025 as well. New restaurants are outperforming in both existing and new markets. The five restaurants in Salt Lake City are achieving more than $90,000 in average weekly sales per store, which equates to a roughly $4.68 million annualized AUV.
The reimage program, which Jack has committed $50 million toward, has seen 1,100 requests for remodels. Seventeen have been completed, with 67 others in the design and permitting stage. Remodeled units historically have seen a 15 percent lift in same-store sales.
At Del Taco, a new menu initiative launched systemwide following a successful test. The rollout demonstrated improved speed, positive operator feedback, and enhancements in top and bottom-line performance. The new menu is expected to better serve both value and premium guests, aligning with guest segmentation research conducted for the first time in seven years.
Sequential transaction growth was observed for the first time in several quarters, indicating potential traction in the brand’s efforts to address guest demands for value. Additionally, the chain expanded its rollout of freestanding kiosks, with 63 already installed and plans for an additional 300 by the end of fiscal 2025. These machines deliver a 15 percent to 20 percent lift in average check.
Same-store sales fell 3.9 percent—3 percent at company-owned units and 4.2 percent at franchises. For full-year fiscal 2024, comps fell 1.5 percent—1.4 percent at company-owned units and 1.5 percent at franchises. The chain ended the year with 594 units after opening 14 stores and closing 12. Del Taco is now roughly 78 percent franchised after beginning the year at 71 percent.
