Jack in the Box announced earlier this week that CEO Darin Harris is stepping down to take on a new position outside of the restaurant industry. CFO Lance Tucker was named interim principal executive officer, effective Monday, with Harris remaining on board as a consultant through the middle of March.
Tucker rejoined the company as CFO last month, returning to the role he held from 2018 to 2020. He was CFO of Hardee’s and Carl’s Jr. parent company CKE Restaurants from 2020 to 2022 and previously spent 14 years with Papa Johns. Dawn Hooper, senior vice president and controller at Jack in the Box, will serve as interim principal financial officer while Tucker oversees the company.
Harris helped the chain recover from the pandemic, acquire Del Taco, and begin opening new locations for the first time in decades during his nearly five-year tenure. The company started aggressively franchising under his leadership, welcoming its first new operators in over 10 years and seeing the vast majority of existing franchisees sign on to build restaurants in new and existing markets.
That’s a stark contrast to where things stood before he arrived. The brand had channeled much of its efforts toward refranchising, shifting from an 80 percent company-operated chain to a primarily franchised system, with franchisees simply acquiring company-owned stores instead of opening new ones for most of the early 2000s. Deteriorating relations between operators and the fast-food chain also hindered growth in the years leading up to 2020, when Harris took charge. The tensions peaked in 2018 when the National Jack in the Box Franchisee Association filed a lawsuit against the franchisor over concerns about marketing funds and remodeling initiatives.
In his first few months on the job, Harris settled the lawsuit, reenergized the relationship with franchisees, and laid out the brand’s strategic direction, identifying thousands of opportunities for potential stores across the country. Operators quickly aligned behind his agenda to reach 4 percent annual growth, and eventually, more than 6,000 restaurants across the country.
The company has continued building on the momentum with a host of initiatives aimed at making the franchise opportunity more appealing. That includes shuttering underperforming locations, buying out struggling markets to optimize them for fresh development, zeroing in on restaurant-level margin improvement opportunities, and debuting a fresh CRAVED image for future stores available in multiple models.
The chain has been closing stores about as quickly as it opens new ones in recent years. So, while the system is slightly smaller than when Harris took over—2,190 units today versus 2,241 at the end of 2020—he told investors last fall that it’s healthier and better positioned for growth going forward.
By the end of fiscal 2024, Jack had signed 101 development agreements for 464 restaurant commitments since launching the new franchise program. It opened 30 new units last year and shuttered 25 for a net gain of five. It lost one additional unit in Q1 of fiscal 2025, with two corporate openings and three franchised openings offset by six closures
Tucker told investors on Tuesday’s Q1 earnings call that the brand will continue growing primarily through franchising, with corporate stores supporting entry into new markets.
“The foundation now in place was a major reason I wanted to return to Jack in the Box,” he said. “While there is certainly work and assessment to do at both brands to maximize what they can ultimately become, the foundational investments made over the past several years were the right steps to set up the company for future success.”
The company has some work to do in regaining its sales momentum. Comps have slipped at Jack in the Box and Del Taco amid a tough consumer backdrop. Same-store sales for both chains declined in the last three quarters of fiscal 2024.
The challenges continued into Q1, though Jack in the Box reported same-store sales growth of 0.4 percent, despite the California wildfires and unusual weather in the Texas and Midwest regions in the final two weeks of the period. Tucker said those two factors combined had a roughly 20 basis-point negative impact on first-quarter comps. Price was higher versus the same period a year ago, while both transactions and mix were down. Systemwide sales increased 0.5 percent.
“As with others in the industry, traffic and macro pressures persist, so it likely won’t come as a surprise to hear that there are more headwinds and tailwinds for us thus far in the second quarter,” Tucker said. “We are running negative quarter-to-date and expect a negative Q2 same-store sales result for both brands. With that said, we have a strong marketing calendar and will stay the course in executing on our barbell strategy, value leadership, and digital evolution to drive sales.”
Jack expects to open between 35 and 45 new restaurants in 2025, including in Chicago this summer and Florida later this year. The chain’s restaurant level margin in Q1 was essentially flat year-over-year at 23.2 percent, helped by the completion of a new beverage partner contract that Tucker said should be viewed as a one-time benefit.
For Del Taco, it was another challenging quarter with same-store sales down 4.5 percent, driven by declines in transactions and mix that were partially offset by higher menu prices. Restaurant-level margin was 13.8 percent, down from 15.6 percent in the same period a year ago. The decline was driven by higher labor costs from California’s new wage law and a shift in restaurant mix from refranchising. Systemwide sales were down 1.9 percent for the period.
On a positive note, Tucker said results from a menu optimization initiative that rolled in Q1 are encouraging, with the new menu driving higher attach rates and better average check.
Del Taco’s restaurant count at the end of Q1 was 589, with one opening and six closures. It is expected to open 15 to 20 locations this year. The chain also refranchised 13 restaurants during the period. That deal included an agreement for 12 new future restaurants. Additionally, it inked an agreement to enter Indianapolis. That marked its 12th new market announcement in the past three years. Del Taco has signed 40 agreements for a total of 303 restaurants since being acquired by Jack in the Box in 2022, 14 of which have already opened.
