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Jack in the Box is getting, and keeping, more customers

The chain’s sales accelerated last quarter, including positive traffic, behind an influx of new customers and Popcorn Chicken.
Photograph: Shutterstock

Jack in the Box same-store sales rose 10.2% in the quarter ended July 4, and 17.4% on a two-year cumulative basis.

Some of that growth came from what’s been a relative rarity in the fast-food business: More customers. The San Diego-based chain said that its sales came from a combination of higher prices, customers ordering more premium items, and transaction growth.

“This was our second consecutive quarter of positive transaction growth instead of having a reliance on average check,” CEO Darin Harris told investors on Wednesday. “I’m pleased to see this be more of a balance.”

The transaction growth came in part from new customers. Harris told investors on Wednesday that the company’s frequent customers continue to go to the chain’s restaurants at a “steady” rate, but that lower frequency and new customers are coming in more often.

“We’ve created some new behaviors,” Harris said. “We’re bringing customers back, new customers, infrequent customers. Hopefully, we’ve introduced them to new experiences and new flavors.”

Fast-food sales have been thriving in recent months, even as customers return to dining in at casual dining restaurants. Yet a lot of that has come from average check growth—customers making larger orders, ordering more expensive items—as well as pricing. Industry transactions have generally been down since the outset of the pandemic.

Jack in the Box got a boost last quarter with its April reintroduction of Popcorn Chicken. The product proved popular among customers, Harris said. “It almost performed too well,” he said. “It drove me crazy that we weren’t able to continue with a product the customer was clearly craving.”

Jack in the Box is banking on strong sales helping improve unit economics, which in turn could get its operators adding units again. The company operates 2,219 locations, a net unit decrease of nine restaurants. “Unit economics are key to our growth potential,” he said. “We are on our way.”

The company is shifting more to digital. It launched its loyalty program, Jack Pack Rewards, in the third quarter and Harris believes that digital orders will remain key for customers going forward. Harris believes the ease of that program has helped it generate new customers. “There’s been a fundamental shift overall in behavior,” Harris said. “Our business is growing from digital.”

Revenues in Jack in the Box’s fiscal third-quarter rose 11% to $269 million. Net earnings rose 21% to $40 million, or $1.79 per share, from $33 million, or $1.42.

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