Jack in the Box has 2,200 locations, mostly out west. It is only in 22 states.
Yet a lot of people know about it.
“We have 80% brand awareness,” Ryan Ostrom, chief marketing officer for the San Diego-based Jack in the Box, said this week at the company’s “Investor Day” presentation to analysts.
That awareness could be key for the chain as it quickly ramps up unit growth. Jack in the Box plans to grow unit count by 2.5% per year by 2027. Between it and its sister chain Del Taco, which it acquired in 2022, the company expects to open 90 to 120 units per year by then.
Ultimately, executives said, they believe that the company could have more than twice its current unit count, about 5,750 locations, and that Del Taco could operate 2,600. “I’m not sure I’m knowledgeable of any other restaurant chains that have such scale and proof of concept that still has such tremendous white space across the United States for growth,” Darin Harris, CEO of Jack in the Box, told investors.
Jack in the Box certainly has some proof that its name recognition is generating customer interest.
The brand recently opened locations in Salt Lake City and in Louisville, Ky., the latter of which was the first new market for the chain in over a decade. Both markets opened strongly, with restaurants averaging sales of $100,000 per week, well over twice the system average.
Executives cite the company’s presence on social media and its marketing for generating the level of awareness that is helping it break into new markets. “The excitement we’re seeing across the United States about our brand, the demand in the U.S., and now socially, is something I’ve never seen,” Ostrom said.
Jack in the Box has long been stagnant in the U.S., despite its name recognition. Harris was brought in to fix that. He became CEO in 2020, in the aftermath of a massive uprising by the chain’s franchisees, who had largely ceased thinking of new development.
Indeed, Harris noted, before 2022 Jack in the Box generated low same-store sales, had strained franchise investments, low digital sales and underinvested in technology. Franchisees had called for the resignation of the previous CEO and had sued the brand.
“We were further behind than we realized” in 2020, Harris said. “The pipeline had dried up because of the lawsuit. There wasn’t a pipeline. Franchisees were not searching for real estate. That was something we underestimated.”
Jack in the Box has a healthy pipeline now, with more than 80 development commitments for 340 locations. It has a new prototype, called “Crave.” It opened net new units last year for the first time in five years.
The company also didn’t have development commitments. If a franchisee wanted to develop a location in a market, but a franchisee closer to that area raised their hand, they’d be able to build the location. But those franchisees often wouldn’t do so. “We lost five sites where the franchisee brought it to the table, but the other franchisee said they wanted to do it, and they never did it,” Harris said.
Fixing development, however, requires an investment in unit economics. Jack in the Box wants to get its average unit volumes to $2.5 million, a substantial increase from the $1.9 million it generates these days. And it wants to get Del Taco to $2 million average unit volumes, up from $1.6 million.
The company also believes it can improve profitability, and it has a task force working on finding profits. That includes ideas such as reducing the size of its receipts, an idea that seems small on the surface, Harris said, but which has saved the system $400,000 per year.
The company’s goal is to get restaurant margins to 23% to 25% by 2027 at Jack in the Box, up from 21% to 23% now. At Del Taco, the company’s goal is to get them to 18% to 20%, from 14% to 16% now.
Getting to those sales and profitability will take a combination of technology investments, marketing and operations improvements.
The company’s goal is to get 20% of its sales through digital channels, up from 12% now and 4% in 2020. The company has been investing in a new point-of-sale system that connects its ordering channels. Jack in the Box is also looking at drink automation and voice AI in its drive-thru, something Del Taco is apparently using.
Jack in the Box also believes it has a strong pipeline of new menu news. The chain succeeded with its Smashed Jack burger, which took two years to develop. That proves the company’s ability to generate enthusiasm. “The good news and bad news is, we sold out,” Ostrom said. Imagine, he added later, what the brand could do with some actual marketing of the product.
But key, he said, is simply getting back to what made Jack in the Box popular in the first place. “The guest really didn’t know who we were fully,” Ostrom said. “They didn’t know what we stood for. And we definitely were called out for losing our edge and our attitude that made Jack famous in the late-90s and early 2000s.”
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