Financing

Jack in the Box puts its faith in the Smashed Jack

The brand’s sales have been slow so far this year due to weather and low-income consumers. But executives believe a better value offering and a new burger will change things.
Jack in the Box
Jack in the Box's sales have been slow in January and February. | Photo: Shutterstock.

Weather and economic concerns have kept Jack in the Box’s sales down so far in 2024, but executives believe their new Smashed Jack will change the trajectory. But they plan new value offers just in case.

That, at least, is based on the San Diego-based company’s earnings report for the fiscal first quarter, which ended Jan. 21.

Same-store sales for the quarter rose 0.8% at its flagship brand, and 2.2% at Del Taco. Executives said there was some “meaningful pressure” on sales at Jack in the Box during the last four weeks of the quarter due to weather.

They remain pressured in February. “February has still been down, a little more than we expected,” CFO Brian Scott told investors on Wednesday. He noted that the chain’s same-store sales are “still trending a little bit slightly below in the negative year-over-year right now.”

It wasn’t just weather. Executives said they’re seeing “challenges with attach rates” among consumers making $75,000 and below, and particularly those making $45,000 and below.

That echoes comments made by rival McDonald’s, which said that weak traffic late last year was rooted in lower-income consumers staying home. Wendy’s, too, suggested that lower-income consumers were cutting back.

For Jack in the Box, the response to these sales pressures involves a trio of efforts: The Smashed Jack burger, value and breakfast.

Executives are particularly enthused about the burger, which the company sold for three weeks last quarter as part of a “soft launch.”

“We sold over 70,000 on the first day with no media support,” CEO Darin Harris told investors. The burger sold out within three weeks.

Executives plan a bigger launch, with full media support, starting in March. “We believe that it can help us throughout the year to outperform what we anticipate with some of the headwinds that we’re facing right now,” Harris said. “Smashed Jack is something that we are leaning into and very excited about.”

But the company also plans more value. Harris said the company is working with operators on “the best approach to make value a competitive advantage” for both Jack in the Box and sister chain Del Taco.

Thus, the company plans more everyday value at Jack in the Box, in addition to existing offers such as its $3 Jack wrap and two tacos for 99 cents. Harris suggested the company would improve its deal menu to provide more variety.

“We’ve tested a value menu that we feel really good about, that we will roll out through the year,” Harris said.

Breakfast is another area Jack in the Box is targeting. The company first plans to bring back some menu items that were eliminated to improve speed of service and profit margins, but proved to be “too strong a headwind to sales.”

But Harris also said the company could make the daypart a more regular part of the marketing calendar and introduce new items. The company is also testing new breakfast offers to target value customers.

“We’ve got to make sure that we have a very competitive plan,” Harris said. “We also know that when we market the consumer for breakfast that we see it benefit our business.”

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