Jack in the Box 2024

Mar 25, 2024 | Insights, Restaurant Research

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Executive Summary

From burgers to tacos to egg rolls to flat sour dough carriers, Jack in the Box’s menu is known for variety and innovation. Jack’s management team refers to itself as a “burger chain famous for its tacos” and the brand’s menu addresses cravings throughout the day and munchies at night (late-night leadership benefits from 24/7 drive-thru access & breakfast served all-day). Although this is a regional player with almost 70% of its stores located in California & Texas, the brand enjoys leading QSR hamburger share in 7 of its 10 major markets. In any case, as a regional player without a national footprint, Jack adopts a challenger brand positioning (seeking to go against convention & norms). The chain’s brand positioning also reflects: craveable flavors at different times of the day, allowing customers to taste & live outside the box on their terms; tacos for breakfast; breakfast for dinner; and options to satisfy late night munchies (“turning-up the purple during evening”). Price value is important to Jack as 70%+ of visits are represented by customers who profile as value conscious, and a plethora of lower priced menu options include snacks & sides that work well both for value-oriented customers and as add-ons for crave-hunting guests. FY23 system comps were strong, increasing +7.3% y/y and FY24 comps are expected to increase low to mid-single digits. Sales tailwinds include: hook-and-build strategy which leverages menu items like tacos, tiny tacos & egg rolls to increase items/check & add-on sales; innovative new product news; and increased digital relevancy. Having said all this, it is notable that Jack’s FY23 menu prices increased high-single-digits and the company expects to raise its average prices +6% to +8% during FY24 in response to the California minimum wage hike. This is problematic as the chain’s exposure to value-oriented customers is well illustrated by 1QFY24 system comps that increased just +0.8% y/y, reflecting that its customers earning under $75k (especially those under $45k) were attaching less low-priced items to their orders. Resultantly, sales headwinds are represented by hefty, but necessary, menu price increases taken in a weak economy. In conclusion, while Jack is doing an admirable job of executing around a solid strategic plan, the chain is challenged to hold the line on menu price increases during a turbulent macro environment that is badly aggravated by operating cost increases driven by California’s impudence.

Jack in the Box Market Share Graph

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