Dive Brief:
- Jack in the Box will open five stores in the Detroit area through a franchising deal the company said Wednesday.
- The deal continues the brand’s new market momentum. This year, the burger chain signed agreements for Chicago, western Michigan and Georgia.
- The company’s franchising programs enabled it to continue unit growth despite sales weakness. Jack in the Box opened net five new units in fiscal 2024, the same net unit increase it saw last fiscal year. It ended the year with 2,191 units and 101 development agreements for 464 new restaurants, CEO Darin Harris said on an earnings call.
Dive Insight:
Jack in the Box’s same-store sales slid 2.1% in its Q4 fiscal 2024, with that metric down by 1.3% for the whole year.
Harris said that franchisee finances remained fairly strong regardless of the sales dip.
“If we just look at our franchisee’s financials, they basically held flat when we compare last year to this year. And so we feel good about the overall health of the system,” Harris said.
Still, the chain accelerated the closure of some underperforming units, closing 20 in the quarter and 25 in the whole year, a little more than 1% of its system. Harris said this rate of closure was in line with industry trends, and that last year Jack in the Box held closures to a somewhat lower level — 15 stores.
But new commitments will more than make up for these closures. It will enter Florida for the first time and return to Chicago in 2025, he said. New restaurants have achieved strong weekly AUVs. Five of its newest restaurants, located in Salt Lake City, including three that have been open for over a year, have an average unit volume over $90,000 per week.
The modest acceleration of closures and the erosion of same-store sales are both in keeping with broader trends for many legacy brands this year. Wendy’s is closing 140 stores in Q4 and will offset them with new openings. McDonald’s saw its sales slide in Q2, and its Q3 rebound will likely be undone by the impacts of an E. coli outbreak tied to onions from one of the Golden Arches’ suppliers.
But Jack in the Box is taking measures to strengthen its system in the medium term. The chain is replacing the POS system in its restaurants with one that allows for the use of kiosks, Harris said.
“Although it is early innings using the new kiosk capabilities, we are experiencing a double-digit increase in average check helped by upsell and menu visibility,” Harris said. “We are now starting to test freestanding kiosks.”
The brand also updated the iOS version of its app, which Harris said led to “improved user experience, speed of ordering, incremental sales and accelerated acquisition of loyalty members,” and set the burger chain up to make significant loyalty improvements in the future.
