Jack in the Box Inc., which acquired the Del Taco Restaurants Inc. brand in 2022, is finding synergies in franchise development and operations between the two brands, executives said Thursday at the RBC Capital Markets Consumer Conference.
The San Diego, Calif.-based quick-service company, which completed the $585 million Del Taco purchase last March, plans to research a new point-of-sale system this year and to begin installing it in 2024, said Chris Brandon, Jack in the Box vice president of investor relations.
With digital revenue for the brands running at about 12% of sales, the near-term sales drivers can involve point of sale systems and the loyalty program, he said.
Darin Harris, Jack in the Box CEO, added that digital investments will produce richer information by expanding the customer databases.
“We can even grow digital further than the 11 to 12% we are in today,” he said, adding that the brands can improve operations.
“If you think about it at Jack in the Box,” Harris said, “a lot of our digital businesses is late night. We do really well there on digital, but it creates challenges in our drive-thru. Our dining rooms are closed at late night, so we have different operational opportunities to take that digital business outside of the drive-thru and make it easier for the drivers and make it even more of a robust system and robust sales driver.”
Del Taco, for example, is testing Presto artificial intelligence ordering in its drive-thru, they said.
With two quick-service brands, the executives said the franchisor has been able to offer franchisees options.
“We bought Del Taco knowing that we could grow it,” Harris said. “It was a growth play.” The company is looking to refranchise company-owned Del Taco restaurants as well as franchise new restaurants.
In May, the company also signed a 22-unit commitment with the Terrazas family in four northern Mexican states, the first franchise agreement in Mexico for Jack in the Box in more than 30 years.
“If you look at our business from Yuma, Ariz., to El Paso [Texas], where we signed this agreement along the border states of Mexico, some of the highest performing restaurants that we have in our system are along that trail,” Harris said.
As part of the initiative, the company also announced new development agreements for both Jack in the Box and Del Taco to enter Montana and Wyoming, a first for both brands in those markets.
Harris added that the company wanted to give existing franchisees the opportunity to expand in existing markets before reaching out to attract new franchisees in new markets.
For the second quarter ended April 16, Jack in the Box reported net earnings of $26.5 million, or $1.27 a share, compared to $7.8 million, or 37 cents a share, in the same period a year ago. Revenues in the quarter rose 22.8% to $395.7 million from $322.3 million in the same period a year ago.
Jack in the Box same-store sales increased 9.5%, and Del Taco same-store sales increased 3.2% in the quarter, the company said.
As of April 16, the company had 2,187 Jack in the Box units and 495 Del Taco locations systemwide.
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