Jack in the Box increases menu prices nearly 10% as traffic struggles continueJack in the Box increases menu prices nearly 10% as traffic struggles continue

Joanna Fantozzi

Jack in the Box had a challenging third quarter, punctuated by declining traffic and external inflationary pressures, as heard on the earnings call on Wednesday for the quarter ended July 10, 2022.

The San Diego-based company reported same-store sales declines of -0.6%, which was offset by Del Taco’s strong first full quarter under Jack in the Box ownership of 3.5% same-store sales growth. The decline in Jack in the Box sales was largely attributable to a continued traffic slowdown and reduced operating efficiencies as staffing slowly begins to improve, though partially offset by growth in late-night traffic.

“Inflation, staffing and operating hours continued operating hours continue to create pressure on our restaurant level performance,” CEO Darin Harris said during Monday’s call. “However, increased pricing, improved training and focused restaurant level execution is helping franchisees deliver a better guest experience and assisting with financial fundamentals.”

The one-two punch of traffic declines and macroeconomic issues caused Jack in the Box to take a nearly 10% pricing increase during the quarter, which helped boost average check. Moving forward, the company plans to focus on value to build average check and not just pricing increases.

“Pricing of 9.7% helped us manage the cost environment and we will continue to take a disciplined and measured approach to pricing strategies as a means of mitigating the impact on our margin and bottom line,” CFO Timothy Mullany said during the call.

One of Jack in the Box’s strategies for value creation is a focus on menu innovation, a focus that helped to boost Jack in the Box’s performance during the challenging quarter. During the third quarter, the company introduced a new grilled chicken sandwich and Girl Scout cookies shake, and also brought back some older fan-favorite items like popcorn chicken.

Moving forward, Harris said, Jack in the Box will home in on growth of the breakfast daypart, kicking off with the return of French toast sticks. The return of the menu item was marketed with celebrity guest, Star Wars star Mark Hamill, who was fired from a Jack in the Box years ago for impersonating a clown.  

Jack in the Box will also continue to focus on rolling out the previously announced store redesign, and digital technology, driven by its partnership with Miso Robotics and launch of mobile web ordering.

“We believe this platform will help us not only attract incremental e-commerce guests, but also help us create a more seamless, personalized relationship with our loyal guests while retargeting our lapsed users to reengage across both our app and mobile web solution,” Harris said. “I continue to see digital as an area where the scale and resources of two brands will help us move faster and more efficiently as we evolve and flex our digital and tech opportunities as a new company.”

Total Jack in the Box revenues increased 47.8% to $398.3 million driven by the acquisition of Del Taco. Net income for the third quarter nearly halved, from $40 million in Q3 2021 or $1.79 per share, to $22.9 million in Q3 2022, or $1.08 per share. Jack in the Box did not gain any store openings last quarter, and store count remains at 2,207 restaurants systemwide.

Contact Joanna at [email protected]

Find her on Twitter: @JoannaFantozzi