SAN DIEGO —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
In what can be seen as the latest example, Jack in the Box has unveiled an ambitious lineup of new menu items designed to boost slowing traffic as the San Diegobased chain faces a challenging year of soaring food costs and reduced consumer spending. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Joining many other quick-service players who aim to compete on new beverage, breakfast and snack platforms, Jack in the Box is stepping up its emphasis on signature drinks, including its scheduled April introduction of a smoothie line and premium iced coffees. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Higher costs, especially for dairy products, eggs and shortening, are affecting product decisions, according to analysts, as commodity inflation cuts into restaurant sales and profits in all segments. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
“A lot of brands out there are trying to focus on items that don’t carry the burden of higher food costs right now,” said Stuart Morris, president of QSR Consulting Group Inc. in Coronado, Calif. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
But moves to launch smoothies and other high-margin drinks by the likes of Jack in the Box, Taco Bell and McDonald’s are probably more an attempt to tap into the lucrative beverage market than they are simply a shift away from dairy-heavy milk shakes, he said. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Still, signature beverages like iced coffee yield better profits than milk shakes or food items and can boost traffic between traditional dayparts, as can snack items. Among Jack in the Box’s new slate of products is Spicy Chicken Bites, an à la carte snack that debuted in late February, and a warm cinnamon roll drizzled with icing, being rolled out for breakfast this month. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Both items are similar to successful offerings by McDonald’s and planned introductions by others. Yum! Brands, parent of Taco Bell, KFC and Pizza Hut, recently disclosed plans to introduce a smoothie product called Frutista Freezes this summer at Taco Bell along with a new breakfast day-part by that chain. Yum said KFC would debut a nonfried-chicken toasted wrap sandwich, which also sounds similar to McDonald’s burritolike, chicken-based Snack Wrap line, launched last year. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Jack in the Box’s new products are aimed at countering the difficult macroeconomic climate, which suppressed its sales and corporate profit in the first quarter ended Jan. 20, and are expected to continue those trends, said chairman and chief executive Linda Lang. Jack in the Box and its franchisees own and operate 2,100 namesake quick-service restaurants and the 400 units of Denver-based sister chain Qdoba Mexican Grill. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
For the past nine months, quarterly cost of sales for restaurants across the quick-service segment have risen 1.9 percent on average due to commodity inflation, especially for boneless beef, cheese, eggs and shortening. Noticeable in Jack in the Box’s new-product arsenal is that only one of the items is a burger and the array is weighted heavily toward snacks and drinks. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Smoothies appeal to a different customer, Lang said. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
“We saw an opportunity, and a lot of other players have, as well, in the beverage platform,” she said. “Smoothies are just a huge trend, especially among young people.” —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Lang acknowledged, however, that the new drinks also have a higher profit margin, given currently elevated dairy prices, and analysts predict that the beverage strategy will benefit the chain’s same-store sales. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Dubbed Real Fruit Smoothies and offered in strawberry-banana, mango and orange sunrise flavors, each is made with nonfat yogurt and Minute Maid-brand fruit juice. Pricing information was not yet available. The smoothies will require some new equipment, and the rollout is expected to take about four months, Lang said. The cost per store to add the smoothie line is about $8,000. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
In tests of the smoothies, Jack in the Box saw a slight cannibalization of the chain’s milk shakes and malts, but not by a significant amount, Lang said. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Jack in the Box’s new iced coffees are an extension of the Bold Roast Coffee upgrade introduced last year. The iced coffees will include a “slightly sweetened” blend of French roast coffee and 2-percent milk poured over ice in “original,” vanilla or caramel flavors. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Among quick-service players, however, McDonald’s has taken the boldest move so far into coffee-house territory by launching a rollout of bargain-priced espresso bars throughout its nearly 14,000-unit U.S. system. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Meanwhile, the Dallas-based 7-Eleven convenience store chain in late February disclosed plans to debut a new caffeinated Slurpuccino frozen-coffee drink—like a caffè latte-flavored Slurpee—that contains no milk. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Jack in the Box’s new Spicy Chicken Bites, at a franchisor-suggested price of $1.89 for seven pieces and $4.09 for 16, add to the chain’s finger-food options. The bites were part of Jack’s Sampler Trio, along with stuffed jalapeños and mozzarella cheese sticks. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
The chain’s new cinnamon roll, a recommended $1.59, brings a sweet pastry option to the chain’s all-day breakfast menu lineup of burritos, sandwiches and biscuits. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Jack in the Box also plans to expand its burger line with the BBQ Bacon Sirloin Burger, featuring a sirloin patty topped with two slices of American cheese, crispy onion rings, bacon strips, and barbecue sauce on a bakery-style bun. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Despite a 3-percent increase in beef prices for the chain, further line extensions around the sirloin product are expected this year, and Lang hinted at more to come. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
“We’ve got a strong pipeline of other new products in various stages of development or test that are slated for introduction in our third and fourth quarters,” she said. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.
Jack in the Box also is planning product price- and menu-bundling promotions designed to increase traffic, particularly in the hard-hit West. In late February, Jack in the Box launched a $1.99 Ultimate Cheeseburger in certain West Coast markets, including Los Angeles and San Diego. Lang also cited the success of the Big Deal, launched in January for $2.69, which includes a choice of a chicken sandwich or cheeseburger, plus two tacos and a 20-ounce soft drink. —Quick-service chains industrywide are cautiously balancing their need to launch enticing new products with the inclination to counteract rampant inflation in key commodities.