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Jack in the Box Inc. leans into value barbell strategy as it notes challenges among lower-income consumers.

Jack in the Box emphasizes value with barbell offerings

Lower-income consumers pose industrywide challenge, CEO Darin Harris says on Q2 earnings call

Jack in the Box Inc., after encountering supply-chain problems with its highly anticipated premium Smashed Jack burger in the second quarter, is also focusing on barbell value offerings at both the Jack and Del Taco brands, executives said Tuesday.

Darin Harris, CEO of San Diego, Calif.-based 2,195-unit Jack in the Box Inc., said on an earnings call for the April 14-ended second quarter, that lower-income consumers are facing pressures industrywide.

“We in the industry are all seeing this kind of pressure from the headwinds of the consumer,” Harris said. “We definitely felt it coming into the second quarter, and so we know that value is going to be something we talk about for the rest of the year. We know the competition is doing that, so we will be in that game. We were preparing for it.”

Jack in the Box, which also owns the 595-unit Del Taco brand, plans to lean into its Munchies Under $4 platform.

“We have different $5 price points, whether it's on the app or whether we have the $5 Jack Pack,” Harris said. “We will have a strong value message across both brands that speak to the specific needs by the consumer.”

Digital offers will also play a role, Harris said. “It depends on the channel,” he said, adding that some customers consider $10 as value.

“It's what you get for what you pay, and we’ll have the right price point in the right channel,” Harris said.

Harris said Jack in the Box was disappointed that supply-chain bottlenecks didn’t allow it to make a big launch of the premium Smashed Jack burger at the beginning of the quarter, as planned. But once those problems were ironed out, it mixed at about 7.5% of sales.

“We arere really excited about the initiatives to come,” Harris added. “We've got a good balance on the barbell strategy.”

Jack in the Box has focused on French Toast Sticks and other breakfast messaging, he said, and the company plans to promote late-night occasion with rapper-actor Ice Cube later in the year with the Chicken-Tater Melt. The company will also be launching wings in the back half of the year as well, he said.

“We will lead with value and follow with innovation,” Harris said.

Executives said the California-heavy Jack in the Box and Del Taco brands had dealt well with the California wage increases that went into effect April 1.

“I'm proud of how our California franchisees joined together with our company leadership teams to execute strategic price increases, implement our margin savings plans, share best practices, and test equipment and technology that can support labor savings in the future,” Harris said.

He added that California restaurants of both brands during the second quarter “performed on par and, in some cases, better than other regions across the country.”

For the second quarter ended April 14, Jack in the Box reported net income of $25 million, or $1.26 a share, compared to net earnings of $26.5 million, or $1.27 a share, in the same period a year ago. Revenues were $365.3 million compared to $395.7 million in the prior-year quarter.

Second-quarter same-store sales were down 2.5% at Jack in the Box and down 1.4% at Del Taco, the company reported.

Jack in the Box has restaurants across 22 states, and Del Taco has restaurants in 16 states.

Contact Ron Ruggless at [email protected]

Follow him on X/Twitter: @RonRuggless

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