Jack in the Box Inc. announced its third-quarter 2024 earnings, revealing a 2.2% decline in system same-store sales. The company is actively working to enhance value offerings, drive digital growth, and improve transactions. Despite the decline, Jack in the Box is expanding its operations, planning to enter the Chicago market, and accelerate its re-imaging program.
Del Taco, also under the company's umbrella, experienced a decrease in same-store sales but is implementing strategies to recover sales and profitability. The company remains confident in its long-term growth potential and is committed to delivering sustained value for shareholders.
Key Takeaways
- Jack in the Box's same-store sales decreased by 2.2%, with Del Taco's sales also declining.
- The company is focusing on value offerings, digital growth, and menu innovation to attract customers.
- New point-of-sale systems with kiosk capabilities are being rolled out.
- Expansion plans include entering the Chicago market and opening new restaurants for both brands.
- A non-cash goodwill impairment of $162.6 million was reported for Del Taco.
- Full-year adjusted EBITDA is expected to be between $320 million and $325 million, with operating EPS of $6.10 to $6.25.
Company Outlook
- Jack in the Box plans to open 25 to 35 new restaurants, and Del Taco expects to open 10 to 15 in the fiscal year.
- The company aims to become an asset-light model and is focused on long-term shareholder value.
- Full-year adjusted EBITDA is projected to be $320 million to $325 million, with operating EPS from $6.10 to $6.25.
Bearish Highlights
- Both Jack in the Box and Del Taco have faced a decline in same-store sales.
- A significant non-cash goodwill impairment charge was taken for Del Taco.
Bullish Highlights
- Del Taco's recent restaurant openings have set new records for first-week sales.
- The company is seeing success with new menu items and late-night sales.
- Franchisee profitability has improved despite increased labor costs.
- Positive feedback and results from menu tests suggest potential for sales and margin improvement.
Misses
- The company missed its target for same-store sales growth.
- There's a need to increase attachment rates and drive additional drink sales due to the decline in transactions.
Q&A Highlights
- Executives discussed plans to improve momentum through value offerings and promotions.
- The California market is performing better than the overall system, with pricing helping to offset transaction declines.
- Franchisees are seeing a 1% to 2% impact from labor costs, which pricing strategies have helped to mitigate.
- The company is focused on driving transactions and attachment rates to combat underperformance in certain regions.
Jack in the Box continues to navigate a challenging market by leveraging strategic initiatives aimed at enhancing value for customers and improving operational efficiency. The company's commitment to expansion and innovation, despite the recent declines in same-store sales, reflects its confidence in future growth and the potential to deliver long-term shareholder value.
