Published on 11 Apr 2024 on Zacks via Yahoo Finance
Sales-Driving Plans Aid Jack in the Box (JACK), High Costs Ail
Jack in the Box Inc. JACK is benefiting from menu innovation, focus on delivery channels and marketing strategies. It is investing aggressively in store improvements and new store build. However, high costs remain a concern.
Growth Drivers
Menu innovation is one of the primary characteristics of JACK. It is the nation’s one of the largest hamburger chains. The company is continuously working on maintaining the uniqueness of its brand, menu and premium food offerings.Jack in the Box continues to focus on driving operating excellence across its existing store base by building brand loyalty. Given the menu diversity, price points and positive customer feedback, it remains flexible and resilient against a shift in customer behavior. Going forward, management intends to focus on innovation plus beverage and snack attachment to support the hook-and-build strategy. This and the emphasis on value messaging are likely to drive frequency in the upcoming periods.JACK is also increasingly focusing on delivery channels, which is a growing area for the industry. Given the high demand for this service, the company has undertaken third-party delivery channels to bolster transactions and sales. It partnered with DoorDash, Postmates, Grubhub and Uber Eats. It is expanding its mobile application in a few markets that support order-ahead functionality and payment. In the first quarter of fiscal 2024, the company reported digital sales growth of about 12% year over year, with a notable uptick in first-party web and app ordering.The company, which shares space with McDonald's Corporation MCD, The Wendy's Company WEN and The Cheesecake Factory Incorporated CAKE, is also benefiting from the Del Taco merger. During first-quarter fiscal 2024, Del Taco's same-store sales increased 2.2%, comprising franchise same-store sales growth of 2.4% and company-operated same-store sales rise of 1.8%. The upside was driven by the Birria promotion, a new product introduced during the quarter.Del experienced flat net unit growth, including three restaurant openings, in first-quarter fiscal 2024. The company currently holds 155 development agreements at quarter-end, with 49 sites in the construction or permitting phases.