Jack in the Box recruiting challenges continue into second quarter

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Jack in the Box Inc. continued to struggle with labor issues in the second quarter, with about half of company-owned dining rooms remaining closed due to staffing issues, the company said Thursday. .

A ‘significant number’ of restaurants were operating reduced hours in the quarter ended April 17, but CEO Darin Harris said efforts were underway to improve hiring and retention, including pay hikes on some markets – particularly to restore staffing levels for the end- the day-to-night portion he said the brand has the potential to dominate once it can fully execute it.

During the quarter, same-store sales at Jack in the Box fell 0.8% system-wide, as lower traffic was offset by an increase in the average check, largely due to higher prices. menus. Restaurants were also still seeing the negative impact of Omicron and tougher comparisons to last year, when consumers were buoyed by stimulus checks.

But work was the challenge most within the company’s control, and Harris said the chain is seeing positive results through investments in recruiting and retention in company units, looking at what workers appreciate to improve messaging and using tactics like direct mail and referrals. In the Los Angeles market, mostly owned by the company, for example, he said units had seen their workforce increase by 7% and were almost at pre-pandemic levels.

The acquisition of the Del Taco chain by San Diego-based Jack in the Box Inc. was completed during the quarter, bringing together the brand’s 599 franchised restaurants with Jack in the Box’s 2,207 units. The marriage should bring beneficial synergies, particularly related to supply chain, Harris said.

“With the addition of Del Taco, we are now a bigger, stronger company well positioned to take ownership and drive meaningful innovation, growth and shareholder value,” he said.

Del Taco’s system-wide same-store sales increased 2.5% in the quarter, as sales were driven by the brand’s 20-under-$2 value platform and strong performance from the limited time offer, as well as a higher average ticket increased by menu price increases.

“Industry winners will find ways to maintain traffic while driving pricing in other areas of the menu, and I believe this value initiative achieves its goal,” Harris said of the company’s strategy. dumbbells from Del Taco of mixing value and more premium offerings.

Harris said both brands have pricing power and menu prices are likely to rise further in the second half.

Jack in the Box will continue its “hook and build” strategy of using more value-priced menu options to attract customers, then upselling with attractive add-ons to create the ticket.

Harris also said a number of value-driven menu offerings will arrive in 2023. “We have more new menu items on the test counter than we’ve seen since the start of this new team. leadership,” he said.

During the quarter, Jack in the Box also saw positive results from a reimagining package officially launched in the second quarter that included store improvements, new packaging and uniforms.

“It’s imperative that we rebrand our current restaurant base, which not only impacts restaurant performance, but also helps attract franchisees to grow the brand in the future,” Harris said. .

The company has a tenant image improvement program, and 12 units are in the design and approval phase for refreshment, with another 136 franchise restaurants approved for future projects.

Harris pointed to a company unit in Yuma, Arizona, for example, where the parking area was doubled in size, the layout was reconfigured for better traffic flow and wide-gauge drive-thru. was added, alongside a remodeling of the dining room. Early results indicate a 25% increase in same-store sales, surpassing $100,000 in weekly transaction-driven sales, he said.

Jack in the Box also tested the use of automation, including cheese pumps, automated cleaning of shake machines, and testing with Flippy 2 (frying) and Sippy (drink making) robots from Miso, as well as finding ways to simplify the process. to build menu items to improve speed.

Jack in the Box ended the quarter with a net decrease of one restaurant – the company opened five units but closed six. But Harris said the system is on track to meet its unit growth target of 4% by 2025. The brand has signed 54 franchise agreements for a total of 218 restaurants, 12 of which have opened.

Del Taco also had a net decrease of one restaurant, with one opening and two closings.

Revenue for the quarter was $322 million, down from $257 million a year ago, including partial quarterly results from Del Taco from the March 8 closing of the acquisition.

Net income was $7.8 million, or 37 cents per share, for the quarter, compared with $35 million, or $1.58 per share, a year ago.

Contact Lisa Jennings at [email protected]

Follow her on Twitter: @livetodineout

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