Dive Brief:
- Jack in the Box sustained a 7.4% decline in same-store sales in the fourth quarter of its fiscal 2025, surpassing its Q3 7.1% decline — then its worst sales drop in years, according to a Wednesday earnings release.
- Del Taco’s sales drop also worsened, with a 3.9% fall in the key metric. Three weeks after the Sept. 28 end of the fiscal year, Del Taco shuffled off its parent company’s balance sheet in a $115 million deal with Yadav Enterprises, one of its franchisees.
- The declines in sales were driven by falling traffic and unfavorable menu mix, resulting in pressure on company-operated restaurant margins and on franchise-level margins, both of which slipped year-over-year in the quarter.
Dive Insight:
Closures associated with the company’s restructuring program dragged its franchised store base below the 2,000-unit mark. The brand closed 47 restaurants in the quarter, with 38 of those related to JACK on Track. That program aims to strengthen the company’s balance sheet and the performance of franchisees by closing unprofitable units, among other measures.
CEO Lance Tucker said the brand would “work with urgency to strengthen our operating results over the coming quarters,” in concert with the JACK on Track program.
Tucker said on the chain’s Wednesday earnings call that the brand’s performance was weaker in the first half of the quarter.
How Jack in the Box and Del Taco have performed since 2023
“Our value equation was not resonating and lacked enough price point value,” Tucker said. “Coming out of August, we adapted quickly and implemented a true barbell promotional strategy.”
The brand used its media to highlight its $4.99 Bonus Jack combo meal and its $5 Smashed Jack burger promotion, a take on the smashed burger that serves as a more premium anchor, since the $5 price does not include fries and a drink. Transactions began to improve as a result, Tucker said, and the quarter saw a 300-basis-point positive shift in sales over time.
The brand made several other value moves, according to Tucker. It increased the size of its small drinks by 25% and lowered the prices on the bulk of its combos to below $10 in most markets, according to a press release.
But, Tucker said, value is a holistic perception that includes the experience. To improve that aspect of its brand value, Jack in the Box has to undertake operational initiatives; Tucker first outlined this as the Jack’s Way program earlier this year. But the details of the plan are getting more coherent.
“In the near term, we are retraining the entire system with a disciplined focus on getting back to basics. It isn't glamorous, but it is essential,” Tucker told analysts and investors on Wednesday.
The chain is also looking to reimage its store base, but that may be a long process.
“We're going to need to do a comprehensive reimage program, and that needs to start sooner rather than later,” Tucker said.
The brand is testing a mini-reimaging program for the near term, in hopes of boosting sales without significant expense. Tucker said franchisees would need more time to prepare financially for the cost of full remodels, considering the sales and profitability problems that the brand faced over the last year.
