Jack in the Box Inc. (NASDAQ:JACK) Q1 2023 Earnings Call Transcript

David Tarantino: Great. Thank you for that. And then I guess my second question on development is, you are entering a lot of new markets and I wondered if you would be able to elaborate on what the go-to-market approach might be on building the brand where brand awareness presumably is low. I know there’s been challenges in the past when we’ve seen this, this type of kind of new market entry. So just wanted to get your perspective on what you might do differently this time?

Darin Harris: Yes. We’ve approached it pretty €“ felt a lot differently. And so if you think about Salt Lake City one of the key strategies was we’re going into Salt Lake City with multiple franchisees, including corporate and putting dollars into the market at a heavy level to get awareness built very, very quickly. In other markets, what our focus is and what’s changed is from where Jack in the Box went into markets in the past, we needed to be in TV and we needed €“ we only would put out a general manager and we’d built one to two locations. Instead, we’re going into, say Louisville and we’re going to get to a point of expansion to where we can get to our lowest level of awareness through digital, which is part of the change.

And then build upon that to get to some point where we have full awareness through a television and all other media metrics. So first and foremost, going with franchisees around us, we all build second hit different awareness levels at different strategies, first and foremost being digital, which we can reach a lot of customers to that methodology.

Operator: We’ll take our next question from Jeff Bernstein with Barclays.

Jeff Bernstein: Great. Thank you. Following up on the commentary around the industry and promotional activity we’re definitely hearing about a re-acceleration in that trend. I’m wondering whether there’s anything that’s been surprising to you. I know you mentioned Del Taco’s challenge battling their largest taco competitor, but presumably for the Jack in the Box brand, just wondering what you’re seeing from your largest peers or whether or not the trade down perhaps from above is more than offsetting any of those competitive or discounting pressures? And I have one follow up.

Darin Harris: Yes. I think as a whole we’re seeing some trade down from casual dining and fast casual into QSR. We’re also seeing across the industry what I think a lot of us over the last two years thought that maybe we would flatten out on a digital and delivery standpoint. Our business continues to accelerate in the digital and delivery space. So €“ and then the last I would say is, if you look back over history, nothing would point to our ability to continue to take price at this level and still improve transactions. And so we’re finding a way to do that. And a lot of that is through improved operating hours. And so those of us who can win at improving our operating hours and take care of our people are winning with our consumers. And a perfect example of that is for our business taking late night share; both in both Del Taco and Jack in the Box we are taking share at late night.

Jeff Bernstein: Understood. And then my follow up was just a clarification on your unit growth comments earlier. Clearly net growth this year is impressive but as we look at a year or two, your confidence in accelerating that growth, I mean, you talked a lot about increasing these agreements, which is obviously a good leading indicator, but on the flip side, there’s seemingly a more challenging macro rising interest rates, and some of the re-franchising you’re doing is probably taking proceeds away from what otherwise been used for new unit growth. So I’m just wondering whether any of those are concerns or whether or not you have that line of sight by year to know that that unit growth’s going to continue to accelerate despite those headwinds. Thank you.