QSR January 2023


Upon joining Jack in the Box in June 2020, Harris was tasked in his first 90 days with every new CEO’s dream—set tling a two-year-old lawsuit with the Jack in the Box National Franchisee Association, which represents 95 franchise owners with about 2,000 of the brand’s more than 2,200 restaurants. However, his diligent work paid off. Jack’s stock price, as of press time, was hovering around $89, an increase of 170 per cent since Harris came on board. Overall franchisee satisfaction scores also improved from 56 percent in 2020 to 72 percent. He attributes Jack’s successful turnaround to clarifying the brand’s strategic direction, re-establishing franchisee relationships, hir ing a new leadership team, and focusing on culture. Delving into the latter, Harris faced another immediate chal lenge when he entered an empty office during a pandemic and began assembling a new C-suite at a time when people were still nervous about meeting in person. “Just trying to f igure out, how do I roll up my sleeves and understand the business, and understand what really happens at Jack in the Box and the culture and the people and franchi sees, was a huge challenge,” Harris says. The lack of in-person meetings led to missed moments to connect and build culture, “because you’re focused so much on how do we execute, what do we need to get done today,” he adds. “A whole new leadership team didn’t know their employ ees personally, because they weren’t seeing each other in the office each day.” Though Harris admits the solution to building a strong cul ture in today’s environment is ever evolving, building time in the schedule to get to know employees and ask about their fam ilies has boosted morale, and even helped the team align on a shared vision and strategy. “If we get people and culture right, 90 percent of our success will come from those two things,” Harris says, plus “having a clear strategy and being able to adapt.” If rising sales figures are the measure of success, Harris must be on to something. In 2021, Jack in the Box reported $1.8 million average-unit volumes—up 20 percent from 2020, and providing $4.3 million enterprise average EBITDA, Harris says. In the fourth quarter ending on October 2, Jack in the Box reported total revenues of $402.8 million—an increase of 44.6 percent from last year during the same period. The brand ended Q4 with 2,181units, including 2,035 franchises and 146 com pany-run locations. AN ENERGIZING ACQUISITION LEADS TO LEARNINGS AND NEW PROTOTYPE A signif icant driver of Jack in the Box’s success over the last year can be attributed to a strategic acquisition completed in March 2022 of Del Taco, which comprised about $126.3 mil lion—nearly 32 percent—of the total revenue in Q3. Aligning menu offerings, company cultures, and guest profiles drove Jack in the Box’s interest in the $585 million purchase of Del Taco, another California-based American fast-food chain that offers burgers, fries, shakes, and, no surprise—tacos. By acquiring Del Taco, Jack in the Box added about 300 corpo

rate-owned and 300 franchise-owned units under its portfolio, growing Jack’s overall reach to more than 2,800 locations span ning about 25 states. There was also the opportunity for Jack in the Box to learn from Del Taco’s success with its “Fresh Flex” prototype, a new restaurant design that dropped in January 2021 and led to increased franchise deals for the 600-unit-plus franchise. Highlights include third-party delivery pickup stations, double drive-thru lanes dedicated to mobile or delivery orders, and a


kitchen redesigned for optimal labor efficiency. Following the deal, Harris and his team ref lected and real ized it “had been a very long time” since Jack in the Box released a new prototype, Harris says. “So our focus became, what can we do to make this a more viable development opportunity for growth?” he says. “One, it has to have a great image to the street, but it also has to be more cost effective and efficient to build and have a great eco nomic model.” Del Taco’s Fresh Flex design was based off of a previous Jack in the Box prototype that a former architect brought to Del Taco, Harris reveals, which they tweaked and improved upon. “We very quickly said, OK, this is very interesting,” Harris says. “Why don’t we take their learnings and provide our new image to a building that’s already more value engineered? And that’s what we were able to do.” In October, Jack in the Box announced its new “CRAVED” model—which stands for “Cultural, Relevant, Authentic, Vis ible, Easy, and Distinctive”—with a new restaurant opening in Tulsa, Oklahoma, at only 1,350 square feet, less than half the size of Jack’s typical dine-in restaurants. The new prototype features a double Y-lane drive-thru and pickup window, no inte rior seating to lower building costs, dual assembly kitchens, and exclusive parking for mobile and third-party delivery orders— sound familiar? The brand also brought a more modern design and color palette to its restaurant of the future with warm wood tiles, nat ural concrete waiting blocks, graphic poster panels, white cube tiles, and upgraded lighting and landscaping.



JANUARY 2023 | QSR | www.qsrmagazine.com

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