JACK IN THE BOX INC Q4 FY2024 earnings call

• Digital Sales: Digital now at over 14%, first-party sales up 83% year-over-year in quarter four, third-party nearly 70% of total digital business. Launched new iOS Jack app with improved user experience, etc. Plan to become a 20% digital business by 2027, with nearly 550 Jack in the Box restaurants on new POS by end of 2025.
• New Stores: 2024 had 30 gross openings, highest in over a decade. 2025 has 101 development agreements for 464 restaurant commitments. Entering Chicago, Florida, Mexico, and Detroit. New restaurants in whitespace markets outperform system.
• Brand Building: $50 million committed to reimage program, 17 industrial reimages completed, 67 in design and permitting. Crave design has 377 sites approved. Margin improvement initiatives rolling out, including beverage provider contract.
• Del Taco: Making progress on transformation, first brand research study in seven years. New menu initiative launched system wide. Focus on rebuilding innovation pipeline, freestanding kiosks, catering, and evolving rewards program. 80% franchised, asset-light business.

Jack in the Box

• Fourth quarter system same-store sales declined 2.1%, with franchise comps lower by 2% and company owned comps down 2.2%. Transaction decrease and negative mix partially offset by 4.8% price increase. Opened 16 restaurants in the quarter. Full year had 30 Jack restaurant openings, 25 closures, ending with 2,191 restaurants. Restaurant level margin for the quarter decreased year-over-year by 220 basis points to 18.5%. Franchise level margin was $70.9 million or 40.4% of franchise revenues compared to $71.1 million or 39.9% a year ago.
• 2025 expectations: Same-store sales of flat to up 1%, 35 to 45 gross restaurant openings, company owned restaurant level margin of 20% to 22%, franchise level margin of 40% to 41%.

Del Taco

• Fourth quarter system same-store sales declined 3.9%, consisting of company owned comps down 3% and franchise comps down 4.2%. Transaction decline and unfavorable mix partially offset by 8.2% price increase. Full year had 14 restaurant openings and 12 restaurant closures, ending with 594 restaurants. Restaurant level margin was 9.3% compared to 14.8% in the prior year. Franchise level margin was $6 million or 26.5% of franchise revenues compared to $6.3 million or 32.5% in the prior year.
• 2025 expectations: Same-store sales approximately flat-to-down 1%, 15 to 20 gross restaurant openings, company-owned restaurant-level margin of 9% to 11%, franchise level marks for 25% to 26%.

• Consolidated: Capital expenditures of $105 million to $115 million, SG&A expenses of $160 million to $170 million, depreciation and amortization of $58 million to $60 million, share repurchases of approximately $20 million, operating EPS tax-rate of approximately 27.5%, adjusted EBITDA of $288 million to $303 million, and operating EPS of $5.05 to $5.45.
• Jack in the Box: Same-store sales of flat to up 1%, 35 to 45 gross restaurant openings, company owned restaurant level margin of 20% to 22%, franchise level margin of 40% to 41%.
• Del Taco: Same-store sales approximately flat-to-down 1%, 15 to 20 gross restaurant openings, company-owned restaurant-level margin of 9% to 11%, franchise level marks for 25% to 26%.

• Macro Environment: Industry headwinds affecting top line. QSR transactions softer than historical levels.
• Cost Pressures: Impact of California's new minimum wage law, AB1228, and inflation on labor and other costs.
• Competition: Changing competitive dynamics that could impact traffic and market share.

Q: Lauren Silberman asked about quarter-to-date running up 1% and what's driving the acceleration.

A: Darin Harris said it's due to alignment of innovation and value, and leaning into digital with new app and Android component.

Q: Brian Mullan asked about Del Taco's restaurant level margin guide.

A: Darin Harris said work on financial fundamentals is in progress, discipline on inventory management helped, but AB1228 and inflation are challenges, key is driving top line.

Q: Katherine Griffin asked about extent of softer performance in quarter due to California demand backdrop vs share loss.

A: Brian Scott said California has performed relatively well, it's more of an industry issue.

Q: Brian Bittner asked about visibility into bottom quintile of Jack in the Box franchise portfolio and closures subsiding.

A: Darin Harris said franchisees' financials held flat, anticipate closures to be more industry norm around 16-18 a year.

Q: Gregory Francfort asked about CapEx and breakdown.

A: Brian Scott said technology investments around $40-45 million, new restaurant openings around $30-40 million, including POS rollout and new market entries.

Q: Alton Stump asked about Jack in the Box growth and impact on franchisees' appetite.

A: Darin Harris said site pipeline is strong, 101 development agreements, 22 new franchisees, new markets working well.

Q: Dennis Geiger asked about Del Taco refranchising.

A: Darin Harris said at 80% refranchised, evaluating impact of AB1228 and restaurant environment, holding steady for now.

Q: Jon Tower asked about new product news and pricing.

A: Darin Harris said focused on brand positioning and digital, Brian Scott said Jack price around 3%-4%, Del around 5%-6%, aligned with new menu.

Q: Logan Reich asked about franchisee profitability.

A: Darin Harris said it comes down to sales growth, franchisees running flat year-over-year, AB1228 impacts P&L. Brian Scott said franchisees are multi-unit owners, system is healthy.

Q: Alex Slagle asked about digital and basics approach.

A: Darin Harris said focus on improving guest experience, frictionless digital, accuracy in digital and drive-thru. Brian Scott said supported by new app, loyalty program, and POS.

Q: Andrew Charles asked about value mix and competitive dynamics.

A: Darin Harris said Munchies Under $4 improved trends, digital performing offers helped. Brian Scott said price guidance aligned with same-store sales.

Q: Christine Cho asked about value mix and balance.

A: Darin Harris said Munchies Under $4 improved check and add-on, digital offers like $5 breakfast helped.

Q: Brian Harbour asked about refranchising and share repurchase.

A: Brian Scott said no refranchising beyond 13 in guidance, share repurchases based on operating cash flow and investment priorities.