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Jack in the Box Joins Food Chains Expanding Across the United States

Restaurants Come to Michigan, Florida as Company Cites Rising Interest From Franchisees
Jack in the Box has franchise agreements in place that would add nearly 400 restaurants nationwide over the next several years. (CoStar)
Jack in the Box has franchise agreements in place that would add nearly 400 restaurants nationwide over the next several years. (CoStar)
CoStar News
February 22, 2024 | 7:27 P.M.

Jack in the Box has agreed to open restaurants in Michigan and Florida as the San Diego-based company extends its push beyond a traditional Western United States focus after successful entries into markets such as Kentucky and Arkansas.

The operator of 2,180 Jack in the Box restaurants and 600 Del Taco locations across 22 states, said it signed with new franchisee Niraj Patel to expand the flagship burger brand into Michigan’s southwest and south-central areas, including the cities of Kalamazoo, Battle Creek, Calhoun County, and Kent County with at least five locations planned.

Executives said Jack in the Box also has an agreement in place with existing Southeast franchisee Ed Zausch for 10 new restaurants in greater Orlando, Florida. Financial terms were not disclosed for the agreements that follow openings and development in the past two years in Utah, Kentucky, Arkansas, Montana, and Wyoming.

“The continued expansion into Florida and Michigan matches up with our strategic growth plan for new markets,” said Tim Linderman, chief development officer at Jack in the Box, in a company statement. “With the recent success from our new market openings in Salt Lake City and Louisville, we’ve recognized how much pent-up demand Jack in the Box has across the country.”

The restaurants are the latest fast casual food chains to further expand throughout the U.S. Taco Bell aims to open nearly 3,000 new locations over the next several years to bring its portfolio count to 10,000 restaurants. Parent company Yum Brands added 1,130 new stores in 65 countries during the third quarter, a record for the company that operates mostly franchised brands, including Taco Bell, KFC, Pizza Hut and Habit Burger Grill.

Smaller burger chain Shake Shack, which operates nearly 500 global eateries, opened dozens of locations last year and plans to expand to Canada this year. And Jack in the Box's sister brand, Del Taco, signed 138 new franchise deals in 2023, including 52 agreements in Florida.

Foot Traffic Boost

Started in 1951 and credited with operating the nation’s first drive-thru lanes that used intercom-connected menu boards, Jack in the Box has historically focused on the western United States, especially along the West Coast. But in recent years, it has leaned into development in other regions as its business model moved increasingly into franchised rather than company-owned stores.

During a quarterly earnings call, CEO Darin Harris said the company has 91 signed development agreements in place that would eventually add nearly 400 restaurants nationwide over the next several years. There are 81 restaurants in some phase of permitting or construction, as the company prepares to open its first restaurant in Mexico by the end of this month.

Planned growth comes as the company, like its rivals, deals with relatively high labor and food costs, but as consumers at the same time increasingly gravitate to tech-enhanced drive-thru services and app-enabled food orders for pickup and delivery.

Harris told analysts the company has witnessed “very good volumes” of customer traffic from recent new openings in Louisville, Kentucky, and Salt Lake City. “We’ve received a good reception to designs we’ve placed in those markets,” the CEO said, referring to new smaller store formats that emphasize drive-thrus while downsizing dining rooms.

Chief Financial Officer Brian Scott said severe weather near the end of the company’s first fiscal quarter of 2024 that ended Jan. 21 cut into overall revenue, though same-store food sales increased 0.8% from a year earlier.

The company reported total revenue, including royalty and other franchise fees, of $487.5 million, down slightly from $527.1 million a year earlier. Net income was $38.7 million, down from $53.3 million, as Scott cited factors such as higher labor and insurance costs.

Franchisee Patel’s first planned Jack in the Box will be in Battle Creek, Michigan, and he expects to employ 40 to 50 people at each upcoming location in the state. “We own and operate a dozen hotels in the West Michigan area and want to expand our hospitality portfolio with the addition of a quick-service restaurant concept,” Patel said in the company statement.