Q1 2024 Jack In The Box Inc Earnings Call

Operator: Thank you for standing by, and welcome to the Jack first quarter 2024 earnings webcast call. I would now like to welcome Chris Brandon, Vice President of Investor Relations, to begin the call. Chris, over to you.

Thank you for standing by and welcome to the Jack first quarter 'twenty 'twenty four earnings webcast call.

I would now like to welcome Chris Brandon Vice President of Investor Relations.

Chris Brandon: Begin the call.

Chris Brandon: Chris over to you.

Chris Brandon: Thanks, operator, and good afternoon, everyone. We appreciate you joining today's conference call, highlighting results from our first quarter of 2024. With me today are Chief Executive Officer, Darin Harris, and our Chief Financial Officer, Brian Scott. Following their prepared remarks, we will be happy to take questions from our covering sell-side analysts. Note that during both our discussion and Q&A, we may refer to non-GAAP items. Please refer to the non-GAAP reconciliations provided in the earnings release, which is available on our Investor Relations website at jackinthebox.com. We will also be making forward-looking statements based on current information and judgments that reflect management's outlook for the future. However, actual results may differ materially from these expectations because of business risks. We therefore consider the Safe Harbor statement in the earnings release and the cautionary statements in our most recent 10-K to be part of our discussion. Material risk factors as well as information relating to company operations are detailed in our most recent 10-K, 10-Q, and other public documents filed with the SEC and are available on our Investor Relations website. And with that, I'd like to turn the call over to our Chief Executive Officer, Darin Harris

Chris Brandon: Thanks, operator, and good afternoon, everyone. We appreciate you joining today's conference call highlighting results from our first quarter of 2024 with me today are Chief Executive Officer, Darrin Harris, and our Chief Financial Officer Bryan Scott.

Chris Brandon: We appreciate you joining today's conference call highlighting results from our first quarter of 2024. With me today are our Chief Executive Officer, Darren Harris, and our Chief Financial Officer, Brian Scott. Following their prepared remarks, we will be happy to take questions from our covering cell site analysts.

Chris Brandon: Following their prepared remarks, we will be happy to take questions from our covering sell side analysts note that during both our discussion and Q&A. We may refer to non-GAAP items. Please refer to the non-GAAP reconciliations provided in the earnings release, which is available on our Investor Relations website at Jack in the box Dot com.

Chris Brandon: Note that during both our discussion in Q&A, we may refer to non-GAAP items. Please refer to the non-GAAP reconciliations provided in the earnings release, which is available on our investor relations website at jackinthebox.com. We will also be making forward-looking statements based on current information and judgments that reflect management's outlook for the future. However, actual results may differ materially from these expectations because of business risk.

We will also be making forward looking statements based on current information and judgments that reflect managements outlook for the future.

Chris Brandon: However, actual results may differ materially from these expectations because of business risks.

Chris Brandon: We therefore consider the safe harbor statement in the earnings release and the cautionary statements in our most recent 10K to be part of our discussion. Material risk factors, as well as information relating to company operations, are detailed in our most recent 10K, 10Q, and other public documents filed with the SEC and are available on our Investor Relations website. And with that, I'd like to turn the call over to our Chief Executive Officer, Darren Harris. Thank you, Chris.

We therefore consider the safe harbor statement in the earnings release and the cautionary statements in our most recent 10K to be part of our discussion. Material risk factors, as well as information relating to company operations, are detailed in our most recent 10K, 10Q, and other public documents filed with the SEC and are available on our Investor Relations website. And with that, I'd like to turn the call over to our Chief Executive Officer, Darren Harris.

Chris Brandon: We therefore consider the safe Harbor statement in the earnings release and the cautionary statements in our most recent 10-K to be part of our discussion material.

Chris Brandon: Material risk factors as well as information relating to company operations are detailed in our most recent 10-K 10-Q and other public documents filed with the SEC and are available on our Investor Relations website.

Chris Brandon: And with that I'd like to turn the call over to our Chief Executive Officer Darrin Harris.

Darin Harris: Thank you, Chris. Last month, we hosted our first in-person investor day in several years here at our restaurant support center in San Diego, and we appreciate everyone who was able to join us in person or tune in, during the Investor Day, we introduced how we intend to take the next step in our strategy and break out of the box, we communicated our bold ambition, starting with expanding our reach to achieve 2.5% net new restaurant growth. Based upon the tremendous whitespace we have a new and existing market. We want to increase AUVs that are two challenger brands by exceeding $2.5 million in sales at Jack and 2 million for Del Taco. Our AUV goals will be supported by achieving 20% digital sales. And lastly, if we can generate 15% four-wall franchise EBITDA with a sub five year new restaurant payback, our top-tier restaurant economics will further support our growth strategy. We have entered the next phase of our transformation and to achieve our ambition, there are three key drivers that will be the focus of our strategy, driving top-tier AUVs, improve restaurant-level economics and strengthen development capabilities. I'd like to mention a few highlights from the first quarter that supported achieving our ambition. Our AUV performance for both brands is driven by steady same-store sales for Jack in the Box and Del Taco, we generated systemwide sales of over $1.3 billion for Jack and nearly $300 million for Del Taco. Our comps at Jack-in-the-Box overcame some meaningful pressure during the last four weeks of the quarter as a result of weather during January.

Darrin Harris: Thank you Chris last month, we hosted our first in person Investor day, and several years here at our restaurant support center in San Diego and.

Darren Harris: Last month, we hosted our first in-person Investor Day in several years here at our Restaurant Support Center in San Diego, and we appreciate everyone who was able to join us in person or tune in. During Investor Day, we introduced how we intend to take the next step in our strategy and break out of the box. We communicated our bold ambitions, starting with expanding our reach to achieve 2.5% net new restaurant growth. Based upon the tremendous white space.

And we appreciate everyone, who was able to join us in person or tune in.

Darrin Harris: During the Investor Day, we introduced how we intend to take the next step in our strategy and break out of the box.

Darrin Harris: We communicated our bold ambition, starting with expanding our reach to achieve two 5% net new restaurant growth based upon the tremendous white space.

Darren Harris: We have a new and existing market. We want to increase AUVs that are two-challenger brands by exceeding $2.5 million in sales at Jack and $2 million for Delta. Our AUV goals will be supported by achieving 20% digital sales.

Darrin Harris: Have a new and existing markets.

Darrin Harris: We want to increase <unk> at our two challenger brands by exceeding $2 5 million in sales at Jack and $2 million for del Taco.

Darrin Harris: Our goals will be supported by achieving 20% digital sales.

Darren Harris: And lastly, if we can generate 15% four-wall franchise EBITDA with a sub-five-year new restaurant payback, our top-tier restaurant economics will further support our growth strategy. We have entered the next phase of our transformation, and to achieve our ambition, there are three key drivers that will be the focus of our strategy to drive top-tier AUVs, improve restaurant level economics, and strengthen development capability. I'd like to mention a few highlights from the first quarter that support achieving our ambition.

Darrin Harris: And lastly, if we can generate 15% four wall franchise EBITDA with a sub five year new restaurant payback.

Darrin Harris: Our top tier restaurant economics will further support our growth strategy.

Darrin Harris: We have entered the next phase of our transformation and to achieve our ambition. There are three key drivers that will be the focus of our strategy.

Darrin Harris: Driving top tier <unk>.

Darrin Harris: Improve restaurant level economics, and strengthen development capabilities.

Darrin Harris: I'd like to mention a few highlights from the first quarter that support achieving our ambition.

Darren Harris: Our AUV performance for both brands is driven by steady same-store sales for Jack in the Box and Del Taco. We generated system-wide sales of over $1.3 billion for Jack and nearly $300 million for Del Taco. Our cops at Jack in the Box overcame some meaningful pressure during the last four weeks of the quarter as a result of the weather in January.

Darrin Harris: Our <unk> performance for both brands is driven by steady same store sales for Jack in the box and del Taco we.

Darrin Harris: We generated system wide sales of over $1 3 billion.

Darrin Harris: For Jack in nearly $300 million for del Taco.

Darrin Harris: Our comps at Jack in the box overcame some meaningful pressure during the last four weeks of the quarter as a result of weather during January.

Darin Harris: With that said, sales accelerated sequentially on a two, three, and four-year stack basis helped by the performance of our burgers, including our ultimate cheeseburger platform, with support from our three-week soft launch of Smashed Jack, our sides, including our Jack wraps and famous tacos, and lastly, our Munchie Meal platform, particularly at late night. Del Taco's sales performance was bolstered by our Birria promotion, a new product we introduced during the quarter. Both brands continued to accelerate digital sales, having now achieved 12% of total revenue with year-over-year growth in all channels and particularly strong growth in first-party web and app ordering. Breakfast continues to be an opportunity we are addressing, starting with bringing back some deleted items that, while good for margins and speed, were too strong of a headwind to sales. I am confident we can improve our breakfast share helped by three tactics. First, making breakfast a regular recurring part of the marketing calendar, innovating around new breakfast items while continuing to roll out fan-favorite LTOs such as French Toast Sticks or Mini Cinnis, and testing new breakfast offers, especially through digital channels, to target and reengage the valued guest.

Darrin Harris: With that said sales accelerated sequentially on a two three and four year stacked basis helped by the performance of our burgers, including our ultimate Cheeseburger platform with support from our three week soft launch of smashed Jack.

Darrin Harris: Our sides, including our Jack wraps and famous tacos.

Darrin Harris: And lastly, our <unk> mill platform, particularly at late night.

Darren Harris: El Taco's sales performance was bolstered by our Beerier promotion, a new product we introduced during the quarter. Both brands continue to accelerate digital sales, having now achieved 12% of total revenue, with year-over-year growth in all channels, and particularly strong growth in first-party web and app ordering. Breakfast continues to be an opportunity we're addressing, starting with bringing back some deleted items that, while good for margins and speed, were too strong of a headwind to sail. I'm confident we can improve our breakfast share, helped by three tactics. First, making breakfast a regular recurring part of the marketing calendar.

Darrin Harris: Del Taco sales performance was bolstered by our barrier promotion, a new product we introduced during the quarter.

Darrin Harris: Both brands continued to accelerate digital sales, having now achieved 12% of total revenue with year over year growth in all channels, and particularly strong growth in first party web and App ordering.

Darrin Harris: Breakfast continues to be an opportunity we are addressing starting with bringing back some deleted items that while good for margins and speed.

We're too strong of a headwind to sales I am confident we can improve our breakfast share helped by three tactics.

Darrin Harris: First making breakfast a regular recurring part of the marketing calendar.

Darren Harris: Innovating around new breakfast items while continuing to roll out fan-favorite LTOs such as French Toast Sticks or Mini Cinnies and testing new breakfast offers, especially through digital channels, to target and re-engage valued guests. Now switching to restaurant-level economics, Jack Restaurant Level Margin continues to accelerate and serve as a highlight for our business, coming off a year of four and a half percent improvement in 2023.

Innovating around new breakfast items while continuing to roll out fan-favorite LTOs such as French Toast Sticks or Mini Cinnies and testing new breakfast offers, especially through digital channels, to target and re-engage valued guests.

Darrin Harris: Innovating around new breakfast items, while continuing to rollout fan favorite <unk>, such as French toast sticks or many cities.

Darrin Harris: And testing new breakfast offers especially through digital channels to target and Reengage the value guest.

Darin Harris: Now switching to restaurant-level economics. Jack restaurant-level margin continued to accelerate and serve as a highlight for our business. Coming off a year of 4.5% improvement in 2023, our 23.1% margin in Q1 is a 3.3% increase year-over-year and demonstrates that our margin initiatives are working. We will continue our focus on these financial fundamental initiatives to strengthen restaurant-level EBITDA and gain further franchisee adoption. At Del Taco, our new leadership team of Tom Rose and Sarah McAloon are very focused on both sales and restaurant profitability initiatives, some of which can be realized as soon as this year. We will continue to provide updates on the execution and results as we progress throughout the year. And lastly, our strength in development capabilities enabled a solid start to 2024, highlighted by seven restaurant openings and one closure in Q1 at Jack in the Box. We expanded further into Salt Lake City, now at four restaurants, and Louisville now at two restaurants, and both markets continue to perform very well.

Darrin Harris: Now switching to restaurant level economics.

Darrin Harris: Jack restaurant level margin continue to accelerate and serve as a highlight for our business.

Darrin Harris: Coming off a year of four 5% improvement in 2023.

Darren Harris: Our 23.1% margin in Q1 is a 3.3% increase year-over-year and demonstrates that our margin initiatives are working. We will continue our focus on these financial fundamental initiatives to strengthen restaurant-level EBITDA and gain further franchisee adoption. At Del Taco, our new leadership team of Tom Rose and Sarah McAloon is very focused on both sales and restaurant profitability initiatives, some of which can be realized as soon as this year.

Darrin Harris: Our 23, 1% margin in Q1 is a three 3% increase year over year and demonstrates that our margin initiatives are working.

Darrin Harris: We will continue our focus on these financial fundamental initiatives to strengthen restaurant level EBITDA and gained further franchisee adoption.

At del Taco, our new leadership team of Tom Rose and Sarah Mcaloon are very focused on both sales and restaurant profitability initiatives.

Darrin Harris: Some of which can be realized as soon as this year.

Darren Harris: We will continue to provide updates on the execution and results as we progress throughout the year. And lastly, our strength and development capabilities enabled a solid start to 2024, highlighted by seven restaurant openings and one closure in Q1 at Jack in the Box. We expanded further into Salt Lake City, now at four restaurants, and Louisville, now at two restaurants, and both markets continue to perform very well. We announced two new franchise agreements. The first one will add an additional 10 restaurants to our Florida expansion, and the second is another new franchisee that will bring Jack to Michigan by signing on to build five restaurants. Our new restaurant pipeline continues to grow. As we now have 91 signed development agreements for 399 future rest. We currently have 81 residents that are in the construction or permitting phase.

We will continue to provide updates on the execution and results as we progress throughout the year. And lastly, our strength and development capabilities enabled a solid start to 2024, highlighted by seven restaurant openings and one closure in Q1 at Jack in the Box. We expanded further into Salt Lake City, now at four restaurants, and Louisville, now at two restaurants, and both markets continue to perform very well.

Darrin Harris: We will continue to provide updates on the execution and results as we progress throughout the year.

Darrin Harris: And lastly, our strength and development capabilities enabled a solid start to 2024 highlighted by seven restaurant openings and one closure in Q1 at Jack in the box.

Darrin Harris: We expanded further into Salt Lake City now at four restaurants, and Louisville now at two restaurants.

Darrin Harris: In both markets continued to perform very well.

Darrin Harris: We announced two new franchise agreements. The first one will add an additional 10 restaurants to our Florida expansion and the second is another new franchisee that will bring Jack to Michigan by signing on to build five restaurants.

Darin Harris: We announced two new franchise agreements. The first one will add an additional 10 restaurants to our Florida expansion, and the second is another new franchisee that will bring Jack to Michigan by signing on to build five restaurants. Our new restaurant pipeline continues to grow, as we now have 91 signed development agreements for 399 future restaurants. We currently have 81 restaurants that are in the construction or permitting phases. I'm also pleased to report we will open our first Jack in the Box restaurant in Mexico next week, our latest new market, and one that we are very excited about given high demand for the brand.

Darrin Harris: Our new restaurant pipeline continues to grow as.

Darrin Harris: As we now have 91 signed development agreements for 399 future restaurants.

Darrin Harris: We currently have 81 restaurants that are in the construction or permitting phases.

Darren Harris: I'm also pleased to report we will open our first Jack in the Box restaurant in Mexico next week. This is our latest new market and one that we are very excited about given the high demand for the brand. At Dell, we had flat net unit growth, including three restaurant openings in the first quarter. We currently have 155 development agreements at quarter end and 49 sites that are in the construction or permitting phase. Quarter 2 will see the system-wide launch of Smash Chat, our most exciting burger innovation in nearly a decade. And I may be biased, but it is the best burger I've tasted in a QSR.

I'm also pleased to report we will open our first Jack in the Box restaurant in Mexico next week. This is our latest new market and one that we are very excited about given the high demand for the brand.

Darrin Harris: I'm also pleased to report we will open our first Jack in the box restaurant in Mexico next week, our latest new market and one that we are very excited about given high demand for the brand.

Darrin Harris: At del we had flat net unit growth, including three restaurant openings in the first quarter.

Darin Harris: At Del, we had flat net unit growth, including three restaurant openings in the first quarter. We currently have 155 development agreements at quarter end and 49 sites that are in the construction or permitting phases. Quarter two will see the systemwide launch of Smashed Jack. Our most exciting burger innovation in nearly a decade, and I may be biased, but it is the best burger I have tasted in QSR. And guests who got their hands on one during the soft launch agreed, as we sold over 70,000 on our very first day with no media support. The full launch, including a bold television campaign featuring real Jack guests, begins this quarter, and we're excited about the potential for this product and building on the positive response we've already received. I'd like to briefly touch on value, a key topic within the industry at the moment. We continue to work with our franchisees and utilize guest insights on the best approach to make value a competitive advantage for both brands. We're seeing solid results from our variety of value offers, such as our $3 Jack Wrap, $5 Jack Pack, our $10 Fan Box, and our $12 Munchie Meals. In today's competitive environment, we are looking to provide even more everyday value. So look for an improved Jack's deal menu, providing a variety of value for the budget-conscious guest.

Darrin Harris: We currently have 155 development agreements at quarter end and 49 sites that are in the construction or permitting phases.

Darrin Harris: Quarter, two we will see the system wide launch of smashed Jack.

Darrin Harris: Our most exciting Burger innovation in nearly a decade and I may be biased, but it is the best Burger tasted in <unk>.

Darren Harris: And guess who got their hands on one during the soft launch of Grease? We sold over 70,000 on our very first day with no media support. The full launch, including a bold television campaign featuring real Jack guests, begins this quarter, and we're excited about the potential for this product and building on the positive response we've already received. I'd like to briefly touch on value, a key topic within the industry at the moment. We continue to work with our franchisees and utilize guest insights on the best approach to make value a competitive advantage for both brands. We're seeing solid results from our variety of value offers, such as our $3 jack wrap, $5 jack pack, our $10 fan box, and our $12 munchie. In today's competitive environment, we are looking to provide even more everyday value. So look for an improved Jack's Deal menu, providing a variety of value for budget-conscious guests.

Darrin Harris: And guess who got their hands on one during the soft launch agreed as we sold over 70000, our very first day with no media support.

Darrin Harris: The full launch, including a bold television campaign, featuring real Jack guests.

Darrin Harris: <unk> this quarter and we're excited about the potential for this product and building on the positive response, we have already received.

I'd like to briefly touch on value.

Darrin Harris: A key topic within the industry at the moment.

Darrin Harris: We continue to work with our franchisees and utilized guest insights on the breast approach to make value of competitive advantage for both brands.

Darrin Harris: We're seeing solid results from our variety of value offers such as our $3 <unk> $5 Jack pack.

Our $10 sandbox and our $12 <unk> mills.

Darrin Harris: In today's competitive environment, we're looking to provide even more everyday value.

Darrin Harris: So look for an improved Jack deal menu, providing a variety of value for the budget conscious guest.

Darin Harris: In the meantime, we will continue to utilize our digital channel to provide targeted offers to our most loyal guests and app users. And we continue to attract new users via aggressive offers, such as our famous two tacos for $0.99. At Del Taco, our brand insights have demonstrated that we win on value versus the competition and have an opportunity to go beyond just low price points and offer more food for the money. We will utilize the hook and build strategy and lead with value while growing average check in a healthy way via upsell. I'm also excited about our learnings thus far from our current menu redesign initiative at Del. And once fully rolled out, we expect this to drive both sales and margin improvement. To close, I'd like to thank our franchisees and team members for helping us get off to a good start in 2024 and for their continued passion toward providing remarkable guest experiences. I will now turn the call over to Brian.

Darrin Harris: In the meantime, we will continue to utilize our digital channels to provide targeted offers to our most loyal guests and app users.

Darrin Harris: And we continue to attract new users via aggressive offers such as our famous two tacos for 99.

Darrin Harris: At del Taco.

Darrin Harris: Our brand insights have demonstrated that we win on value versus the competition.

Darrin Harris: And have an opportunity to go beyond just low price points and offer more food for the money.

Darren Harris: We will utilize the hook and build strategy and lead with value while growing average checks in a healthy way via upsell. I'm also excited about our learnings thus far from our current mini-redesign initiative at Dell. And once fully rolled out, we expect this to drive both sales and margin improvement. To close, I'd like to thank our franchisees and team members for helping us get off to a good start in 2024 and for their continued passion toward providing a remarkable guest experience. I will now turn the call over to Brian.

We will utilize the hook and build strategy and lead with value while growing average check in a healthy way via upsell.

Darrin Harris: I'm also excited about our learnings thus far from our current menu redesign initiative at Dell and.

Darrin Harris: And once fully rolled out we expect this to drive both sales and margin improvement.

Darrin Harris: To close I'd like to thank our franchisees and team members for helping us get off to a good start in 2024 and for their continued passion towards providing remarkable guest experiences.

Darrin Harris: I will now turn the call over to Brian.

Brian M. Scott: Thanks, Darin, and good afternoon, everyone. I will start by reviewing our two brands individually, followed by details on our consolidated performance and capital allocation. Beginning with Jack in the Box, our first quarter system same-store sales growth was 0.8%, consisting of company-owned comps of 2% and franchise comps of 0.7%. Our overall average check increased in the prior year driven by price. And while transactions were down, we are seeing continued success from our hook and build platforms and certainly saw a nice lift in sales and transactions during the Smashed Jack soft launch period. Additionally, we have continued our positive trends related to operations and speed, posting the sixth consecutive quarter of increasing speed of service with a six-second sequential improvement. Regarding product categories, notable contributors came from burgers and sides. The late-night daypart once again stood out and was the strongest contributor to overall sales.

Brian: Thanks, Darren and good afternoon, everyone I will start by reviewing our two brands individually followed by details on our consolidated performance and capital allocation.

Brian: Beginning with Jack in the box are first quarter system same store sales growth was 8%.

Brian: Consisting of company owned comps of 2% and franchise comps of <unk>, 7%.

Brian: Our overall average check increase from prior year, driven by price and while transactions were down we are seeing continued success from our hook and build platforms.

Brian: And certainly saw a nice lift in sales and transactions during the smash Jack soft launch period.

Brian: Additionally, we have continued our positive trends related to operations and speed.

Brian: And the sixth consecutive quarter of increasing speed of service with a sixth sequential improvement.

Brian: Regarding product categories. Notable contributors came from burgers and sides.

Brian M. Scott: The late night day part once again stood out and was the strongest contributor to overall sales. Turning to restaurant count, there were seven restaurant openings and one closure in the quarter. This resulted in a quarter increase in restaurant count of 2,192, and we remain on track to achieve our net unit growth objectives for the full fiscal year. Jack, restaurant level margin expanded year over year by 330 basis points to 23.1%, driven primarily by commodity deflation, strong sales leverage, and operational improvement. Food and packaging cost of the percentage of company on sales declined 310 basis points to 29.7%, primarily due to lower commodity costs. Commodity deflation was 2.9% for the quarter.

The late night day part once again stood out and was the strongest contributor to overall sales.

Brian: The late night day part once again stood out and was the strongest contributor to overall sales.

Turning to restaurant count there were seven restaurant openings and one closure in the quarter.

Brian M. Scott: Turning to restaurant count, there were seven restaurant openings and one closure in the quarter. This resulted in a quarter end restaurant count of 2,192, and we remain on track to achieve our net unit growth objectives for the full fiscal year. Jack restaurant level margin expanded year-over-year by 330 basis points to 23.1%, driven primarily by commodity deflation, strong sales leverage, and operational improvements. Food and packaging costs of the percentage of company-owned sales declined 310 basis points to 29.7%, primarily due to lower commodity costs. Commodity deflation was 2.9% for the quarter. Labor as a percentage of company-owned sales fell 50 basis points to 30.8% due to sales leverage partially offset by higher wages and insurance costs. Labor inflation was 2.8% in the quarter, in line with our expectations. Occupancy and other operating costs increased 20 basis points to 16.4% of company restaurant sales.

Brian: This resulted in a quarter in restaurant count at 2192, and we remain on track to achieve our net unit growth objectives for the full fiscal year.

Brian: Jack restaurant level margin expanded year over year by 330 basis points to 23, 1% driven primarily by commodity deflation strong sales leverage and operational improvements.

Brian: Food and packaging costs as a percentage of company owned sales declined 310 basis points to 29, 7%, primarily due to lower commodity costs.

Brian: Commodity inflation was two 9% for the quarter.

Brian M. Scott: Labor as a percentage of company-owned sales fell 50 basis points to 30.8% due to sales leverage partially offset by higher wages and insurance costs. Labor inflation was 2.8% in the quarter, in line with our expectations. Occupancy and other operating costs increased 20 basis points to 16.4% of company restaurant sales. Franchise level margin was $97.5 million, or 41.2% of franchise revenue, compared to 106.8 million or 44.4% a year ago. The decrease was expected and driven mainly by lapping the $7.3 million fee paid by a franchisee related to their sale of the Hawaii market, along with a prior year 1.5 and our bad debt reverse. Turning now to Del Taco, system same store sales rose 2.2%, consisting of company-owned comps of 1.8% and franchise comps of 2.4%. Average check was up year-over-year, partially offset by lower trends. The Del Taco restaurant count at quarter end was unchanged at 590.

Labor as a percentage of company-owned sales fell 50 basis points to 30.8% due to sales leverage partially offset by higher wages and insurance costs. Labor inflation was 2.8% in the quarter, in line with our expectations. Occupancy and other operating costs increased 20 basis points to 16.4% of company restaurant sales.

Brian: Labor as a percentage of company owned sales fell 50 basis points to 38% due to sales leverage partially offset by higher wages and insurance costs.

Brian: Labor inflation was two 8% in the quarter in line with our expectations.

Brian: Occupancy and other operating costs increased 20 basis points to 16, 4% of company restaurant sales.

Brian: Franchise level margin was $97 5 million or 41, 2% of franchise revenues compared to $106 8 million or <unk> 44, 4% a year ago.

Brian M. Scott: Franchise level margin was $97.5 million, or 41.2% of franchise revenues, compared to $106.8 million, or 44.4% a year ago. The decrease was expected and driven mainly by lapping the $7.3 million fee paid by a franchisee related to their sale of the Hawaii market, along with a prior year $1.5 million bad debt reversal. Turning now to Del Taco. System same-store sales rose 2.2%, consisting of company-owned comps of 1.8% and franchise comps of 2.4%. Average check was up year-over-year, partially offset by lower transactions. Del Taco restaurant count at quarter end was unchanged at 592, with three openings and three closures. Del Taco restaurant level margin was 15.6%, compared to 16.1% in the prior year. The decrease was due to wage and utility inflation, as well as a change in the mix of restaurants, partially offset by higher sales performance and commodity deflation. Food and packaging as a percentage of sales decreased 120 basis points to 27%, which was primarily due to menu price increases and commodity deflation of 0.5%. Labor as a percentage of sales increased 100 basis points to 35.2%, primarily due to wage inflation, which was approximately 3.2% in the quarter. Occupancy and other operating expenses increased 70 basis points to 22.2%, driven primarily by higher utility costs, as well as a change in the mix of restaurants.

Brian: The decrease was expected and driven mainly by lapping the $7 $3 million fee paid by a franchisee related to their sale of the Hawaii market.

Brian: Along with a prior year $1 $500 bad debt reversal.

Brian: Turning now to del Taco.

Brian: System same store sales rose two 2% consisting of company on comps of one 8% from franchise comps of two 4%.

Average check was up year over year, partially offset by lower transactions.

Brian: Del Taco restaurant count at quarter end was unchanged at 592 with three openings and three closures.

Brian M. Scott: The three openings and three closures. Del Taco's restaurant level margin was 15.6%, compared to 16.1% in the prior year. The decrease is due to wage and utility inflation, as well as a change in the mix of restaurants, partially offset by a higher sales performance and commodity prices. Food and packaging as a percentage of sales decreased 120 basis points to 27%, which is primarily due to menu price increases and commodity deflation of 0.5%. Labor as a percentage of sales increased 100 basis points to 35.2%, primarily due to wage inflation, which was approximately 3.2% in the quarter

Brian: So I'll talk about restaurant level margin was 15, 6% compared to 16, 1% in the prior year.

Brian: The decrease was due to wage and utility inflation as well as a change in the mix of restaurants.

Brian: Partially offset by higher sales performance and commodity deflation.

Brian: Food and packaging as a percentage of sales decreased to 120 basis points to 27%.

Brian: Which was primarily due to menu price increases and commodity deflation of 5%.

Brian: Labor as a percentage of sales increased to 100 basis points to 35, 2%, primarily due to wage inflation, which was approximately three 2% in the quarter.

Brian M. Scott: Occupancy and other operating expenses increased 70 basis points to 22.2%, driven primarily by higher utility costs, as well as a change in the mix of restaurants. Franchise level margin was $8 million, or 29.3% of franchise revenue, compared to 6.4 million, or 39.6% last year. The decrease in percentage was driven by higher franchise support costs, and the impact of re-franchizing transactions was passed through rent and advertising, partially offset by franchise same store sales.

Occupancy and other operating expenses increased 70 basis points to 22.2%, driven primarily by higher utility costs, as well as a change in the mix of restaurants.

Brian: Occupancy and other operating expenses increased 70 basis points to 22, 2% driven primarily by higher utility costs as well as the change in the mix of restaurants.

Brian M. Scott: Franchise level margin was $8 million, or 29.3% of franchise revenues, compared to $6.4 million, or 39.6% last year. The decrease in percentage was driven by higher franchise support costs, and the impact of refranchising transactions was passed through rent and advertising, partially offset by franchise same-store sales growth. While there were no refranchising transactions in Q1, we have signed an agreement to sell 13 Del Taco restaurants later this month. We also signed a letter of intent this week to refranchise an additional 25 restaurants. Both of these transactions include development agreements. We remain on track for 40 to 60 refranchised restaurants this year, and achieving our goal of having Del 90% franchised by the end of 2025. Shifting now to our consolidated results. Consolidated SG&A for the first quarter was $46.4 million, or 9.5% of revenues, as compared to $50.1 million, or 9.5% a year ago. The decline was due in large part to $5.9 million lower legal expenses from a prior year litigation settlement. G&A expenses, excluding net COLI gains and selling and advertising, were 2.5% of total systemwide sales.

Brian: Franchise level margin was <unk> 8 million or 29, 3% of franchise revenues.

Brian: Third to $6 4 million or 39, 6% last year.

Brian: The decrease in the percentage of it was driven by higher franchise support costs, while the impact of Refranchising transactions was pass through rent and advertising.

Brian: Partially offset by a franchise same store sales growth.

Brian M. Scott: While there were no re-franchising transactions in Q1, we have signed an agreement to sell 13 Del Taco restaurants later this month. We also signed a letter of intent this week to re-franchise an additional 25 restaurants. Both of these transactions include development. We remain on track for 40 to 60 refranchised restaurants this year and achieving our goal of having Dell 90% franchised by the end of 2025. Shifting now to our consolidated results, consolidated SG&A for the first quarter was $46.4 million, or 9.5% of revenues, as compared to $50.1 million, or 9.5% a year ago. The decline was due, in large part, to $5.9 million lower legal expenses from a prior year litigation settlement. GNA expenses, excluding net COLA gains and selling and advertising, were 2.5% of total system-wide spending.

Brian: While there were no refranchising transactions in Q1.

Brian: We have signed an agreement to sell 13 del Taco restaurants later this month.

Brian: We also signed a letter of intent this week to Refranchising additional 25 restaurants.

Brian: Both of these transactions include development agreements.

Brian: We remain on track for 40% to 60 re franchise restaurants, this year and achieving our goal of having Dell, 90% franchised by the end of 2025.

Shifting now to our consolidated results consolidated SG&A for the first quarter was $46 4 million or nine 5% of revenues as compared to $50 1 million or nine 5% a year ago.

Brian: The decline was due in large part to $5 9 million lower legal expenses from a prior year litigation settlement.

G&A expenses, excluding net coli gains in selling and advertising were two 5% of total system wide sales.

Brian M. Scott: Consolidated adjusted EBITDA was $101.8 million, down from $108.6 million in the prior year, due primarily to the previously noted prior year Hawaii franchise transaction gain and impacts from the Del Taco refranchising. Consolidated GAAP diluted earnings per share was $1.93, compared to $2.54 in the prior year. Operating earnings per share, which includes certain adjustments, was $1.95 for the quarter versus $2.01 in the prior year. The effective tax rate for the first quarter was 26.9%, compared to 26.7% for the same quarter a year ago. The operating EPS tax rate for the first quarter of 2024 was 27.2%. Cash flows from operations reflect a use of cash of $22.7 million, an $85.1 million decrease from the prior year. There were two primary causes of this change. First, we had $50 million of income tax payments related to 2023 that we deferred into Q1 in connection with a weather disaster relief program. And second, we incurred a $25 million final payment on the Torrez legal settlement. Overall, cash flow in the quarter was consistent with our expectations.

Brian: Consolidated adjusted EBITDA was $101 8 million down from $108 6 million in the prior year due primarily to the previously noted prior year, Hawaii franchise transaction gain and impacts from the del Taco Refranchising.

Brian: Consolidated GAAP diluted earnings per share was $1 93, compared to $2 54 in the prior year.

Brian: Operating earnings per share, which includes certain adjustments with a $1 95 for the quarter versus $2 <unk> in the prior year.

Brian: The effective tax rate for the first quarter was 26, 9% compared to 26, 7% for the same quarter a year ago.

Brian M. Scott: The operating EPS tax rate for the first quarter of 2024 was 27. Cash flows from operations reflect a use of cash of $22.7 million, an $85.1 million decrease from the prior year. There were two primary causes of this.

Brian: The operating EPS tax rate for the first quarter of 2024 was 27, 2%.

Brian: Cash flows from operations reflect a use of cash of $22 7 million and $85 $1 million decrease from the prior year.

Brian: There were two primary causes of this change first we had $50 million of income tax payments related to 2023 that we deferred into Q1 in connection with a weather disaster relief program.

Brian M. Scott: First, we had $50 million of income tax payments related to 2023 that we deferred into Q1 in connection with the Weather Disaster Relief Program. And second, we incurred a $25 million final payment on the Torres legal settlement. Overall, cash flow in the quarter was consistent with our expectations. During the first quarter, we repurchased approximately 300,000 shares for $25 million as part of our ongoing share repurchase program. We currently have $225 million dollars remaining under our board-authorized, On February 16, 2024, the Board of Directors declared a cash dividend of 44 cents per share to be paid on March 27, 2024. As of quarter end, we had available borrowing capacity of $172 million under our variable funding notes and credit facility. Our total debt outstanding at quarter end was $1.7 billion.

First, we had $50 million of income tax payments related to 2023 that we deferred into Q1 in connection with the Weather Disaster Relief Program. And second, we incurred a $25 million final payment on the Torres legal settlement. Overall, cash flow in the quarter was consistent with our expectations.

Brian: And second we incurred a $25 million final payment on the tour as legal settlement overall.

Brian: Overall cash flow in the quarter was consistent with our expectations.

Brian M. Scott: During the first quarter, we repurchased approximately 300,000 shares for $25 million as part of our ongoing share repurchase program. We currently have $225 million remaining under our board-authorized program. On February 16, 2024, the Board of Directors declared a cash dividend of $0.44 per share to be paid on March 27, 2024. As a quarter end, we had available borrowing capacity of $172 million under our variable funding notes and credit facility. Our total debt outstanding at quarter end was $1.7 billion, and our net debt to adjusted EBITDA leverage ratio was five times. Related to guidance, we are not providing any updates to our outlook and expectations from what was provided during the earnings call last November. With that, we did provide some updated 2027 targets at our recent Investor Day, which included the following. Annual same-store sales growth of 2% to 3%; ramping Jack restaurant-level margin to 23% to 25%; and Del Taco to 18% to 20%; improving operating leverage to drive G&A as a percentage of systemwide sales down to 2.2% to 2.3%; reaching 20% digital sales, and achieving 2% to 2.5% company-wide net unit growth. In closing, I would also like to thank every member of our Jack and Del Taco teams, as well as our outstanding franchise partners, for what they do every day on behalf of our brands. Their efforts are the key to Jack's ability to deliver sustained growth and shareholder value. And with that, we'd be happy to take some questions. Operators, please feel free to open up the line for Q&A.

Brian: During the first quarter, we repurchased approximately 300000 shares for $25 million as part of our ongoing share repurchase program.

Brian: We currently have $225 million remaining under our board authorized program.

Brian: On February 16th 2024, the board of directors declared a cash dividend of <unk> 44 per share can be paid on March 27 2024.

Brian: As of quarter end, we had available borrowing capacity of $172 million under our variable funding notes and credit facility.

Brian: Our total debt outstanding at quarter end was $1 7 billion.

Brian M. Scott: And our net debt to adjusted EBITDA leverage ratio was five times. Related to guidance, we are not providing any updates to our outlook and expectations from what was provided during the earnings call last November. With that in mind, we did provide some updated 2027 targets at our recent Investor Day, which included the following: annual same store sales growth of two to 3%. Ramping Jack restaurant level margin to 23 to 25% and Del Taco to 18 to 20%. Approving Operating Leverage to Drive G&A Its Percentage of Systemwide Sales Down to 2.2 to 2.3%, reaching 20% digital sales, and achieving two to two and a half percent company-wide net unit growth.

Brian: And our net debt to adjusted EBITDA leverage ratio was five times.

Brian: Related to guidance, we are not providing any updates to our outlook and expectations from what was provided during the earnings call last November.

With that we did provide some updated 2027 targets at our recent Investor day, which included the following <unk>.

Brian: Annual same store sales growth of 2% to 3%.

Brian: Ramping Jack restaurant level margins of 23% to 25% and del Taco to 18% to 20% improving operating leverage to drive G&A as a percentage of system wide sales down to two two to two 3%.

Brian: Reaching 20% digital sales and achieving 2% to two 5% company wide net unit growth.

Brian M. Scott: In closing, I would also like to thank every member of our Jack and Del Taco teams, as well as our outstanding franchise partners, for what they do every day on behalf of our brand. Their efforts are the key to Jack's ability to deliver sustained growth and shareholder value. And with that, we'd be happy to take some questions. Operator, please feel free to open up the line for Q&A. The floor is now open to your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad.

In closing, I would also like to thank every member of our Jack and Del Taco teams, as well as our outstanding franchise partners, for what they do every day on behalf of our brand. Their efforts are the key to Jack's ability to deliver sustained growth and shareholder value. And with that, we'd be happy to take some questions. Operator, please feel free to open up the line for Q&A.

Speaker Change: In closing I would also like to thank every member of our JAK and del Taco teams as well as our outstanding franchise partners, but what they do every day on behalf of our brands.

Speaker Change: Their efforts are the key to jacks ability to deliver sustained growth and shareholder value.

Speaker Change: With that we'd be happy to take some questions. Operator, please feel free to open up the line for Q&A.

Speaker Change: Yes.

Operator: The floor is now open for your questions. To ask a question at this time, simply press the star followed by the number 1 on your telephone keypad. We ask that you please limit yourself to one question. We'll now take a moment to compile our roster. Our first question comes from the line of Brian Bittner with Oppenheimer & Co. Please go ahead.

Speaker Change: The floor is now open for your questions to ask a question at this time simply press the star followed by the number one on your telephone keypad.

Brian John Bittner: We ask that you please limit yourself to one question. We'll now take a moment to compile our list. Our first question comes from the line of Brian Bittner, with Oppenheimer & Co. Please go ahead.

Speaker Change: We ask that you please limit yourself to one question.

Speaker Change: We will now take a moment to compile a roster.

Speaker Change: Our first question comes from the line of Brian Bittner with Oppenheimer and company. Please go ahead.

Brian John Bittner: Thank you. Hey, good afternoon, guys. Just as it relates to Jack in the Box, your full-year guidance for same-store sales for Jack in the Box is low to mid-single digits, which you kept intact. You did a 0.8% in the first quarter, so I'm just curious, how do you anticipate your sales trends at Jack in the Box to unfold following this quarter into the rest of the year? I know that weather impacted you guys in the first quarter, and I also realize you're very excited about the Smash Jack burger that's coming in March and pulsing in some value with that. So is that kind of what's underpinning your confidence on the Jack in the Box comps moving forward, just the weather impact and then the new catalyst coming? Or anything you could unpack there would be helpful. Thanks. So, you know, I'll turn it to Brian. Well, first of all, it's good to talk to you, Brian, but I'll turn it over to Brian Scott in a second.

Brian John Bittner: Thank you. Hey, good afternoon, guys. Just as it relates to Jack in the Box, your full year guidance for same-store sales for Jack in the Box is low to mid-single digits, which you kept intact. You did a 0.8% in the first quarter, so I'm just curious, how do you anticipate your sales trends at Jack in the Box to unfold following this quarter into the rest of the year? I know that weather impacted you guys in the first quarter, and I also realize you're very excited about the Smashed Jack burger that's coming in March and pulsing in some value with that. So, is that kind of what's underpinning your confidence on the Jack in the Box comps moving forward, just the weather impact and then the new catalyst coming or anything you could unpack there would be helpful? Thanks.

Brian John Bittner: Thank you Hey, good afternoon, guys just as it relates to Jack in the box your full year guidance for same store sales for Jack in the box is low to mid single digits, which you've kept intact you did a <unk> 8% in the first quarter. So I'm just curious how do you anticipate your sales trends at Jack in the box.

Brian John Bittner: Following this quarter into the rest of the year I know that weather impacted you guys in the first quarter and I also realize youre very excited about the smashed Jack Burger, that's coming in March and closing and some value with that so.

Brian John Bittner: Is that kind of whats underpinning your confidence on the Jack in the box comps moving forward just the weather impact and then the new catalysts coming or anything you could unpack there would be helpful. Thanks.

Darin Harris: So, you know, I'll turn it to Brian. Well, first of all, it's good to talk to you, Brian, but I'll turn it over to Brian Scott in a second. But I think the first comment I would say is we're really excited about Smash Jack and what it can do for the year. We knew going into the year that we had tough comps that we were lapping over in Q1 and Q2, and that we had a good marketing plan for the back half of the year with Smash Jack and some of the other things we have coming. So we took that into account as we built our plan, and we provided guidance. As you mentioned, I think the industry as a whole has seen some softness at the start of the year. We've experienced the weather, as you mentioned, that probably impacted us somewhere between a half a point in sales for the quarter. But we do know that going into the year, we had a strong back-end plan with our marketing calendar. Brian, what would you add?

Brian John Bittner: So I'll turn it to Brian well first of all good to talk to you, Brian, but I'll turn it to Brian Scott in a second but I think the first comment I would say is we're really excited about smash check and what it can do for the year.

Brian M. Scott: But I think the first comment I would say is we're really excited about Smash Jack and what it can do for the year. We knew going into the year that we had tough comps that we were lapping over in Q1 and Q2, and that we had a good marketing plan for the back half of the year with Smash Jack and some of the other things we have coming. So we took that into account as we built our plan, and we provided guidance. As you mentioned, I think the industry as a whole has seen some softness at the start of the year. We've experienced the weather, as you mentioned, that probably impacted us somewhere between a half a point in sales for the quarter. But we do know that going into the year, we had a strong back-end plan with our marketing calendar. Brian, what would you add?

Brian M. Scott: We knew this going into the year that we had tough comps that were lapping over in Q1 and Q2.

Speaker Change: We had a good.

Brian: Marketing plan for the back half of the year with Smash Jack and some of the other things we have coming so we took that into account as we built our plan and we provided guidance.

Speaker Change: As you mentioned I think the industry as a whole has seen some softness at the start of the year. We've experienced the weather as you mentioned that probably impacted us somewhere between a half a point.

Speaker Change: And sales for the quarter.

Speaker Change: But we do know that going into the year, we had a strong back end plan with our marketing calendar, Brian what would you add.

Brian M. Scott: Yeah. Thanks. And that's a good summary, Brian, that you made with the question. As Darin said, we had some pressure in January from the weather, but we looked at our plan for this year. We knew that the comps in the first half of the year were going to be tougher. So, as Darin said, the back half of the year we would expect to be stronger, not only because of Smashed, but just our overall marketing calendar. And the comps will get easier as we get to the back half of the year. In addition to that, we still will have some price that will come as we get closer to implementing AB 1228. So ultimately, it's a little early in the year for us to really try to predict what the full year is going to look like. So we've kind of kept everything as it is, and we still see a path towards achieving a number within that range. But there's more to unfold here over the next several months. I'll just add, as we came out of the first quarter here, February has still been down a little more than we expected. It sounds like it's more of an industry thing that we're hearing from others as well. So, we're still trending a little bit slightly below in the negative year-over-year right now. But again, we have Smashed rolling out here soon, and some of the other actions we're taking to attract value guests, we feel good that we're going to be able to move that in a positive direction here in the ensuing weeks.

Speaker Change: Yeah. Thanks, guys. Good summary, Brian you made with the question yes.

Brian: As Darren said, we had some pressure in January from the from the weather, but we looked at our plan for this year, we knew that the comps in the first half of the year, we're going to we're going to be tougher so and as Darren said the back half of the year, we would expect to be stronger not only because of smashed, but just our overall marketing calendar and the comps will get will get easier as we get to the back half.

Brian: For the year. In addition to that we still will have some some price that will come as we move closer to implementing <unk> 12, 28, So I mean ultimately it's a little early in the year for us.

Brian: We really try to predict what the full year is going to look like so we've kind of kept everything as it is and we still see a path towards achieving a number within that range, but there is more to unfold here over the next several months.

Brian M. Scott: So we've kind of kept everything as it is, and we still see a path towards achieving a number within that range. But there's more to unfold here over the next several months. All of that said, as we come out of the first quarter here, February has still been down a little more than we expected. It sounds like it's more of an industry thing that we're hearing from others as well. So we're still trending slightly below in the negative year over year right now.

Speaker Change: I'll just add as U K.

Speaker Change: Came out of the first quarter here.

Speaker Change: February Pat has still been down a little more than we expected it sounds like it's more of an industry thing that we're hearing from others as well so we're still trending a little bit.

Speaker Change: Hello.

Darren Harris: But again, we have Smash rolling out here soon, and some of the other actions we're taking to attract value guests, we feel good that we're going to be able to move that in a positive direction here in the coming weeks. The only thing I would add to what Brian said is, you know, as he mentioned, we're seeing, you know, similar trends industry wide, and that at Dell, we're seeing, you know, flat comps at this point. Okay, and, and just real quick on the new markets. Louisville, Salt Lake.

But again, we have Smash rolling out here soon, and some of the other actions we're taking to attract value guests, we feel good that we're going to be able to move that in a positive direction here in the coming weeks.

Speaker Change: And the negative year over year right now, but again, we have smash rolling out here soon and some of the other.

Speaker Change: Actions, we're taking to attract value guests.

Speaker Change: We feel good that we're going to be able to move that in a positive direction here in the ensuing weeks.

The only thing I would add to what Brian said is, you know, as he mentioned, we're seeing, you know, similar trends industry wide, and that at Dell, we're seeing, you know, flat comps at this point. Okay, and, and just real quick on the new markets. Louisville, Salt Lake.

Darin Harris: The only thing I would add to what Brian said is, as he mentioned, we're seeing similar trends industry-wide. And at Del, we're seeing flat comps at this point.

Speaker Change: The only thing I would add Brian.

Speaker Change: As he mentioned, we're seeing similar trends industry wide in that Delaware seeing flat.

Speaker Change: Comps at this point.

Speaker Change: Okay, and just real quick on the new markets.

Brian John Bittner: Okay. And just real quick on the new markets. Louisville, Salt Lake. Are you guys sustaining the outperformance you initially saw entering those new markets? Are you still seeing super-high volumes? And what are your expectations for Mexico? I can't believe you're opening in Mexico next week. Can you just talk to us about what your expectations are there? Thanks.

Speaker Change: Louisville Salt Lake are you guys sustaining the outperformance you initially saw entering those new markets are you still seeing super high volumes.

Darren Harris: Are you guys sustaining the outperformance you initially saw entering those new markets? Are you still seeing super-high volumes? And what are your expectations for Mexico?

Speaker Change: What are your expectations for Mexico, I cant believe Youre opening in Mexico next week can you just come to us about what your expectations are there. Thanks.

Darren Harris: I can't believe you're opening in Mexico next week. Can you just talk to us about what your expectations are there? Thanks. Well, I'm going to start with Mexico.

I can't believe you're opening in Mexico next week. Can you just talk to us about what your expectations are there?

Thanks. Well, I'm going to start with Mexico.

Thanks.

Darin Harris: Well, I'm going to start with Mexico. Mexico is very exciting. We'll have two openings in 2024. We know some of our highest-performing restaurants in the country, until we had Salt Lake City, were along the border states. So, we anticipate big volume out of Mexico. And we really are excited about the partnership we have with the operator there. As far as our new markets in Salt Lake City and Louisville, we couldn't be happier. We're seeing volume sustained, new stores are opening up very strongly, I think, our restaurants at this point in time were our lowest performing unit somewhere in the $70,000 range per week, and the highest is still in the $140,000-$150,000 range per week. So, very good volumes. We're getting a lot of great reception for the design that we put in those markets. We crave design. And so, I couldn't be as excited as I am right now about what we're doing with new stores.

Speaker Change: I'm going to start with Mexico, Mexico is a very exciting one of two openings in 2024, we know some of our highest performing restaurants in the country until we had the Salt Lake City, where along the border states.

Darren Harris: Mexico is very exciting. We'll have two openings in 2024. We know some of our highest-performing restaurants in the country, until we had Salt Lake City, were along the border states. So we anticipate big volume out of Mexico. And we really are excited about the partnership we have with the operator. As far as our new markets in Salt Lake City and Louisville, we couldn't be happier. We're seeing volume sustained. New stores are opening up very strongly. I think our restaurants at this point in time are our lowest performing unit somewhere in the $70,000 range per week, and the highest is still in the $140,000-$150,000 range per week. So, very good volumes.

Speaker Change: We anticipate big volume out of Mexico, and we really are excited about the partnership we have with the operator there.

Speaker Change: As far as our new markets in Salt Lake City in Louisville, we couldnt be happier, but we're seeing.

Speaker Change: Volume sustain new stores are opening up very strong I think our restaurants at this point in time I think the.

Speaker Change: No.

Speaker Change: Our lowest performing units somewhere in the $70000 range per week and the highest is still in the 140 <unk> hundred 50000, a week. So very good volumes, we're getting a lot of great reception on the design that we put in those markets be creative design and so I couldnt be as excited as I am right now about what we're doing with new stores.

Darren Harris: We're getting a lot of great reception for the design that we put in those markets. We crave design. And so I couldn't be as excited as I am right now about what we're doing with new stores. Thanks, guys. Our next question comes from a line at Gregory Frankfurt with Guggenheim. Please go ahead.

We're getting a lot of great reception for the design that we put in those markets. We crave design. And so I couldn't be as excited as I am right now about what we're doing with new stores.

Speaker Change: Thanks, guys.

Speaker Change: Our next question comes from the line of Gregory Frankfurt with Guggenheim. Please go ahead.

Thanks, guys. Our next question comes from a line at Gregory Frankfurt with Guggenheim. Please go ahead.

Brian John Bittner: Thanks, guys.

Operator: Our next question comes from a line at Gregory Frankfurt with Guggenheim. Please go ahead.

Gregory Frankfurt: Hey, guys, thanks for the question. I'm just curious about your pricing. I mean, I know you're planning on pricing six to 8% this year for the company. But I think over the last four years, you've taken four or five 6% less than a lot of your large QSR competitors. Are you seeing that show up in value scores or anything else in the business where you might see a leading indicator that might be improving traffic going forward? Greg, I think that where I would go with this question is more around pricing more in line with the competition. The company needs to catch up from a pricing standpoint; we do see some room there. We also see some room where our franchises in California have not taken as much of a price compared to the competition. So we do think with what's happening with AB 1228 coming up that we do have some room to take, you know, anywhere from two to 3% additional price heading into April. I got it.

Gregory Frankfurt: Hey, guys, thanks for the question. I'm just curious about your pricing. I know you’re planning on pricing 6% to 8% this year for the company. But I think over the last four years, you’ve taken 4%, 5%, 6% less pricing than a lot of your large QSR competitors. Are you seeing that show up in value scores or anything else in the business where you might see a leading indicator that might be improving traffic going forward?

Gregory Frankfurt: Hey, guys. Thanks for the question.

Gregory Frankfurt: Just curious on your pricing.

Gregory Frankfurt: Plenty on pricing, 6% to 8% this year for the company, but I think over the last four years, you've taken four or five 6% less pricing than a lot of your large <unk> competitors are you seeing that show up in value scores or anything else in the business, where you might see a leading indicator.

Gregory Frankfurt: There might be improving traffic going forward.

Gregory Frankfurt: Greg, I think that where I would go with this question is more around pricing more in line with the competition. The company needs to catch up from a pricing standpoint; we do see some room there. We also see some room where our franchises in California have not taken as much of a price compared to the competition. So we do think with what's happening with AB 1228 coming up that we do have some room to take, you know, anywhere from two to 3% additional price heading into April. I got it.

Darin Harris: Greg, I think that where I would go with this question is more around, we’re seeing on the franchise side of it, pricing more in line with the competition. The company needs to catch up from a pricing standpoint. We do see some room there. We also see some room where our franchises in California have not taken as much price compared to the competition. So, we do think with what’s happening with AB 1228 coming up, that we do have some room to take anywhere from 2% to 3% additional price heading into April.

Gregory Frankfurt: Greg I think where I would go with this question is more around.

Greg: We're seeing on the franchise side of it pricing more in line with the competition the company needs to catch up from a pricing standpoint, we do see some room. There. We also see some room, where our franchisees in California have not taken as much price compared to the competition. So we do think with what's happening with AB 228, coming up that we do have some room.

Greg: Take anywhere from 2% to 3% additional price heading into April.

Gregory Frankfurt: Got it. Thanks. And just maybe any thoughts on the consumer, anything you’re seeing in the business in terms of trade-down or utilization of beverages or attach that might give you a read on flow through from pricing to the comps or any changes on that front? Thanks.

Darren Harris: And just maybe any thoughts on the consumer, anything you're seeing in the business in terms of trade down or utilization of beverages or attache that might give you a read on flow through from pricing to the comps or any changes on that front. Thanks.

Speaker Change: Got it thanks, and then just maybe any thoughts on the consumer.

Speaker Change: Anything youre seeing in the business in terms of trade down or utilization of beverages or attach.

Speaker Change: Might give you a read on flow through from pricing to the comp. So are there any changes on that front. Thanks.

Darin Harris: I think we’re seeing the same thing that most of our competition is, is that as you — the consumer that’s $75,000 and under, particularly the $45,000 and under, you’re definitely seeing some challenges with attach rates. And so our focus is, how do we make sure that we have the right breakfast offerings, the right offerings and deals through digital channels, that we have the right value menu. So our focus is about making sure we understand our consumers by all segments and dayparts. And so, from a value standpoint, as I mentioned on my remarks, we have multiple options, whether it’s our $3 wrap, our Jack Pack, $10 Fan Phase, our $12 Munchie Meals. And then beyond that different channel offers like the two tacos for $0.99 and getting even more aggressive through that channel to build loyalty members.

Speaker Change: I think we're seeing the same thing that most of our competition is is that as you.

Speaker Change: Yes.

Speaker Change: The consumer that 75000 under particularly that 45000 number youre definitely seeing some.

Speaker Change: Challenges with attach rates and so our focus is how do we make sure that we have the right breakfast offerings, the right offerings and deals through digital channels.

Speaker Change: We have the right value menu. So our focus is about making sure we understand our consumers by all segments and day parts and so from a value standpoint, as I mentioned on my.

Speaker Change: Remarks, we have multiple options, whether it's our $3 wrap our JAK pack $10 fan phase are $12 Munchy meals, and then beyond that different channel offers like the two tacos for 99 cents.

Darren Harris: And then beyond that, different channel offers, like the two tacos for $0.99, and getting even more aggressive through that channel to build loyalty members. And the last point is we've tested a value menu that we feel really good about that we will roll out throughout this year, that has a revised Jack Deals menu that we think can have some strong performance. So we feel good there.

And then beyond that, different channel offers, like the two tacos for $0.99, and getting even more aggressive through that channel to build loyalty members.

Speaker Change: And getting even more aggressive through that channel to build loyalty members.

Darin Harris: And the last point is we’ve tested a value menu that we feel really good about that we will roll out throughout this year. And it had a revised Jack deals menu that we think can have some strong performance. So feel good there. And then Del on its own with the things we’re doing at Del, we feel really good about what’s happening with our menu redesign. We’ve seen both sales and margin improvement in our early tests. We still have some more time with those tests to solidify it. And then as we’ve done at Jack, we’ll implement our hook and build strategy because we already know we get credit for value at Del. Now it’s how do we bring people in and then build them into a more attached rate.

Speaker Change: And the last point is we've tested a value menu that we feel really good about that we will rollout throughout this year.

Speaker Change: Ed.

Speaker Change: A revised Jack deals.

Speaker Change: That we think can have some strong performance. So feel good there and then Dell on its own with the things we're doing at Bell, we feel really good about what's happening with our menu redesign we've seen both sales and margin improvement in our early tests, we still have some more time with those tests to solidify it.

Darren Harris: And then Dell on its own, with the things we're doing at Dell, we feel really good about what's happening with our menu redesign. We've seen both sales and margin improvement in our early tests. We still have some more time with those tests to solidify it.

Sara Harkavy Senatore: And then, as we did at Jack, we'll implement our hook and build strategy because we already know we get credit for value at Dell. Now it's how do we bring people in and then build them into a more attached ratio. Thank you. Our next question comes from Sara Senatore with Bank of America. Please go ahead.

And then, as we did at Jack, we'll implement our hook and build strategy because we already know we get credit for value at Dell. Now it's how do we bring people in and then build them into a more attached ratio.

Speaker Change: And as we've done at Jack will implement our hook and build strategy because we already know we get credit for value at Bell now, it's how do we bring people in and then build them into more.

Speaker Change: A more attach rate.

Speaker Change: Okay. Thanks Darren.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of Sara Senatore with Bank of America. Please go ahead.

Thank you. Our next question comes from Sara Senatore with Bank of America. Please go ahead.

Gregory Frankfurt: Thanks, Darin.

Operator: Our next question comes from a line of Sara Senatore with Bank of America. Please go ahead.

Sara Harkavy Senatore: Great. Thank you.

Sara Harkavy Senatore: Great. Thank you. A follow up on some of your comments about the consumer and what you’re doing to reengage the value guests. I guess on Jack in the Box, could you talk about the dayparts like the breakfast daypart is there softness there and that’s why you have to sort of reinvest a little bit more, it’s just more competitive. And then you mentioned that burgers I think were a strength in the quarter. So do you have sharper price points there or was the industry stronger? I’m trying to tease out how much you think is kind of industry and where the consumer is versus what you think you can — is it within your control?

Speaker Change: A follow up.

Sara Harkavy Senatore: Some of your comments about the consumer and what Youre doing to Reengage the value gas I guess on Jackson box.

Sara Harkavy Senatore: Could you talk about the day parts like the breakfast day part is their softness there and Thats why you have to sort of reinvest a little bit more it's just more competitive and then you mentioned that burgers, I think where strength in the quarter. So you have sharp sharper price points, there or with the industry stronger trying to tease out how much you.

Darren Harris: I'm trying to tease out how much you think this is kind of an industry and where the consumer is versus what you think is within your control. Yeah, I think a lot of what we're seeing with breakfast is the consumer. And, you know, we've got to make sure that we have a very competitive plan. We also know that when we market to the consumer for breakfast, we see it benefit our business. So we'll make sure that's a part of our marketing calendar. We also know that we will bring back some items that we took off the menu that we thought were beneficial to margin and speed. But we found it was too much of a headwind for sales.

I'm trying to tease out how much you think this is kind of an industry and where the consumer is versus what you think is within your control.

Sara Harkavy Senatore: <unk> is kind of industry and where the consumer is versus.

Sara Harkavy Senatore: What you think you can.

Darin Harris: Yeah. I think a lot of what we’re seeing with breakfast is consumer. And we’ve got to make sure that we have a very competitive plan. We also know that when we market to the consumer for breakfast that we see it benefit our business. So we’ll make sure that’s a part of our marketing calendar. We also know that we will bring back some items that we took off the menu that we thought were beneficial to margin and speed, but we found it was too much of a headwind to sale. So we’ll bring back some of the items, not all. And so again, with breakfast, I think it’s one of the more competitive areas right now that we have to make sure we’re competing heavily in and having the right offerings. So, I think that’s one that we have to lean into and be more aggressive. With LTOs, like we’ve just introduced a new French Toast Stick with a cinnamon churro flavor and then our Mini Cinnis that performed well. And then as it relates to burgers, I think for the quarter, it was more about a difference in what we promoted last year was more of a chicken focus versus burger focus. So, that’s more of why we had stronger performance out of our burgers this quarter versus last year at this time. And then also, Smashed Jack, which we’ve talked about, it more than outperformed our expectations. And so we’re excited about the launch of Smashed Jack in March.

Sara Harkavy Senatore: Is it within your control.

Sara Harkavy Senatore: Yes, I think a lot of what we're seeing with breakfast is consumer.

Sara Harkavy Senatore: <unk>.

Sara Harkavy Senatore: <unk> got to make sure that we have a very competitive plan. We also know that when we market to the consumer for breakfast that we see it benefit our business. So we will make sure that as a part of our marketing calendar.

Sara Harkavy Senatore: We also know that.

Sara Harkavy Senatore: We predict.

Sara Harkavy Senatore: We will bring back some items that we took off the menu that we thought were beneficial to margin and speed, but we found it was too much of a headwind to sales. So we'll bring back some of the items not all.

Darren Harris: So we'll bring back some of the items, not all. And so again, with breakfast, I think it's one of the more competitive areas right now that we have to make sure we're competing heavily in and having the right offerings. So I think that's one that we have to lean into and be more aggressive. With LTOs, like we've just introduced a new French toast stick with a cinnamon churro flavor and then our mini thinnies, which performed well.

Sara Harkavy Senatore: And so again with breakfast I think it's one of the more competitive areas right now that we have to make sure we're competing heavily in and having the right offerings. So I think that's one that we have to lean into and be more aggressive.

Sara Harkavy Senatore: With <unk> like we've just.

Sara Harkavy Senatore: Introduced a new French toast stick.

Sara Harkavy Senatore: Cinnamon.

Sara Harkavy Senatore: <unk> flavor.

Sara Harkavy Senatore: And there are many synergies that performed well.

Darren Harris: And then as it relates to burgers, I think for the quarter, it was more about a difference in what we promoted last year, which was more of a chicken focus versus burger focus. So that's more of why we had a stronger performance out of our burgers this quarter versus last year at this time. And then also Smash Jack, which we've talked about, more than outperformed our expectations. And so we're excited about the launch of Smash Jack in March. Thanks. Our next question comes from the line of Alton Stump with Loop Capital. Please go ahead. Great, thank you. Good afternoon,

And then as it relates to burgers, I think for the quarter, it was more about a difference in what we promoted last year, which was more of a chicken focus versus burger focus. So that's more of why we had a stronger performance out of our burgers this quarter versus last year at this time. And then also Smash Jack, which we've talked about, more than outperformed our expectations. And so we're excited about the launch of Smash Jack in March.

Sara Harkavy Senatore: And then as it relates to burgers.

Sara Harkavy Senatore: I think for the quarter it was more about a.

Sara Harkavy Senatore: Difference in what we promoted last year was more of a chicken focus versus Burger focused so thats more of why we had stronger performance out of our burgers this quarter versus last year at this time.

Sara Harkavy Senatore: And then also smash check, which we've talked about it.

Sara Harkavy Senatore: More than outperformed our expectations and so we're excited about the launch of Smash Shack in March.

Speaker Change: Thank you.

Speaker Change: Okay.

Thanks. Our next question comes from the line of Alton Stump with Loop Capital. Please go ahead. Great, thank you. Good afternoon,

Sara Harkavy Senatore: Thank you.

Our next question comes from the line of Alton Stump with Loop Capital. Please go ahead. Great, thank you. Good afternoon,

Operator: Our next question comes from the line of Alton Stump with Loop Capital. Please go ahead.

Speaker Change: Our next question comes from the line of Alton Stump with loop capital. Please go ahead.

Alton Stump: Great. Thank you. Good afternoon. I just want to ask Darin, as you think about the late night business specifically, this doesn’t — of course, shatter from some of your peers that are trying to get into late night, but clearly that’s not a daypart that anybody can establish overnight. Sorry for the pun. But are you seeing any competition? You guys clearly have outpaced, obviously, other dayparts here for quite some time in your late night business. And just overall, are you seeing any signs of that slowing down at all? Or are you continuing to gain share, do you think, particularly in that daypart?

Alton Stump: Great. Thank you and good afternoon.

Alton Stump: Um, you know, I want to ask Darren, you know, as you think about the late night business, specifically, this doesn't, you know, of course, chatter from some of your peers there, you know, are trying to get into late night, but you know, clearly, you know, that's not a day part that, you know, anybody can establish overnight. Sorry for the pun, but, you know, are you seeing any competition? of that slowing down at all? Or are you continuing to gain market share? Do you think, particularly in that day part? You know, we're very aware of what the competition is doing, and we want to make sure that we continue to own late night, which we've done for years. And so, you know, we're still seeing hours of operation benefiting some of our regions. We're seeing positive year over year transactions for the sixth straight quarter at late night.

Um, you know, I want to ask Darren, you know, as you think about the late night business, specifically, this doesn't, you know, of course, chatter from some of your peers there, you know, are trying to get into late night, but you know, clearly, you know, that's not a day part that, you know, anybody can establish overnight. Sorry for the pun, but, you know, are you seeing any competition? of that slowing down at all? Or are you continuing to gain market share? Do you think, particularly in that day part?

Alton Stump: I wanted to ask Darren.

Alton Stump: As you think about the weight in that business specifically.

Alton Stump: Of course chatter from some of your peers there.

Speaker Change: I'm trying to get into late night, but clearly.

Darren: Not a day part that anybody can establish overnight sorry for the pod.

Darren: Are you seeing any competition you guys clearly have outpaced obviously other day parts.

Darren: Quite some time anyway that business and just overall are you seeing any signs of that slowing down at all or are you continuing to gain share do you think particularly in that day part.

Darin Harris: We’re very aware of what the competition is doing, and we want to make sure that we continue to own late night, which we’ve done for years. And so we’re seeing hours of operation benefiting still some of our regions. We’re seeing transactions positive year-over-year for the sixth straight quarter at late night. And our Munchie Meals were a very solid contributor to Q1. And so I think we have the right offerings at the right time. And so we know that the competition wants to challenge us, and so we’ll be ready for it through innovation and other marketing opportunities that we see available at late night.

Darren: Okay.

Darren: We're very aware of what the competition is doing and we want to make sure that we continue to own late night, which we've done for years and so.

Darren: We're seeing hours of operation have been benefiting still some of our regions, we're seeing transactions positive year over year for the sixth straight quarter at late night and our.

Darren Harris: And, you know, our munchie meals were a very solid contributor to Q1. And so I think we have the right offerings at the right time. And so we know that the competition wants to challenge us. And so we'll be ready for it through innovation and other marketing opportunities that we see available at late night. Great. Thanks so much. I'll hop back into the queue, problem.

And, you know, our munchie meals were a very solid contributor to Q1. And so I think we have the right offerings at the right time. And so we know that the competition wants to challenge us. And so we'll be ready for it through innovation and other marketing opportunities that we see available at late night.

Darren: Our mantra mills were a very solid contributor to Q1, and so I think we have the right offerings at the right time, and so we know that the competition wants to challenge us and so it will be ready for it through innovation and other marketing opportunities that we see available at late night.

Got it great. Thanks, so much I'll hop back in the queue.

Alton Stump: Got it. Great. Thanks so much. I’ll hop back into the queue.

Speaker Change: That's helpful.

Dennis Geiger: Our next question comes from the line of Dennis Geiger with UBS. Please go ahead. Great, thanks, guys. I just wanted to ask a little bit more about Smash Jack. Clearly, a great product, I think, for those of us fortunate enough to have tried it thus far. You saw great results there during the soft launch. I guess the question is specific to, you know, it being sort of on the premium end of the barbell strategy there. As you think about this environment where a portion of the industry's consumer is acting a bit more cautiously, how do you think about that dynamic? Is this just, you know, that much of a hero new item based on what you've seen in the soft launch that this is going to be that strong for however long? Do you do anything different around marketing the product, you know, knowing maybe a portion of that customer base is a bit softer? Any, you know, kind of comments on Smash Jack and then relative to the environment to add?

Operator: Our next question comes from the line of Dennis Geiger with UBS. Please go ahead.

Speaker Change: Our next question comes from the line of Dennis Geiger with UBS. Please go ahead.

Dennis Geiger: Great. Thanks, guys. I just wanted to ask a little bit more on the Smashed Jack. Clearly a great product, I think, for those of us fortunate enough to have tried it thus far. You saw great results there in the soft launch. I guess the question is specific to it being sort of on the premium end of the barbell strategy there. As you think about this environment where a portion of the industry consumer is acting a bit more cautiously, how do you think about that dynamic? Is this just that much of a hero new item based on what you’ve seen in soft launch that this is going to be that strong for however long? Do you do anything different around marketing the product, knowing maybe a portion of that customer base is a bit softer? Any kind of comments on Smashed Jack and then relative to the environment to add? Thank you.

Dennis Geiger: Great. Thanks, guys I, just wanted to ask a little bit more on this mass Jack clearly a great product I think for those of US fortunate enough to have tried it thus far.

Dennis Geiger: So great results there in the soft launch I guess the question is specific to it being sort of on the premium end of the barbell strategy there.

Dennis Geiger: As you think about this environment, where a portion of the industry consumer is a bit more cautiously how do you think about that dynamic is this just that much of a hero new item.

Dennis Geiger: Based on what you've seen in soft launch that this is going to be that strong for however long.

Dennis Geiger: Do you do anything different around marketing.

The products, knowing maybe a portion of that customer base is a bit softer.

Dennis Geiger: Any kind of comments on Smiths, Jack and then relative to the environment too to add thank you.

Darren Harris: Thank you. Yeah, any day of the week, I'd take the best tasting product out there over the competition. And so, from a differentiation standpoint, Smash Jack is that differentiated and that much tastier than a lot of what's out there in the marketplace. So we feel really good about what Smash Jack can do for our business. I think it does have the ability to overcome some of the challenges that we see with the consumer just because the product is so good. And that's what we saw in the test.

Thank you.

Darin Harris: Yeah. Any day of the week I’ll take the best tasting product out there over the competition. And so I think from a differentiation standpoint, Smashed Jack is that differentiated and that much tastier than a lot of what’s out there in the marketplace. So, we feel really good about what Smashed Jack can do to our business. So, I think it does have the ability to overcome some of the challenges that we see with the consumer just because the product is so good. That’s what we saw in test. It’s what we saw in our soft launch. And we believe that it can help us throughout the year really outperform what we anticipate with some of the headwinds that we’re facing right now. So, Smashed Jack is by far something that we are leaning into and very excited about. And we can’t wait to roll out our marketing campaign where we really tell an authentic story about what Jack has done differently with the burger to make it the best in QSR.

Speaker Change: Yes, any day of the week I'll take the best tasting product out there over the competition and so I think from a differentiation standpoint smash Jack is that differentiate it isn't that much tastier than a lot of what's out there in the marketplace. So we feel really good about what's magicjack and due to our business I think.

Speaker Change: It does have the ability to overcome some of the challenges that we see with the consumer just because of the product is so good and that's what we saw in test. It's what we saw on our soft launch and we believe that it can help us throughout the year really outperform.

Darren Harris: It's what we saw in our soft launch, and we believe that it can help us throughout the year really outperform what we anticipate with some of the headwinds that we're facing right now. So Smash Jack is by far something that we are leaning into and very excited about. And we can't wait to roll out our marketing campaign where we really tell an authentic story about what Jack has done differently with the burger to make it the best in QSR. I appreciate it. Thanks, Darren. Our next question comes from the line of Alex Slagle with Jeffrey's. Please go ahead.

It's what we saw in our soft launch, and we believe that it can help us throughout the year really outperform what we anticipate with some of the headwinds that we're facing right now. So Smash Jack is by far something that we are leaning into and very excited about. And we can't wait to roll out our marketing campaign where we really tell an authentic story about what Jack has done differently with the burger to make it the best in QSR.

Speaker Change: What are what we anticipate with some of the headwinds that we're facing right now so smashed Jack.

Speaker Change: Is by far is something that we are leaning into and very excited about and we can't wait to ROE and our marketing campaign, where we really tell an authentic story about what Jack has done differently with the Burger to make it the best in <unk>.

Speaker Change: I appreciate it thanks Darren.

I appreciate it. Thanks, Darren. Our next question comes from the line of Alex Slagle with Jeffrey's. Please go ahead.

Dennis Geiger: I appreciate it. Thanks, Darin.

Speaker Change: Our next question comes from the line of Alex Slagle with Jefferies. Please go ahead.

Operator: Our next question comes from the line of Alex Slagle with Jefferies. Please go ahead.

Speaker Change: Okay.

Alexander Russell Slagle: Thanks, guys. Do you think there'll be additional opportunities like the nine units you took over in Detroit, where you sort of end up with a small portfolio involving markets again that you fix up and refranchise? Didn't seem like you were heading that way, or that it was on the radar at this point, but curious if you think there's more opportunity there. I'll let Brian handle this question. Yeah. I mean, this was, I think, a very unique situation.

Alexander Russell Slagle: Thanks, guys. Do you think there’ll be additional opportunities like the nine units you took over in Detroit where you sort of end up with the small portfolio involving markets again that you fixed up and refranchised? It didn’t seem like you were heading that way or that was on the radar at this point, but curious if you think there’s more opportunity there.

Alexander Russell Slagle: Thanks, guys.

Alexander Russell Slagle: There'll be additional opportunities like the nine units he took over in Detroit.

Alexander Russell Slagle: Where do you sort of end up with a small portfolio of evolving markets again that you fix up and re franchise didn't seem like you are heading that way or that was on the radar at this point, but curious if you think there's more opportunity there.

I'll let Brian handle this question. Yeah. I mean, this was, I think, a very unique situation.

Darin Harris: I'll let Brian handle this question.

Brian M. Scott: Yeah. This was a very unique situation. As you know, we’re on a path towards refranchising Del Tacos. And as we mentioned in prepared remarks, we actually just signed a deal and have another one in the works here. In this particular case, it’s a good market. We happen to have a franchise operator that wanted to disengage from the franchise. And so, we took it back now. We’re already seeing improving trends as we’ve invested more in operations and extending hours and are absolutely intent to, at some point, refranchise that market. So, we don’t really look at this as a new trend that we’re going to start to take back more restaurants, but in a case like this, we absolutely think it’s a good market to be in. We can grow. And the next operator that we partner with there, we think, will grow that market as well.

Alexander Russell Slagle: I'll, let Brian handle this question.

Brian: This was I think a very unique situation as you know we're on a path towards Refranchising del Tacos, and then because we mentioned in the prepared remarks, we actually just signed the deal and have another one at work here that this particular case, it's a good market we happened to have a franchise operator that.

Brian M. Scott: As you know, we're on a path towards re-franchising Del Tacos, and as we mentioned in prepared remarks, we actually just signed a deal and have another one in the works here. In this particular case, it's a good market. We happen to have a franchise operator that wanted to disengage from the franchise, and so we took it back now.

Brian: Wanted to disengage from the franchise and so we took it back now we're already seeing improving trends as we've invested more in operations and extending hours and are absolutely intend to at some point refranchising of that market. So we don't really look at this as a.

Brian M. Scott: We're already seeing improving trends as we've invested more in operations and extended hours, and are absolutely intent to, at some point, re-franchise that market. So we don't really look at this as a new trend that we're going to start to take back more restaurants, but in a case like this, we absolutely think it's a good market to be in. We can grow, and the next operator that will partner with them, we think will grow that market as well. Yeah, to add what Brian is, you know, before Brian joined us, we had a term called evolving markets that we used related to Jack where we were bringing them in. Operating them corporately for a period of time and preparing them for refranchising, and that's exactly what we'll do at Detroit, as Brian has mentioned. Okay, thanks. And just to clarify on the softer comps in February, is weather a part of that? I know being here in California, it's been pretty wet.

We're already seeing improving trends as we've invested more in operations and extended hours, and are absolutely intent to, at some point, re-franchise that market. So we don't really look at this as a new trend that we're going to start to take back more restaurants, but in a case like this, we absolutely think it's a good market to be in. We can grow, and the next operator that will partner with them, we think will grow that market as well.

Brian: A new trend that we're going to start to take back more restaurants, but in a case like this we absolutely think it's a good market to be and we can grow and the next operator that were part of where they are we think we will.

Brian: To grow that market as well so.

Brian: Yes, Brian before.

Yeah, to add what Brian is, you know, before Brian joined us, we had a term called evolving markets that we used related to Jack where we were bringing them in. Operating them corporately for a period of time and preparing them for refranchising, and that's exactly what we'll do at Detroit, as Brian has mentioned. Okay, thanks. And just to clarify on the softer comps in February, is weather a part of that? I know being here in California, it's been pretty wet.

Darin Harris: I have to add what Brian said. Before Brian joined us, we had a term called evolving markets that we used related to Jack where we were bringing them in, operating them corporately for a period of time and preparing them for refranchising and that’s exactly what we’ll do at Detroit, as Brian has mentioned.

Brian: Before Brian joined US we had a term called evolving markets that were used related to Jack where we're bringing them in.

Brian: Operating them Corporately for a period of time and preparing them for Refranchising and that's exactly what we'll do at Detroit.

Brian: Brian has mentioned.

Brian: Okay, Thanks, and just to clarify on the softer comps in February is whether a piece of that I know being here in California, it's been pretty wet.

Alexander Russell Slagle: Okay. Thanks. And just to clarify on the softer comps in February’s weather piece of that, I know being here in California, it’s been pretty wet January and February.

Brian M. Scott: We do think it's been a part of the story with the storms that have continued to persist here and different weather patterns in some other markets as well. So I think it's a combination of that as well as just some of the consumer behavior, and we have to align our marketing to that, and so we're on the track to do that right now, and in conjunction with the launch of Smash next month, we feel like we've got a good strategy in place to turn that around here. Great, thanks. Our next question comes from Alana Drew North on behalf of Baird. Please go ahead.

Brian M. Scott: Yeah. We do think it’s been a part of the story with the storms that have continued to persist here and different weather patterns in some other markets as well. So, it’s a combination of that as well as just some of the consumer behavior. And we have to align our marketing to that. We’re on the track to do that right now. And that in conjunction with the launch of Smashed next month, we feel like we’ve got a good strategy in place to turn that around here.

Speaker Change: Yes, we were yeah. We didn't think had been a part of the story with the storms that have continued to persist here in <unk>.

Speaker Change: Current weather patterns in some other markets as well so it's a combination of that as well as just some of the consumer behavior and better align our are our marketing to that and so we're at an attracted to that right now and that in conjunction with the launch of Smash next month, we feel like we've got a good strategy in place to turn that around here.

Speaker Change: Great. Thanks.

Great, thanks. Our next question comes from Alana Drew North on behalf of Baird. Please go ahead.

Alexander Russell Slagle: Great, thanks.

Speaker Change: Okay.

Operator: Our next question comes from the line of Drew North with Baird. Please go ahead.

Speaker Change: Our next question comes from the line of drew <unk> with Baird. Please go ahead.

Drew North: Great. Thanks for taking the time to answer the question. I was hoping you could provide an update on some of the various cost savings initiatives you have in place and perhaps your level of confidence in reaching that 15 percent unit level EBITDA target at Jack in the Box. Seems like commodities are providing a bit of a tailwind on the food cost line so far this year. I guess, do you see that continuing in the near term and, maybe more broadly, what are the key risks that you see related to your ability to achieve that 15 percent target over the next several years? Yeah, so I think, as we mentioned in our targets, Prior to inflation, we were getting close to 13 to 13.5% at Jack in the Box.

Drew North: Great. Thanks for taking the question. I was hoping you could provide an update on some of the various cost savings initiatives you have in place and perhaps your level of confidence in reaching that 15% unit level EBITDA target at Jack in the Box. It seems like commodities are providing a bit of a tailwind on the food cost line so far this year. I guess, do you see that continuing in the near term and maybe more broadly, what are the key risks that you see related to your ability to achieve that 15% target over the next several years?

Drew: Great. Thanks for taking the question I was hoping you could provide an update on some of the various cost savings initiatives you have in place and perhaps your level of confidence in reaching that 15% unit level EBITDA target at Jack in the box it seems like commodities that providing a bit of a tailwind on the food cost line. So far this year I guess do you see that.

Drew: <unk> in the near term and maybe more broadly what are the key risks that you see related to your ability to achieve that 15% target over the next several years.

Speaker Change: Yes, so I think as we mentioned in our targets.

Darin Harris: Yeah. So I think, as we mentioned in our targets, prior to inflation, we were getting close to 13% to 13.5% at Jack in the Box. We’ve been able to improve some of the inflationary impacts that we had in 2022 through these initiatives that we’ve had called financial fundamentals where we were looking for 200 to 300 basis points of improvement. So we’ve rolled out some of those initiatives. They’ve taken hold. We’re also getting some benefit from commodities and some deflation right now. So two of those things are working in our favor. But we feel it’s an achievable target. We haven’t put the specific timeframe on it, but we know already if you look at some of the improvement we’ve had just on the Jack corporate side, the RLM running at 23.1% would point to some of these initiatives are taking hold and actually showing results on the scoreboard and we want to continue to do that.

Prior to inflation, we were getting close to 13 to 13, 5% at Jack in the box.

Unknown Participant: We've been able to improve, you know, some of the inflationary impacts that we had in 2022 through these initiatives that we have called Financial Fundamentals, where we were looking for 200 to 300 basis points of improvement. So we've rolled out some of those initiatives, and they've taken hold. We're also getting some benefit from commodities and, you know, some deflation right now. So, two of those things are working in our favor. But we feel it's an achievable target. We haven't put a specific timeframe on it, but we know already if you look at some of the improvement we've had just on the JAC corporate side, the RLM running at 23.1% would point to some of these initiatives taking hold and actually showing results on the scoreboard. And we want to continue to do that.

Speaker Change: We've been able to improve.

Speaker Change: Some of the inflationary impacts that we had in 2022 through these initiatives that we've had called financial fundamentals, where we were looking for 200 to 300 basis points of improvement. So we've rolled out some of those initiatives. They have taken hold and we're also getting some benefit from commodities and some deflation right now so two of those things are working on our <unk>.

Speaker Change: <unk>, where we feel we feel it's a achievable target we haven't put a specific timeframe on it but we know already if you look at some of the improvement we've had just on the Jack corporate side. The R&M running at 23, 1% would point to some of these initiatives are taking hold and actually showing our results on the scoreboard and we want to continue.

Speaker Change: To do that so we will we will it is a core part of our focus as I mentioned in my earlier comments drive top avs.

Brian M. Scott: So it is a core part of our focus, as I mentioned in my earlier comments, drive top AUVs, help improve that with innovation and digital, make sure our economic models are always being challenged and looked at on how we can improve them. And I think we've done that in light of our pricing strategy, our supply chain strategy, and also our operational strategy. And those things will ultimately help us lead to new restaurant growth. Yeah, I'd add as well, as you look at some of the newer markets we're in, you see the strong AUV. So that's another component of how we're going to get to that higher margin. And so if we continue that path, that's going to help in our crave strategy, and the new restaurant designs, we think are an important factor in that.

Darin Harris: So we will — it is a core part of our focus, as I mentioned in my earlier comments. Drive top AUVs, help improve that with innovation in digital, make sure our economic model is always being challenged and looked at on how do we improve it. And I think we’ve done that in light of our pricing strategy, our supply chain strategy, and also our operational strategy. And those things will ultimately help us lead to new restaurant growth.

Speaker Change: Improve that with innovation and digital make sure our economic models is always being challenged and looked at on how do we improve it and I think we've done that in light of our pricing strategy, our supply chain strategy and also our operational strategy and those things will ultimately help us lead to new restaurant growth.

Brian M. Scott: Yeah. What I’d add as well is as you look at some of the newer markets we’re in, you see the strong AUV. So, that’s another component of how we’re going to get to that higher margin. And so, that is we continue that path that’s going to help. And our crave strategy and the new restaurant designs, we think is an important factor in that. So I think that will — as you look ahead towards opening more restaurants with that design and our menu innovation and the higher AUVs that comes from that, that’s going to also be additive. And then the last thing I’d add is, as we talked about Investor Day, we’re investing more in technology. Putting in a new point of sale system at Jack is really very foundational to a lot of the opportunity we see to drive more automation and efficiency within the restaurant four-walls. And so that — as we roll that out over the next couple of years, there’s more we know we can do in the stores to be drive efficiency, whether it’s on food product or staffing that will help us achieve that 15% as well.

Speaker Change: As well as the as you look at some of the newer markets, where you see the strong <unk>. So that's another component of how we're going to get to that higher margin.

Speaker Change: And so that if we continue that down that path, that's going to help in our crave strategy.

Speaker Change: And the new.

Speaker Change: The new restaurant designs I think is an important factor in that so I think that as you look ahead towards opening more restaurants with that design and our menu innovation.

Brian M. Scott: So I think that will, as you look ahead towards opening more restaurants with that design and our menu innovation and the higher AUVs that come from that, that's also going to be additive. And then the last thing I'd add is, as we talked about yesterday, we're investing more in technology; putting in a new point of sale system at a JAC is really very foundational to a lot of the opportunity we see to drive more automation and efficiency within the restaurant's four walls. And so as we roll that out over the next couple of years, there's more we know we can do in the stores to drive efficiency, whether it's on food or staffing, that will help us achieve that 15% as well. Thank you for all the color.

So I think that will, as you look ahead towards opening more restaurants with that design and our menu innovation and the higher AUVs that come from that, that's also going to be additive. And then the last thing I'd add is, as we talked about yesterday, we're investing more in technology; putting in a new point of sale system at a JAC is really very foundational to a lot of the opportunity we see to drive more automation and efficiency within the restaurant's four walls. And so as we roll that out over the next couple of years, there's more we know we can do in the stores to drive efficiency, whether it's on food or staffing, that will help us achieve that 15% as well.

Speaker Change: The higher <unk> that comes from that that's going to also be additive and then the last thing I'd add is we talked about Investor day, we are investing more in technology, putting in a new point of sale system that Jack is really very foundational to a lot of the opportunity we see to drive more automation and efficiency within the restaurant for walls and so that as we roll that out in the next couple of <unk>.

Speaker Change: <unk> there is more we know we can do in the stores to.

Speaker Change: Drive efficiency or whether it's on three product our staffing that will help us achieve that 15% as well.

Speaker Change: Yeah.

Speaker Change: Thank you for all the color.

Speaker Change: Sure.

Drew North: Thank you for all the color. Sure.

Drew North: Thank you for all the color.

Darin Harris: Sure.

Eric Gonzalez: Our final question comes from the line of Eric Gonzalez with KeyBank Capital Markets. Please go ahead. Hey, thanks for letting me join the queue here. My question is about the labor environment in California. With fast food wages going up to $20 in the next few months, have you seen other industries start to advertise a similar wage? And I think when this was first contemplated, I think you talked about being proactive with regard to advertising a higher wage at Jack versus other industries. So I'm wondering if that gap has closed at all and whether you're seeing an influx of demand for these positions, or whether we're a bit early on that. So I think we're still a bit early. We haven't seen, you know, a dramatic influx of competition starting to take up wages.

Operator: Our final question comes from the line of Eric Gonzalez with KeyBanc Capital Markets. Please go ahead.

Speaker Change: Our final question comes from the line of Eric Gonzalez with Keybanc capital markets. Please go ahead.

Hey, thanks for letting me join the queue here. My question is about the labor environment in California. With fast food wages going up to $20 in the next few months, have you seen other industries start to advertise a similar wage? And I think when this was first contemplated, I think you talked about being proactive with regard to advertising a higher wage at Jack versus other industries. So I'm wondering if that gap has closed at all and whether you're seeing an influx of demand for these positions, or whether we're a bit early on that. So I think we're still a bit early. We haven't seen, you know, a dramatic influx of competition starting to take up wages.

Eric Gonzalez: Hey, thanks for letting me in the queue here. My question is about the labor environment in California with fast food wages going up to $20 in the next few months. Have you seen other industries start to advertise a similar wage? And I think when this was first contemplated, I think you talked about being proactive with regards to advertising the higher wage at Jack versus other industries. So I’m wondering if that gap has closed at all and whether you’re seeing an influx of demand for these positions or whether we’re a bit early on this.

Eric Gonzalez: Hey, Thanks for letting me in the queue. Here. My question is on the labor environment, California, with fast food wages going into $20. In the next few months have you seen other industry start to advertise a similar wage and I think when this was first contemplated I think you talked about being proactive with regards to advertising higher wages JAK versus other industries. So I'm wondering if that gap is.

Eric Gonzalez: Close at all and whether Youre seeing an influx of demand for these positions or whether we're a bit early on this.

Speaker Change: So I think we're still a bit early we haven't seen a dramatic influx of competition starting to take up wages. We know that's about ready to kick off is we want to go out to the market until.

Darin Harris: So, I think we’re still a bit early. We haven’t seen a dramatic influx of — the competition starting to take up wages. We know that’s about ready to kick-off as we want to go out to the market and tell — and advertise what we’re offering from a wage rate standpoint. So, we think we’re at the early stage of that occurring. We have heard of some of some movements within the healthcare sector, specifically of foodservice and healthcare that are increasing their minimum wage even beyond $20. So, we do know it’s starting to be talked about in the marketplace, but still early stages.

Darren Harris: We know that's about ready to kick off as we want to go out to the market and tell, you know, and advertise what we're offering from a wage rate standpoint. So we think we're at the early stage of that happening. We have heard of some movements within the healthcare sector, specifically in food service and healthcare, that are increasing their minimum wage even beyond $20.

And advertisement.

Speaker Change: We're offering from a wage rate standpoint, so we think we're at the early stage of that occurring we have heard of some of some movements within the health care sector, specifically of foodservice in health care that are increasing their minimum wage even beyond $20. So we do know.

Darren Harris: So we do know it's starting to be talked about in the marketplace, but it is still in the early stage. Okay, and if I could squeeze one more in, on the refranchising, I think you said you were going to sell 13 later this month and have an agreement to sell 25 more, which puts you pretty close to the low end of that 40 to 60 target, so I'm wondering maybe if there's a little bit of upside, given that we're only in the second quarter here and you're kind of approaching that bottom end of the range Yeah, that's why I mentioned that, you know, that range that we feel confident about. So, as we said before, we have plenty of interest. So again, we're being very strategic in how we approach these markets and who we partner with, both as good operators as well as being good development partners. So, but there's certainly opportunity for us to, you know, end up in that range. And if we wanted to exceed it, we likely could, but we're going to do it in a disciplined way.

So we do know it's starting to be talked about in the marketplace, but it is still in the early stage.

Speaker Change: Starting to be <unk>.

Speaker Change: Talked about in the marketplace, but but still early stages.

Eric Gonzalez: Okay, and if I could squeeze one more in, on the refranchising, I think you said you were going to sell 13 later this month and have an agreement to sell 25 more, which puts you pretty close to the low end of that 40 to 60 target, so I'm wondering maybe if there's a little bit of upside, given that we're only in the second quarter here and you're kind of approaching that bottom end of the range Yeah, that's why I mentioned that, you know, that range that we feel confident about. So, as we said before, we have plenty of interest. So again, we're being very strategic in how we approach these markets and who we partner with, both as good operators as well as being good development partners. So, but there's certainly opportunity for us to, you know, end up in that range. And if we wanted to exceed it, we likely could, but we're going to do it in a disciplined way.

Eric Gonzalez: Okay. And if I could squeeze one more in. On the refranchising, I think you said you were going to sell 13 later this month and have an agreement to sell 25 more, which puts you pretty close to the low end of that 40 to 60 target. So, I’m wondering maybe if there’s a little bit of upside, given that we’re only in the second quarter here and you’re kind of approaching that, the bottom end of the range.

Speaker Change: Okay, and if I could squeeze one more in on the Refranchising. I think you said you were going to sell 13 later this month and have an agreement to sell 25 more.

Speaker Change: Which puts you pretty close to the low end of that 40 to 60 target. So I'm wondering maybe if theres a little bit of upside given that we're only in the second quarter here and youre kind of approaching that the bottom end of the range.

Speaker Change: Yes, so that's why I mentioned that that range that we feel confident of alto as we said before we have.

Brian M. Scott: Yeah. That’s why I mentioned that, that range that we feel confident about. So as we said before, we have plenty of interest. So again, we’re being very kind of strategic in how we approach these markets and who we partner with, both as good operators as well as being good development partners. But there’s certainly opportunity for us to end up in that range. And if we wanted to exceed it, we likely could, but we’re going to do it in a disciplined way.

Speaker Change: Plenty of interest so we're again, we're being very strategic in how we approach these markets and who we partner with <unk>.

Speaker Change: Both are good operators as well as being good development partners. So that there is certainly opportunity for us to end up.

Speaker Change: In that range and if we wanted to exceeded we likelihood, but we're going to we're going to do it in a disciplined way.

Brian M. Scott: Thank you very much, http://TheBusinessProfessor.com. This concludes today's call. You may now disconnect. Thank you.

Eric Gonzalez: Got it. Thank you very much. Thanks, Eric.

Eric Gonzalez: Got it. Thank you very much.

Speaker Change: Got it thank you very much.

Speaker Change: Okay.

Brian M. Scott: Thanks, Eric.

Operator: This concludes today's call. You may now disconnect.

Speaker Change: This concludes today's call you may now disconnect.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.