Q2 2024 Jack in the Box Inc Earnings Call

Okay.

Operator: Thank you for standing by. At this time, I would like to welcome everyone to the Jack in the Box second quarter 2024 earnings webcast. All lines have been placed on mute to prevent any background noise.

Speaker Change: Thank you for standing by at this time I would like to welcome everyone to the Jack in the box second quarter 2024 earnings webcast. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. Once again, press star one. And if you'd like to withdraw your question, simply press star one again. Finally, in the interest of time, we ask that you limit yourself to one question. Thank you. I would now like to turn the call over to Chris Brandon, Vice President of Investor Relations. Chris, please go ahead.

Operator: After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad once again star one and if you'd like to withdraw your question simply press Star one again finally in the interest of time, we ask that you limit yourself to one question. Thank you.

I would now like to turn the call over to Chris Brandon.

Chris Brandon: President of Investor Relations, Chris. Please go ahead.

Chris Brandon: Thanks, Operator, and good afternoon, everyone. We appreciate you joining today's conference call, highlighting results from our second quarter 2024. With me today are our 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 cell site analysts. Note that during both our discussion and Q&A, we may refer to certain 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.

Chris Brandon: Thanks, operator, and good afternoon, everyone. We appreciate you joining today's conference call highlighting results from our second quarter 2024 with me today are Chief Executive Officer, Darren Harris, and our Chief Financial Officer, Bryan Scott following their prepared remarks, we will be happy to take questions from our covering sell side analysts.

Chris Brandon: Note that during both our discussion and Q&A, we may refer to certain 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.

Darin S. Harris: We will also be making forward looking statements based on current information and judgments that reflect managements 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.

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 10-K, 10-Q, and other public documents filed with the SEC and are available on our Investor Relations website. And lastly, I'd like to update you on our upcoming conference and event plans for the next few weeks.

Darin S. Harris: Shipments in our most recent 10-K to be part of our discussion.

Speaker Change: 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: On Tuesday, June 2nd, we will be attending the Stiefel Conference in Boston. On Wednesday, June 3rd, we will be attending both the Baird and Cohen conferences in New York City. On Thursday, June 4th, we will be attending the RBC Conference in New York City, and on Tuesday, June 11th, we will participate in the Oppenheimer Conference, which will be held virtually. We look forward to seeing many of you at these events. And with that, I would like to turn the call over to our Chief Executive Officer, Darin Harris. Thank you, Chris.

Darin S. Harris: And lastly, I'd like to update you on our upcoming conference and event plans for the next few weeks on Tuesday June 2nd we will be attending the Stifel Conference in Boston on Wednesday June 3rd we will be attending both the bird and Cowen conferences in New York City.

RBC conference: On Thursday June 4th we will be attending the RBC conference in New York City.

RBC conference: And on Tuesday June 11th we will participate in the Oppenheimer conference, which will be held virtually we look forward to seeing many of you at these events and with that I would like to turn the call over to our Chief Executive Officer Darrin Harris. Thank you, Chris I appreciate the opportunity to speak with.

Darin S. Harris: Thank you, Chris. I appreciate the opportunity to speak with you today about our performance and results. To start, I want to thank everyone in the organization for their efforts in driving material progress on our breaking out of the box, long-term additions of targeting top-tier AUVs, improving restaurant-level economics, driving digital growth, and building new restaurants with compelling returns for franchisees. Now, at this point, you're aware of the consumer headwinds impacting our industry and the need to drive transactions and win share, especially with lower-income guests.

Darin S. Harris: You today regarding our performance and results.

Darin S. Harris: To start I want to thank everyone in the organization for their efforts in driving material progress on our breaking out of the box long term additions of targeting top tier <unk>.

Darin S. Harris: Improving restaurant level economics.

Darin S. Harris: Diving digital growth and building new restaurants with compelling returns for our franchisees.

Speaker Change: Now at this point Youre aware of the consumer headwinds impacting our industry.

Speaker Change: And the need to drive transactions and win share, especially with the lower income guest.

Darin S. Harris: Providing a compelling value offering, in essence, what you get for what you pay, is more important than ever to our barbell strategy and message. Today, I'll talk more about our second quarter results and long-term goals, but we'll also share our near-term plans to play offense by executing on our exciting second half of the year marketing calendar. Although Q2 proved to be a challenging sales environment.

Speaker Change: Providing a compelling value offering in essence, what you get for what you pay is more important than ever to our barbell strategy and messaging.

Speaker Change: Today, I will talk more about our second quarter results and long term goals, but will also share our near term plans to play offense by executing on our exciting second half of the year marketing calendar.

Speaker Change: Although Q2 proved to be a challenging sales environment.

Darin S. Harris: I'm encouraged by the improvement at Jack near the end of the quarter and leading into May. Brian will speak more about what happened during the quarter and our current trends, and while there are still headwinds, the direction through the early stages of Q3 is more encouraging. Q2 margins and earnings were better than expected, particularly as we lapped our strongest comp quarter last year for Jack, producing 7% same-store sales growth on a two-year basis while adapting to the initial effects of AB 1228.

Speaker Change: I am encouraged by the improvement at Jack near the end of the quarter and leading into May.

Darin S. Harris: Brian will speak more on what occurred during the quarter and our current trends and while there are still headwinds the direction through the early stages of Q3 is more encouraging.

Darin S. Harris: Q2 margins and earnings were better than expected, particularly as we lapped our strongest comp quarter last year project, producing 7% same store sales growth on a two year basis, while adapting to the initial effects from AB $12 28.

Darin S. Harris: Speaking of AB 1228, I'm proud of how our California franchisees joined together with our company leadership teams to execute strategic price increases, implement our margin savings plans, share best practices, and test equipment and technology that can support labor savings in the future. Interestingly, our California restaurants at both brands have performed on par, and in some cases better, than other regions across the country, particularly with our company-owned restaurants, as transaction and mixed pressures persisted throughout Q2 for both brands. I want to spend some time on our focus areas for the remainder of the year. Let's start with Jack in the Box.

Brian Smith: Speaking of AB 228, I'm proud of how our California franchisees joined together with our company leadership teams to execute strategic price increases.

California franchisees: <unk>, our margin savings plans share best practices and test equipment and technology that can support labor savings in the future.

California franchisees: Interestingly, our California restaurants at both brands have performed on par.

California franchisees: And in some cases better.

Speaker Change: Then other regions across the country, particularly with our company owned restaurants.

Speaker Change: As transaction and mixed pressures persisted throughout Q2 for both brands.

Speaker Change: Want to spend some time on our focus areas for the remainder of the year.

Speaker Change: Let's start with Jack in the box.

Darin S. Harris: Later this month, we will launch our Munchies Under $4 platform, which will accomplish three things. First, it will provide a strong value message for our guests. Second, support our hook and build strategy with disciplined pricing on our add-on and upsell favorites to increase attachment, and lastly, support value through digital channels. We are aggressively building direct guest connections via first party, growing the JackPack rewards program, and gaining further data and insights that we can utilize to create personalized marketing strategies for

Speaker Change: Later this month, we will launch our monkeys under $4 platform, which will accomplish three things first provide a strong value message for our guests second support our hook and build strategy with disciplined pricing on our add on and up sell favorites to increase attachment and lastly support value through digital.

Speaker Change: <unk>, we are aggressively building direct guest connections via first party growing the JAK Pac rewards program and gaining further data and insights that we can utilize to create personalized marketing strategies for the future.

Speaker Change: We're examining all marketing channels and promotional windows as an opportunity to drive value to complement our premium offer messages.

Darin S. Harris: We're examining all marketing channels and promotional windows as an opportunity to drive value to complement our premium offer messages, particularly within digital, where we are generating 13% of sales and growing. We will also deliver opportunities for value across all five Bay Parks. And on that note, I'd like to share a few of our upcoming marketing calendar highlights that I'm confident will drive sales during the second half of 2024. In two weeks, we will be concentrating on the late-night day part, where we can continue to win share.

Speaker Change: Particularly within digital where we are generating 13% of sales and growing.

Speaker Change: We will also deliver opportunities for value across all five day parts.

Speaker Change: And on that note I'd like to share a few of our upcoming marketing calendar highlights that I'm confident will drive sales during the second half of 2024.

Speaker Change: In two weeks, we will be concentrating on the late night day part, where we can continue to win share.

Darin S. Harris: Backed by popular demand will be our chicken tater melt, a favorite from our original munchie meal menu. And to make it even more exciting, we are partnering with Ice Cube to help us reintroduce it. Cube's Munchie Mill will help bring back this item that has been in high demand from our longtime late night fans for the past couple of years. We were thrilled to learn that Ice Cube, the rapper, actor, film producer, and rock and roll hall of famer, was a huge Jack in the Box fan, and we are eager to roll out the campaign via television and our social channels.

Speaker Change: Backed by popular demand will be our chicken tater mill, a favorite from our original Munching mill menu.

Unknown Executive: And then make it even more exciting we are partnering with ice cube to help us reintroduce it Q.

Dennis Geiger: <unk> is much email will help bring back this item that has been in high demand from our longtime late night fans for the past couple of years.

Unknown Executive: We were thrilled to learn that ice cube.

Unknown Executive: <unk> film producer in rock and Roll Hall of Famer was a huge Jack in the box fan and.

Speaker Change: We are eager to rollout the campaign via TV and our social channels. This partnership further displays the pop icon status of Jack box as a partners with other celebrities to deliver the unique offering our guests and fans expect.

Darin S. Harris: This partnership further displays the pop icon status of Jackbox as he partners with other celebrities to deliver the unique offering our guests and fans expect. Also, at the end of this month, we will launch Wing System-Wide. Our product test this past November drove both transactions and outstanding feedback from our guests who craved this product and wanted to order it again. We will initially promote WINGS via digital and social, then plan to support the product with a major campaign in the future.

Jack Box: Also at the end of this month, we will launch wing system wide.

Jack Box: Our product test this past November drove both transactions and outstanding feedback from our guests that crave this product.

Jack Box: And wanted to order it again.

Speaker Change: We will initially promote wings via digital and social then plan to support the product with a major campaign in the future.

Jack Box: Our smash Jack which launched in the second quarter drove high single digit mix and improved the average check by 200 basis points and really resonated with our premium guests.

Darin S. Harris: Our Smash Jack, which launched in the second quarter, drove high single-digit mix and improved the average check by 200 basis points and really resonated with our premium guests. Consumer scores for the product have been outstanding, and in fact, we're looking to further innovate and develop new builds utilizing this differentiated and craveable burger patty. Brian will have more detail on how Smash Jack performed and its supplier delay, which impacted Q2 results.

Speaker Change: Consumer scores for the product have been outstanding and in fact, we're looking to further innovate and develop new builds utilizing this differentiated and craveable Burger Patty <unk>.

Jack Box: Brian will have more detail on how smashed Jack performed and its supplier delay, which impacted Q2 results.

Brian Smith: We will drive breakfast topline by making French toast sticks, a proven fan favorite <unk> item permanent on our menu.

Darin S. Harris: We will drive breakfast sales by making French toast sticks, a proven fan favorite LTO item, permanent on our menu. This will provide a strong offering, in addition to featuring breakfast messaging in every marketing window. And lastly, in the spirit of continuing to capture culturally relevant moments, we will be partnering with one of Jack's celebrity friends this summer in one of the most anticipated major motion picture events in recent years. Stay tuned.

Brian Smith: This will provide a strong offering in addition to featuring breakfast messaging and every marketing window.

Brian Smith: And lastly in the spirit of continuing to capture culturally relevant moments, we will be partnering with one of Jack celebrity friends. This summer and one of the most anticipated major motion picture events in recent years stay tuned.

Brian Smith: Despite the challenging consumer environment I'm excited by what this team is creating to connect with guests and drive transactions and as you can see our second half marketing and promotional calendar is robust and will occur as we lap easier comparisons from a year ago.

Darin S. Harris: Despite the challenging consumer environment, I'm excited by what this team is creating to connect with guests and drive transactions. And as you can see, our second half marketing promotional calendar is robust and will occur as we lap easier comparisons from a year ago. We will lead with value and follow with innovation while communicating in our own unique Jack way. As part of our breaking out-of-the-box strategy, we shared plans at our investor day to modernize our technology and data capabilities at the restaurant level and within our Martech stack.

Brian Smith: We will lead with value and follow with innovation, while communicating in our own unique Jack way.

Jack: Part of our breaking out of the box strategy, we shared plans at our Investor day to modernize our technology and data capabilities at the restaurant level and within our Martech stack.

Darin S. Harris: This strategy includes our plan to aggressively pursue digital growth. Our first-party platforms continue to grow meaningfully, and our third-party activity remains stable as we battle in a pay-to-play marketplace. First-party channels grew over 80% during the quarter and have grown on average 75% each quarter for the past year.

Jack Box: This strategy includes our plan to aggressively pursue digital growth.

Jack Box: Our first party platforms continue to grow meaningfully and our third party activity remains stable as we battle in a pay to play marketplace.

Speaker Change: First party channels grew over 80% during the quarter and has grown on average 75% each quarter for the past year.

Darin S. Harris: We believe we can continue this strong growth through the launch of our next generation mobile app later this year, with an emphasis on building active users and capturing data to reach our guests more effectively. At the restaurant level, we recently announced our partnership with Q, which will serve as the unified commerce platform at the heart of our new point of sale that will be installed across the entire Jack in the Box system.

Speaker Change: We believe we can continue the strong growth through the launch of our next generation mobile App later this year.

Speaker Change: With an emphasis on building active users and capturing data to reach our guests more effectively.

Speaker Change: At the restaurant level, we recently announced our partnership with Q, which will serve as the unified Commerce platform at the heart of our new point of sale that will be installed across the entire Jack in the box system.

Darin S. Harris: The new POS unlocks a variety of ways to enhance the guest experience and pursue our vision for the Jack restaurant of the future. It will significantly enhance our digital and in-restaurant loyalty integration, improve customer data capture, and streamline integration with our web and mobile ordering platform. It will unlock the ability to effectively deploy kiosks and upgrade our back office inventory and labor management systems, and in the longer term, it will improve our ability to deploy automation and use AI throughout the restaurant.

Speaker Change: But the new Pos unlocks a variety of ways to enhance the guest experience and pursue our vision for the restaurant of the future.

Speaker Change: It will significantly enhance our digital and in restaurant loyalty integration improve customer data capture and streamlined integration with our web and mobile ordering platforms.

Speaker Change: It will unlock the ability to effectively deploy kiosks and upgrade our back office inventory and labor management systems and in the longer term it will improve our ability to deploy automation and use AI throughout the restaurant.

Speaker Change: Turning to unit growth and restaurant level economics are focus on increasing restaurant level margins is critical to our long term growth and will ultimately benefit the entire system.

Darin S. Harris: Turning to unit growth and restaurant-level economics, our focus on increasing restaurant-level margins is critical to our long-term growth and will ultimately benefit the entire system. These efforts contributed toward Jack's 23.6% restaurant-level margin this quarter and were driven in part by ongoing equipment, technology, and financial fundamentals initiatives that our franchisees are embracing. Of the programs we have rolled out to the system, an example being Hydro Rinse Equipment, we are currently at over 50% full system adoption.

Speaker Change: These efforts contributed towards <unk> 23, 6% restaurant level margin this quarter.

Speaker Change: It was driven in part by ongoing equipment technology and financial fundamentals initiatives that our franchisees are embracing.

Speaker Change: Of the programs, we have rolled out to the system. An example, being hydrants equipment. We're currently at over 50% full system adoption.

Darin S. Harris: Next steps for additional savings include the 3-in-1 toaster and then the inventory and labor tool rollout. We are very encouraged at the way these initiatives are supporting our long-term ambition of franchise restaurants realizing 15% four-wall EBITDA and an under five-year payback on new restaurants. Aligning to our ambition to drive higher AUVs, last month we rolled out our new Craved Reimage and Refresh program to the franchise, coupled with a $50 million commitment to this program.

Speaker Change: Next steps for additional savings include the three in one poster and then inventory and labor tool Rollouts.

Speaker Change: We are very encouraged that the way. These initiatives are supporting our long term ambition of franchise restaurants, realizing 15% four wall EBITDA and in under five year payback on new restaurants.

Speaker Change: Aligning to our ambition to drive higher <unk> last month, we rolled out our new craved re image and refresh program to the franchise system.

Speaker Change: Coupled with a $50 million commitment towards this program.

Darin S. Harris: We are thrilled with the interest and excitement from franchisees, with submitted requests to remodel over 500 restaurants. The performance of our new restaurants with this design has been outstanding, and we are confident these remodel efforts will drive incremental same-store sales. Franchisees will utilize this design in new restaurant builds and now have this image option in a remodel format, which has created even more excitement around the remodel program. We now have 71 restaurants in the design and permitting stages for our previous industrial design. And all restaurants from this point forward will feature the new Crave treatment.

Speaker Change: We are thrilled with the interest and excitement from franchisees with submitted request to remodel over 500 restaurants.

franchisees: The performance of our new restaurants with this design has been outstanding and we are confident these remodel efforts will drive incremental same store sales.

franchisees: Franchisees will utilize this design and new restaurant builds and now have this image option and a remodel format, which has created even more excitement around the remodel program.

Speaker Change: We now have 71 restaurants in the design and permitting stages for our previous industrial design and all restaurants from this point forward will feature the new crave treatment.

Speaker Change: Turning to new market performance, we opened our first restaurant in Mexico during Q2 and much like our other new market locations. Its performance has been beyond expectations. We will open our second Mexico restaurant in June with a third set to open later this year.

Darin S. Harris: Turning to new market performance, we opened our first restaurant in Mexico during Q2, and much like our other new market locations, its performance has been beyond expectations. We will open our second Mexico restaurant in June, with a third set to open later this year. The success of our first opening there has generated interest from other operators throughout the country. And I am pleased to report that the trailing 12-month AUV for all new market restaurants, which now includes Mexico, is nearly $100,000 in weekly sales on average.

Speaker Change: The success of our first opening there has generated interest from other operators throughout the country and I am pleased to report that the trailing 12 month AAV for all new market restaurants, which now includes Mexico is nearly $100000 in weekly sales on average.

Jack: Jack also continues to have success in signing development agreements with new franchisees, particularly in Florida.

Darin S. Harris: Jack also continues to have success in signing development agreements with new franchisees, particularly in Florida, where we will open our first restaurant in Orlando in early 2025. We recently signed a new franchisee with the Outstanding Restaurant Experience to open in Tallahassee, and we now have 31 total restaurant commitments in Florida and have seen a continued increase in franchise development interest. Maximizing unit economics and lowering bill costs are critical elements in achieving our ambitions of a sub-five-year payback and hitting net unit growth of over 2%.

Jack: We will open our first restaurant in Orlando in early 2025.

Jack: We recently signed a new franchisee with outstanding restaurant experience to open in Tallahassee.

Jack: Now have 31 total restaurant commitments in Florida and has seen a continued increase in franchise development interest.

Jack: Maximizing unit economics, and lowering build costs are critical elements in achieving our ambitions at a sub five year payback.

Jack: And hitting net unit growth of over 2%.

Darin S. Harris: Our design and construction teams continue to identify ways to value engineer our C.R.A.V.E. prototype and have made significant progress toward our build cost goals for both brands. While it will take some time to fully realize our new restaurant payback objectives, there is a clear path to making this happen. On the development front, there are 88 restaurants in the design, permitting, and construction stage, and we remain on track for both brands to hit our gross openings expectations range for the year.

Jack: Our design and construction teams continue to identify ways to value engineer, our crave prototype and have made significant progress toward our build cost goals for both brands.

Jack: It will take some time to fully realize our new restaurant payback objectives. There is a clear path to making this happen.

Jack: On the development front, there are 88 restaurants in the design permitting and construction stage and we remain on track for both brands to hit our gross openings expectations range for the year.

Jack: Shifting to del Taco I am pleased with common sales efforts to get the team aligned on the right strategy to improve sales and profitability.

Darin S. Harris: Moving to Del Taco, I am pleased with Tom and Sara's efforts to get the team aligned on the right strategy to improve sales and profitability. As an early example, we are encouraged by Dell's new menu simplification test. It is showing signs of improving sales, speed of service, and margin, and Dell's ability to test kiosks, which are producing increased ticket sales and lower labor cost benefits, only helps our progress toward it being a future system-wide opportunity for both brands.

Del Taco: As an early example, we're encouraged by <unk> new menu simplification test it is showing signs of improving sales speed of service and margins.

Speaker Change: And <unk> ability to test kiosks, which are producing increased ticket and lower labor cost benefits only helps our progress towards being a future system wide opportunity for both brands.

Speaker Change: New restaurants recently opened in Utah, Alabama, Florida, and California continue to perform well, leading the recently signed agreements to expand in Atlanta in Greensboro, North Carolina.

Darin S. Harris: New restaurants recently opened in Utah, Alabama, Florida, and California continue to perform well, leading to recently signed agreements to expand in Atlanta and Greensboro, North Carolina. In terms of Back Half 2024 plans, due to our everyday value, we will launch premium innovation that supports our barbell strategy, starting with bringing back the popular birria, including a new burrito, as well as another quality product with the introduction of al pastor. In addition, this week, two fan favorites will return: nacho cheese after a 12-year hiatus and many fan requests, and funnel cake.

Speaker Change: In terms of back half 2024 plans due to our everyday value. We will launch premium innovation that supports our barbell strategy, starting with bringing back the popular <unk>, including a new brito as well as another quality product with the introduction of our pet store.

Speaker Change: In addition, this week to fan favorites will return Nacho cheese. After a 12 year hiatus in many fan requests and funnel cakes.

Darin S. Harris: We will couple this with a revised media activation strategy, which will bring heightened awareness to both our campaigns and new brand position. We look forward to updating you on the progress of these Del Taco initiatives under our new leadership throughout the remainder of 2024. We have the right team focused on the right things to achieve both our goals and the brand's potential. In closing, I am confident in our ability to navigate industry headwinds in the short term while also ensuring that we remain focused on executing our strategy to achieve our long-term goals. Our strong margin and growth fundamentals are evident and will continue to support our ambitious target. Thank you again, and I'll now turn the call over to Brian.

null: We will couple this with a revised media activation strategy, which will bring heightened awareness to both our campaigns and new brand positioning.

Del Taco: We look forward to updating you on the progress of these del Taco initiatives under our new leadership throughout the remainder of 2024, we have the right team focused on the right things to achieve both our goals and the brand's potential.

Speaker Change: In closing I am confident in our ability to navigate industry headwinds in the short term while also ensuring that we remain focused on executing our strategy to achieve our long term goals are.

Speaker Change: Our strong margin and growth fundamentals are evident and will continue to support our ambitious targets.

Brian: Thank you again and I'll now turn the call over to Brian.

Brian M. Scott: Thank you, 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 second quarter system, same store sales declined 2.5%, consisting of a company-owned comp decrease of 0.6% and Franchise Cop Decrease of 2.6%. Jack experienced a decline in transactions as well as an unfavorable mix shift during the quarter, partially offset by an approximately 5% lift in price.

Brian: Thank you Darrin 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 second quarter system same store sales declined two 5% consists.

Brian: Consisting of a company owned comp decrease of <unk>, 6% on franchise cocky crease of two 6%.

Brian: Jack experienced a decline in transactions as well as unfavorable mix shift during the quarter, partially offset by an approximately 5% lift in price.

Jack: The same store sales decline was clearly impacted by the macro headwinds, but was exacerbated by delay in our smash Jack launch, which I will describe in a bit more detail.

Brian M. Scott: The St. George sales decline was clearly impacted by the macro headwind, but it was exacerbated by a delay in our Smash Jack launch, which I'll describe in a bit more detail. For Smashed, our original plan was to transition from the late December soft launch into a full marketing-supported launch in February. However, two things happened.

Jack: Smashed our original plan was to transition from the late December soft launched into a full marketing supported launch in February however.

Speaker Change: However, two things happened first the soft launch was so successful that we ran out of product in about three weeks.

Brian M. Scott: First, the soft launch was so successful that we ran out of product in about three weeks. Second, and even more impactful, was an unexpected supplier issue that temporarily stalled our ability to proceed with our original February launch timing. This delay forced us to push the launch date with full marketing to March 15th, about four weeks later than originally planned.

Speaker Change: And even more impactful wasn't unexpected supplier issue that temporarily stalled our ability to proceed with our original February launch timing.

Speaker Change: This delay forced us to push the launch date with full marketing to March 15th about four weeks later than originally planned.

Brian M. Scott: While we were able to delay our TV campaign until the supplier issue was resolved, this caused an extended point-of-purchase promotion gap as our window panels had been updated in January to promote Smash Jack. This delay also meant the temporary loss of the premium component of our familiar barbell marketing approach, forcing us to pivot to a suboptimal value promotion that negatively impacted average checks. Based on our sales performance after the Smash Jack launch, we estimate that the delay caused about 100 basis points of drag on our Q2 same-store sales. The supplier issue has been fully resolved, and Smash Jack has performed very well and consistently with our expectations, including mixing at a high single-digit level.

Speaker Change: While we were able to delay our TV campaign until the supplier issue was resolved. This caused an extended point of purchase promotional gap as our window panels had been updated in January to promote flashback.

Speaker Change: This delay also meant a temporary loss of the premium component of our familiar barbell marketing approach, forcing us to pivot to a sub optimal value promotion that negatively impacted average check.

Speaker Change: Based on our sales performance after the smashed Jack launch we estimate that the delay caused about 100 basis points drag on our Q2 same store sales.

Speaker Change: The supplier issue has been fully resolved and smash Jack has performed very well and consistent with our expectations, including mixing at a high single digit level.

Brian M. Scott: Boosting average check by approximately 2% and providing strength and lapping the very successful Mint Mobile promotion from a year ago. In terms of our recent performance, Jack's quarter-to-date same-serve sales trends have been running about 1% below the prior year, with the company on restaurants actually comping positive since March. Showing the opportunity for our franchisees to reignite growth. As Darin mentioned, we have several upcoming initiatives, along with more favorable comparisons, that give us optimism in regaining system-wide positive sales for the back half of the year. Regarding product categories, notable contributions came from burgers and sides, with the introduction of Smash Jack driving our burger category, and sides benefiting from increased purchases of Jack wraps and our famous two taco offer.

Speaker Change: We're seeing average check by approximately 2%.

Speaker Change: Providing strength in lapping the very successful net mobile promotion from a year ago.

Speaker Change: In terms of our recent performance Jack quarter to date same store sales trends have been writing about 1% below prior year.

Speaker Change: With company owned restaurants actually Comping positive since March show any opportunity for our franchisees to reignite growth.

Speaker Change: As Darren mentioned, we have several upcoming initiatives along with more favorable comparisons will give us optimism and re total system wide positive sales for the back half of the year.

Speaker Change: Regarding product categories. Notable contributions came from burgers will side.

Speaker Change: With the introduction of NASDAQ driving our Burger category.

Darren: <unk> benefiting from increased purchases of Jack wraps and our famous two taco offering.

Darren: Turning to restaurant count there were three restaurant openings and no closures in the quarter.

Brian M. Scott: Turning to restaurant count, there were three restaurant openings and no closures in the quarter. This resulted in a quarter and restaurant count of 2,195, and we continue to remain on track with our target of opening 25 to 35 restaurants this year with positive net unit growth. Jack Restaurant-Level Margin expanded year-over-year by 220 basis points to 23.6%, driven primarily by lower commodity costs along with price increases. Food and packaging costs as a percentage of company-owned sales declined 250 basis points to 28.8%, primarily due to 0.5% commodity deflation and pricing. Labor as a percentage of company-owned sales remains consistent at 30.6% compared to the prior year. However, wage inflation in the quarter was 4.6%.

Darren: This resulted in a quarter in restaurant count of 2195.

Speaker Change: And we continue to remain on track with our target of opening 25% to 35 restaurants. This year with positive net unit growth.

Darren: Jack restaurant level margin expanded year over year by 220 basis points to 23, 6% Kevin.

Kevin: Driven primarily by lower commodity costs, along with price increases.

Kevin: Food and packaging costs as a percentage of company owned sales declined 250 basis points to 28, 8%.

Kevin: Primarily due to a <unk>, 5% commodity deflation and price increases.

Kevin: Labor as a percentage of company owned sales remained consistent at 36% compared to prior year.

Speaker Change: Wage inflation in the quarter was four 6%.

Speaker Change: Franchise level margin was $71 7 million or 44% of franchise revenues compared to $73 9 million or <unk> 41, 2% a year ago.

Speaker Change: The decrease in dollars and margin was mainly driven by the sales decline and resulting decrease in royalty revenue.

Del Taco: Turning now to del Taco system same store sales declined one 4%.

Speaker Change: Listing of our company owned comp decrease of one 8% and franchise comp decrease of one 1%.

Speaker Change: A decline in sales as a result of declines in transactions, partially offset by a lift in price.

Speaker Change: Del Taco restaurant count at quarter end was 595 with three openings and no closures during the quarter.

Brian M. Scott: Franchise level margin was $71.7 million for 40.4% of franchise revenue, compared to 73.9 million or 41.2% a year ago. The decrease in dollars and margin was mainly driven by the sales decline and resulting decrease in royalty and rent revenue. Turning now to Del Taco, system same-source sales declined 1.4%, consisting of a company-owned cost decrease of 1.8% and franchise cost decrease of 1.1%. The decline in sales is a result of declines in transactions partially offset by a lift in price. The Del Taco restaurant count at quarter end was 595, with three openings and no closures during the quarter.

Brian M. Scott: Del Taco also remains on track to achieve their target of opening 10 to 15 restaurants this year with positive net new unit growth. Del Taco's restaurant level margin was 16.8% compared to 17.3% in the prior year. The decrease was due to increased labor, utilities, and technology support costs, partially offset by menu price increases and commodity deflation. Food and packaging as a percentage of sales decreased by 190 basis points to 25.6%, which was primarily due to price increases and commodity deflation of 1.6 percent. Labor as a percentage of sales increased by 140 basis points to 34.9%, primarily due to wage inflation, which was approximately 4.7% in the quarter.

Speaker Change: While Taco also remains on track to achieve our target of opening 10 to 15 restaurants. This year with positive net new unit growth.

Speaker Change: Del Taco restaurant level margin was 16, 8% compared to 17, 3% in the prior year.

Del Taco: The decrease was due to increased labor utilities and technology support costs parse.

Speaker Change: Partially offset by menu price increases and commodity deflation.

Speaker Change: Food and packaging as a percentage of sales decreased to 190 basis points to 25, 6%.

Speaker Change: Primarily due to price increases and commodity deflation of one 6%.

Speaker Change: Labor as a percentage of sales increased 140 basis points to 34, 9%, primarily due to wage inflation, which was approximately four 7% in the quarter.

Speaker Change: Occupancy and other operating expenses increased 110 basis points to 22, 8%.

Brian M. Scott: Occupancy and other operating expenses increased by 110 basis points to 22.8%, driven primarily by higher utility costs and an increase in technology costs. Franchise level margin was $6.1 million, or 28.9% of franchise revenue, compared to 5.1 million or 37.3% last year. The increase in dollars was due to re-franchising over 100 restaurants over the past year. The decrease in margin percentage was primarily driven by re-franchising efforts and the resulting impact of pass-through rent and marketing.

Speaker Change: Driven primarily by higher utility costs, and an increase in technology costs.

Speaker Change: Franchise level margin was $6 1 million or 28, 9% of franchise revenues okay.

Speaker Change: Compared to $5 1 million or <unk> 37, 3% last year.

Speaker Change: The increase in dollars was due to refranchising over 100 restaurants over the past year while.

Speaker Change: While the decrease in margin percentage was primarily driven by Refranchising efforts and the resulting impact of the pass through rent and marketing fees.

Del Taco: During the quarter, we re franchised 13 del Taco restaurants, with a new franchisee that includes a development agreement for 10 additional restaurants.

Brian M. Scott: During the quarter, we re-franchised 13 Del Taco restaurants with a new franchisee that includes a development agreement for 10 additional restaurants. We also have an agreement in place to re-franchise an additional 27 restaurants, which is expected to close later in the third quarter. We currently remain on track to have 40 to 60 re-franchised restaurants this year.

Del Taco: We also have an agreement in place to re franchise, an additional 27 restaurants that is expected to close later in the third quarter.

Speaker Change: We're currently remain on track to have 40% to 60 Refranchising restaurants this year.

Brian M. Scott: Shifting now to our consolidated results, consolidated SG&A for the second quarter was $37.5 million, or 10.3% of revenue, as compared to 39.4 million, or 10% a year ago. The decline was due primarily to lower incentive-based compensation and lower advertising due to fewer company-owned restaurants.

Speaker Change: Shifting now to our consolidated results.

Speaker Change: Consolidated SG&A for the second quarter was $37 5 million or 10, 3% of revenues.

Speaker Change: As compared to $39 4 million or 10% a year ago.

Speaker Change: The decline was due primarily to lower incentive based compensation and lower advertising due to fewer company owned restaurants.

Brian M. Scott: Partially offset by higher share base compensation along with higher legal and technology costs. Our G&A expenses, excluding net COLA gains and selling and advertising, were $31 million, with 2.5% of total system-wide sales. Consolidated adjusted EBITDA was $75.7 million, down from $80.6 million in the prior year, due primarily to the impacts of the Del Taco refranchising, as well as a decrease in sales. Consolidated GAAP diluted earnings per share was $1.26 compared to $1.27 in the prior year.

Speaker Change: Partially offset by higher share based compensation, along with higher legal and technology costs.

Speaker Change: Our G&A expenses, excluding net coal again, and selling and advertising up $31 million or two 5% of total system wide sales.

Speaker Change: Consolidated adjusted EBITDA was $75 7 million down from $80 6 million in the prior year.

Speaker Change: Due primarily to the impact from the del Taco Refranchising as well as a decrease in sales.

Speaker Change: Consolidated GAAP diluted earnings per share was $1 26, compared to $1 27 in the prior year.

Brian M. Scott: Operating earnings per share, which includes certain adjustments, was $1.46 for the quarter versus $1.47 in the prior year. The effective tax rate for the second quarter was 26.5%, compared to 34.8% for the same quarter a year ago. The higher effective tax rate in the prior year was due to the write-off of non-deductible goodwill on a re-franchising transaction.

Speaker Change: Operating earnings per share, which includes certain adjustments was $1 46 for the quarter versus $1 47 in the prior year.

Speaker Change: The effective tax rate for the second quarter was 26, 5%.

Speaker Change: Compared to 34, 8% for the same quarter a year ago.

Speaker Change: The operating EPS tax rate for the second quarter of 2024 was 27, 1%.

Speaker Change: The higher effective tax rate in the prior year was due to the write off of nondeductible goodwill on our Refranchising transactions.

Speaker Change: Cash flows from operations for the quarter were $16 7 million.

Brian M. Scott: Cash flows from operations for the quarter were $16.7 million, while capital expenditures were $22.2 million, related primarily to our technology and digital initiatives, as well as constructing new company restaurants and remodeling existing restaurants. During the quarter, we repurchased approximately 200,000 shares of our common stock for $15 million, and now have $210 million remaining under our board-authorized program. On May 10th, 2024, the Board of Directors declared a cash dividend of 44 cents per share to be paid on June 25th.

Speaker Change: While capital expenditures were $22 2 million related primarily to our technology and digital initiatives as well as constructing new company restaurants and remodeling existing restaurants.

Speaker Change: During the quarter, we repurchased approximately 200000 shares of our common stock for $15 million.

Speaker Change: Now have $210 million remaining under our board authorized program.

Speaker Change: On May 10, 2024, the board of directors declared a cash dividend of <unk> 44 per share contained on June 25.

Speaker Change: As of quarter end, we had available borrowing capacity of $175 5 million under our variable funding notes and credit facility.

Brian M. Scott: At quarter end, we had available borrowing capacity of $175.5 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 $5.2 billion. And finally, we are providing the following updates to our guidance and underlying assumptions reflecting the company's current expectations for the fiscal year ending September 29th, 2024. Any guidance measures not discussed today remain the same as provided on November 21st, 2023, for the fiscal year 2024 company-wide guidance.

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

Speaker Change: And our net debt to adjusted EBITDA leverage ratio was five two times.

Speaker Change: And finally, we are providing the following updates to our guidance and underlying assumptions, reflecting the company's current expectations for the fiscal year ending September 29 2024.

Speaker Change: Any guidance measures not discuss today remain the same as provided on November 21 2023.

Speaker Change: For the fiscal year 2020 for company wide guidance we.

Brian M. Scott: We are anticipating adjusted EBITDA of $325 to $330 million, operating earnings per share of $6.25 to $6.40, and depreciation and amortization expense of $60 to $62 million. For our Jack in the Box segment, we are expecting same-store sales growth of flat to low single digits and a company-owned restaurant-level margin of 22 to 23 percent. And for Del Taco, we are anticipating same-source sales growth of flat to low single digits and a franchise level margin of 27 to 29 percent.

Speaker Change: We anticipate adjusted EBITDA of $325 million to $330 million.

Speaker Change: Operating earnings per share of $6 25 to $6 40.

Speaker Change: And depreciation and amortization expense of $60 million to $62 million.

Speaker Change: For our Jack in the box segment, we are expecting same store sales growth of flat to low single digits.

Speaker Change: On a company owned restaurant level margin of 22% to 23%.

Speaker Change: And for del Taco, we anticipating same store sales growth of flat to low single digit.

Speaker Change: And our franchise level margin of 27% to 29%.

Speaker Change: Before we transition to Q&A I want to take a moment to recognize and thank all of our team members across the organization.

Brian M. Scott: Before we transition to Q&A, I want to take a moment to recognize and thank all of our team members across the organization. Their passion, drive, and dedication are what gives us confidence in our ability to deliver a superior guest experience and achieve our long-term ambition. 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: Their passion drive and dedication are what gives us confidence in our ability to deliver a superior guest experience and achieve our long term ambitions.

Operator: And with that we'd be happy to take some questions. Operator, please feel free to open up the lines for Q&A.

Speaker Change: Thank you.

Operator: And at this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Once again, press star one. And again, in the interest of time, we ask that you please limit yourself to one question. Thank you in advance.

Operator: And at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad once again star one and again in the interest of time, we ask that you. Please limit yourself to one question. Thank you in advance and we will pause just a moment to compile the Q&A roster.

Operator: And it looks like our first question today comes from the line of Brian Bittner with Oppenheimer. Brian. Please go ahead.

Operator: And we'll pause just a moment to compile the Q&A roster, and it looks like our first question today comes from the line of Brian Bittner with Oppenheimer. Brian, please go ahead.

Brian John Bittner: Thanks. Good morning.

Operator: Okay.

Brian John Bittner: Thanks. Good morning. Thank you for all the details on the call you mentioned that macro headwinds and pressure on the low end consumers.

Brian John Bittner: <unk> same store sales.

Brian John Bittner: Diagnose your sales trends.

Litle: Litle is incremental success with value to achieving the back half sales guidance considering.

Litle: Youre underwriting a pretty nice acceleration and are you able to talk at all about what type of price points Youre thinking about deploying to compete in this more aggressive value environment that we're going to see for the rest of the year.

Litle: Thanks.

Unknown Executive: Hey, good morning, Brian. Great question. And I here's what I think about it. I mean, we in the industry are all seeing this kind of pressure from the headwinds of the consumer. We definitely felt it coming into, you know, the second quarter. And so we know that value is going to be, you know, something we talk about for the rest of the year. We know the competition is doing that. So we will be in that game.

Unknown Executive: Thank you for all the details on the call. You mentioned that macro headwinds and pressure on the low-end consumer are impacting same-store sales. And as you diagnose your sales trends, just how vital is incremental success with value to achieving the back half sales guidance, considering, you know, you're underwriting a pretty nice acceleration? And are you able to talk at all about what type of price points you're thinking about deploying to compete in this more aggressive value environment that we're going to see for the rest of the year? Hey, good morning, Brian.

Brian: Hey, good morning, Brian Great question here.

Speaker Change: Here's what I think about it I mean, we in the industry are all seeing this kind of pressure from the headwinds of the consumer we definitely felt that coming into.

Speaker Change: In the second quarter.

Brian: So we know that value is going to be something we've talked about for the rest of the year. We know the competition is doing that so we will be in that game and we are preparing for it as we talked about at our Investor day. So much. He is under four will be a price point.

Unknown Executive: And we were preparing for it as we talked about our investor day. So munchies under four will be a price point; we have different $5 price points, whether it's two, four on the app, or whether we have the $5 jackpot, but we will have a strong value message across both brands that speak to the specific needs of the consumer. And as you know, it depends on the channel and depends on the offering at sometimes our larger fan favorite box at, you know, greater than $10 as a value.

Speaker Change: We have different.

Litle: $5 price points, whether it's two four on the App or.

Speaker Change: Whether we have the $5 jackpot, but we will have a strong value message across across both brands that speak to the specific needs by the consumer and as you know it depends on channel depends on the offering at sometimes are larger fan favorite box.

Unknown Executive: So it's what you get for what you pay, and we'll have the right price point in the right channel. Thank you. All right. Thanks, Brian. And our next question comes from the line of Lauren Silberman with Deutsche Bank. Lauren, please go ahead. Thank you, guys.

Speaker Change: Greater than $10 of value. So what you get what you pay and we will have the right price point and the right channel.

Litle: Thank you.

Brian: Alright, Thanks, Brian.

Unknown Executive: All right, thanks, Brian. And our next question comes from the line of Lauren Silberman with Deutsche Bank. Lauren, please go ahead. Thank you, guys.

Brian: And our next question comes from the line of Lauren Silberman with Deutsche Bank Lauren. Please go ahead.

Brian: Thank you guys I wanted to ask just about the quarter to date trends you guys have to that down 1%.

Lauren Danielle Silberman: Running smashed it a nice high single digit next can you unpack, what you're seeing quarter to date, how you expect that to evolve as we move through the quarter and in the context of mix, particularly running negative and with incremental value, how youre thinking about that trade off between incremental transactions and the offsetting mix. Thank you very much.

Lauren Danielle Silberman: Hi, Lauren.

Unknown Executive: Hi Lauren. We, you know, Jack, what we saw is once we were finally able to get Smash Jack up and running, like we said, we were disappointed that we couldn't start the quarter off as we anticipated. We made a lot of good shifts, but we knew we were going to have trouble overcoming the headwinds. So Smash just performed great. It was mixing at 7.5% and, you know, kind of leveled off a little bit less than that. But it definitely, the full launch improved mix shift and average check by about 200 basis points.

Jack: Jack what we saw is once we finally were able to get smashed Jack up and running like you said, we are disappointed that we couldnt start the quarter off as we anticipated we made a lot of good shifts, but we knew we were going to have trouble to overcome the headwinds. So smashed has performed great. It's mixing at seven 5%.

Speaker Change: And kind of level off a little bit less than that.

Speaker Change: But it definitely the full launch improved mix shift in average check by about 200 basis points, we've had a nice sell upsell with it and we see that to have future innovation with it. The other thing I would say is that.

Unknown Executive: We've had a nice sell-up with it, and we see that to have future innovation with it. The other thing I would say is that, from last quarter to date, Jack, over the last two periods, specifically on the company side, has been positive. And we have, you know, continued to improve sales on the company side over those last two periods. Franchisees have also improved, but they are not yet positive. And as we said, we're, you know, as a whole, running a negative quarter to date.

Lauren Danielle Silberman: Quarter to date, Jack over the last few periods, specifically on the company side has been positive.

Jack: And we have continued to improve sales on the company side over the last two periods franchisees are also improved but not positive yet and as we said.

Speaker Change: As a whole running negative quarter to date.

Unknown Executive: We're really excited about the initiatives to come. We've got a good balance on the barbell strategy between really focusing on breakfast, as we know that's probably where the industry as a whole has faced the most headwinds. So whether it's French toast sticks becoming an everyday item and then marketing every, you know, having a breakfast message in every marketing window and then bringing back a product that was, where we had some self-inflicted sales issues with taking some products off. We've put back on a couple of the products that we'll start seeing on the menu in Windows 6.

Lauren Danielle Silberman: We're really excited about the initiatives to come we've got a good balance on the barbell strategy between really focusing on breakfast as we know thats, probably where the industry as a whole are faced the most headwinds so whether its French toast sticks, becoming.

Speaker Change: Everyday item.

Speaker Change #102: And then marketing every year, having a breakfast message every marketing window, and then bringing back a product that was.

Speaker Change: Where we had some self inflicted sales issues with taking some products off we've put back on a couple of the products that we will start seeing on the menu in windows six and then I get really excited about our late night with ice cube, the chicken tater melt and then the wings that we have launching.

Unknown Executive: And then I get really excited about our late night with Ice Cube, the chicken tater melt, and then the wings that we have launching. And then lastly Two other things that I think in the back half of the calendar, we get this good balance between the munchies under four, but we also get the higher priced munchie meal, or we get what we're not going to talk about in detail. But what we have in the fourth quarter with a really nice partnership that I think will get us a lot of media attention.

Dennis Geiger: And then lastly.

Speaker Change: Two other things that I think the back half calendar, we get this good balance between the munchies under four but we also get the higher priced Munchy mill or we get what we're not going to talk about in detail, but what we have in the fourth quarter with a really nice partnership.

Speaker Change #106: <unk> will be get us a lot of media attention.

Speaker Change: Thank you.

Lauren Danielle Silberman: Thanks Lauren.

Operator: And our next question comes from the line of Nick Setian with Wedbush Securities. Nick, please go ahead.

Nick <unk>: And our next question comes from the line of Nick <unk> with Wedbush Securities. Nick. Please go ahead.

Nick <unk>: Thank you.

Nick Setian: Thank you. I have just a couple of questions. The first one, just a kind of, you know, bigger picture approach to value. You know, do you think sort of this, you know, for under $4, munchie? Is the platform enough, you know, to compete with things like, you know, the $5 national launch of a value menu by your biggest competitor? Is it enough in terms of just, you know, what Jack's value going forward should be?

Nick <unk>: Just a couple of questions. The first one just to kind of.

Nick <unk>: Bigger picture approach to value.

Nick <unk>: Do you think sort of this four under $4 a month fee.

Speaker Change: Platform is enough.

Speaker Change: <unk>.

Speaker Change #100: <unk> with things like the $5 national launch of our value menu by by your biggest competitor.

Jack: Is it enough in terms of just what Jack value going forward should be or is there.

Speaker Change #108: Like a more holistic approach to value in terms of.

Nick Setian: Or is there like a more holistic approach to value in terms of, you know, more sort of specific value meal type of offering that is necessary? Number one, and then just on the Del Taco side, it would be great to know what the quarterly trends there are and where you'd say you are with respect to the progress around, around the new strategy that launches there. Thank you.

Speaker Change #109: More sort of specific value meal type of.

Speaker Change: Offering that is necessary.

Jack: Number one and then just on the del Taco side.

Jack: It would be great to know what the quarterly trends there are.

Speaker Change: And where you would say you are with with respect to the progress around around the new strategy that launches there. Thank you.

Speaker Change: So I.

Unknown Executive: So, you know, I would be speculating if I and Scott knew how to react to the market. But what I would say is we're going to stick to what we do well, and we think munchies under four is the right value message, you know, to promote. But I also think, you know, what we're seeing is value is what you get for what you pay. And so the right channel to the right guest is really what we're focused on.

Speaker Change: I would be speculating if I thought.

Speaker Change: We knew how to react to the market, but what I would say is we are going to stick to what we do well and we think the monkeys and therefore is the right value message.

Speaker Change: To promote.

Speaker Change #105: But I also think what we're seeing is value is what you get for what you pay and so the right channel to the right guest is really what we're focused on and sometimes that's not just a $5 meal, we do have that available to us.

Unknown Executive: And sometimes that's not just a $5 meal. We do have that available to us. And we will promote it in the app; we'll get a lot more aggressive in the app to build our loyalty and database. As an example, recently, we've had two for $3 jacks. So we know it's really going to depend on knowing our consumers and how to reach them through the right channel at the right price with the right product. And like you said, our premium items, if you think about smash jack, for the right guest, you know, that's one of the more premium price points we've had on the menu, and it's doing extremely well. Yeah, and keep in mind that we have value on the menu.

Speaker Change #104: We will promote it in App will get a lot more aggressive in app.

Speaker Change #112: To build our loyalty database.

Speaker Change #104: As an example recently we've had two for $3 jacks. So we know it's really going to depend on.

Speaker Change: Knowing our consumer how to reach them through the right channel at the right price with the right product.

Speaker Change: You said our premium items, if you think about smashed check for the right guest.

Speaker Change #101: That's one of the more premium price points, we've had on the menu and it's doing extremely well.

Unknown Executive: And keep in mind, we have value on the menu. So part of this Munchies Under 4 strategy is to make sure that it's easier for guests to see that and all in one place, and then promote that more. We've changed our marketing strategy going forward. We're promoting value more so that our customers know that they'd have that option. And then, as they come in, they're more likely to add on as we have the right products at the right price.

Speaker Change #114: And keep in mind, we have value on the menu. So part of this much is under four strategy is to making sure that it's easier for guests to see that.

Speaker Change #101: And all in one place and then promoting that more.

Speaker Change #103: Turning to our marketing strategy going forward, we're promoting value more so to say that.

Marketing representative: Our customers know that they would have that option and then as they come in and there are more likely to add on as we have the right products at the right price. So we've got a good strategy. There we have other things we're looking at and we could activate more if we need based on market conditions, but I think we've got a good strategy in place we think will resonate.

Unknown Executive: So we've got a good strategy there. We have other things we're looking at, and we could activate more if we need based on market conditions. But I think we've got a good strategy in place that we think will resonate, and then we'll continue to evaluate what happens with the competition. All right, thanks, Nick. And our next question comes from the line of Gregory Frankfurt with Guggenheim Securities.

Speaker Change #103: And then we will continue to evaluate what happens to the competition.

Speaker Change: Okay.

Speaker Change: Alright, Thanks, Nick.

Operator: All right. Thanks, Nick. And our next question comes from the line of Gregory Frankfurt with Guggenheim Securities. Gregory, please go ahead.

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

Speaker Change: Hey, Thanks for the question. My question is just can you guys, maybe expand a little bit more on the experience in California.

Gregory Frankfurt: Since since the minimum wage increases went into effect and what youre seeing from a consumer standpoint, I mean, you guys have a lot of exposure there, but you also I think <unk> done some things to try to mitigate it just just any more detail on how that's gone.

Gregory Frankfurt: Yeah, our restaurants in California are at par or actually better than non California markets. So we've seen check is offsetting the lower transactions are company owned is performing even better than the positive comps.

Speaker Change #111: But we're keeping a close eye on it still and it's still early but overall, we feel that we.

Speaker Change #111: We've done the right things with the right price with the franchisees were seeing.

Speaker Change #111: Early indications that theyre able to manage through kind of the sales and margins and we're all learning how to do that and we've offered significant strategies in which to overcome kind of the margin compression issues, but overall, our California restaurants are at par or better than non California, yes, as Darren said as ordinary market it's interesting.

Gregory Frankfurt: Yeah, our restaurants in California are at par or actually better than non-California markets. So we've seen that check is offsetting the lower transactions. Our company-owned is performing even better than the positive comp. But we're keeping a close eye on it still, and it's still early, but overall, we feel that we've done the right things with the right price for the franchisees. We're seeing early indications that they're able to manage through, you know, kind of sales and margins, and we're all learning how to do that. And we've offered significant strategies to overcome kind of the margin compression issues. But overall, our California restaurants are at par or better than non-California restaurants. Yes, as Darren said in his opening remarks.

Unknown Executive: Yes, as Darren said in his opening remark, it's interesting that, you know, our company restaurants have been running, have been running positive since the March period. And that's, and most of those restaurants are in California.

Speaker Change: Our company restaurants are have been running have been running positive.

Speaker Change: Since the March period.

Speaker Change: And most of those restaurants are in California. So I think it's just an indication that if we are really strategic and surgical on how we adjust price too.

Unknown Executive: So I think it's just an indication that if we're really strategic and surgical in how we adjust price to, you know, to accommodate for the higher minimum wage, you can still do it effectively and drive comps. So I think we're working closely right now with our franchisees because they are running negative, you know, much better since Smash launched. But I think there's some opportunity there for them to kind of relook at some of the price points on certain products that will help drive better traffic for them going forward as well.

Speaker Change: Yes.

Darren: To accommodate for the higher minimum wage.

franchisees: You can still do it effectively and drive comp. So I think we're working closely right now with our franchisees.

Speaker Change: They are running negative.

Speaker Change #121: Yes, much better since Snash launch, but I think there's some opportunity there for them to that or we look at some of the price points on certain products that will help drive better traffic for them going forward as well I think again there.

Unknown Executive: I think, again, the positive comps we're seeing in the company stores are an indication of the opportunity they have as well to turn things around. And then you couple that with the next promotional calendar we have and some of the new products coming out. That's why we have confidence in getting the whole system back to positive in the back half of the year.

Speaker Change #122: Positive comps were saying the company stores is an indication of the opportunity that they have as well to turn things and then you couple that with the next promotional calendar. We have one from the new products coming out that's why we have confidence in getting the whole system back to positive here.

Speaker Change: In the back half of the year.

Speaker Change: Alright, Thanks, Greg.

Operator: All right, thanks, Greg. And our next question comes from the line of Alton Stump with Loop Capital. Alton, please go ahead. Great. Thanks for taking my question. You know, I just wanted to ask you...

Operator: All right, thanks, Greg. And our next question comes from the line of Alton Stump with Loop Capital. Alton, please go ahead. Great, thanks for taking my question. You know, I just want to ask you something.

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

Speaker Change: Great. Thanks for taking my question just wanted to ask you.

Alton Stump: It sounds like you've got obviously.

Alton Stump: Several pretty big <unk>.

Alton Stump: Things going on in the wings launched execute much you meal something bigger coming this summer it sounds like.

Alton Stump: I'm curious.

Speaker Change #125: How much of an impact do you think that could have not just on obviously, it's in their own right selling well, but just kind of bringing more news flow back to the Jack in the box brands in general to consumers.

Alton Stump: Yes, I think.

Unknown Executive: Yeah, I think, you know, from a standpoint of leading wings is one where we see the benefits of leading with value, but also innovation. So that'll be an innovation item that we think will drive traffic to Jack. We saw that when we tested it, it performed extremely well.

Alton Stump: From a standpoint of leading wings is one where we.

Speaker Change #107: It's a good benefit or is the benefit we see from leading with value, but also innovation. So that'll be an innovation item that we think will drive traffic to Jack we saw that when we tested it.

Speaker Change #107: It performed extremely well so we think it'll bring traffic. We also think it will improve our attachment rates.

Jack: It's similar to what when we rolled out tiny tacos I think it's a great product for attachment we saw that in the test.

Unknown Executive: So we think it'll bring traffic. We also think it'll improve our attachment rates. It's similar to when we rolled out tiny tacos; I think it's a great product for attachment. We saw that in the And so we think there's a substantial benefit in the back half of the year when you think of, you know, attachment of munchies under four or as a meal. And then the wings, I think, will be a really good lift for us.

Jack: And so we think there is a substantial benefit in the back half of the year when you think of.

Speaker Change #127: Attachment of munchies under four or as many as Emil.

Speaker Change #129: And then the wings I think will be a really good lift for us.

Speaker Change #123: Great. Thanks, so much.

Speaker Change #107: Thank you.

Speaker Change #107: And our next question comes from the line of Jon Tower with City. John. Please go ahead.

Operator: And our next question comes from the line of Jon Tower with Citi. Jon, please go ahead.

Jon Michael Tower: Great. Thanks for taking the question just a clarification and then a question on the months you said $4 is that effectively just kind of your existing products or you're introducing some value engineered products.

Jon Michael Tower: Great, thanks for taking the question. Just a clarification on the question, on the munchies under $4, is that effectively discounting existing products? Are you introducing some value and engineered products on this menu? So there'll be some new news with it. And then the question is, on the value front, in particular, with a lot of larger brands kind of amplifying their message in the back half, are you guys contemplating the idea of upping your dollar spend to kind of combat that? Or is it just a shift in mediums and some of the messaging, like you're saying, tagging breakfast in most of your advertising?

Jon Michael Tower: On this menu so there'll be some new news with it and then the question is on the value front in particular with a lot of larger brands kind of amplifying their message to the back half are you guys contemplating the idea of upping your dollar spend.

Speaker Change #126: To kind of combat that or is it just a shift in mediums and some of the messaging like youre, saying tire tagging breakfast.

Jon Michael Tower: In most of your advertising.

Jon Michael Tower: So the munchies under four is definitely a change to our overall value menu by adding some items.

Unknown Executive: So the munchies under four is definitely a change to our overall value menu by adding some items and, you know, As you said, tweaking or changing some of the offerings under the munchies under four with some, you know, margin improvement opportunities. Beyond that, we also, as you mentioned, in the back half of the year, what we've seen is, you know, on third-party delivery, it's a pay-for-play. People are spending a lot more money to buy shares.

Jon Michael Tower: And.

Jon Michael Tower: Yes.

Jon Michael Tower: Yes.

Speaker Change #116: As you said tweaking or changing some of the offerings under the munchies under four with some <unk>.

Speaker Change #115: Margin improvement opportunities.

Speaker Change #116: Beyond that we also as.

Speaker Change #116: As you mentioned.

Speaker Change #128: In the back half of the year, what we've seen is on third party delivery. It's a pay for play people are spending a lot more money to buy share.

Unknown Executive: We've done some reallocation of some media dollars that we think will help us in the back part of the year that we think can offset some of what we lost in third-party during Q2. So, we think overall we can improve third-party. Our first party is growing tremendously. It grew over 80% at Jack in quarter two and contributed positively to sales. Now we just need, you know, third-party partners to continue to be positive, and we'll shift some media that we think can buy a share in the back half of the year. The other thing on the Munchies under four, we can have...

Speaker Change #116: We've done some reallocation of some media dollars that we think will help us in the back part of the year that we think can offset some of what we lost in third party. During Q2. So we think overall, we can improve third party or first party is growing tremendously grew over 80% at Jack in quarter two.

Speaker Change #116: And contributed positively to sales now we just need third party to continue to be positive and we will shift some media that we think can buy a share in the back half of the year.

Unknown Executive: The other thing is that for Munchies under four, we can have a lot more consistent pricing across the franchise, which then allows us to market that in a more effective way. So that's an important part to just make sure that our customers understand they've got a lot of choices there and there will be consistency on that pricing across whatever restaurant they go to. I think that's going to resonate well also, and we think it'll drive more attachment as well.

Speaker Change #116: The other thing on the nitrogen therefore, we can have Rob.

Rob: We'll have more consistent pricing across the franchise, which then allows us to add mark.

Rob Smith: With that in a more effective way so I think thats an important part of this make sure that our customers understand that got that got a lot of choices there, although it would be consistency how that pricing across.

Rob: Restaurant they go to.

Speaker Change #131: And Ah resonate well also have and it'll also because we think it will it'll drive more attachment as well.

Rob: Thank you.

John: Thanks, John.

Operator: And our next question comes from the line of Dennis Geiger with UBS. Dennis, please go ahead.

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

Dennis Geiger: Great, thank you. Guys, I appreciate the commentary and the details on development and the pipeline. It sounds like things are progressing nicely, consistent with your expectations. Just curious if you could talk a little bit more about that development trajectory and sort of if there are any recent updates on the development environment as well as just some of the pressures out there across the industry that you've spoken to and whether that has any impact on the pipeline or getting boxes open, anything along those lines. Thank you.

Dennis Geiger: Great. Thank you guys I appreciate the commentary on the details on development in the pipeline. It sounds like things are progressing nicely consistent with your expectations.

Dennis Geiger: Just curious if you could talk a little bit more about that development trajectory and sort of if theres any latest updates on on the development environment as well as just some of the pressures out there across the industry that you've spoken to and whether that has any impact on pipeline or we're getting boxes open anything along those lines. Thank you.

Darin S. Harris: So the development pipeline continues to grow, as we mentioned in our comments. We're now at 88 sites in permitting and construction. We've signed more DAs, you know; 93 development agreements for 409 restaurants. So it's always critical that the top of the funnel is being built, and that's what we'll consistently share.

Dennis Geiger: So development pipeline continues to grow as we mentioned in our comments. We're now 88 sites in permitting and construction, we signed more days 93 development agreements for 409 restaurants. So it's always critical that the top of the funnel is being built and Thats, what we will consistently share so ultimately that net.

Darin S. Harris: So ultimately, that net unit growth of 2% becomes, you know, Clearly Visible to the Street. Our stores are performing extremely well in Mexico, Salt Lake City, and Louisville. You know, Mexico's averaging, you know, 90,000 plus a week. We have four restaurants that open by the end of the calendar year. More franchise interest in Mexico. Salt Lake City, we have five restaurants open. You know, the trailing 12 months of over $100,000 in average weekly sales.

Rob: Unit growth of 2% becomes.

Rob: Clearly visible to the street.

Mexico: Our stores are performing extremely well in Mexico, Salt Lake City, and Louisville, Mexico's averaging 90000, plus a week for restaurants to open by the end of the calendar year more franchise interest interest in Mexico Salt Lake City, we have five restaurants open.

Unknown Executive: The trailing 12 months of 100 over $100000 in average weekly sales theyre performing extremely well.

Darin S. Harris: They're performing extremely well. Eight more restaurants are scheduled to open by the end of 24 in Salt Lake City. And then Louisville, we have two restaurants open, and they're averaging over $70,000 a week in average sales, with five more restaurants to open by the end of 2025.

Speaker Change #137: More restaurants to open by the end of 'twenty, four and Salt Lake City, and then Louisville, we have two restaurants opened and they're averaging over 70000, a week and average sales with five more restaurants to open by the end of 2025, so our new markets are doing well, we have not seen a slowdown in development I think there is naturally some projects.

Darin S. Harris: So our new markets are doing well. We have not seen a slowdown in development. I think there are naturally some projects that haven't, they're not stopping. They just may take a little bit longer, but we haven't seen the development pipeline slow down as a result of what's going on in the market. I'll add one more thing and then turn it back over for questions, but Florida is, we're excited about the interest we're getting there.

Rob: That haven't they're not stopping they just may take a little bit longer, but we haven't seen the development pipeline slowdown as a result of what's going on in the market.

Rob: And then I'll.

Florida representative: I'll add one more thing and then turn it back over for questions, but Florida is we're excited about the interest we're getting there we've talked about it at our Investor day about just the awareness in the market is strong.

Darin S. Harris: We talked about it at our investor day about just how the awareness in the market is strong. So we signed, you know, over 30 commitments to build in both Tallahassee and Orlando with some experienced operators. So our plan to grow this brand in new markets is working very well, to expand with new franchisees is working well, and you're starting to see the traction, and we just continue to look forward to updating as it grows.

Rob: Signed.

Florida representative: Over 30 commitments to build in both Tallahassee and Orlando with some experienced operators. So our plan to grow this brand in new markets is working very well.

Florida representative: To expand with new franchisees is working well and youre starting to see the traction and we just continue to look forward to updating you as it grows.

Unknown Executive: Yeah, another thing I'd add is that, you know, in terms of development, you can imagine, you know, California with AB 1228, we've heard some, you know, a little bit of maybe concern or cause or pause on that. It's just a little bit longer, but we're seeing a lot of development agreements in the Southeast and other markets, so I think that's also why we're confident in our ability to continue to drive unit growth, and that's why it's been so critical to expand into new markets and bring in new franchisees, so that, you know, all the things that you just heard Darren talk about, we're all in new markets where there's a lot of enthusiasm in driving forward, so we feel good about that, really haven't lost any momentum at this point, and everything, if anything, we're continuing to see more new franchisees come in, and we've also got a couple other markets as well that we'll be announcing here, hopefully soon, with new franchisees, so momentum is strong, and as we mentioned on the prepared remarks, you know, we're still on track to hit our new unit openings for both brands in this fiscal year, and feel like we're setting ourselves up for inflection to higher unit growth in fiscal 25.

Florida representative: Yes, the other thing I'd add is it.

Speaker Change #133: In terms of development, you can imagine, California with AB 201, eight we've heard some.

Speaker Change #133: A little bit of maybe.

Speaker Change #134: Concern or cause or pause on that.

Gary: Just a little bit a little bit longer, but we're seeing a lot of development agreements in the southeast and other markets. I think that's also why we are confident in our ability to continue to drive unit growth and that's why it's so critical to expand into new markets and bring in new franchisees. So that in all of the things that you just heard Gary talk about we're all in new markets, where there is a.

Speaker Change #135: A lot of enthusiasm.

Gary: And driving forward. So we feel good about that really haven't lost any momentum at this point.

Gary: Everything gets anything we're continuing to see more new franchisees come in and we've also got a couple of other markets as well that.

Speaker Change #135: We'll be announcing here hopefully soon with new with new franchisees. So momentum is strong as we mentioned on the prepared remarks, we're still on track to hit our new unit openings for both brands in this fiscal year and feel like we're setting ourselves up.

Speaker Change #135: For an inflection to higher higher unit growth in fiscal 'twenty five.

Speaker Change #135: Yeah.

Rob: Alright, Thanks Dennis.

Operator: All right. Thanks, Dennis. And our next question comes from the line of Chris O'Cole with Stifle. Chris, please go ahead. Thanks, guys. This is Patrick.

Operator: All right, thanks, Dennis. And our next question comes from the line of Chris O'Cole with Stifle. Chris, please go ahead. Thanks, guys. This is Patrick on behalf of Chris. Good morning.

Chris Brandon: Our next question comes from the line of Chris <unk> with Chris. Please go ahead.

Patrick: Thanks, guys. This is Patrick on for Chris Good morning, So the restaurant performance, obviously it Jack was impressive this quarter and I was hoping you could help us understand just the commodity outlook for the company stores over the remainder of the year given you didn't decrease your commodity inflation outlook for the year and then just beyond that how should we be thinking about the more sustainable draw.

Chris Brandon: <unk>.

Chris Brandon: That.

Speaker Change #138: Won't come under pressure as we think about how to.

Speaker Change #138: Forecast that out over the second half of the year.

Speaker Change #138: Yes.

Patrick: Thanks, Patrick. Yeah, you said commodities have been favorable in the first half of the year. We talked about deflation in both the first and second quarters. But we still have a favorable outlook in terms of commodities for the full year. The amount of benefit we expect will moderate in the third and fourth quarters because we've seen some upward pricing like everybody else in beef prices, but other commodities have continued to work favorably, and we've hedged well to kind of manage those costs.

Speaker Change #138: Yeah. Thanks, Patrick you said commodities have been have been favorable in the first half of the year, we talked about deflation in both the first and second quarter.

Chris Brandon: We still have a.

Patrick: The favorable outlook in terms of commodities for the full year.

Patrick: The amount of benefit we expect will moderate in the third and fourth quarters, because we're we've seen some upward pricing like everybody else and as beef prices, but.

Patrick: Other commodities have continued to still work favorably and we've hedged well to kind of manage those costs. So it overall for the full year.

Patrick: So overall for the full year, we've tightened our restaurant level margin outlook for the full year on Jack in part because commodity costs have been favorable and that will continue through the back half of the year, but not at the pace we've seen in the first half, but still good overall and helpful when you consider some of the impacts we're going to feel from the minimum wage increase. And the same is true on the Dell side of commodity deflation, 1.6% in the second quarter. You still expect to have deflation in the back half of the year, but not at the same level.

Chris Brandon: We've tightened our restaurant level margin outlook for the full year on Jack and in part because the commodity costs have been favorable and that will continue through the back half of the year, but not at the pace. We've seen in the first half, but still still still a bit overall and helpful. When you consider some of the impacts we're going to feel from the minimum wage increase.

Chris Brandon: And the same is true on the on the Dell side.

Chris Brandon: Commodity deflation of one 6% in the second quarter, we still expect to have deflation in the back half of the year, but not at the same level.

Chris Brandon: Great. Thanks, Patrick.

Chris Brandon: And our next question comes from the line of Sara Senatore from Bank of America. Sir. Please go ahead.

Brian M. Scott: And our next question comes from the line of Sara Senatore from Bank of America. Sara, please go ahead. Yes.

Sara Harkavy Senatore: Thank you. I actually have two questions, but they're both follow-ups, so hopefully that counts as one. The first is that you mentioned the quarter-day comp is down one for Jack, which I think on a quarterly basis would imply stable two-year, if that's the right way to look at it. I know there's been a lot of volatility over the last couple of years. Is that the right interpretation of how you're thinking about the comp trajectory going forward?

Chris Brandon: Thank you.

Sara Harkavy Senatore: I just had two questions and follow.

Chris Brandon: Following that so hopefully that counts as one.

Sara Harkavy Senatore: The first is that you mentioned that quarter to date comp is down one for Jack and which I think on a quarterly basis would imply stable tier.

Sara Harkavy Senatore: That's the right way to look at it I know there's been a lot of volatility in the last couple of years is that the right interpretation.

Analyst: How youre thinking about the comp trajectory going forward, which is to your point you compare gets a lot easier in fiscal <unk> and <unk> just started up assuming the underlying trends are stable or is there a.

Sara Harkavy Senatore: Which is, to your point, your comparison gets a lot easier in fiscal 4Q, and so just sort of assuming the underlying trends are stable, or is it predicated on improvement given all of the initiatives you have underway? That was the first, and then just in terms of SMASH, the high single-digit mix, but the seamstress still is obviously negative, so not entirely incremental. What are you seeing in terms of existing customers trading up versus bringing in new customers, again, to the extent that you can tell? Thanks.

Speaker Change #142: Is it predicated on.

Speaker Change #152: Given all of the.

Speaker Change #149: The initiatives you have underway.

Speaker Change #143: That's first and then just in terms of Smash your high single digit mix.

Speaker Change #151: The same store sales that'd be seen negative.

Speaker Change #151: So not entirely incremental what are you seeing in terms of.

Speaker Change #151: Existing customers trading up versus bringing in new customers to the extent that you can tell.

Speaker Change #151: Yes, so so overall I think youre right Youre seeing our toughest comp was in Q2.

Unknown Executive: Yeah, so overall, I think you're right, you're seeing our toughest comp was in Q2, and in the back half of it, we started a comp positive on the company side. So we definitely saw improvement over our toughest comp last year. And so, you know, definitely, as you look into Q3, you're right, we're looking about flat on comp, but with growth coming, we think in the back half of the years, we have, you know, less of a lap.

Speaker Change #151: And by the back half of it we started to comp positive on the company side. So we definitely saw improvement over our toughest comp last year and so.

Speaker Change #151: As you look into Q3.

Speaker Change #144: We're looking at about flat on comp, but with growth coming we think in the back half of the year as we have.

Speaker Change #144: Less less of a lap and so we think with what we have in the pipeline along with smash at a higher ticket. We've got a lot of things working in our to our benefit in the back half of the year.

Unknown Executive: And so we think with what we have in the pipeline, along with smashing at a higher ticket, we've got, you know, a lot of things working in our favor in the back half of the year. And so as you think about Smash, there were really, you know, some unfortunate events that occurred, as we, we ran out early because we, we outperformed, we think that impacted Q2, which is not calculated in the 100 base, we think overall Smash Jack during the normal promotional window that we had planned, and the lag of four weeks cost us about 100 basis points on Q2.

Speaker Change #145: As you think about smash there was really.

Speaker Change #157: Some unfortunate events that occurred as you knew we ran out early because we outperformed we think that impacted Q2.

Speaker Change #146: Which is not calculated in the 100 basis, we think overall smash shack during the normal promotional window that we had planned.

Speaker Change #147: And the lag of four weeks cost us about 100 basis points on Q2.

Unknown Executive: Probably even more so if we had had it for the entire time when we soft launched it, and we ran into, you know, a lack of availability and sold out of the product. So we know SmashCheck is performing as we expected. It did improve mixed shift, and it's a nice upsell. So we think overall check is up about 200 basis points. And so we continue to be very pleased with what Smash is doing in light of the environment that occurred during quarter two. Yeah, and I'm the...

Speaker Change #150: Probably even more so if we would have had it for the entire time when we soft launched it and we ran into.

Speaker Change #150: Lack of availability and sold out of the product. So we know smash Jack is performing as we expected it did improve mix shift and it's a nice upsell. So we think overall check is up about 200 basis points and.

Speaker Change #146: So we continue to be very pleased with what smashed is doing in light of the environment that that occurred during quarter two.

Unknown Executive: Yeah, and on the second point, too, on the mix, we saw... Still pressure on breakfast, you know; our attachment rates on drinks and combos were lower as well. And so that's why we think some of this work on the value side will be very helpful as we can bring more guests back through and improve attachment rates. I think that's going to be part of our story of how we improve the mix going forward as well.

Speaker Change #146: Yes, and on the second 0.1.

Speaker Change #146: On the mix.

Speaker Change #146: We saw still.

Speaker Change #161: Still pressure on breakfast.

Speaker Change #162: Our attachment rates on drinks and combos was lower as well and so that's why we think there's some good work on the value side will be very helpful. As we can bring more guests back through and improve attachment rates.

Speaker Change #154: That's going to be part of our story of how we improve the mix going forward as well.

Unknown Executive: In terms of that, predominantly, we've seen more trade-ups than bringing in new guests, but I think it's, you know, we kind of launched it into a kind of a different environment than we expected. But I think as we go forward, we do believe it will continue to drive more guests in over time as they get a chance to experience the product. And then, again, we want to make sure we have other items in the menu that are going to bring them in.

Speaker Change #154: In terms of that predominantly we've seen more trade up and bringing in new guests, but I think it's.

Speaker Change #154: Launch it into kind of a different environment than we expected, but I think as.

Speaker Change #154: As we go forward, we do believe it will it will continue to drive more guests and over time as they get a chance to experience the product.

Speaker Change #153: And then again, we want to make sure we have other other items on the menu that are going to bring them in but once everybody has tried the product is impressive we think it's a really important part of our go forward strategy.

Unknown Executive: But once, I mean, everybody who's tried the product is, you know, impressed, and we think it's a really important part of our go-forward strategy. Great, thank you, Sarah. And our next question comes from the line of Jim Sanderson with North Coast.

Speaker Change #153: Yes.

Speaker Change #153: Yes.

Speaker Change #153: Great. Thank you Sara and our next question comes from the line of Jim Sanderson with Northcoast Research Jim. Please go ahead.

Operator: Great, thank you, Sarah. And our next question comes from the line of Jim Sanderson with North Coast Research. Jim, please go ahead.

James Jon Sanderson: Hey, Thanks for the question I wanted to follow up on the commentary you provided about the point of sale system. Just wondering if you can update us on how that will influence the timing of.

James Jon Sanderson: Loyalty and potentially adding kiosks across Jack in the box and del Taco. Thank you.

James Jon Sanderson: Yeah, I think from a standpoint of the POS rolling out as our first focus, and we'll target full implementation by 2025. But we're also aggressively moving towards, you know, kiosks. We've seen really good results on the key. Many of our POS systems have a guest-facing component to the POS, so it operates as a kiosk. And we've seen really good countertop performance out of that system. We also add freestanding kiosks to the dining room. And we can do that hand in hand, and we'll lead in California with kiosks throughout the next year to year and a half.

Speaker Change #158: Yes, I think from a standpoint of the POS Rolling out is our first focus and we will target full implementation by 2025, but we're also.

Speaker Change #166: Aggressively moving towards kiosks, we've seen really good results on that so many of our Pos systems have a.

Speaker Change #156: Guests facing component to the Pos so at opera.

Speaker Change #159: Because the kiosks.

Speaker Change #167: Seen really good.

Unknown Executive: Countertop performance out of that out of that system will also add freestanding kiosks into the diner.

Speaker Change #168: We can do that hand in hand, and we will lead in California with kiosk.

Speaker Change #169: The next year to year and a half.

Unknown Executive: Yeah, on the loyalty side, so as we roll out the new POS, in conjunction with that, we mentioned, we're also going to be coming out with kind of a next generation of our app on the Jack side, and that will roll out here in the next few months. That's going to improve just the overall experience for anybody ordering through the app. It works well now, but we know that there's an opportunity to improve that experience.

Speaker Change #163: On the loyalty side, so as we rollout.

Speaker Change #170: Ill pass in Conjuncture that we mentioned, we're also going to be.

Speaker Change #171: Coming out with kind of a next generation of our App.

Speaker Change #173: On the Jack side now that we're all here in the next few months, that's going to improve just the overall experience for anybody ordering through the App. It works now well, but we know that there is opportunity to improve that experience and then between those two things will create a more integrated loyalty program, where they're ordering through the app, if theyre coming in and using the kiosks.

Unknown Executive: And then between those two things, we'll be able to create a more integrated loyalty program where if they're ordering through the app, if they're coming in and using the kiosk, they'll just be more easily able to access their loyalty program. And so that's all coming here very soon. At the kiosks we have in place at both Dell and

Jack: There'll just be more easily able to access their loyalty program and so that's all coming here very very soon and the kiosk we have in place and Brookdale and Jack we're seeing about a 15% to 20% lift in ticket and about 4% to six hours a week and savings.

Unknown Executive: In the kiosks we have in place in Bobel and at Jack, we're seeing about a 15 to 20 percent lift in ticket sales and about four to six hours a week in savings.

Labor: From labor Thank you.

Labor: Thank you.

Jack: Jim.

Jack: And our next question comes from the line of Jake Bartlett with <unk> Securities. Please go ahead.

Operator: And our next question comes from the line of Jake Bartlett with Truist Securities. Jake, please go ahead.

Jack: Great. Thanks for taking the question.

Jake Rowland Bartlett: Great, thanks for taking the question. Um, you know, mine is another one on the smash jack. And in the past, I think it's been compared to buttery jack, especially the initial test and how strong that was. My question is, um, how it's mixed, how buttery jack mixed initially, and then what was its trajectory, you know, after the initial mix? I'm just wondering whether there was a, you know, deceleration, material deceleration, then build from there. Just, you know, kind of what we can expect from the smash jack going forward. Yeah, if it follows the same path.

Jake Rowland Bartlett: And the other one on the smash Jack in the past when you're spending compared to buttery, Jack, especially the initial.

Jake Rowland Bartlett: Test and how strong that was my question is.

Jake Rowland Bartlett: How it's mix has the buttery Jack mixed initially and then what was the trajectory and the ask.

Jake Rowland Bartlett: The initial mix I'm, just wondering whether there was a <unk>.

Speaker Change #177: Deceleration material deceleration and then build from there.

Jake Rowland Bartlett: Kind of what we can expect from the Snapchat doing both.

Jake Rowland Bartlett: Post impact.

Unknown Executive: Yeah, my view is Smash Jack will have a longer-lasting impact at, you know, 6 to 7% of sales and stay solid as just a solid menu performer like our Ultimate Cheeseburger, whereas Buttery Jack had a very high spike in launch closer to 10 or 11% where Jack was, you know, Smash Jack was probably close to 8 or 9%, and then Buttery Jack had a more precipitous fall off. And so, you know, we think overall Smash Jack, because of what we're doing with innovation with that product, because of how good it is, we think there's a lot of continuation of, you know, product extensions that we'll add to the menu that can really help our innovation pipeline.

My view: Yes, My view is smashed Jack will have a longer.

Speaker Change #165: Lasting impact at 6% to 7% of sales and stay solid as a just a solid menu performer like our ultimate cheeseburger.

Jack: Whereas buttery Jack had a very.

Jack: Spike in launch closer to 10, or 11% where Jack.

Jack: The smash Jack was probably close to eight or 9%.

Jack: And then.

Jack: Buttery Jack had a more precipitous fall off and so we think overall the smash Jack because of what we're doing with innovation with that product because of how good. It is we think theres a lot of continuation of.

Speaker Change #174: Product extensions that will add to the menu that can really help our innovation pipeline.

Speaker Change #174: Yes.

Speaker Change #174: Great. Thanks, so much.

Speaker Change #175: Thanks, Dan Thanks Jake.

Operator: And our final question today comes from the line of Alex Slagle with Jeffreys. Alex, please go ahead.

Speaker Change #175: And our final question today comes from the line of Alex Slagle with Jefferies. Alex. Please go ahead.

Alexander Russell Slagle: All right, thanks. I just wanted to follow up a little more on MenuMix, which has become, I guess, increasingly a bigger headwind in recent quarters for Jack and already been tough for Del Taco for a while, and you called out the Smash Jack issue this quarter, but any sense of where we are now in terms of rebalancing back to pre-COVID levels, a number of items per check after MenuMix was up nearly double-digit for Yeah, I think it's a great question.

Alexander Russell Slagle: Alright, Thanks, I just wanted to follow up a little more on menu mix, which has become increasingly.

Alexander Russell Slagle: A bigger headwind in recent quarters for Jack and already been tough for del Taco for a while and you called out the Smash Jack issue.

Alexander Russell Slagle: This quarter, but just any sense of where we are now in terms of rebalancing back to pre COVID-19 level, a number of items per check. After many next is up nearly double digits for two years in 2020, one just trying to get a sense of.

Speaker Change #179: And what to expect in the back half on next and how that plays out going forward.

Unknown Executive: Yeah, I think it's a great question. We definitely are not back to the days of pre-COVID. It is the lowest we've seen on, you know, items per ticket since COVID. And what I would say is I think some of that is what we've done from a standpoint of our add-on strategy. I think that's one of the opportunities we have to get more aggressive during this value period on those attach-on and add-on items, and we've got a strategy that, in addition to the Munchies under four, that will do via our loyalty program and via online and digital that I think can really push back on some attachment rates that we saw. I don't think we'll get all the way back to pre-COVID.

Speaker Change #182: Yes, I think it's a great question, we definitely we're not back to the days of pre Covid.

Speaker Change #179: It is the lowest we've seen on.

Speaker Change #172: Items per ticket.

Speaker Change #183: Since COVID-19.

Speaker Change #184: What I would say is I think some of that is what we've done from a standpoint of our add on strategy I think.

I think: That's one of the opportunities we have to get more aggressive during this value period is on those attach an add on items that we've got a strategy.

Speaker Change #185: In addition to the munchies under four that will do via our loyalty and via online and digital that I think can really push.

Unknown Executive: But we definitely think there's an opportunity there that we're pursuing. And part of that is things like wings, as we mentioned, and then a few other items that we have in the pipeline that we think can really help those attachment rates and drive those, you know, items per ticket.

Speaker Change #181: Back to some attachment rates that we saw I don't think we'll get all the way back to pre COVID-19, but we definitely think there is an opportunity there that we're pursuing and part of that is things like wings that we mentioned and then a few other items that we have in the pipeline that we think can really help those attachment rates and drive that.

Speaker Change #181: Items per ticket.

I think: Thanks.

Operator: Thank you, Alex. And thank you all for your questions today. Ladies and gentlemen, that does conclude today's call. Thank you all for joining, and you may now disconnect. Have a great day, everyone.

I think: Thank you Alex and thank you all for your question today, ladies and gentlemen that does conclude today's call. Thank you all for joining and you may now disconnect have a great day everyone.

I think: Thanks.

I think: Thank you.