Q3 2024 Jack in the Box Inc Earnings Call
Chris Brandon: We'll also be making forward-looking statements based on current information and judgments that reflect management's outlook for the future. However, actual results may differ materially from these expectations because of business risk.
We will also be making forward looking statements based on current information and judgments that reflects managements outlook for the future.
However, actual results may differ materially from these expectations because of business risks.
Chris Brandon: We therefore consider the Safe Harbor Statement in the earnings release and the cautionary statements in our most recent 10K to be part of our discussion. Material risk factors as well as information relating to company operations are detailed in our most recent 10K, 10Q, and other public documents filed with the SEC and are available on our investor relations website. A quick note on conferences and events between now and our fourth-quarter earnings. We plan to attend the Piper-Standler Conference on Tuesday, September 10th in Nashville. I hope to see many of you there. And with that, I'd like to turn the call over to our Chief Executive Officer, Darin Harris.
We therefore consider the safe Harbor statement in the earnings release and the cautionary statements in our most recent 10-K to be part of our discussion.
Material risk factors as well as information relating to company operations are detailed in our most recent 10-K 10-Q and other public documents filed with the SEC and are available on our Investor Relations website.
A quick note on conferences and events between now and our fourth quarter earnings we plan to attend the Piper Sandler Conference on Tuesday September 10th in Nashville.
Hope to see many of you there.
And with that I would like to turn the call over to our Chief Executive Officer Darin here.
Darin Harris: Thank you, Chris, and good afternoon, everyone. We appreciate you joining today's call to discuss our third quarter 2024 performance. I want to start by thanking everyone within our organization for their efforts in continuing to manage through a challenging environment for our industry while driving meaningful progress on our key long-term ambitions of targeting top-tier AUVs, driving digital growth, delivering industry-leading restaurant level economics, and building new restaurants with best-in-class returns for franchises.
Darin: Thank you, Chris and good afternoon, everyone.
Darin: We appreciate you joining today's call to discuss our third quarter 2024 performance.
Darin Harris: Our industry is operating in an unusual consumer environment, and we are quickly responding with initiatives intended to drive transactions and win share, with an enhanced focus on reconnecting with the lower income value-oriented guests. We realize that what you get for what you pay is more important than ever, and we continue to feel confident in our barbell and hook and build strategies to achieve that for all guest segments. Innovation, variety, and value will continue to be an important part of our offering at both Jack in the Box and Del Taco, and we will pursue messaging that breaks through to our guests. The third quarter results reflect the combined effect of a tougher sales environment while lapping a high single-digit same-store sales comparison at Jack in the Box.
Darin Harris: We took action to address many of our guests' needs with innovation and quickly adapting offers to be relevant and deliver value. I'd like to highlight a few areas where we demonstrated a dual commitment to addressing the current environment while remaining steadfast and driving towards our long-term ambition. First, and in partnership with franchise operators, we took action to enhance and highlight our value offerings with the launch of our Munchies Under 4 platform, which has two objectives.
Darin Harris: This offering provides a compelling price point and value offer to grow transactions, and it achieved pricing and menu consistency across our system for potential add-on items with the outcome of increasing items per check. To begin the fourth quarter, we have also brought back a $5 price point called Jack's Big Deal Meal as a relaunch of the Jack Pack. Our differentiated menu uniquely positions us to provide a wide range of value offers in the future, including our famous two tacos Jack Rapp, $5 Meals for Munchies Under $4, our $10 Fan Faves boxes, and our Late Night Munchie Meals. Speaking of late night, we successfully executed on our commitment to a day part where we win.
Darin Harris: We partnered with Ice Cube to develop a unique munchie meal featuring our late night fan favorite, the chicken tater melt. We certainly faced a tough competition from last year's Snoop Dogg promotion and the popular spicy chicken strips LTO. I am glad to say it met the challenge and performed above expectations, with order volume for the Munchie Mill outperforming year over year. This result is a great example of offering significant value for the dollar, although the price point is higher than other meal combos.
Darin Harris: We continued pairing value offerings alongside our innovation capabilities, including the launch of WING and our continued success with Smash Jack and now Mini Chimney. Because of the success of Smash Jack, which sold above 5% in the quarter, two of our fan favorite premium burgers just got even better. The Classic and Bacon Swiss Buttery Jack have rolled out featuring the Smash patty, now available system-wide.
Darin Harris: We are excited to deliver it as an upgrade to our already existing strong duo of buttery burgers, and it is only the beginning of our ability to keep innovating around the smash line. The launch of WINGS, debuting in the third quarter through digital and social channels, was very well received, while providing a solid operations knowledge for larger campaigns and future promotion. After simplifying our breakfast menu last year and impacting top line, we wanted to enhance our breakfast offering by making French toast sticks, a fan favorite LTO, permanent on the menu and part of our breakfast platter.
Darin Harris: Plus, we will incorporate breakfast value promotions into each marketing window, like we did during the third quarter, while adding innovative options like our recent introduction of chicken and waffle sticks as part of our ambition to drive digital growth from 14% to 20% of sales. We made progress in first party, which increased 80% versus last year. First Party enables us to build our loyalty membership and directly engage with our guests. At the start of next month, we will be releasing a redesigned version of our Jack app, which will provide an enhanced experience for our guests.
Speaker Change: 80% versus last year.
Speaker Change: First party enables us to build our loyalty membership and directly engage with our guests.
Speaker Change: At the start of next month, we will be releasing a redesigned version of our JAK App, which will provide an enhanced experience for our guests setting the foundation for personalization and targeted loyalty offerings.
Darin Harris: Setting the Foundation for Personalization and Targeted Loyalty Offering. As we continue to enhance our marketing and restaurant technology stack, it's important that I provide an update on the progress of our new point-of-sale rollout at Jack, with nearly 100 restaurants completed and a plan to be at approximately 450 by the end of 2024 and fully deployed in 2025. This POS system includes kiosk capability and will support a seamless loyalty experience while unlocking future operational innovation, including enhanced inventory and labor management, along with AI to reduce costs and improve speed.
As we continue to enhance our marketing and restaurant technology stack, it's important that I provide an update on the progress of our new point of sale rollout of Jack with nearly 100 restaurants completed and are planned to be at approximately 450 by the end of 2024 and fully deployed in 2025.
Speaker Change: This Pos system includes kiosk capability and will support seamless loyalty experience, while unlocking future operational innovation, including enhanced inventory and labor management, along with automation and AI to reduce costs and improve speed.
Speaker Change: I want to say, thank you for the outstanding effort of our it and operations teams as well as our franchise technology Committee for their tireless efforts to launch. This program. We will continue to update you on the progress of this rollout.
Darin Harris: I want to say thank you for the outstanding effort of our IT and operations teams as well as our Franchise Technology Committee for their tireless efforts to launch this program. We will continue to update you on the progress of this rollout. And, as always, we are showing our commitment to cultural relevance and putting our Challenger brand in the bright lights in unique ways. Our promotional partnership with the biggest movie of the summer, Deadpool and Wolverine, is underway with two new products and is exactly the type of brand partnership that continues to make Jack in the Box relevant and high profile.
Speaker Change: And as always we are showing our commitment to cultural relevance and putting our challenger brand in the bright lights in unique ways.
Speaker Change: Our promotional partnership with the biggest movie of the summer Deadpool and Wolverine is underway with two new products and is exactly the type of brand partnership that continues to make Jack in the box relevant and high profile.
Speaker Change: Im encouraged by these areas of commitment and our improving momentum heading into the fourth quarter.
Darin Harris: I'm encouraged by these areas of commitment and our improving momentum heading into the fourth quarter. With a high-profile partnership, continued innovation, emphasis on value, and easing comparisons, our goal is to improve transactions and demonstrate sales growth led by strategic, fundamental approaches rather than short-term actions or temporary discounting. Turning to restaurant-level economics, our restaurant-level margin declined as expected this quarter due to increased California wages from AB 1228.
Darin Harris: Over time, we will regain this margin and more through improved sales and our ongoing equipment, technology, and financial fundamentals initiatives. We have a solid line of sight to these margin enhancement opportunities, which in Q3 included increased adoption of a new oil management process, hydro rinse, and labor tools, the addition of our second fire automation test restaurant in Dallas, and our latest restaurant training programs focused on food and labor management that have the potential to drive meaningful cost savings.
Darin Harris: The team continues to work with urgency to roll these out to our entire system to maximize both our franchisee four-wall EBITDA and our company-owned restaurant margin as it relates to restaurant growth. Interest to develop from both existing and new franchises is being driven in part from our strong new market performance. We opened our second restaurant in Mexico during Q3, and our five Salt Lake City restaurants continue to collectively achieve over $100,000 in weekly AEB, with now an average of 40 weeks open between the five locations, and our two Louisville restaurants are averaging nearly $70K in weekly AUVs, with performance sustaining nicely during the nine months since we entered the market.
Darin Harris: All in all, our new market restaurants continue to thrive, demonstrating that this brand is craved by customers across the country and south of the border as well. I am also thrilled about our exciting news related to Chicago.
Darin Harris: We plan to rapidly enter this key market with a plan to open up to 10 company locations in fiscal year 2025, with an eye on partnering with franchisees to continue to expand in a market with significant growth potential. This, in addition to our entry into Florida in 2025, sets us up for an exciting year for the brand, and our team is ready to make it happen. I also want to provide an update on our reimagination program, which has been enthusiastically received by our franchisees. As a reminder, Jack in the Box has committed $50 million to this multi-year program.
Darin Harris: We ultimately received requests to remodel over 1,000 restaurants, and we believe we can support approximately 25 to 30% of these with incentives. Our franchisees are now prioritizing which restaurants to reimage and gearing up for executing on the approved remodels at a more accelerated pace. This program will yield meaningful same-store sales growth and enhance the overall brand image. Shifting to Del Taco, we were disappointed with the third quarter same-store sales and margin results, but we are recently seeing some early signs of improved sales performance.
Darin Harris: The new leadership team is making good progress on multiple fronts to optimize our marketing, media, and menu strategy, along with implementing operational changes to improve margins and speed of service. The Dell team is moving quickly on these efforts while adeptly dealing with the recent changes in consumer buying behavior and wage increases in California. I've been part of many brands' transformation projects in my career, and similar to the changes we have been making at Jack in the Box, it takes time.
Darin Harris: I'm confident that we have the right team in place, and I'm encouraged by their progress in executing a strategy to improve sales and profitability at a brand that stands for incredible quality and value. As an early example, we are encouraged by Dell's new menu simplification test, which has received very favorable guest feedback and has shown increased sales, speed of service, and margin. We're expanding this test in Q4 to a few markets to validate the results and gain additional learning, with a plan for a full system-wide rollout next year.
Speaker Change: We will utilize the best practice knowledge we've gained at Dell as we introduce kiosks to both brands.
Darin Harris: Another example is Dell's testing of Kiosks, which are producing increased ticket and labor savings, and guest adoption has been even higher than expected. We will utilize the best practice knowledge we've gained at Dell as we introduce kiosks to both brands. And Jack isn't the only brand demonstrating successful new openings. In fact, our most recent three Del Taco restaurant openings in Tallahassee and Port Orange, Florida, as well as Chesapeake, Virginia, each set new records for first week sales.
Brian Harbour: As we said at the time of the acquisition, development and new market entry are initiatives where both brands can combine resources, share best practices, and use similar proven strategies from Jack's new market playbook to provide early performance momentum for our new Dell restaurant. I look forward to updating you on Del Taco's strategy execution, notably top-line sales, RLM improvements, results of our menu simplification, as well as more new restaurant success stories as we take the brand into untapped territory.
Brian Harbour: I believe strongly, particularly as we close in on being an asset-light model and the brand's ability to deliver shareholder value in the long run and add to an even stronger growth story we are creating. In closing, we are pursuing the right initiatives with the right teams to manage through this unprecedented consumer environment for our industry. We have so much upside and opportunity within both of these brands, and we will stay focused on making the right investments, executing on the unique Jack and Dell experience that our guests expect and doing everything we can to navigate the short term while never losing focus on supporting our ambition to create sustained long-term value for our shareholders. Thank you again, and I'll now turn the call over to Brian. Thanks, Darin.
Speaker Change: I believe strongly, particularly as we close in on being an asset light model, in the brand's ability to deliver shareholder value in the long run and add to an even stronger growth story we are creating.
Speaker Change: In closing, we are pursuing the right initiatives with the right teams to manage through this unprecedented consumer environment for our industry.
Speaker Change: We have so much upside and opportunity within both of these brands.
Speaker Change: And we will stay focused on making the right investments.
Speaker Change: and doing everything we can to navigate the short-term while never losing focus on supporting our ambition to create sustained, long-term value for our shareholders.
Speaker Change: Thank you again, and I'll now turn the call over to Brian .
Brian Harbour: Thanks Darin and good afternoon everyone. I will start by reviewing our two brands individually, followed by details on our consolidated performance and capital allocation. Beginning with Jack in the Box, our third-quarter system, same store sales declined 2.2%, with franchise restaurant comps decreasing 2.4%, and company and sales up 0.1%. While price continues to be positive, both mix and transactions were negative, although transactions improved modestly from last quarter. As Darin mentioned, we continue to work on delivering the right mix of value, innovation, and compelling LTOs across our dayparts to improve transactions and attachment rates.
Brian: Thanks Darin and good afternoon everyone. I will start by reviewing our two brands individually, followed by details on our consolidated performance and capital allocation.
Brian: Beginning with Jack in the Box, our third quarter system, same store sales declined 2.2 percent, with franchise restaurant comps decreasing 2.4 percent, and company end sales up 0.1 percent.
Brian: While price continues to be positive, both mix and transactions were negative, although transactions improved modestly from last quarter.
Speaker Change: As Darin mentioned, we continue to work on delivering the right mix of value, innovation, and compelling LTOs across our day parts to improve transactions and attachment rates.
Brian Harbour: This was the first full quarter of operating under the increased minimum wage law in California, and we are proud of how our team has executed through this change using very strategic price increases to counter the higher labor costs. For example, for a Jack in the Box company in restaurants, which are predominantly in California, same-store sales performance was better than in all but one other market. I'll also note that Del Taco had a very similar result, with California being one of their top markets in the quarter.
Speaker Change: This was the first full quarter of operating under the increased minimum wage law in California and we are proud of how our teams executed through this change using very strategic price increases to counter the higher labor costs.
Speaker Change: I'll also note that Del Taco had a very similar result with California being one of their top markets in the quarter.
Brian Harbour: Regarding Prada categories, notable sales contributions came from chicken and burgers. Promotional windows, including wings and popcorn chicken, drove the increased chicken sales, with Smash Jack driving our burger category. Smash Jack continues to perform very well even as consumers are more discriminating in their purchasing decisions, demonstrating a willingness to pay for a high-quality item.
Speaker Change: Regarding product categories, notable sales contributions came from chicken and burgers.
Speaker Change: Promotional windows including wings and popcorn chicken drove the increased chicken sales with Smash Jack driving our burger category.
Speaker Change: Smash Jack continues to perform very well, even as consumers are more discriminating in their purchasing decisions, demonstrating a willingness to pay for a high quality item.
Brian Harbour: As Darin noted, we continue to deliberately drive increases on our own channels of mobile and web, which is essential in our efforts to increase active loyalty program membership and create personalized, targeted promotions for this high-value channel. And we are excited by the early signs from our kiosk test at both brands, which will ultimately help drive higher average ticket via upsell. We will continue to make investments in technology and marketing as we work towards achieving our ambition of 20% of sales through digital channels.
Speaker Change: As Darin noted, we continue to deliberately drive increases on our own channels of mobile and web, which is essential in our efforts to increase active loyalty program membership and create personalized, targeted promotions to this high-value channel.
Darin: And we are excited by the early signs from our kiosk tests at both brands, which will ultimately help drive higher average ticket via upsell.
Speaker Change: We will continue to make investments in technology and marketing as we work towards achieving our ambition of 20% of sales through digital channels.
Brian Harbour: Turning to restaurant count, there were three Jack restaurants openings and three closures in the quarter. Year-to-date, Jack has opened 14 restaurants and is still expecting to open between 25 and 35 restaurants for the fiscal year, and we are heading into 2025 with a strong development pipeline and two exciting new market openings on the way. Jack's restaurant-level margin percentage decreased year-over-year by 80 basis points to 21%. This decrease was driven primarily by higher costs for labor, partially offset by lower food and packaging costs. Food and packaging costs declined 220 basis points from the prior year to 29.2%, with a half percent commodity deflation.
Speaker Change: Turning to restaurant count, there were three jacked restaurant openings and three closures in the quarter.
Brian Harbour: Labor costs were 32.4% of company sales, reflecting a 200 basis points increase from the prior year due to wage increases to comply with California's new minimum wage law. Franchise level margin was $74.6 million, or 41.1% of franchise revenues, compared to $75.3 million, or 41.1% a year ago. The decrease in dollars was mainly driven by the sales decline and the resulting decrease in royalty and rent revenue. Turning now to Del Taco, system same-store sales declined 3.9%, with a franchise sales decline of 4.1%, and a company-owned comp decline of 3.5%.
Darin: Year-to-date, Jack has opened 14 restaurants and is still expecting to open between 25 and 35 restaurants for the fiscal year.
Darin: And we are heading into 2025 with a strong development pipeline and two exciting new market openings on the way.
Darin: Jack's restaurant-level margin percentage decreased year-over-year by 80 basis points to 21%.
Darin: This decrease was driven primarily by higher costs for labor, partially offset by lower food and packaging costs.
Darin: Food and packaging costs declined 220 basis points from prior year to 29.2%, with a 0.5% commodity deflation.
Darin: Labor costs were 32.4% of company on sales, reflecting a 200 basis points increase from prior year due to wage increases to comply with California's new minimum wage law.
Darin: Franchise level margin was $74.6 million, or 41.1% of franchise revenues, compared to $75.3 million, or 41.1% a year ago.
Darin: The decrease in dollars was mainly driven by the sales decline and the resulting decrease of royalty and rent revenue.
Darin: Turning now to Del Taco, system same-store sales declined 3.9% with a franchise sales decline of 4.1% and a company-owned comp decrease of 3.5%.
Brian Harbour: The lower sales were a result of the decline in transactions and an unavailable mix, partially offset by price. As Darin noted earlier, transactions have been impacted by both external and internal factors, and we are executing several initiatives to reignite traffic for the brand.
Darin: The lower sales was a result of a decline in transactions and an unavailable mix, partially offset by price.
Darin: As Darren noted earlier, transactions have been impacted by both external and internal factors, and we are executing several initiatives to reignite traffic for the brand.
Brian Harbour: Del Taco's restaurant level margin was 13.4%, down 400 basis points in the prior year. The decrease is due mainly to increased costs for laboring utilities, partially offset by favorable commodity cost trends relative to price increases.
Darren: Del Taco restaurant level margin was 13.4%, down 400 basis points from the prior year.
Darren: The decreases due mainly to increased costs for labor and utilities, partially offset by favorable commodity cost trends relative to price increases.
Brian Harbour: Food and packaging as a percentage of sales decreased 210 basis points to 25.6%, with modest commodity inflation of 0.2%. Labor as a percentage of sales increased 460 basis points to 38.6%, with this increase also due to the new California minimum wage. Occupancy and other operating expenses increased by 160 basis points, driven primarily by higher utility costs and an increase in technology support. Franchise level margin was $5.8 million, or 27.1% of franchise revenues, compared to $5.5 million, or 36.7% last year.
Darren: Food and packaging as a percentage of sales decreased 210 basis points to 25.6%, with modest commodity inflation of 0.2%.
Darren: Labor as a percentage of sales increased 460 basis points to 38.6%, with this increase also due to the new California minimum wage.
Darren: Occupancy and other operating expenses increased 160 basis points driven primarily by higher utility costs and an increase in technology support costs.
Darren: Franchise level margin was $5.8 million, or 27.1% of franchise revenues, compared to $5.5 million, or 36.7% last year.
Darren: The increase in FLM dollars was due to re-franchising 58 restaurants since the third quarter last year, while the decrease in margin percentage was primarily driven by these re-franchising efforts and the resulting impact of a direct pass-through of rent and marketing fees.
Brian Harbour: The increase in FLM dollars was due to re-franchising 58 restaurants since the third quarter last year, while the decrease in margin percentage was primarily driven by these re-franchising efforts and the resulting impact of a direct pass-through of rent and marketing. Del Taco Restaurant County Quarter End was $597 with five openings and three closures during the quarter. With 12 openings year to date, Del Taco expects to hit the higher end of its original guidance of opening 10 to 15 restaurants this fiscal year.
Darren: Del Taco Restaurant County Corridor Inn was $597, with 5 openings and 3 closures during the quarter.
Darren: With 12 openings year-to-date, Del Taco expects to hit the higher end of our original guidance of opening 10 to 15 restaurants this fiscal year.
Brian Harbour: Subsequent to Quarter End, we re-franchised 27 Del Taco restaurants to a strong Jack-in-the-Dell operator, which included a development agreement for 25 additional restaurants. With this transaction, we have re-franchised 40 restaurants this year, and Del Taco is now over 75% franchise owned. We also have a seven restaurant deal expected to close this quarter with continued strong buyer interest. Moving now to our consolidated results. SG&A for the third quarter was $29.6 million, or 8% of revenues, as compared to $39.6 million, or 10% a year ago. The decline was due primarily to a favorable workers compensation and general liability reserve adjustment, lower incentive-based compensation, and gains on the cash surrender value of our company-owned life insurance policy.
Darren: Subsequent to Quarter End, we re-franchised 27 Del Taco restaurants to a strong Jack-in-the-Dell operator, which included a development agreement for 25 additional restaurants.
Darren: With this transaction, we have re-franchised 40 restaurants this year, and Del Taco is now over 75% franchise owned.
Darren: We also have a seven-restaurant deal expected to close this quarter with continued strong buyer interest.
Brian Harbour: Excluding the net COVID gains, along with company-owned marketing expenses, G&A was $24.5 million, or 2% of total system-wide sales. Consolidated adjusted EBITDA was $78.9 million, down from $81.6 million in the prior year, due primarily to the impacts of Del Taco's refranchising and a decrease in sales, partially offset by the lower G&A. During the quarter, the company recorded a non-cash goodwill impairment of $162.6 million for the Del Taco reporting unit. This charge resulted from lower current performance and other assumption updates impacting our long-term forecast and related cash flows. Despite this forecast reset, we continue to see a significant opportunity to grow this brand through market expansion and sales and margin increases.
Darren: Moving now to our consolidated results.
Darren: SG&A for the third quarter was $29.6 million, or 8% of revenues, as compared to $39.6 million, or 10% a year ago.
Darren: The decline was due primarily to a favorable workers' compensation and general liability reserve adjustment, lower incentive-based compensation, and gains on the cash surrender value of our company-owned life insurance policies.
Darren: Excluding the net COLA gains along with company-owned marketing expenses, G&A was $24.5 million, or 2% of total system-wide sales.
Darren: Consolidated Adjusted EBITDA was $78.9 million, down from $81.6 million in the prior year, due primarily to the impacts from Del Taco refranchising and a decrease in sales, partially offset by the lower G&A.
Darren: During the quarter, the company recorded a non-cash goodwill impairment of $162.6 million for the Del Taco reporting unit.
Darren: This charge resulted from the lower current performance and other assumption updates impacting our long-term forecasts and related cash flows.
Darren: Despite this forecast reset, we continue to see significant opportunity to grow this brand through market expansion and sales and margin increases.
Brian Harbour: Due to the non-cash goodwill charge in the quarter, we reported a consolidated gap to looted loss per share of $6.26 compared to earnings per share of $1.41 in the prior year. Operating Earnings Per Share, which includes adjustments for certain items, was $1.65 for the quarter versus $1.45 in the prior year. The effective tax rate for the third quarter was a negative 0.1% compared to a positive 32.6% for the same quarter a year ago. The effective tax rate for these periods was impacted by the impairment of non-deductible goodwill recorded this year and the disposal of non-deductible goodwill in conjunction with re-franchising transactions last year.
Darren: Due to the non-cash goodwill charge in the quarter, we reported a consolidated gap to looted loss per share of $6.26 compared to earnings per share of $1.41 in the prior year.
Darren: Operating Earnings Per Share, which includes adjustments for certain items, was $1.65 for the quarter versus $1.45 in the prior year.
Darren: The effective tax rate for the third quarter was a negative 0.1%, compared to positive 32.6% for the same quarter a year ago.
Darren: The effective tax rate for these periods were impacted by the impairment of non-deductible goodwill recorded this year and the disposal of non-deductible goodwill in conjunction with re-franchising transactions last year.
Brian Harbour: The adjusted tax rate used to calculate operating EPS for this quarter was 26.2%. Cash flows from operations for the quarter were $45.3 million. On the investing front, our capital expenditures were $24.7 million for the quarter and included investments in our technology and digital initiatives, as well as the development of new company restaurants and remodeling existing restaurants. During the quarter, we repurchased 272,000 shares of our common stock for $15 million. And on August 2nd, our Board of Directors declared a cash dividend of 44 cents per share to be paid on September 19th.
Darren: The adjusted tax rate used to calculate operating EPS this quarter was 26.2%.
Darren: Cash flows from operations for the quarter were $45.3 million.
Darren: On the investing front, our capital expenditures were $24.7 million for the quarter and included investments in our technology and digital initiatives, as well as development of new company restaurants and remodeling existing restaurants.
Darren: During the quarter, we repurchased 272,000 shares of our common stock for $15 million.
Darren: And on August 2nd, our Board of Directors declared a cash dividend of 44 cents per share to be paid on September 19th.
Brian Harbour: As of quarter end, we had available borrowing capacity of $175 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 times. Lastly, I would like to provide certain updates to our guidance for the current fiscal year. Based on our year-to-date performance and expectations for the fourth quarter, we are now anticipating full-year adjusted EBITDA of $320 to $325 million and operating EPS of $6.10 to $6.25.
Darren: As of quarter end, we had available borrowing capacity of $175 million under our Variable Funding Notes and Credit Facility.
Darren: Our total debt outstanding at quarter end was $1.7 billion, and our net debt to adjusted EBITDA leverage ratio was 5.2 times.
Darren: Lastly, I would like to provide certain updates to our guidance for the current fiscal year.
Darren: Based on our year-to-date performance and expectations for the fourth quarter, we are now anticipating full-year adjusted EBITDA of $320 to $325 million and operating EPS of $6.10 to $6.25.
Brian Harbour: Consolidated SG&A, excluding COLE gains and losses, is expected to be approximately $160 million. For our Jack in the Box segment, we are expecting fiscal year same store sales of approximately minus 1% and a company-owned restaurant level margin of approximately 22%. And for Del Taco, we are anticipating same-store sales of approximately minus 1.5% and a restaurant level margin of approximately 14%. Before we take any questions, I want to take a moment to thank all of our restaurant and corporate team members, along with our franchise partners across both brands, for bringing their A-game every day on behalf of our guests and each other. Thanks again for your time this afternoon. Operator, please feel free to open up the line for Q&A.
Darren: Consolidated SG&A, excluding COLE gains and losses, is expected to be approximately $160 million.
Darren: For our Jack in the Box segment, we are expecting fiscal year same-store sales of approximately minus 1% and a company-owned restaurant-level margin of approximately 22%.
Darren: And for Del Taco, we are anticipating same-store sales of approximately minus 1.5% and a restaurant-level margin of approximately 14%.
Speaker Change: Before we take any questions, I want to take a moment to thank all of our restaurant and corporate team members, along with our franchise partners across both brands, for bringing their A-game every day on behalf of our guests and each other.
Darren: Thanks again for your time this afternoon. Operator, please feel free to open up the line for Q&A.
Operator: 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. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Brian Bittner. Please go ahead.
Speaker Change: At this time, I would like to remind everyone, in order to ask a question, press star then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster.
Brian Bittner: Thank you. Darin, you announced you're entering the Chicago market with a bang in 2025, 10 company-owned units, including utilizing conversions. How are you positioning the brand to succeed with this type of rapidly scaled opening, which is a pretty unique, pretty unique strategy for a new market? So if you could touch on that, and Brian, your same store sales guidance for Jack in the Box for the full year, it does give us an implied 4Q outlook of around a 1% same store sales decline. That's the math in my model.
Speaker Change: Your first question comes from the line of Brian Bittner. Please go ahead.
Brian Bittner: Is that the way you want us thinking about the 4Q for Jack in the Box based on where you've put the full year guide? Any updated thoughts on that would be helpful as well. Thanks, guys.
Brian Bittner: Thank you.
Darren: Darin, you announced you're entering the Chicago market with a bang in 2025, 10 company owned units, including utilizing conversions
Brian Bittner: How are you positioning the brand to succeed with this type of a rapidly scaled opening which is pretty unique?
Speaker Change: Pretty unique strategy for a new market, so if you could touch on that.
Brian Bittner: Brian
Speaker Change: Your same store sales guidance for Jack in the Box for the full year, it does give us an implied 4Q.
Brian: Outlook, I guess, of around a 1% same-store sales decline, is the math in my model. Is that the accurate way you want us thinking about the fourth quarter for Jack in the Box, based on where you've put the full year guide? Any updated thoughts on that would be helpful as well. Thanks, guys.
Brian Harbour: Yeah, Brian, this is Brian. Maybe I'll take your second question first, then we can talk about Chicago. In terms of the full year guidance update and where we sit today, for the quarter to date, we are running slightly negative for Jack, but definitely improved from where we were in the third quarter, which was not surprising to us. And so, yeah, the implied fourth quarter guidance, I'd say it's kind of flattish to slightly down.
Brian: Yeah, Brian , this is Brian . Maybe I'll take your second question first, then we can talk about Chicago.
Brian Bittner: Yeah, in terms of the full year guidance update and where we sit today.
Speaker Change: For the quarter to date, we are running slightly negative for Jack, but definitely improved from where we were in the third quarter, which is not surprising to us.
Speaker Change: And so the, yeah, the implied fourth quarter, guys, I'd say it's, you know, kind of flattish to slightly down. We do think there's some opportunity for the remainder of the quarter to improve from where we are today with some easier comps and then some of the, just some carry-through of some of the activities we had during the summer months here, but you're right in the right ballpark there.
Brian Harbour: We do think there's some opportunity for the remainder of the quarter to improve from where we are today with some easier comps and then some just some carry through of some of the activities we had during the summer months here. But you're right in the right ballpark there.
Darin Harris: So I'll take the second part of the question. Also, I'll talk about how Dell continues to find improvement throughout the quarter from our low point last quarter, which we knew we were gonna have a tough quarter in the third quarter due to some media laps that we were making year over year. So we're seeing an improvement into the fourth quarter, and like Brian said, just slightly negative here at Jack with some improving trends that we were enthused about.
Speaker Change: So, I'll take the second part of the question. Also, I'll talk, Dell continues to find improvement throughout the quarter from our low point last quarter.
Jack: Which we knew we were going to have a tough quarter in the third quarter due to some media laps that we were making year over year. So we're seeing improvement into the fourth quarter and like Brian said, just slightly negative here at Jack with some improving trends that we were enthused about.
Darin Harris: With that said, let's lean into development. And I think your question related to Chicago goes all the way back to our strategy that we shared yesterday, which is that we're continuing to invest in growth. And we have seen a tremendous increase in our pipeline on the development agreement and site, and Chicago is another one of the new markets we had targeted. And we went in aggressively by working through an opportunity to convert quite a few locations in a very short period of time.
Speaker Change: With that said, let's lean into development. And I think your question related to Chicago goes all the way back to our strategy that we shared yesterday, which is, you know, we're continuing to invest in growth. And we have seen a tremendous increase in our pipeline of development agreements and sites.
Speaker Change: and Chicago is another one of the new markets we had targeted and we we went in aggressively by working through an opportunity to convert quite a few locations in a very short period of time so we see we could open up to ten locations
Darin Harris: So we see we could open up to 10 locations, possibly up to 10. We'll see how many we get open in 2025 in the Chicago market. And it's a way for us to get quick penetration and then follow through with what we've done in other markets like Louisville and Salt Lake, where we surround that with additional franchisees and company builds to make sure we make an impact in the market very quickly.
Speaker Change: Up to 10. We'll see how many we get open in 2025 in the Chicago market and it's a way for us to get quick penetration and then follow through with what we've done in other markets like Louisville and Salt Lake where we surround that with additional franchisees and company builds to make sure we make impact in the market very quickly.
Speaker Change: Thank you.
Brian Bittner: Thanks, Brian .
Sara Senatore: Your next question comes from the line of Sara Senatore with Bank of America. Please go ahead.
Speaker Change: Your next question comes from the line of Sara Senatore with Bank of America. Please go ahead.
Darin Harris: Great, thank you. I wanted to ask about Darin's comment that the improving momentum heading into the fourth quarter, you know, you talked about just now that it was better than 3Q. I guess, can you sort of help me understand, like, when you talk about improving momentum, what is it in particular? Is it the value pieces, the advertising? And I guess, in that context, how confident are you in the momentum given, I think, you know, 3Q started a little bit stronger and then it decelerated through the quarter. So just trying to understand kind of the underlying demand and also how you're thinking about your ability to respond to it given, you know, I think you have to be kind of reactive.
Sara Senatore: Great, thank you.
Sara Senatore: I wanted to ask about Darin's comment that the improving momentum heading into fourth quarter, you know, you talked about just now that was better than 3Q, I guess.
Sara Senatore: Can you...
Speaker Change: Sort of help me understand like when you talk about improving momentum What is it in particular? Is it the is the value pieces the advertising?
Speaker Change: And I guess in that context, how confident are you in the momentum given, I think, you know, 3Q started a little bit stronger and then it decelerated through the quarter. So just trying to understand kind of the underlying.
Speaker Change: Demand and also how you're thinking about your ability to respond to it given, you know, I think you have to be kind of reactive.
Darin Harris: Yeah, I think, you know, what we've been doing with the balance of our Barbell Strategy when we rolled out Munchies Under 4, what we saw is that our ticket, it didn't drive as much traffic as we wanted, so it increased the ticket to over $14. We also saw a higher unit per transaction, so we know that Munchies Under 4 is working. It just hasn't moved enough of the traffic we needed to count as positive.
Speaker Change: Barbell strategy when we rolled out munchies under four what we saw is it increased
Speaker Change: Our ticket, it didn't drive as much of the traffic as we wanted, so it increased ticket to over $14. It also, we saw a higher unit per transaction.
Speaker Change: So we know that Munchies Under 4 is working, it just hasn't moved enough of the traffic we needed to count positive. In addition to that, we also have a $5 big meal deal in the fourth quarter, so we have a good value strategy.
Darin Harris: In addition to that, we also have a $5 big meal deal in the fourth quarter, so we have a good value strategy. You add those two things together, and you add that along with what we're doing with our $5 or our $10 Fan Faves box, we have enough value options in our digital offers to really focus on that part of the barbell. And then we roll out things like we did with this promotion with Deadpool and Wolverine, where we did the mini chimneys and, you know, a popular fan favorite with our chicken strips.
Speaker Change: You add those two things together you add that along with what we're doing on our $5 or $10 fan faves box We have enough value options in their digital offers to come to really focus on that part of the barbell And then we roll out things like we've done with this promotion with Deadpool
Speaker Change: and Wolverine where we've done the mini chimneys.
Speaker Change: and, you know, a popular fan favorite with our chicken strips.
Darin Harris: And so we have both ends of the barbell. So we feel confident in the fourth quarter calendar, along with what we're doing. We also know that we had softer comps at this time last year, so we feel good about the back end of the quarter. Yes, sir. This is Brian. We've obviously had
Speaker Change: And so we have both ends of the barbell. So we feel confident in the fourth quarter calendar, along with what we're doing. We also know that we had softer comps at this time last year, so we feel good about the back end of the quarter.
Brian Harbour: Yes, so this is Brian. We've had obviously several weeks now and into this quarter, and we've seen pretty consistent, you know, better trends than we had in the third quarter. So, it really doesn't take much of a change from where we're currently running to still end up with a better performance than we had in the third quarter and getting near to that flattish that we talked about a little while ago here. So, the comps get progressively easier each period in this last quarter.
Speaker Change: Yes, sir. This is Brian . Just to add, we've had, obviously, several weeks now into this quarter, and we've seen...
Brian Bittner: Pretty consistent, you know, better trend than we had in the third quarter, so it really doesn't take much of a change from what we're currently running to
Brian Bittner: to still end up with a better performance than we had in the third quarter and getting near to that, you know, flattish that we talked about a while ago here. The comps get progressively easier each period in this last quarter.
Speaker Change: Great, thank you.
Lauren Silberman: Your next question comes from the line of Lauren Silberman from Deutsche Bank.
Lauren Silberman: Great, thank you. Your next question comes from the line of Lauren Silberman from Deutsche Bank. Please go ahead.
Speaker Change: Your next question comes from the line of Lauren Silberman from Deutsche Bank. Please go ahead.
Lauren Silberman: Hey guys, thanks for the question.
Lauren Silberman: A follow-up on the comp side, can you talk about the cadence of comp as you moved through the quarter, any discernible changes in consumer behavior, and then a big peer of yours launched a $5 meal deal in July . Did you see any impact on your trends from that? Sounds like perhaps not, but just trying to think about breaking through the noise as the industry presumably gets more aggressive.
Darin Harris: Yeah, I don't think that we saw a major impact related to, you know, just one competitor. I think it's all of the competitors combined, trying to shout value is tougher to break through. But overall, nothing that I would say is demonstrable that we've seen, you know, dramatic change as a result of any of the competitive pressure. It's more overall competitive pressure on the consumer is what we're feeling in the lower income guests. And then Brian, do you want to take the question?
Speaker Change: Yeah, I don't think that we saw, you know, a major impact related to...
Speaker Change: You know, just one competitor. I think it's all of the competitors combined.
Speaker Change: Trying to shout value is tougher to break through, but overall nothing that I would say is demonstrable that we've seen, you know, dramatic change as a result of any of the competitive pressure. It's more overall the competitive pressure on the consumer is what we're feeling in the lower income guests.
Brian Harbour: As it relates to the comps, I don't think there was anything significant to point out in terms of the comps. They were a little bit tougher in the second half of the third quarter, but we were relatively consistent. We were a little bit weaker in the very last part of the quarter, but then we kind of expected that just from what we were losing. And then we turned, as we were exiting the third quarter into the fourth quarter, into this trend that we've talked about more.
Speaker Change: And then, Brian , you want to take the question? I don't think there was anything significant to point out in the
Brian Bittner: In terms of the comps, they were a little bit tougher in the second half of the third quarter.
Brian Bittner: But we were relatively consistent. We had a little bit weaker in the last part of the quarter, but then we kind of expected that just from what we were lapping, and then we turned as we were exiting the third quarter into the fourth quarter into this trend that we've talked about more recently.
Speaker Change: Thank you
Jon Tower: Your next question comes from the line of Jon Tower with Citi. Please go ahead.
Speaker Change: Your next question comes from the line of Jon Tower with Citi. Please go ahead.
Jon Tower: Great, thanks. Maybe just a quick clarification and then a question. The clarification is, I know you've talked about gross units for the year at Jack in the Box that are sustaining at the same level you'd previously do, but are you still anticipating net unit growth this year and, perhaps, what you think for next year? And then I can, you know, ask my question.
Jon Tower: Great, thanks. Maybe just a quick clarification and then a question. The clarification, just, I know you talked about gross units for the year at Jack in the Box, that's sustaining at the same level you had previously, too, but
Jon Tower: Are you still anticipating net unit growth this year, and perhaps what you think for next year? And then I can, you know, ask my question after.
Darin Harris: Yeah, we definitely are continuing to believe that we will come in within our guide and also be net unit positive. So we feel good about the numbers we put in from a development standpoint, as we've talked about both at Dell and Jack. Dell I think will be closer to our high end of our guide on gross openings. And then also, we feel good about, you know, net openings together on both brands.
Speaker Change: The numbers we put in from a development standpoint, as we've talked about, both at Dell and Jack, Dell, I think, will be closer to our high end of our guide on gross openings. And then also, we feel good about, you know, net openings together on both brands.
Jon Tower: And then just on the value side, Darin, you highlighted earlier in the call just the $5 price point, the Jack's Big Deal LTO, and then I think you talked about relaunching JackPack, and then a few different others. You get the $4 Munchie platform and the famous Two Tacos Jack Wraps, and I guess my broad question is, does this get a little too confusing for consumers? I mean, you've got a lot of different platforms, different price points. And like, what have you guys picked up that suggests that that's what should work with consumers rather than sticking with a $5 price point for a year or whatever it might be?
Jon Tower: And then just on the value side, you, Darin, had highlighted earlier in the call, just, I think, the $5 price point, the Jack's Big Deal LTO, and then...
Speaker Change: I think you talked about relaunching JackPack and then a few different others. You've got the $4 Munchie platform and the famous Two Tacos, Jack Raps. And I guess my broad question is.
Speaker Change: Does this get a little too confusing for consumers? I mean, you've got a lot of different platforms, different price points, and like, what have you guys picked up that suggests that that's what should work with consumers rather than, you know, sticking with a $5 price point for a year or whatever it might be?
Darin Harris: Yeah, I think the key differentiation for us is LTO value versus everyday value. And so think of Munchies Under 4 as everyday value. Think of the $5 big meal deal as more of a promoted value. And then we utilize some of these other ideas such as, you know, our digital offers to also drive transactions. Don't give up, don't stay strong, stay open.
Speaker Change: Yeah, I think the key differentiation for us is LTO value versus everyday value.
Speaker Change: And so think of Munchies Under 4 as everyday value. Think of the $5 big meal deal as more of a promoted value. And then we utilize some of these other ideas such as, you know, our
Speaker Change: Digital offers to also drive transactions.
Jon Tower: be you know a discount play to really drive motivation on a particular day to drive traffic via digital means so it's really about LTO versus everyday value
Brian Harbour: Yeah, I think some of the work we've done on the menu with the munchies on our floor, kind of putting it all in one place on the menu, it is easier for our guests to navigate and know that they've got a place to look if they want value, but we've also created more clarity across all of our different menu items. So they know value's there, they're seeing it maybe in the promotion at the restaurant, but then often, though, we're still paying that trade-up to more premium items.
Jon Tower: I think some of the work we've done on the menu with the Munchies and our four, kind of putting it all in one place in the menu, it is easier for our guests to navigate and know that there's...
Jon Tower: They've got a place to look if they want value, but then we've also created more clarity across all of our different menu items. So, you know, they know value is there, they're seeing it maybe at the promotion at the restaurant, but then, you know, often though, we're still paying that trade up to more premium items.
Darin Harris: As Brian said, our promoted value on the LTO is to drive people off the couch and get them to trade up into something else on our menu. And that's been our strategy with the hook and bill.
Jon Tower: With what Brian said, our promoted value on the LTO is to drive people off the couch and get them to trade up into something else on our menu. And that's been our strategy with the hook and bill.
Darin Harris: Okay, and then just last one for me, in terms of California, you spoke of at least the company stores having some pretty good success there. Just curious, is there any way, you know, how did your share in California hold up during the fiscal third quarter?
Speaker Change: Okay, and then just last one for me. In terms of California, you spoke to at least the company stores having some pretty good success there. Just curious, is there any way, you know, how did your share in California hold up during the fiscal third quarter?
Darin Harris: California fared better than our system and I think you know with we're continuing to see price offset that some of the transaction decline so you know we definitely saw California fared substantially better we thought and I think it's franchisees worked with us when we rolled out our plan for AB 1228 where we looked at pricing by menu item across every every you know market by every store we took specific you know surgical pricing on individual items and and so and we did it you know in a timed fashion so I think we we made the right moves in California.
Speaker Change: California fared better than our system.
Speaker Change: And I think, you know, with, we're continuing to see price offset that some of the transaction declines, so.
Speaker Change: We definitely saw California fared substantially better than we thought, and I think it's franchisees worked with us when we rolled out our plan for AB 1228, where we looked at pricing by menu item across every market, by every store. We took specific surgical pricing on individual items.
Speaker Change: And so, and we did it, you know, in a timed fashion, so I think we made the right moves in California.
Brian Harbour: Yeah, and the same would be true, as you mentioned in the prepared remarks, with Del Taco again with taking some incremental price there, you know, some impact on traffic, negative, negative impact, but the net was a better performance for Dell overall in California, it speaks to that you know that the brand's being really well regarded here, but I think also the team's working really surgically to price appropriately to manage against too much traffic decline, great.
Speaker Change: Yeah, and the same would be true as you mentioned in the prepared remarks with Del Taco.
Speaker Change: Again, we're taking some incremental price there, you know, some impact on traffic, a negative impact, but the net was a better performance for Dell overall in California, it speaks to the
Speaker Change: You know, the brand's being really well regarded here, but I think also the team's working really surgically to price appropriately to manage against too much traffic decline.
Speaker Change: Great, thanks for taking the questions.
Chris O'Call: Great, thanks for taking the question. Your next question comes from the line of Chris O'Call with Stifle. Please go ahead.
Speaker Change: Your next question comes from the line of Chris O'Call with Stifle. Please go ahead.
Chris O'Call: Great. Thanks, guys. Given the geographic concentration of the company-owned stores, it's difficult to use them as a proxy for franchisee profitability. So could you give us an update on where you think the average franchisee profits are relative to last year for the brand year-to-date?
Darin Harris: Yeah, I think, you know, in our last quarterly data, we're a quarter behind, we saw profitability up year over year and trailing 12 months for franchisees by about two points. Now, we know that that information doesn't have AB 1228.
Speaker Change: Yeah, I think, you know, in our last quarterly data, we're a quarter behind, we saw profitability up.
Speaker Change: year-over-year and trailing 12 months for franchisees by about two points now we know that that information doesn't have AB 1228
Speaker Change: And what I would say with AB 1228, we think there's somewhere between 1% and 2% that probably has, you know, impacted some of the P&L from a labor standpoint.
Speaker Change: But we've had offsets against that with pricing, so, you know, definitely, you know, it's probably somewhere in the one to two percent range that franchises have felt, and we've already seen that improve into Q4.
Darin Harris: And what I would say with AB 1228 is that we think there's somewhere between one and 2% that probably has impacted some of the P&L from a labor standpoint. But we've had offsets against that with pricing. So, you know, definitely, it's probably somewhere in the one to 2% range that franchises have felt, and we've already seen that improve in Q4. Yeah, and the other thing I'd add is if you look back, you know, kind of pre-COVID and where we are today, our franchisees overall.
Brian Harbour: Yeah, and the other thing I'd add is if you look back, you know, kind of pre-COVID and where we are today, our franchisees overall, from a profitability standpoint, are stronger than they've been. So, you know, we do have this near-term headwind, but we also, as Darin mentioned, we have a lot of initiatives in place beyond growing sales, which I think there's a distinct opportunity The POS is a kind of starting point for that.
Speaker Change: Yeah, and the other thing I'd add is, if you look back, you know, kind of pre-COVID and where we are today,
Speaker Change: Our franchisees overall, from a profitability standpoint, are stronger than they've been. So, you know, we do have this near-term headwind, but we also, as Darin mentioned, we have a lot of initiatives in place.
Darin: Beyond growing sales, which you think there's a distinct opportunity there, but to drive more operational improvement.
Darin: The POS is the starting point of that. We'll be able to now offer a kiosk with our new point-of-sale system, and then other initiatives we have around technology to drive improved labor management, inventory management,
Brian Harbour: We'll now be able to offer a kiosk with our new point-of-sale system. And then other initiatives we have around technology to drive improved labor management, inventory management, and more automation in the restaurant. We've talked before about the opportunity to gain margin there. Those are all very good opportunities, and many of them are in flight right now. And so, again, as we see our sales stabilize and implement more of those, you know, our franchisees are in a really good place now, and we think, and they're very optimistic about what they've got ahead of them as well.
Speaker Change: and more automation in the restaurant. We've talked before about the opportunity to gain margin there. Those are all very good opportunities. Many of them are in flight right now. And so, again, as we see our sales stabilize and implement more of those.
Speaker Change: Our franchisees are in a really good place now, we think, and they're very optimistic about what they've got ahead of them as well.
Speaker Change: That's really helpful, thanks. And then, does the decline in Del Taco sales and store-level cash flows change your timing or maybe any of the economics of re-franchising the remaining 70 or so units?
Darin Harris: No, we will continue. We've got many deals in the pipeline that we anticipate closing. We just closed on a transaction with Del Taco from a re-franchising standpoint for 27 locations with a development agreement for 25, and then we have other LOIs that we're working through closing in the back of the quarter. So our plan is to continue with the re-franchising program, and we have plenty of demand.
Speaker Change: No, we will continue. We've got many deals in the pipeline that we anticipate closing. We just post-quarter closed on a transaction.
Speaker Change: with Del Taco from a re-franchising standpoint for...
Speaker Change: 27 locations with a development agreement for 25.
Speaker Change: and then we have other LOIs that we're working through closing in the back of the quarter. So our plan is to continue on the re-franchising.
Brian Harbour: Yeah, and as I mentioned, we have another seven-unit deal that's very close to closing. That will put us just below 80% franchise at that point, and the largest percentage of the remaining restaurants are still in California, as we mentioned. The performance has been better there, and I think there's a lot again of optimism about not only the brand here but also the opportunities to grow sales and margins at Del Taco as well, so the interest has remained strong. We'll do it at our pace if we think it's appropriate with the right partners, but in terms of our ability to do it, we still see a lot of optimism. You know, we've recently both recently both recently both
Speaker Change: Program, and we have plenty of demand. Yeah, and as I mentioned, we have another seven-unit deal that's very close to closing. That will put us just right below 80%.
Speaker Change: franchise at that point and you know the largest percentage of the remaining restaurants are still in California as we mentioned the performance has been better there and I think there's a lot again of optimism about not only the brand
Speaker Change: Here but also the opportunities to grow sales and margins at Del Taco as well So that's we the interest is remain strong, you know, we'll we'll do it at our pace We think it's appropriate with the right partners, but in terms of our ability to do it. We still see a lot of opportunity
Darin Harris: We've recently had some of the most successful openings in the history of both Jack and Dell. We're still signing new development agreements because people see the opportunity for growth and know that this is a transitory cycle with same-store sales. And we believe that as our pipeline continues to build, our interest in refranchising also continues to build.
Speaker Change: You know, we've recently, both at Jack and Dell, had some of the most successful openings in the history.
Brian Mullan: Great. Thanks, guys. Thank you. Your next question comes from the line of Brian Mullan with Piper Sanford. Please go ahead.
Speaker Change: We're still signing new development agreements because people see the opportunity for growth and know that this is a transitory kind of cycle with same-store sales and And we believe that you know as our pipeline continues to build our interest in refranchising also continues to build
Speaker Change: Great, thanks guys.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Brian Mullan with Piper Sanford. Please go ahead.
Brian Mullan: Thank you. Just a question on your remodel and refresh initiatives that you have going on with the Jack in the Box franchise.
Brian Mullan: Talk about the uptake you're seeing for some of the programs you're offering and if the current environment has any influence on the demand for that, you know, maybe for some, maybe capital tightness environment, but maybe others want to invest in an environment like this. So just any color you could offer would be great.
Darin Harris: Yeah, so when we rolled out the industrial park, you know, that was our industrial remodel program a year and a half or so ago. We have nine of those completed, another eight under construction, and 72 in design and permitting, so we're making progress there.
Speaker Change: Yeah, so when we rolled out the industrial, you know, that was our industrial remodel program a year and a half or so ago.
Brian Mullan: We have nine of those completed, another eight under construction, and 72 in design and permitting, so we're making progress there.
Darin Harris: Once we rolled out the Crave, we saw a very high demand from the system to say we want the Craved image, and we're excited about that and the performance we're seeing, so we sent it back out to the system and their ability to nominate for re-images, and we saw over 600 forms submitted for desire to re-image and refresh the restaurants. And so we believe the system is very excited about, and we hear this from franchisees about the opportunity and the incentive program we provided alongside of them to help get some of these stores re-imaged.
Speaker Change: Once we rolled out the Crave we saw a very high demand from the system to say we want the Craved image and we're excited about that and the performance we're seeing and so we sent it back out to the system and their ability to
Brian Mullan: nominate for re-images and we saw over 600 forms submitted for desire to re-image and refresh the restaurants.
Brian Mullan: And so we believe the system is very excited about, and we hear this from franchisees, about the opportunity.
Brian Mullan: and the incentive program we provided alongside of them to help get some of these stores re-imaged. And so, you know, we're working through prioritization of what locations of those 600 will be selected for the incentive. But there's a substantial demand is the point behind the desire to re-image at Jack in the Box.
Darin Harris: And so we're working through prioritization of what locations of those 600 will be selected for the incentive, but there's a substantial demand is the point behind the desire to re-image Jack in the Box. And in the industrial image re-images, we're seeing a lift of anywhere from 15 to 16% of sales on the re-images that have been completed in the industrial image over the last, you know, two or three years.
Speaker Change: and in the industrial imagery images we're seeing a lift of anywhere you know 15 to 16 percent of sales on the re-images that have been completed of the industrial image over the last you know two or three years
Alex Slagle: Your next question comes from the line of Alex Slagle with Jeffreys. Please go ahead.
Speaker Change: Your next question comes from the line of Alex Slagle with Jeffreys. Please go ahead.
Darin Harris: All right, thanks for the question. Wanted to ask about the JAC new market performance and Curious if you could offer a few more highlights kind of what you've seen now that you've had these new markets open some of them, you know, in the ground, 6, 12 months, but and what you're learning in terms of how to effectively drive the sustained frequency and the excitement and then operationally drive speed and throughput execution. Just any other dynamics you're seeing there that help inform the playbook.
Alex Slagle: Alright, thanks for the question. I wanted to ask on the Jack, new market performance and...
Speaker Change: Curious if you could offer a few more highlights, kind of what you've seen now that you've had these new markets open, some of them, you know, in the ground 6-12 months, but kind of what you're learning in terms of how to effectively drive the sustained frequency and the excitement and then operationally drive speed and throughput execution. Just.
Speaker Change: Any other dynamics you're seeing there that help inform the playbook?
Darin Harris: Yeah, and I think the last statement on the playbook is what's been working. We rolled out our new market playbook. It involved everything from how do we select real estate, how do we develop a market alongside franchisees, what image we go in with, how do we start to create demand prior to entering our awareness-driving campaigns, and then post-opening, how do we roll out our current menu without LTOs, then implement a digital strategy later on, and all of the tools right now are working.
Darin Harris: And we're seeing that and then replicating it at Del Taco. And I say that Salt Lake City now... We've got 40 weeks of average opening for the five locations that are there. We're averaging over 100k, right at 100k right now. So, tremendous success.
Speaker Change: Yeah, and I think the last statement on the playbook is what's been working, we rolled out our new market playbook, it involved everything from how do we select real estate, how do we develop a market alongside of franchisees, what image we go in with, how do we start to create demand prior to entering our awareness driving campaigns.
Speaker Change: and then post-opening, how do we roll out, you know, our current menu without LTOs, then implement a digital strategy later on, and all of the tools right now are working. And we're seeing that, and then replicating it, Del Taco, you know, and I say that Salt Lake City now...
Darin Harris: We have six additional locations opening in 2020 by calendar 2024, and then 17 total we see throughout 2025. So we're excited about what's happening in Salt Lake City, or at least we have that many sites in the process, whether they'll all get open in the calendar year. We're still working through that.
Speaker Change: We've got 40 weeks of, you know, average opening for the five locations that are there. We're averaging over 100k, right at 100k right now. So, tremendous success.
Speaker Change: We have six additional locations opening in 2020 by calendar 2024, and then 17 total we see throughout 2025, so we're excited about what's happening in Salt Lake City, or at least we have that many sites in process, whether they'll all get open.
Darin Harris: Louisville, we have eight total by 2025 that should be open. And the two current locations, nine months in the market, are averaging, you know, between $60,000 and $70,000. And then Mexico has two locations open and is performing well. So, you know, we continue to see performance in all the new markets. We're signing development agreements; we've now signed 18 new franchisees at Jack in the Box for 156 restaurant commitments. So they're seeing the performance and the desire to get into the market.
Speaker Change: in the calendar year. We're still working through that. Louisville, we have eight total by 2025 that should be opened. And the two current locations, nine months in the market are averaging between $60,000 and $70,000.
Speaker Change: And then Mexico has two locations open and is performing well.
Speaker Change: We continue to see performance in all the new markets. We're signing development agreements. We've now signed 18 new franchisees at Jack in the Box for 156 restaurant commitments. So they're seeing the performance and the desire to get into the market.
Darin Harris: It's led to Florida having 31 agreements, or Commitments to Build Locations. Chicago, as we mentioned, we're going into Chicago. So we feel good about the new market playbook and that it's working because the sales are sustaining themselves over time. As I mentioned, Dell has now started to follow the same process.
Speaker Change: It's led to Florida having 31 agreements or commitments to build locations, Chicago, as we mentioned, we're going into Chicago, so we feel good about the new market playbook and that it's working because the sales are sustaining themselves over time.
Speaker Change: As I mentioned, Dell has now started to follow the same process. We're signing more franchise agreements for Dell as well.
Darin Harris: We're signing more franchise agreements for Dell as well. More sites in the process than we've ever had. Our last three openings, when you combine the two Florida locations and Virginia, set first week records. And so, you know, clearly we need some more time with those locations because they are recent openings. But what our early indications are, the playbook is working. The teams are excited. We're attracting, you know, outside capital from new franchise
Speaker Change: More sites in process than we've ever had our last three openings and when you combine the two Florida locations of Virginia Set first week records and so you know clearly we need some more time with those locations because there are recent openings
Speaker Change: But what our early indications are, the playbook is working, the teams are excited, we're attracting outside capital from new franchisees. So we feel really good about what we're building from a growth standpoint at Jack.
Darin Harris: So we feel really good about what we're building from a growth standpoint at Jack. And we'll get through this kind of, you know, same store sales environment, the consumer environment with all the other things we're doing to drive the business. Your next question comes from the line. Andrew Charles with CD Cohen.
Speaker Change: and we'll get through kind of this, you know, same store sales environment, the consumer environment with all the other things we're doing to drive the business.
Andrew Charles: Your next question comes from the line of Andrew Charles with CD Cohen. Please go ahead.
Speaker Change: Great, thank you. I want to take the flip side of the California outperformance, you know, where, for both the brands, are you seeing the underperformance? Is this in any of the new markets? Or perhaps not, just given that they're not yet in the comp phase?
Speaker Change: Are these from markets that didn't take as much price? I'm just kind of curious about where the underperformance in the store base is. Yeah, I think geographically, Jack, we're seeing mostly underperformance a little heavier weighted to Texas and the Northwest.
Darin Harris: I think geographically, at Jack, we're seeing mostly underperformance, a little heavier weighted to Texas and the Northwest, whereas we see California and the Midwest performing better at Jack. So, you know, I think that's the key to Jack in the Box.
Speaker Change: where as we see California and the Midwest performing better at JET. So, you know, I think that's the key.
Brian Harbour: Texas I think is a little bit, from a price standpoint, a lot more aggressive from a pricing standpoint, and the same in the Northwest. Yeah, I think because they probably took some prices early.
Jack: Jack in the Box, Texas I think is a little bit from a price standpoint.
Speaker Change: A lot more aggressive from a pricing standpoint and the same in the Northwest.
Brian Harbour: Yeah, I think because they probably took some price earlier in those markets, they're holding prices more now. So they're feeling some of the industry traffic decline, it's not just for us, and so they're not really seeing much of an opportunity to offset with price to make sure we have good discipline there. And so you've seen a little more of that traffic impact hitting their overall performance. I think as we kind of work through that, you know, that near term, we're in good discipline on pricing, and as we, you know, with our menu and some of the changes we've made, you know, we think that any traffic that improves will drop straight through to better sales performance.
Jack: Yeah, I think because they probably took some price earlier in those markets, they're holding price more now, so they're stealing some of that.
Speaker Change: Industry traffic decline, it's you know, it's not, it's not just for us. And so they're, they're not really seeing much of an opportunity to offset with price to make sure we have good discipline there. And so you've seen a little more of that traffic impact hitting their overall performance.
Speaker Change: I think as we kind of work through that, you know, that near term, you know, I think we're taking a good discipline on pricing and as we, you know, with our menu and some of the changes we've made, you know, we think that'll, any traffic that improves will drop straight through to better sales performance.
David Tarantino: Your next question comes from the line David Tarantino with BERT. Please go ahead.
Speaker Change: Thank you. Bye-bye.
Speaker Change: Your next question comes from the line of David Tarantino with BERT. Please go ahead.
Darin Harris: Hi, good afternoon. Darin, I have a question about the Jack in the Box value proposition. I was wondering if you could frame up how you're tracking the value proposition of the brand. I know the brand; you and your franchisees have taken a lot of pricing, as have others in the industry. I'm not sure you're disconnected from what others are doing, but I'm just wondering if the absolute level of pricing is changing the value perceptions of the brand in a way that might make you think about, you know, an action plan related to your kind of structural pricing going forward.
David Tarantino: Hi, good afternoon. Darin, I have a question on Jack in the Box's value proposition. I was wondering if you could
David Tarantino: frame up how you're tracking the value proposition of the brand. I know the brand
David Tarantino: You and your franchisees have taken a lot of pricing as have others in the industry. I'm not sure you're disconnected from what others are doing, but I'm just wondering if the absolute level of pricing
Speaker Change: is changing the value perceptions of the brand in a way that might make you think about, you know, an action plan related to your kind of structural, you know, pricing going forward.
Darin Harris: You know, I think we're always looking at market data, assessing it, and trying to make decisions on what is the right price. We're using plenty of the same tools our competitors are to see how we stand.
Speaker Change: You know, I think we're always looking at market data.
Speaker Change: Assessing it and trying to make decisions on what is the right price. We're using plenty of the same tools our competitors are to see how do we stand and as we've talked about our pricing discipline, how do we stand by item in each and every market and how do we make changes accordingly.
Darin Harris: And as we've talked about our pricing discipline, how do we stand by item in each and every market and how do we make changes accordingly? So I think overall, from a pricing standpoint, we now have the right discipline to pivot to what we need to do, by each market, by each store, by each item. It's now about our everyday value and driving and about our LTO value. And so we feel, from a premium standpoint, we've done the right things for hook and build.
Speaker Change: So I think overall, from a pricing standpoint, we now have the right discipline to pivot to what we need to do by each market, by each store, by each item. It's now about our everyday value and driving transactions.
David Tarantino: and about our LTO value. And so we feel from a premium standpoint, we've done the right things for hook and build.
Darin Harris: Now it's about how can we continue to drive transactions with the lower income guests into this $5 big meal deal and trade them up on the item. We're having other items on the menu, like our munchies under $4, that can be added to items. The last two things, and I think the whole industry is feeling this, we're seeing attachment rates. And that's what we have to figure out is how do we continue to get attachment rates up, or additional drink sales.
Speaker Change: Now it's about how can we continue to drive transaction with the lower income guests into this $5 big meal deal and trade them up into items. We're having other items on the menu like our munchies under $4 that can be added to items.
David Tarantino: The last two things, and I think the whole industry is feeling this, we're seeing attachment rates, and that's what we have to figure out, is how do we continue to get attachment up?
Darin Harris: Because that's where a lot of the industry is seeing some decline in overall, you know, you know, trans transactions and impacting sales. So that's what we have to figure out. And so Munchies Under 4 had a strategic initiative: how do we either drive people to come in and say that's a value or add on? Well, we're seeing more as an add on. And so now we have to, that's why we wanted to roll out the $5 big meal deal alongside of the LTO is to get people off the couch and then trade into something else.
Speaker Change: drink sales, because that's where a lot of the industry
Speaker Change: Transactions and Impacting Sales.
Speaker Change: So that's what we had to figure out on. So Munchies Under 4 had a strategic initiative. How do we either drive people to come in and say, that's a value?
Speaker Change: or add-on. What we're seeing more is add-on and so now we have to that's why we wanted to roll the $5 big meal deal alongside of the LTO is to get people off the off the couch and then trade into something else.
Dennis Geiger: Your next question comes from the line of Dennis Geiger with UBS. Please go ahead.
Speaker Change: Your next question comes from the line of Dennis Geiger with UBS. Please go ahead.
Dennis Geiger: Great. Thanks, guys.
Dennis Geiger: Great, thanks guys. Encouraging to see the continued jack gains on the development agreement side of things and the solid initial performance in those newer markets.
Darin Harris: It's encouraging to see the continued jack gains on the development agreement side of things and the solid initial performance in those newer markets. But, Darin, just kind of building on some of your comments, anything more to share on where franchisee sentiment broadly is with respect to development timelines? You know, any of the macro pressures that we spoke to, is any of that impacting timelines at all or for the most part? Is it, you know, folks are on track, and it's all systems go broadly as we think about the developments?
Speaker Change: But Darin, just kind of building on some of your comments, anything more to share on...
Speaker Change: where franchisee sentiment broadly is with respect to development timelines. You know, any of the macro pressures that we spoke to, is any of that impacting timelines at all or for the most part? Is it, you know, folks are on track and it's all systems go broadly as we think about the development trajectory.
Darin Harris: Yeah, from quarter to quarter, we continue to approve more sites. We're now at 103 sites that are in the process of being permitted and constructed at Jack in the Box.
Speaker Change: Yeah, from quarter to quarter we continue to improve more sites. We're now at 103 sites that are in permitting and construction at Jack in the Box.
Darin Harris: So, we just approved a substantial number, you know, a couple weeks ago. We're still seeing people fill the pipeline, and we'll continue to add development agreements and sites. And so, we haven't seen across the systems, both at Jack and Dell, a decline in interest. Yeah, there's natural time on some of the back end of the development agreements that may be pushed out a bit. But for the coming 18 to 24 months, we feel really, really good about the pipeline and how rapidly it's building.
Darin Harris: It's great; thank you very much.
Logan Wright: Your next question comes from the line of Logan Wright with RBC Capital Markets. Please go ahead.
Speaker Change: Your next question comes from the line of Logan Wright with RBC Capital Markets. Please go ahead.
Darin Harris: Hey, good evening. Thanks for taking the question, sort of a follow up on the prior question. You know, you guys have close to 400 Jack in the Box restaurants in the pipeline. I guess my question is, you know, sort of given everything that's been happening in the macro pressures, how much visibility do you have in the next 18 to 24 months and any sort of guidance relative to the sort of long-term guidance you guys gave at the analyst day in terms of unit growth for Jack in the Box?
Darin Harris: And then separately, so that's on the franchise side and then separately on the company side. Any sort of guidance you guys can give on your expected openings for next year just given all the new markets just any sort of update there would be great thanks we'll provide guidance at the at next quarter for next year but right now we've stayed true to our 2027 guide long-term guidance on unit growth that we're on track for the two percent that we had we had you know commented on and we you know feel even more confident based upon what we've seen in the number of sites being submitted at both brands
Logan Wright: How much visibility do you have in the next?
Logan Wright: 18 to 24 months and any sort of guidance relative to the sort of long term guide you guys gave at the analyst day in terms of unit growth for Jack in the Box. And then separately, so that's on the franchise side and then separately on the company side.
Speaker Change: Your expected openings for next year just given all the new markets just any sort of update there would be great. Thanks We'll provide guidance at the next quarter for next year. But right now we've stayed
Speaker Change: True to our 2027 guide, long-term guidance on unit growth, that we're on track for the 2%.
Speaker Change: that we had commented on and we feel even more confident based upon what we've seen in the number of sites being submitted.
Speaker Change: both brands yeah I just add at the same
Brian Harbour: Yeah, I just add the same. Reiterating that if you look at the investor day presentation, we did give our roadmap to 27. And if you look at the fiscal 25 expectations between the two brands, we feel confident that we're on track to fall within that range. And as we have line of sight into the following year with a number of development agreements, we feel like we're heading in the right direction for 26 as well. So I'd say nothing's really changed. And beyond that,
Speaker Change: Reiterating that, if you look at the Investor Day presentation, we did give our roadmap to 27, and if you look at the fiscal 25 expectations between the two brands, we feel confident that we're on track to fall within that range.
Speaker Change: And as we have line of sight into the following year with a number of development agreements, we feel like we're heading in the right direction for 26 as well.
Darin Harris: and beyond that, just to add on to what Brian said, we're signing more development agreements every day, so we signed three new development agreements at Jack during the quarter for 28 more Del Taco restaurants. We signed one for three restaurants, but post-quarter, we've signed, you know, you know, I think four for 33 more. So we continue to add development agreements, which builds the top of the funnel, which then has our team focused on then how do we get sites in the process and then eventually get these locations open.
Speaker Change: So I'd say nothing's really changed and beyond that just add on to what Brian said is we're signing more development agreements every day So we signed three new development agreements at Jack during the quarter for 28 more restaurants
Speaker Change: Del Taco we signed one for three restaurants but post post the quarter we've signed you know you know I think four for 33 more so we continue to add development agreements which builds the top of the funnel which then
Speaker Change: has our team focused on then how do we get sites in process and then eventually get these locations open. So you know the key here is how do we continue to drive leads, sites, and into the process so we can eventually get these restaurants open.
Darin Harris: You know, the key here is how do we continue to drive leads, sites, and into the process so we can eventually get these restaurants open. Your next question comes from Nick Setyan with Redbush Securities. Please go ahead. Thank you.
Nick Setyan: Your next question comes from a line from Nick Setyan with Redbush Securities. Please go ahead.
Speaker Change: Your next question comes from a line of Nick Setyan with Redbush Securities. Please go ahead.
Nick Setyan: Thank you. You know, I think earlier in the year and even going into this year, there were some conversations around, you know, more wholesale approach to value at Jack in the Box.
Nick Setyan: potentially taking some learnings from Del Taco, etc. You know, where do you think you are now? Do you think that maybe the menu today is appropriate?
Speaker Change: Or do you think there's some, you know, more sort of holistic, permanent change coming in the near future?
Darin Harris: I think we're always trying to innovate and look for different ways to drive both sales and profitability at the restaurant level. So at both brands, we have a menu simplification test and process, and that involves everything from design to, you know, what are the right items to have on the menu, how they're placed, and how they're combined with other items.
Speaker Change: I think we're always trying to innovate and look for different ways to be you know drive both sales and profitability at the restaurant level so at both brands we have a menu simplification test and process and that involves everything from design to you know what are the right items
Darin Harris: And we're seeing we're getting really good guest feedback. We've seen, you know, at Dell in our early reads of our menu test, we're seeing both sales and margin improvement, and speed is significantly improved. So, you know, it's pointing in the right direction for us. Jack is still early in the process, but we now have it. Well, let me back up the Dell. We're also now in three markets with this mini simplification test, and if we continue to have the same results we've been having, then we'll roll it out in 2025. Because we're seeing just enough of an improvement in margin sales, all signs point to the positive.
Speaker Change: To have on the menu how they're placed how they're combined with other items and we're seeing we're getting really good guest feedback We've seen you know at Dell and our early reads of our menu tests. We're seeing both cells and margin improvement
Speaker Change: and speed is significantly improved.
Speaker Change: So, you know, it's pointing in the right direction for us. Jack is still early in the process, but we now have it.
Speaker Change: Well, let me back up the Dell. We're also now in three markets with this mini simplification test, and if we continue to have the same results we've been having, then we'll roll it out in 2025 because we're seeing just enough of an improvement in margin of sales that...
Darin Harris: And Jack in the Box, which is still too early to tell, but the early read is that the same thing is happening with Jack, and that is both sales and margin improvement by doing some of the mini simplifications that we've tested. Your final question comes from the line of Kristen Cho with Goldman Sachs. Please go ahead. Ah, yes, thank you so much. So there were a number of big.
Speaker Change: All signs point to the positive, and Jack in the Box, which is still too early to tell, but the early read is that both the same thing is happening with Jack, and that is both sales and margin improvement by doing some of the menu simplification that we've tested so far.
Kristen Cho: Your final question comes from the line of Kristen Cho with Goldman Sachs. Please go ahead.
Speaker Change: Your final question comes from the line of Kristen Cho with Goldman Sachs. Please go ahead.
Kristen Cho: Yes, thank you so much. So there were a number of big launches and new products over the last few months, as you've called out in the prepared remarks, but would you be able to share any color around the reception of these products, as well as the impact on market share in different day parts, such as late night and breakfast, as well as any color on different income cohort spending? Thank you.
Darin Harris: So we definitely saw a good movement. You know, our Smash Jack Burger platform continues to do well, mixing in over 5% of sales and is adding incremental margins. So it's really performing well. It gives us the opportunity to use it as a platform to innovate around other items. And so we intend to do that in the next year. And we'll go on the offense with our Smash Jack Burger, which is getting just rave reviews from our consumers. The Late Night Cube Mill actually sold more volume than our Snoop Mill last year because it was lower.
Speaker Change: So we definitely saw a good movement, you know, our Smash Jack burger platform continues to do well, mixes it, you know, over 5% of sales and is adding incremental margins. So it's really performing well. It gives us the opportunity to use it as a platform to innovate around into other items.
Speaker Change: And so we intend to do that in the next year. So we'll go on the offense with our Smash Jack burger that is getting just rave reviews from our consumers. The late night cube meal actually sold more volume than our Snoop meal last year because it was lower.
Darin Harris: So from a tiers standpoint, we had positive transactions at late night, you know, plus 13.6%. So some of these tools are working that we've rolled out. It's really the lower income cohort that we haven't driven enough of to offset the positive things we're doing or to balance the positive things we're doing. So the WINGS program drove material check increases of over where our check with WINGS was over $20, and we're gonna run it again in the near future because it performed so well.
Speaker Change: So, from a tiered standpoint, we had positive transactions at late night of, you know, plus 13.6%. So,
Speaker Change: Some of these tools are working that we've rolled out. It's really the lower income cohort that we haven't driven enough of to offset.
Speaker Change: You know, the positive things we're doing, or for balance, the positive things we're doing. So, the wings drove material check increases of over, you know, where our check with wings had over $20.
Speaker Change: And we're going to run it again in the near future because it performed so well. It wasn't enough to drive us to the positive territory because, again, the low-income cohort or our breakfast, but these things that we're doing are the right things to actually move momentum.
Darin Harris: It wasn't enough to drive us to positive territory because again, the low income cohort or our breakfast, but these things that we're doing are the right things to actually gain momentum. From a breakfast standpoint, we'll go permanent on our French toast sticks. And then we're also now rolling over, you know, this quarter's Q4. I think this week is the first week where we will roll over the items that we eliminated from the breakfast menu, and I think that had about a 170 basis point impact on Q3 in same store sales.
Speaker Change: From a breakfast standpoint, we'll go permanent on our French toast sticks.
Speaker Change: And then we're also now rolling over, you know, this quarter Q4, I think this week is the first week where we will roll over the items that we eliminated.
Speaker Change: from the breakfast menu and I think that had about a hundred and seventy basis point impact on Q3 on same-store sales and so going forward we will feature a breakfast item in all marketing windows.
Darin Harris: And so going forward, we will feature a breakfast item in all marketing windows, and then we'll continue to look for what is everyday value at breakfast. So those are those are the big, big rocks. But overall, we felt that the initiatives that we had were responding. It's more now about how do we continue to drive value in a way that the lower income cohort will continue to visit us more frequently.
Speaker Change: for what is everyday value at breakfast.
Speaker Change: We felt that...
Speaker Change: The initiatives that we had were resonating, it's more now about how do we continue to drive value in a way that the lower income cohort will continue to visit us more frequently.
Operator: Thank you. And Thank you. And ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Speaker Change: Thank you.
Speaker Change: Thank you. And ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.