iStock.com/Eric Broder Van Dyke
July 8, 2024
Is Jack in the Box Poised To Overtake Its Fast-Food Competitors?
Jack in the Box is making a noteworthy comeback in Chicago after a four-decade absence and plans to open eight new locations by 2025. This marks the beginning of an ambitious expansion strategy after the company has “identified more than 125 potential trade area opportunities for future corporate and franchise development” across the Chicagoland area, according to the official Jack in the Box website.
“This strategic expansion into Chicago allows us to not only satisfy long-standing customer demand for our brand, but also to become a key member in the region’s thriving restaurant scene. We’re excited to bring our unique menu where customers can order any item at any time — day or night and we’re confident Jack in the Box will quickly become a favorite local destination.”
Darin Harris, CEO of Jack in the Box, via Jack in the Box corporate news
The move is part of a broader initiative to reintroduce the brand’s 24/7 menu offerings to Chicago residents, featuring a variety of popular items such as burgers, tacos, chicken sandwiches, milkshakes, and breakfast options. The expansion will include various formats like freestanding restaurants, drive-thrus, and dark kitchens, highlighting the brand’s commitment to catering to diverse customer preferences.
It is difficult to source all the details as to why Jack in the Box left the Chicagoland market and didn’t decide to return until now. Back in 2014, the company shared how, in the 1970s, Chicago had 20 Jack in the Box locations in the city, but it closed these restaurants in 1980 to focus on the Southwestern U.S., according to the spokesman at the time, Brian Luscomb. He also mentioned that the brand would have no problem reopening in the area if any franchisors were interested in doing so.
Jack in the Box opened its first store in 1951, according to its official website, and the company is based out of San Diego, California. The brand expanded by acquiring Del Taco, the Mexican American fast-food retailer, in 2022 for $585 million.
According to Statista, last year in 2023, Jack in the Box sales totaled $846.2 million and have been on a steady rise. The brand’s peak sales were $1.18 billion in 2011, and they declined into a plateau of between $700 million and $900 million for the next six years. Sales further dipped considerably during the pandemic, reaching new lows in the $300 million range, until they doubled in 2022 and have since risen steadily.
In 2019, Jack in the Box faced a major regime change when CEO Lenny Comma resigned amid financial instability and pressure from franchisees. Despite corporate expense cuts, many restaurants reported losses in 2018, with 300 locations averaging annual losses of $36,000. After this difficult period, the company initiated a two-year development plan and, by late 2022, signed 72 new multi-unit franchisees to open 303 new restaurants, including its first in Arkansas and a return to Florida after a three-decade absence.
Jack in the Box plans to increase its unit count by 2.5% annually, aiming to open 90 to 120 new locations per year, alongside its sister chain Del Taco, by 2027. Executives believe the chain could more than double its current 5,750 locations, with Del Taco potentially reaching 2,600 locations.
Ryan Ostrom, Jack in the Box’s chief marketing officer, attributes this growth to heightened brand awareness driven by social media and marketing efforts, which is helping the fast-food company expand into new markets. “We have 80% brand awareness,” Ostrom told analysts in January at the company’s “Investor Day” presentation. “The excitement we’re seeing across the United States about our brand, the demand in the U.S., and now socially, is something I’ve never seen.”
Jack in the Box CEO Darin Harris, who took over in 2020 after franchisee unrest, added, “I’m not sure I’m knowledgeable of any other restaurant chains that have such scale and proof of concept that still has such tremendous white space across the United States for growth.”
In 2023, Jack in the Box debuted its “Crave” store model that features two drive-thru lanes along with digital menus, express pickups, and smaller dining rooms. This location template has allowed them to scale, adding locations through a steady real estate pipeline that the new CEO claimed the brand had been missing before his arrival.
Discussion Questions
How might Jack in the Box’s decision to re-enter the Chicago market after four decades influence the competitive landscape of the region’s quick-service restaurant industry?
What strategic advantages could this timing offer the brand compared to its previous exit?
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The original withdrawal from some markets, like Chicago, was largely down to Jack In The Box being too similar to McDonald’s. It simply could not compete on that ground and so its restaurants performed badly. The menu today is very different and has a fairly rounded selection that makes it a bit of a hybrid of other fast-food chains. There is also a nice value menu with items under $4. While this is something of a strength, the brand affinity is nowhere near as strong as other fast food chains so Jack In The Box will need to work hard to win over Midwestern customers.
It seems that Jack in the Box is always making some sort of change, whether it is a change in technology, advertising, or the introduction of new menu items. Sometimes, they get it right before they get it wrong, and sometimes, right again.
Jack in the Box is the only chain where fast-food customers can get tacos, egg rolls, and churros in addition to burgers, fries, and shakes.
Jack in the Box’s willingness to innovate, streamline practices, change business concepts, and return to old ones has led to success, but also to major missteps, disasters. However, they always bounce back.
In the 1960s, Jack in the Box ranked near the top, while in the 1970s, it ranked near the bottom. After a horse meat scandal, the brand name was changed to Monterey Jacks, and when that was not successful, the clown was reincarnated as an eccentric executive who enjoyed getting high, and the brand name was brought back.
An outbreak of food poisoning in the 1990s left the company in shambles. Nevertheless, they were able to recover again through advertising, and in the late 1990’s, they launched an upscale grill brand known as JBX Grills – – which failed to succeed as well.
The Munchie Meal was a huge success and remains on the permanent menu of Jack in the Box restaurants nationwide. There is a fierce competition between them and Taco Bell for that special market! – Db
You schooled me well on this one. I don’t eat fast food (except for the VERY rare Taco Bell, but I understand why Jack should exist now. Do I think they’re going to realize their growth plans? Nope. They need healthy options.
I wouldn’t get too excited: JIB has been on the edge of “almost being what it once was” for as long as I can remember. There is nothing here to excite, just the usual ambition snd plans.
Jack In The Box has done well in the Southwest and now eyes the Chicago market as having high growth potential. To ask if the brand will overtake its competitors seems a bit of a stretch, though it will benefit, at least initially, from being the new kid on the block and fresh choice to incumbent brands.
The company has laid out plans for steady, measured growth and should reasonably be able to achieve it through the expanded franchisee agreements. It does enjoy the advantage of a menu attractive to varied tastes, as well as compelling, value-based pricing.
As with every operator in this space, consistently delivering a positive customer experience is a key component of ongoing success – and they’ll need to navigate underlying staffing, training and retention challenges just like every competitor.
Full disclosure: I am biased here. My very first job was at a Jack in the Box in Lafayette, California. I was 16 and did everything, from cashier to cook to cleaning to putting on a Jack in the Box clown costume on in order to “entice” passers by to stop for a Jumbo Jack. I learned some things about finance and business that I still remember (that coke that you just paid $0.35 for? It cost $0.02 to make) and selling (always ask if the customer wants “Cheese on that jumbo” and/or fries with the sandwich). And do not even start with the TACOS….the absolute best item on ANY fast food menu EVER. Several years ago the WSJ even wrote a feature about these desirable creations!
So, with that preamble, Jack in the Box will rock Chicagoland. The only externality that may prevent this from happening is the high crime rates there. Outside of that, I hope that by the time I go back for a Cubs game they have concession availability in Wrigley Field.
Jack in the Box is one of those brands that has been around for decades but hasn’t enjoyed the expansion of its large competitors (McDonald’s, Wendy’s, Burger King, Taco Bell, etc.). I’m not sure why. Good concept, good food, strong variety/selection, fun commercials, and more. Often, the quick-serve restaurants are as much a real estate play as a restaurant play. Going back to Chicago may be because of location opportunities as much as anything.
“…become a key member in the region’s thriving restaurant scene.” Since when are QSRs part of the “restaurant scene” let alone the thriving restaurant scene?
I didn’t even know that JIB still existed. In any case, their menu looks like fun. I hope it delivers for them. It will be a struggle. The QSR market is saturated, and participants are competing aggressively.
I don’t see the re-entry into the Chicago market as a game changer for Jack In The Box. They can go one of two ways–nostalgia by bringing back the clown, aka, Jack and going retro or totally modernizing and adding some healthy fast food options. The burger, chicken, mexican fast food space is full and even with value meals and some new additions, JIB needs to be better differentiated.
Jack in the Box’s all-day menu is a smart strategy that provides options that should appeal to most customers. Their commercials have been entertaining and memorable over the years and they have a fun brand image. It is also smart to have a variety of store models to appeal to local customer demand and preferences. While Jack in the Box is doing a lot of great things, I don’t think they are “poised to take over its fast food competitors.” The fast food market is extremely competitive with many saturated markets and changing customer loyalty is a tough challenge. They can surely make a dent, but it won’t be a “takeover.”
Good luck, Jack in the Box, but your absence from Chicagoland for 45 years suggests that the demand is not there. Eight stores won’t make a dent, and “125 trade area opportunities” won’t translate into 125 new sites. (And thanks to David Biernbaum for reminding all of us about horsemeat and food poisoning!)
Since 1980, the fast food market in Chicago and everywhere else has changed dramatically. Wendy’s was just getting rolling, and regional competitors like Culver’s and White Castle have a foothold in the area. The market is full of non-burger fast-casual options from Chicago-style hot dog stands to pizza and various ethnic choices. Frankly, a brand like In-N-Out Burger, with its cult-like name recognition, would have a better shot.
The Quick Service Restaurant market is crowded and competitive. Its great to see them adjust to a new market and capitalize on the nostalgic factor, but in a quickly changing environment they will need to learn to adapt quicker than they have in the past.
Jack in the Box still needs to better develop their keys to success before they can profitably grow in both new and existing markets. These include better quality products, higher value offerings, and focusing on a simplified menu of just best sellers (which will increase customer satisfaction since they will be able to respond to orders faster). Jack in the Box needs to stop looking for the next, best, thing, and instead focus on being great at a few things. Less is more should be their motto (like In N’ Out), while offering great quality burgers (5 guys) and fries, and some minor diversity (Smash Burger). Short, simple and sweet will win their path to success.