Jack in the Box(JACK)2024-11-21 01:46Financial Data and Key Metrics Changes - In Q4 2024, Jack in the Box reported a system same-store sales decline of 2.1%, with franchise comps down 2% and company-owned comps down 2.2%, despite a 4.8% increase in price [33][36] - Consolidated adjusted EBITDA decreased to 68.4 million year-over-year, primarily due to Del Taco refranchising impacts and decreased sales [41] - GAAP diluted earnings per share increased to 1.08 in the prior year [42] Business Line Data and Key Metrics Changes - Jack in the Box opened 16 restaurants in Q4, totaling 30 openings for the year, the highest in over a decade, with 25 closures resulting in positive net restaurant growth [34][20] - Del Taco experienced a system same-store sales decline of 3.9%, with company-owned comps down 3% and franchise comps down 4.2%, despite an 8.2% price increase [37] - Del Taco's restaurant level margin decreased to 9.3% from 14.8% in the prior year, driven by transaction declines and inflationary increases in wages [38] Market Data and Key Metrics Changes - Jack in the Box's digital sales reached over 14%, with first-party sales up 83% year-over-year in Q4 [14][33] - The company reported strong performance in new markets, with Salt Lake City restaurants averaging over 90,000 in weekly AUVs [20] - Franchise level margin for Jack in the Box was 71.1 million or 39.9% a year ago [36] Company Strategy and Development Direction - The company is focused on a transformation strategy to enhance digital capabilities, with a goal of becoming a 20% digital business by 2027 [11] - Jack in the Box plans to continue expanding its restaurant footprint, with 101 development agreements for 464 restaurant commitments, including new markets like Chicago and Florida [18][19] - The company is committed to a multi-year reimage program, investing 0.44 per share, to be paid on December 30, and repurchased approximately 300,000 shares for 115.5 million, focusing on technology and digital initiatives [44] Q&A Session Summary Question: What is driving the acceleration in quarter-to-date sales? - Management noted that alignment of innovation and value has led to a meaningful improvement in same-store sales growth, with digital initiatives playing a significant role [58] Question: What is the outlook for Del Taco's restaurant level margin? - Management indicated that improvements in financial fundamentals are underway, but challenges remain due to AB1228 and inflation, impacting labor costs [62] Question: How has California's demand backdrop affected performance? - Management stated that California has performed relatively well, with franchisee performance holding steady despite broader industry challenges [68][71] Question: What is the current health of the bottom quintile of stores? - Management reported that closures were accelerated to maintain system health, with franchisee financials remaining flat year-over-year [76] Question: Can you break down the capital expenditures for next year? - Management outlined that capital expenditures will focus on new restaurant openings, digital investments, and maintenance, with a significant portion allocated to technology upgrades [80][83] Question: How is franchisee profitability characterized today? - Management indicated that franchisees are currently running flat year-over-year on profitability, with top-line growth being crucial for margin recovery [105]