If you compete with Jack in the Box, circle the end of January 2016 on the calendar because the chain says it will be coming big and strong with new and improved menu items. Jack added a permanent “better burgers” line—the Buttery Jack burgers—at the beginning of 2015, and included several more upscaled LTOs such as the Jack’s Blazin’ Chicken, Black Pepper Cheeseburger and Jalapeňo Breakfast Burrito.
But you ain’t seen nothing yet, Chairman-CEO Len Comma told analysts today that in its Q2 (beginning at the end of January), Jack in the Box will launch a wave of improved core-menu items equal in scope to all the menu improvements done piecemeal through the first half of 2015. This year, Jack bought local ad time during the Super Bowl and it is expected to do the same during Super Bowl 50 on Feb. 7, 2016.
One of those new menu items could be the Crispy Onion Buttery Jack burger that GrubGrade recently noted is in test. The chain also has tested a Double Jack burger this year. Breakfast and late-night menu additions also will likely be in the wave.
Jack in the Box customers have shown they will pay more for better food, Comma said. That’s good because the chain needs menu trade-ups to bolster same-store sales. For Q4, company-owned stores posted a 4.1% gain in comp sales (franchise stores were up 6.9%), of which 2.6% came from a mix shift to higher-price items and 2.4% came from pricing, offsetting a decline of 0.9% in transactions. Comma said that traffic drop was due to a move away from heavy discounting during the quarter.
Jack will be “cautious” in taking more price in 2016, but “improvements in our food will give us pricing power,” Comma said. He said the chain watches the Consumer Price Index to ensure “we don’t move faster than the pace supermarkets are moving.” However the most recent CPI shows that for the 12-month period ended October, food-at-home prices are up just 0.7%, while food-away-from-home inflation is four times greater at 2.9%. He conceded that the chain also looks at “what the market can bear” on pricing.
Comma was refreshingly honest enough to concede that when a system the size of McDonald’s goes to all-day breakfast “it has an impact on the whole industry.” He said Jack’s counter-tactic has been to focus on burgers (recently adding a Cheddar Onion LTO version of the Buttery Jack burger) and added that its franchisees haven’t shown any “big level of concern” about McDonald’s breakfast program.