Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| And while transactions were down, we are seeing continued success from our hook and build platforms and certainly saw a nice lift in sales and transactions during the Smashed Jack soft launch period |
| We've been able to improve some of the inflationary impacts that we had in 2022 through these initiatives that we've had called financial fundamentals where we were looking for 200 to 300 basis points of improvement |
| And we believe that it can help us throughout the year really outperform what we anticipate with some of the headwinds that we're facing right now |
| So we feel really good about what Smashed Jack can do to our business |
| And our Munchie Meals were a very solid contributor to Q1 |
| We're seeing transactions positive year-over-year for the sixth straight quarter at late night |
| We also know that when we market to the consumer for breakfast that we see it benefit our business |
| With that said, sales accelerated sequentially on a two, three, and four-year stack basis helped by the performance of our burgers, including our ultimate cheeseburger platform, with support from our three-week soft launch of Smashed Jack, our sides, including our Jack wraps and famous tacos, and lastly, our Munchie Meal platform, particularly at late night |
| Del Taco's sales performance was bolstered by our Birria promotion, a new product we introduced during the quarter |
| Both brands continued to accelerate digital sales, having now achieved 12% of total revenue with year-over-year growth in all channels and particularly strong growth in first-party web and app ordering |
| We've seen both sales and margin improvement in our early tests |
| I am confident we can improve our breakfast share helped by three tactics |
| Jack restaurant-level margin continued to accelerate and serve as a highlight for our business |
| Coming off a year of 4.5% improvement in 2023, our 23.1% margin in Q1 is a 3.3% increase year-over-year and demonstrates that our margin initiatives are working |
| And then Del on its own with the things we're doing at Del, we feel really good about what's happening with our menu redesign |
| And lastly, our strength in development capabilities enabled a solid start to 2024, highlighted by seven restaurant openings and one closure in Q1 at Jack in the Box |
| We expanded further into Salt Lake City, now at four restaurants, and Louisville now at two restaurants, and both markets continue to perform very well |
| And it had -- a revised Jack deals menu that we think can have some strong performance |
| I'm also pleased to report we will open our first Jack in the Box restaurant in Mexico next week, our latest new market, and one that we are very excited about given high demand for the brand |
| And the last point is we've tested a value menu that we feel really good about that we will roll out throughout this year |
| The full launch, including a bold television campaign featuring real Jack guests, begins this quarter, and we're excited about the potential for this product and building on the positive response we've already received |
| But again, we have Smashed rolling out here soon, and some of the other actions we're taking to attract value guests, we feel good that we're going to be able to move that in a positive direction here in the ensuing weeks |
| We're seeing solid results from our variety of value offers, such as our $3 Jack Wrap, $5 Jack Pack, our $10 Fan Box, and our $12 Munchie Meals |
| We knew this going into the year that we had tough comps that we were lapping over in Q1 and Q2, and that we had a good marketing plan for the back half of the year with Smashed Jack and some of the other things we have coming |
| At Del Taco, our brand insights have demonstrated that we win on value versus the competition and have an opportunity to go beyond just low price points and offer more food for the money |
| Annual same-store sales growth of 2% to 3%; ramping Jack restaurant-level margin to 23% to 25%; and Del Taco to 18% to 20%; improving operating leverage to drive G&A as a percentage of systemwide sales down to 2.2% to 2.3%; reaching 20% digital sales, and achieving 2% to 2.5% company-wide net unit growth |
| I'm also excited about our learnings thus far from our current menu redesign initiative at Del |
| And once fully rolled out, we expect this to drive both sales and margin improvement |
| Jack restaurant level margin expanded year-over-year by 330 basis points to 23.1%, driven primarily by commodity deflation, strong sales leverage, and operational improvements |
| The late-night daypart once again stood out and was the strongest contributor to overall sales |
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| Our comps at Jack in the Box overcame some meaningful pressure during the last four weeks of the quarter as a result of weather during January |
| I'll just add, as we came out of the first quarter here, February has still been down a little more than we expected |
| As you mentioned, I think the industry as a whole has seen some softness at the start of the year |
| Darin Harris I think we're seeing the same thing that most of our competition is, is that as you -- the consumer that's $75,000 and under, particularly the $45,000 and under, you're definitely seeing some challenges with attach rates |
| We knew that the comps in the first half of the year were going to be tougher |
| And just to clarify on the softer comps in February's weather piece of that, I know being here in California, it's been pretty wet January and February |
| Consolidated adjusted EBITDA was $101.8 million, down from $108.6 million in the prior year, due primarily to the previously noted prior year Hawaii franchise transaction gain and impacts from the Del Taco refranchising |
| We've experienced the weather, as you mentioned, that probably impacted us somewhere between a half a point in sales for the quarter |
| So we're still trending a little bit slightly below in the negative year-over-year right now |
| Food and packaging as a percentage of sales decreased 120 basis points to 27%, which was primarily due to menu price increases and commodity deflation of 0.5% |
| Drive top AUVs, help improve that with innovation in digital, make sure our economic model is always being challenged and looked at on how do we improve it |
| I guess on Jack in the Box, could you talk about the dayparts like the breakfast daypart is there softness there and that's why you have to sort of reinvest a little bit more, it's just more competitive |
| Commodity deflation was 2.9% for the quarter |
| However, actual results may differ materially from these expectations because of business risks |
| We also know that we will bring back some items that we took off the menu that we thought were beneficial to margin and speed, but we found it was too much of a headwind to sale |
| We do think it's been a part of the story with the storms that have continued to persist here and different weather patterns in some other markets as well |
| The decrease was expected and driven mainly by lapping the $7.3 million fee paid by a franchisee related to their sale of the Hawaii market, along with a prior year $1.5 million bad debt reversal |
| The company needs to catch up from a pricing standpoint |
| But are you seeing any competition? You guys clearly have outpaced, obviously, other dayparts here for quite some time in your late night business |
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