Two major operational issues of our time are hampering sales of Jack in the Box.
Jack in the Box is one of the largest fast food chains in the United States, with more than 2,200 locations and system-wide annual sales of nearly $ 3.7 billion. But in recent months, the company has seen its sales negatively impacted by two major issues felt across the restaurant industry: labor shortages and supply chain obstacles.
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According to Catering company, the chain’s lack of manpower, especially during night shifts, has resulted in an overall reduction in sales of around 3% in recent months, while supply chain issues have reduced sales another 1%. It should be noted that sales grew 0.6% at franchise stores, which make up the bulk of the chain’s footprint, but the numbers were reduced to 0.1% growth based on a 4.4% drop in sales at company-operated locations.
System-wide comparable store sales growth of 0.1% during this fiscal period has been so slower than in previous quarters that it is hardly a success. For reference, the company had its best quarter in nearly 30 years at the end of 2020, with same-store sales up 12.5%.
So what’s causing the problem at the popular burger chain? First, Jack in the Box has been hit by the severe labor shortages seen in the restaurant industry and beyond. The lack of workers has resulted in reduced hours of operation at a myriad of businesses nationwide, according to Fortune, and at several fast food giants like McDonald’s and Popeyes. Fewer hands on the deck mean fewer operating hours and lower efficiency when opened, which is a recipe for lower sales.
Jack in the Box also suffers from supply chain issues, an issue that was magnified by a staff walkout at one of its food distribution centers supplying a network of restaurants.
To bolster its declining numbers, Jack in the Box is considering price increases. Customers can expect to see what company executives are calling a “mid-to-high single-digit” increase in menu prices in 2022, according to Catering company.
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