Jack In The Box Inc.

Thank you for standing by, and welcome to the Jack first quarter 2024 earnings webcast call. I would now like to welcome Chris Brandon, Vice President of Investor Relations, to begin the call. Chris, over to you.

Thanks, operator, and good afternoon, everyone. We appreciate you joining today's conference call, highlighting results from our first quarter of 2024. With me today, our Chief Executive Officer, Darren Harris, and our Chief Financial Officer, Brian Scott. Following their prepared remarks, we will be happy to take questions from our covering sell-side analysts. Note that during both our discussion and Q&A, we may refer to non-GAAP items. Please refer to the non-GAAP reconciliations provided in the earnings release, which is available on our Investor Relations website at jackinthebox.com. We will also be making forward-looking statements based on current information and judgments that reflect management's outlook for the future. However, actual results may differ materially from these expectations because of business risks. We therefore consider the safe harbor statement in the earnings release and the cautionary statements in our most recent 10-K to be part of our discussion. Material risk factors as well as information relating to company operations are detailed in our most recent 10-K, 10-Q, and other public documents filed with the SEC and are available on our Investor Relations website. And with that, I'd like to turn the call over to our Chief Executive Officer, Darren Harris.

Thank you, Chris. Last month, we hosted our first in-person Investor Day in several years here at our Restaurant Support Center in San Diego. And we appreciate everyone who was able to join us in person or tune in. During the investor day, we introduced how we intend to take the next step in our strategy and break out of the box. We communicated our bold ambition, starting with expanding our reach to achieve 2.5% net new restaurant growth based upon the tremendous white space we have in new and existing markets. We want to increase AUVs at our two challenger brands by exceeding $2.5 million in sales at Jack and $2 million for Del Taco. Our AUV goals will be supported by achieving 20% digital sales. And lastly, if we can generate 15% four-wall franchise EBITDA with a sub-five-year new restaurant payback, our top-tier restaurant economics will further support our growth strategy. We have entered the next phase of our transformation, and to achieve our ambition, there are three key drivers that will be the focus of our strategy. driving top tier AUVs, improving restaurant level economics, and strengthen development capabilities. I'd like to mention a few highlights from the first quarter that support achieving our ambition. Our AUV performance for both brands is driven by steady same store sales for Jack in the Box and Del Taco. We generated system-wide sales of over $1.3 billion for Jack and nearly $300 million for Del Taco. 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. With that said, sales accelerated sequentially on a two-, three-, and four-year stacked basis, helped by the performance of our burgers, including our ultimate cheeseburger platform, with support from our three-week soft launch of Smash Jack. Our sides, including our Jack wraps and famous tacos, And lastly, our Munchy Meal platform, particularly at late night. Meal Taco sales performance was bolstered by our Beer Year 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. Breakfast continues to be an opportunity we are addressing. starting with bringing back some deleted items that, while good for margins and speed, were too strong of a headwind to sales. I'm confident we can improve our breakfast share helped by three tactics. First, making breakfast a regular, recurring part of the marketing calendar. Innovating around new breakfast items while continuing to roll out fan-favorite LTOs such as French toast sticks or mini cinnies. and testing new breakfast offers, especially through digital channels to target and re-engage the valued guest. Now switching to restaurant level economics, Jack restaurant level margin continue 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. We will continue our focus on these financial fundamental initiatives to strengthen restaurant-level EBITDA and gain further franchisee adoption. At Del Taco, our new leadership team of Tom Rose and Sarah McEloon are very focused on both sales and restaurant profitability initiatives, some of which can be realized as soon as this year. We will continue to provide updates on the execution and results as we progress throughout the year. And lastly, our strength and 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. We announced two new franchise agreements. The first one will add an additional 10 restaurants to our Florida expansion, and the second is another new franchisee that will bring Jack to Michigan by signing on to build five restaurants. Our new restaurant pipeline continues to grow as we now have 91 signed development agreements for 399 future restaurants. We currently have 81 restaurants that are in the construction or permitting phases. 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. At Dell, we had flat net unit growth, including three restaurant openings in the first quarter. We currently have 155 development agreements at quarter end and 49 sites that are in the construction or permitting phases. Quarter two will see the system-wide launch of Smash Jack, our most exciting burger innovation in nearly a decade. And I may be biased, but it is the best burger I have tasted in QSR. And guests who got their hands on one during the soft launch agreed, as we sold over 70,000 on our very first day with no media support. 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. I'd like to briefly touch on value, a key topic within the industry at the moment. We continue to work with our franchisees and utilize guest insights on the best approach to make value a competitive advantage for both brands. We are 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. In today's competitive environment, we are looking to provide even more everyday value So look for an improved Jack's deal menu providing a variety of value for the budget conscious guest. In the meantime, we will continue to utilize our digital channel to provide targeted offers to our most loyal guests and app users. And we continue to attract new users via aggressive offers such as our famous two tacos for 99 cents. 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. We will utilize the hook and build strategy and lead with value while growing average check in a healthy way via upsell. I'm also excited about our learnings thus far from our current menu redesign initiative at Dell. And once fully rolled out, we expect this to drive both sales and margin improvement. To close, I'd like to thank our franchisees and team members for helping us get off to a good start in 2024. and for their continued passion toward providing remarkable guest experiences. I will now turn the call over to Brian.