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Jack in the Box (JACK) Expands Its Del Taco Brand Portfolio
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Jack in the Box Inc. (JACK - Free Report) announced the opening of Del Taco restaurant in Santa Rosa Beach, marking the Consolidated Taco Holdings' inaugural venture as a franchise organization.
The Santa Rosa Beach restaurant signifies Del Taco's focus on freshness with its "Fresh Flex" format. Enhancing the customer convenience, the restaurant features a dual drive-thru system, ensuring a seamless and efficient experience for visitors. Moreover, on-site lockers are provided for secure pickups by third-party delivery partners.
Shares of JACK have increased 34.8% year to date compared with the Zacks Retail - Restaurants industry’s growth of 11.8%.
Image Source: Zacks Investment Research
Del Taco to Drive Growth
On Mar 8, 2022, the company completed its previously-announced acquisition of Del Taco Restaurants for approximately $585 million. The move is in sync with its strategy of expanding the customer base. As of fiscal second-quarter 2023, Del Taco, which has 595 restaurants, served more than three million guests every week. Following the deal, the companies have about 2,782 restaurants in 25 states with similar guest profiles, menu offerings and company cultures. It is worth mentioning that 99% of Del Taco restaurants have a drive-thru, which helps the company achieve robust off-premise sales. The acquisition will enable Jack in the Box to tap the robust Mexican QSR category, where Del Taco is a major brand with a steady track record.
The company is of the opinion that the Del Taco addition will pave the path for improvement in restaurant margins, store-level profitability and strengthening of capital structure and also help mitigate macroeconomic headwinds. Jack in the Box anticipates the deal to be accretive to earnings per share (excluding transaction expenses) in mid-single-digit in a year. In the second year, the company expects meaningful accretion of earnings once full synergies are realized. With this integration, the company anticipates realizing run-rate cost synergies of nearly $15 million by 2023-end. The company emphasizes on Fresh Flex prototype as a catalyst for future system growth. It stated that the Fresh Flex restaurant in Orlando is performing well. The company awarded 13 new development agreements with new franchisees committing to 89 units across 12 states.
In second-quarter fiscal 2023, the company refranchised 17 Del Taco restaurants in Las Vegas with 10 new Del Taco restaurants to be built in Las Vegas, Wyoming and Montana. Given the unit-expansion efforts and the emphasis on Del Yeah! Rewards program, the company anticipates the initiatives to better target guests and drive average spend and frequency in the upcoming periods. For fiscal 2023, the company anticipates Del Taco Restaurant Level Margin to be 14-16%. Our model predicts Del Taco revenues to rise 63.4% year over year to $517.8 million.
Zacks Rank & Key Picks
Jack in the Box currently sports a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for PLAY’s 2023 sales and EPS indicates a rise of 17.1% and 25.5%, respectively, from the year-ago period’s levels.
Abercrombie & Fitch Co. (ANF - Free Report) carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 480.6%, on average. Shares of ANF have increased 58.9% in the past year.
The Zacks Consensus Estimate for ANF’s 2023 sales and EPS indicates a rise of 3.4% and 732%, respectively, from the year-ago period’s levels.
Chipotle Mexican Grill, Inc. (CMG - Free Report) carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 4.7%, on average. Shares of CMG have increased 48.5% in the past year.
The Zacks Consensus Estimate for CMG’s 2023 sales and EPS indicates a rise of 14.1% and 33.8%, respectively, from the year-ago period’s levels.
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Jack in the Box (JACK) Expands Its Del Taco Brand Portfolio
Jack in the Box Inc. (JACK - Free Report) announced the opening of Del Taco restaurant in Santa Rosa Beach, marking the Consolidated Taco Holdings' inaugural venture as a franchise organization.
The Santa Rosa Beach restaurant signifies Del Taco's focus on freshness with its "Fresh Flex" format. Enhancing the customer convenience, the restaurant features a dual drive-thru system, ensuring a seamless and efficient experience for visitors. Moreover, on-site lockers are provided for secure pickups by third-party delivery partners.
Shares of JACK have increased 34.8% year to date compared with the Zacks Retail - Restaurants industry’s growth of 11.8%.
Image Source: Zacks Investment Research
Del Taco to Drive Growth
On Mar 8, 2022, the company completed its previously-announced acquisition of Del Taco Restaurants for approximately $585 million. The move is in sync with its strategy of expanding the customer base. As of fiscal second-quarter 2023, Del Taco, which has 595 restaurants, served more than three million guests every week. Following the deal, the companies have about 2,782 restaurants in 25 states with similar guest profiles, menu offerings and company cultures. It is worth mentioning that 99% of Del Taco restaurants have a drive-thru, which helps the company achieve robust off-premise sales. The acquisition will enable Jack in the Box to tap the robust Mexican QSR category, where Del Taco is a major brand with a steady track record.
The company is of the opinion that the Del Taco addition will pave the path for improvement in restaurant margins, store-level profitability and strengthening of capital structure and also help mitigate macroeconomic headwinds. Jack in the Box anticipates the deal to be accretive to earnings per share (excluding transaction expenses) in mid-single-digit in a year. In the second year, the company expects meaningful accretion of earnings once full synergies are realized. With this integration, the company anticipates realizing run-rate cost synergies of nearly $15 million by 2023-end. The company emphasizes on Fresh Flex prototype as a catalyst for future system growth. It stated that the Fresh Flex restaurant in Orlando is performing well. The company awarded 13 new development agreements with new franchisees committing to 89 units across 12 states.
In second-quarter fiscal 2023, the company refranchised 17 Del Taco restaurants in Las Vegas with 10 new Del Taco restaurants to be built in Las Vegas, Wyoming and Montana. Given the unit-expansion efforts and the emphasis on Del Yeah! Rewards program, the company anticipates the initiatives to better target guests and drive average spend and frequency in the upcoming periods. For fiscal 2023, the company anticipates Del Taco Restaurant Level Margin to be 14-16%. Our model predicts Del Taco revenues to rise 63.4% year over year to $517.8 million.
Zacks Rank & Key Picks
Jack in the Box currently sports a Zacks Rank #3 (Hold).
Some better ranked stocks from the Zacks Retail and Wholesale sector are:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) carries a Zacks Rank #1. PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of PLAY have gained 19% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PLAY’s 2023 sales and EPS indicates a rise of 17.1% and 25.5%, respectively, from the year-ago period’s levels.
Abercrombie & Fitch Co. (ANF - Free Report) carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 480.6%, on average. Shares of ANF have increased 58.9% in the past year.
The Zacks Consensus Estimate for ANF’s 2023 sales and EPS indicates a rise of 3.4% and 732%, respectively, from the year-ago period’s levels.
Chipotle Mexican Grill, Inc. (CMG - Free Report) carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 4.7%, on average. Shares of CMG have increased 48.5% in the past year.
The Zacks Consensus Estimate for CMG’s 2023 sales and EPS indicates a rise of 14.1% and 33.8%, respectively, from the year-ago period’s levels.