Issues at This Beloved Burger Chain Are Slowing Down Its Sales

·2 min read

Two major operational issues of our day are hurting sales at Jack in the Box.

Jack in the Box is one of America's largest fast-food chains, with more than 2,200 locations and annual systemwide sales of nearly $3.7 billion. But in recent months, the company has seen its sales negatively affected by two major issues being felt across the restaurant industry at large: labor shortages and supply chain hurdles.

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According to Restaurant Business, the chain's lack of workers, especially during late-night shifts, led to an overall reduction in sales of about 3% in recent months, while supply chain issues reduced sales by another 1%. It's worth noting that sales were up by 0.6% at franchised stores, which constitute the bulk of the chain's footprint, but the figures were dragged down to 0.1% growth based on a 4.4% decline in sales at company-operated locations.

The systemwide same-store sales growth of 0.1% during this fiscal period was so much 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 by 12.5%.

So, what's causing the trouble at the popular burger chain? First, Jack in the Box has been hit with the severe labor shortages seen across the foodservice industry and beyond. A lack of workers has led to shorter operating hours at myriad companies nationwide, according to Fortune, and at several fast-food giants like McDonald's and Popeyes. Fewer hands on deck mean fewer hours of operation and lower efficiency while open, which is a recipe for a sales decline.

Jack in the Box is also suffering from supply chain issues, a problem that was magnified by a staff walkout at one of its food distribution centers supplying a network of restaurants.

To bolster its flagging numbers, Jack in the Box is looking to 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 Restaurant Business.

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