Jack In The Box Franchise Cost (Average for 2024)
This article is based on the video featured above, originally recorded for Vetted Biz Youtube Channel
Jack in the Box is a quick-serve restaurant that serves foods like hamburgers, specialty sandwiches, french fries, tacos, salads, bowls, drinks, and sides. Among their popular menu items are their tacos, the signature “Jumbo Jack” burger, and waffle breakfast sandwich.
Jack in the Box born in San Diego in 1951, and now there are over 2,200 locations. The current CEO is Darin Harris, who also serves as an Executive Vice President and director and has been with the company since June 2020. Previously, Harris was CEO of Regus North America and CiCi’s Pizza.
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How Is Jack In The Box Positioned in the Fast Food Industry?
Jack in the Box competes in the fast-food industry against big brands like McDonald’s, Burger King, and Wendy’s, as well as other nearby Jack in the Box locations. The Fast Food industry collected $278.6 billion in revenue in the last year, and it is expected to grow by 3.2% over the next five years. Distinguishes itself with its large and distinctive menu.
How Much Is Jack In The Box Franchise?
The initial Jack in the Box franchise fee is typical $50,000. You have to pay this upfront fee when opening.
the estimated total investment necessary to begin the operation of a jack in the box franchise ranges from $1,651,500 to $2,638,600
Jack In The Box Franchise Cost
The following costs are part of the upfront costs included in the initial investment for a Jack in the Box franchise. Many of these are one-time fees that are needed to launch the franchise.
Review the chart below:
Jack in the Box Franchise Costs (2021)
| Type of Expenditure | Estimated Amount or Estimated Low-High Range | Method of Payment | When due | To Whom Made | |
|---|---|---|---|---|---|
| Low | High | ||||
| Initial Franchise Fee | 0 | 50,000 | Lump Sum | At signing of Franchise Agreementr | Us |
| Fee for trade area surveys analysis | 4,500 (plus all expenses) | 7,000 (plus all expenses) | Lump Sum | As agreed | Us |
| Land | Not included | ||||
| Fee for architect/engineering services | 49,000 | 166,000 | As agreed | As agreed | Consultants |
| Environmental assessment | 2,500 | 34,000 | As agreed | As agreed | Consultants |
| On-site improvements | 286,000 | 507,000 | As agreed | As agreed | Contractos, Vendors, Suppliers |
| Building Improvements | 611,000 | 785,000 | As agreed | As agreed | Contractos, Vendors, Suppliers |
| Furniture, fixtures and equipment | 408,000 | 469,000 | As agreed | As agreed | Suppliers |
| IT equipment and installation | 45,000 | 60,000 | As agreed | As agreed | Us or suppliers |
| Computer-related services and licensing | 1,000 | 1,000 | As agreed | Primarily | Us |
| Initial Inventory | 12,000 | 20,000 | As agreed | As incurred | Suppliers |
| Pre-opening training and inventory expenses | 50,000 | 55,000 | As agreed | As incurred | Employees |
| Pre-opening additional funds | 14,000 | 17,000 | As agreed | As incurred | Suppliers |
| Uniforms | 1,500 | 3,000 | As agreed | As incurred | Suppliers |
| Operating cash | 1,200 | 3,000 | As agreed | As incurred | Utilities |
| Business licenses and utility deposits | 500 | 3,000 | As agreed | As incurred | Utilities |
| Additional funds (3 months) | 165,300 | 458,600 | As agreed | As incurred | Employees, suppliers, utilities |
| Total estimated cost for prototypical MK9 or MK10-Style restaurant (excluding land, financing and certain other costs) | 1,651,500 | 2,638,600 | |||
| Development Fee | 60,000 | 60,000 | Lump Sum | At signing of Development Agreement | Us |
| Professional Fee | 1,000 | 5,000 | As incurred | As incurred | Third parties |
| Total Estimated Initial Investment for Two (1) Jack in the Box Restaurants (based upon high / low ranges from Table Above) | 3,303,000 | 5,277,200 | See Table Above for Each Expenditure | Table Above for Each Expenditure | See Table Above for Each Expenditure |
| Total Estimated Initial Investment for a Development Agreement | 3,364,000 | 5,342,200 | |||
Franchise Requirements
Jack in the Box doesn’t list specific requirements for potential franchisees. But they must go through the five-part approval process detailed below:
- Pre-Qualification: Preliminary interview, review of Jack in the Box Franchise Disclosure Document, preliminary review of franchisee background and credit
- Qualification: In-depth competency interview, Jack in the Box restaurant preview, a closer look at financials
- Due Diligence: Review of tax returns, real estate information, and business plan
- Approval: Panel interview with Jack in the Box leadership team, 10-week training
- Post-Approval: Final paperwork, orientation
Ongoing Fees
- Royalty: 5% of gross sales
- Royalty for Games and Devices: 40% of net revenues from games and devices
- Marketing Fee: 5% of gross sales
How Much Do Owners Make?
Historical Gross Sales 2019
| Average Gross Sales by Tier | # of Units above Average | % of Units above Average | High Gross Sales | Median Gross Sales | Low Gross Sales | Total Unit Count | |
|---|---|---|---|---|---|---|---|
| Top | 2,069,491 | 262 | 40.4% | 4,092,756 | 1,997,451 | 1,705,874 | 649 |
| Middle | 1,481,591 | 299 | 46.1% | 1,705,496 | 1,468,229 | 1,265,142 | 648 |
| Bottom | 994,333 | 358 | 55.2% | 1,264,432 | 1,026,705 | 379,071 | 648 |
| Total | 1,515,423 | 911 | 46.8% | 4,092,756 | 1,468,239 | 379,071 | 1,945 |
Historical Gross Sales 2020
| Average Gross Sales by Tier | # of Units above Average | % of Units above Average | High Gross Sales | Median Gross Sales | Low Gross Sales | Total Unit Count | |
|---|---|---|---|---|---|---|---|
| Top | 2,230,468 | 249 | 39.3% | 4,639,187 | 2,139,094 | 1,829,661 | 633 |
| Middle | 1,582,129 | 311 | 49.1% | 1,827,847 | 1,574,599 | 1,355,103 | 633 |
| Bottom | 1,047,473 | 357 | 56.5% | 1,354,590 | 1,080,760 | 352,915 | 632 |
| Total | 1,620,325 | 892 | 47.0% | 4,639,187 | 1,575,246 | 352,915 | 1898 |
Historical Average Gross and Median Sales
| 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Average Gross Sales | Median Gross Sales | # Greater than Average | % Greater than Average | Average Gross Sales | Median Gross Sales | # Greater than Average | % Greater than Average | |
| Gross Sales | 100.00% | 100.00% | 892 | 47.0% | 100.00% | 100.00% | 911 | 46.8% |
| Cost of Sales | 27.5% | 27.7% | 895 | 47.2% | 28.0% | 28.1% | 908 | 46.7% |
| Production Labor | 22.6% | 22.4% | 865 | 45.6% | 22.9% | 22.7% | 976 | 45.0% |
| Management Comp | 3.6% | 3.5% | 806 | 42.5% | 3.7% | 3.6% | 814 | 41.9% |
| Payroll Taxes/Ins | 3.6% | 3.5% | 871 | 45.9% | 3.8% | 3.8% | 866 | 44.5% |
| Total Labor | 29.8% | 29.6% | 869 | 45.8% | 30.5% | 30.3% | 883 | 45.4% |
| Gross Profit | 42.7% | 42.6% | 902 | 47.5% | 41.5% | 41.7% | 929 | 47.8% |
| Operating Costs | ||||||||
| Advertising | 4.9% | 5.0% | 889 | 46.8% | 5.1% | 5.1% | 930 | 47.8% |
| Royalty | 5.1% | 5.0% | 830 | 43.7% | 5.2% | 5.0% | 854 | 43.9% |
| Utilities | 3.2% | 3.1% | 826 | 43.5% | 3.4% | 3.3% | 851 | 43.8% |
| Other Occupancy | 11.6% | 11.7% | 912 | 48.1% | 11.6% | 11.8% | 945 | 48.6 |
| Other | 6.7% | 6.6% | 803 | 42.3% | 6.5% | 6.5% | 829 | 42.6% |
| Total Operating Costs | 31.6% | 31.5% | 863 | 45.5% | 31.7% | 31.7% | 885 | 45.5% |
| Operating Margin | 11.1% | 11.1% | 926 | 48.8% | 9.8% | 9.9% | 951 | 48.9% |
| EBITDA | 12.7% | 12.5% | 908 | 47.8% | 11.2% | 11.2% | 943 | 48.5% |
| EBITDAR | 22.2% | 22.1% | 907 | 47.8% | 20.9% | 21.0% | 943 | 48.5% |
The median gross sales for all franchises were $1,468,239 in 2019 and $1,575,246 in 2020.
In 2019, based on a midpoint investment of $2,145,050 with estimated profits of $164,443 (11.2% profit margin), it would take about 15 years to recoup your investment.
In 2020, based on a midpoint investment of $2,145,050 with estimated profits of $196,906 (12.5% profit margin), it would take about 13 years to recoup your investment.
These estimates account for the approximate 2.5 years that it typically takes for franchises in the food and beverage industry to scale up.
Is the Jack In The Box Franchise Profit Worth the Franchise Cost?
When owners sell their franchise based on the median valuation multiple for the industry of 0.34. And the average sales total from 2019 and 2020 of $1,521,743, the franchise would sell for $517,393. This is only about 24% of the midpoint investment of $2,145,050.
SPV Guarantor, LLC and Subsidiaries Income Statement:
JACK IN THE BOX CONSOLIDATED STATEMENTS OF EARNING
| September 27,2020 | July 8, 2019 to September 29, 2019 | |
|---|---|---|
| Revenues | ||
| Company Restaurant Sales | 342,850 | 78,859 |
| Franchise reveal revenues | 204,317 | 41,046 |
| Franchise royalties and other | 177,312 | 39,768 |
| Franchise contributions for advertising other services | 168,812 | 38,657 |
| Revenue from affiliates | 800 | |
| Total revenue | 894,091 | 198,330 |
| Operating costs and expenses | ||
| Food and packaging | 100,495 | 23,385 |
| Payroll and employee benefits | 104,372 | 23,990 |
| Occupancy and other | 52,961 | 12,337 |
| Franchise occupancy expenses | 124,930 | 23,237 |
| Franchise support and other costs | 1,237 | 518 |
| Franchise advertising and other services expenses | 170,277 | 38,657 |
| Managament fees | 40,688 | 12,253 |
| Selling, general and administrative expenses | 17,310 | 4,354 |
| Depreciation and amortization | 35,659 | 8,386 |
| Impairment and other charges, net | 668 | 14 |
| Total costs and expenses | 348,597 | 147,131 |
| Earning from operations | 245,494 | 51,199 |
| Interest expenes, net | 66,984 | 15,303 |
| Net earnings | 178,510 | 35,896 |
Jack in the Box SPV Guarantor, LLC and Subsidiaries provide their income statement from its inception in July 2019 to September 2019 and then from September 2019 to September 2020. When the two-month figures from 2019 are projected over a full year, net earnings increased by about 15% from about $155,789 to $178,510. A significant portion of this increase is accounted for by a 15% increase in franchise rental revenues from about $178,140 to $204,317.
How Many Units Have Opened/Closed?
System-wide Outlet Summary
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2018 | 1975 | 2100 | +125 |
| 2019 | 2100 | 2106 | +6 | |
| 2020 | 2106 | 2097 | -9 | |
| Company-Owned | 2018 | 276 | 137 | -139 |
| 2019 | 137 | 137 | 0 | |
| 2020 | 137 | 144 | +7 | |
| Total Outlets | 2018 | 2251 | 2237 | -14 |
| 2019 | 2237 | 2243 | +6 | |
| 2020 | 2243 | 2241 | -2 |
By 2020, there were ten less locations than there were in 2018. Decreasing by 0.44% from 2251 outlets to 2241 units.
Former CMO at Jack In The Box Quotes
Former Chief Marketing Officer and Senior Vice President at Jack in the Box, leaving in December 2012 after over 22 years with the company. She was the CMO of JACK when the company faced an e.coli breakout and was on the team to help turn the image of JACK around and change customers’ perspective of the brand.
I can give you this rule of thumb,that we discovered in all the work that we did at jack in the box, and that was, for every dollar that was spent, we would generate roughly a $1.9... well, i'll just round it, $2 in profit
What you have to consider is, one, obviously the effectiveness of the product, as well as the advertising. And then of course, in the restaurant business, key is the people side, and operationally executing
At jack in the box, we would generate $1.94 for every dollar spent, so almost $2 on the return of the media... we spent about.. 4% of our media spend was doing couponing. and we got a good return on coupons as well. but you have to be careful there, because of the promotional.. the phrase we would call it is 'a promotional drug', where you can't get off it
We would buy a lot of sports, because that is the target, that's the sweet spot for the age that eat obviously fast-food, but the same for fast-casual. So, that's 18 to 34 year olds, and the supersweet spot being 18 to 24 year olds. But our target was 18 to 34, and sports is the way to go. And so some of the returns that you can get on the sports TV specifically... it's a seasonal thing too, you have to consider. so, when you're buying nfl, we would get $3 on return for every dollar spent
Source: www.tegus.com.ar
Conclusion
While high revenues and moderate profit margins make Jack in the Box franchises attractive. There is a very high initial investment cost. And they sell for significantly lower than the initial investment amount. Additionally, it typically takes over ten years to recoup the initial investment. And the total number of outlets is not growing. Best explore other franchise opportunities in 2022 on our portal.
