Jack in the Box Inc. (JACK) Earnings Call Transcript & Summary

I'm Chris Brandon, Vice President of Investor Relations. Good morning to everyone, and welcome to San Diego, California. And good afternoon to those of you out in webcast land, where that applies. For those of you here, welcome to our Restaurant Support Center headquarters. We are thrilled to have you join us for our first in-person Investor Day in many years. Great to have you here. A few quick housekeeping items, otherwise known as the Standard IR legal statement. Today's presentation features forward-looking statements that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from our forecast. Certain non-GAAP financial measures are used in today's materials as well. For more information, please refer to the risk factors discussed in our filings with the SEC. Finally, I'd like to give you a brief rundown of today's agenda. As you can see, you will see, you'll hear from several members of our talented management team, a mix of some familiar faces and some new faces. We hope that our in-person attendees skipped breakfasts since we will be taking a brunch break midway through the event, where you will have the opportunity to try our Smash Jack and some other Jack and Del deliciousness. As you know, our menu is all day every day. So burgers and Tacos at 10:30 in the morning for us is normal and a beautiful thing. Presentations will be followed by a Q&A session. And we anticipate today's event to wrap up by noon Pacific Time. Now with that, I have the honor of introducing you to the man of the hour, the brilliant visionary leader that you all came here to see today. And that man is Mr. Jack Box.

Good morning, hopefully, it gives you a little Jack humor. But I just want to say thank you for all that are attending. Thank you to all those who are on the webcast, to take time out of your busy schedule. We're excited about the opportunity to share with you today. So let me just jump right in. And starting with our goals today, we want to give you an opportunity to meet and learn from our executive leadership team. We want to share our ambition in the journey that we're going to take to achieve our objectives and then also communicate our long-term guidance. So that's our goals for today. Now I believe we have a tremendous opportunity to grow these 2 challenger brands. Where combined, we're over 130 years of experience. We have over $6 billion in sales. We have 2 exceptional business models and concepts. As challengers, we're always looking for ways to be nimble or defy the status quo to achieve our objectives and drive performance. And what I believe is unique about Jack in the Box and Del Taco, is we have a real growth opportunity within burger QSR and Mexican QSR. So why do I think that? As the fifth largest burger chain and the second-largest Mexican QSR, I'm not sure I'm knowledgeable of any other restaurant chains that have such scale and proof of concept that still has such tremendous white space across the United States for growth. Now this takes times -- takes time. In the last 3 years, we've been preparing for this growth. The significant number of development agreements we signed over the last 2 years are just one point that -- and one data point that suggests that growth is within our site. So despite some of the challenging macro factors, COVID, supply chain disruption, 40-year high inflation rates, probably more than what I've experienced in the last few years of challenges than I have in my entire career. Since 2020, we have grown earnings by 20%. Beyond earnings, we have returned over $600 million to our shareholders through share repurchases and dividends which have been bolstered by proceeds from our Del Taco refranchising. Jack in the Box and Del Taco have been steady performers for many years. The last 3 years have been no exception, including comp performance of 5% at Jack and 3% at Del Taco on a combined annual growth rate basis. The acquisition of Del Taco has created exciting growth opportunities for franchisees. Our franchisees have solid scale. At Jack in the Box, the average franchisee has over $4 million in EBITDA, and the Del acquisition gives them an opportunity for additional growth. We've also seen Del franchisees sign agreements to become Jack franchisees and develop restaurants at both brands. When we conducted due diligence, we knew the QSR Mexican category and Del itself was the most requested brand by our Jack franchisees to expand with. And they couldn't expand in Mexican due to restrictions that we had within our franchise agreement. That is until now. So rather than Jack franchisees use their capital to develop other brands, because many of them are well developed markets like California or Arizona, had limited growth opportunity. There's still opportunity, but it was limited on how fast or how many restaurants can be built in a 5-year period. So rather than take that capital to other brands, we saw Del Taco's tremendous growth opportunity for our existing franchisees. And we're seeing them, welcome it and -- welcome it with open arms and become franchisees through refranchising transactions. I believe our franchisees share in our ambition and their partners and strategy. This is a very important point in our story. Having a relationship with our franchisees where we are partners in strategy, we have the ability to assist each other, to provide better service to our guests, to share information on how we drive both our top line and bottom line performance, it's critical to our business. And these relationships have to be built on trust, because these best practices are shared amongst each other, we get feedback from our franchisees, and then we share them across the community. And so I'm pleased that this is a core part of our company culture. And in fact, based upon the last study, I think it was a couple of years after I became the CEO, we did a franchisee satisfaction study. And very quickly, we increased our franchise satisfaction by 15% because of the way we started to engage our system. And this improvement and why I make this point is it helped fuel our success. It also helped fuel our existing franchisees, one that develop and develop both Jack and Del Taco restaurants. So let me talk a little bit about prior to 2020 where our business was. Jack performed consistently, but it wasn't on pace to reach or achieve our growth potential. Same-store sales growth on average was about 2% per year and less than 1% of our business was digital. Our relationship with franchisees were strained, causing them to pull back on growth. We were underinvested in many categories, whether it was growth, new prototypes, technology or the image of our restaurants. And we have very few commitments for development agreements to build new restaurants, which led to our new restaurant pipeline being dried up. But over the last few years, we have established a very strong foundation. It's designed to reshape our future. And in order to do this, we had to rebuild our leadership team, and we had to create some key areas to focus on. So we started with culture and people, and we developed a clear strategy. This included repairing the franchisee relationships, concentrating on operational basics. We had to go back to our heritage and that was a heritage of innovation. And that wasn't just innovation on product, that was innovation across our business, how we executed the brand, whether it's equipment, whether it's technology, whether it was people, process, systems. And so it led to AUV growth and improve margins. In addition, we had to build a clear technology roadmap that would require investment in restaurant-level tech and data capability and then becoming a formidable digital competitor. And then, of course, we had to expand our reach. That is the true unlock to value. And so we began building a pipeline of future restaurants. We got to create a new prototype, a new image. And it also included opening company restaurants in new markets successfully. And lastly, we wanted to build our scale and our capability by adding another brand, and that's Del Taco, which we believe has a tremendous upside and growth potential. Now that brings us to today and what we wanted to talk about, and we're glad you're here at our Investor Day. I think we're ready to run and reach a new phase of our growth. And so we have a bold ambition to transform the business, what we're entitling break out of the box. And so Brian is going to provide to you specific guidance today, but let me share with you some of the key metrics in our ambition. And I want to be clear between our ambition and our guidance. Guidance is going to be clear about how you build your models. Our ambition is we're going to strive to achieve these objectives every day and the sooner we can get there, the better. Our ambition is structured around our North Star of reaching and achieving 2.5% net new restaurant growth, attaining AUVs of $2.5 million at Jack and $2 million at Del Taco. And this top line growth is attained to create marketing, innovation, value and driving both brands to 20% digital sales. Further, we have to continue to improve our store-level economics and achieving 15% restaurant-level EBITDA per restaurant, specifically new restaurants, which will ensure a payback period of less than 5 years. Today, you're going to learn from our executives how they will support this ambition in achieving it. So if you think about our strategy, we have 3 key drivers to help our ambition or pillars to our strategy. First, we want to achieve top-tier AUV in both brands. We want to improve our restaurant-level margins and economic model. And third, we want to enhance our development capabilities so we can expand our reach, this is the red thread that you're going to hear through everybody's presentation of a top-tier AUV, improving store-level economics and improving or enhancing our development capabilities. And these things are enabled by 3 key areas. The first is a clear technology roadmap, with emphasis on investing in restaurant-level tech and data capabilities and end market. A strategy realization office so that we can keep our projects and programs on time and meet our objectives and then developing centers of excellence like digital or supply chain that support both brands. And then lastly, a clear capital allocation strategy where we return cash to shareholders but invest for growth. Beyond that, I want to talk about 2 specific areas that a lot of our executives will touch on today, and I want to spend some extra time on those. First, starting with the importance of us developing a new restaurant and opening playbook. Since assertive expansion was not something that was happening at both brands in the past. And there are 4 main elements to this playbook. And it delivered success in 2023, and we'll continue to enhance it as we expand our reach. First, franchise recruitment and market selection. We spent significant time building this capability with people resources, but also designing what markets, and how do we want to go about selecting and recruiting new and existing franchisees to grow with. And then prioritizing markets for expansion. This new approach also included supporting new markets with our co-development strategy where simultaneously the company and franchisees are developing together. In Salt Lake City, you've heard us talk about that's a prime example. It was where we partnered with 2 existing franchisees so that we can all develop at the same time and very quickly, we're going to get scale and awareness to 15 restaurants within a 2-year period. And so beyond that, we also partner with our existing franchisee to operate the company restaurants until we can get scale and we both need our own support of operations. So it's a way that we're developing markets that it's different than we've done in the past, where we're partnering with franchisees so we can be successful in the markets. It helps share in overhead costs. Global, another example where we started as a company-owned market, where very quickly one of our existing franchisees saw the success we're having and signed up to develop alongside of this, and they will begin to open new restaurants next year. In Ryan's comments, you're going to see a very high level of brand awareness in our nonexisting markets, which demonstrates that there is plenty of demand and awareness for both of these brands across the United States. I think it's also worth noting, we are entering new markets with a new image. Our CRAVED design has a modern feel with the latest equipment and features and it's delivering performance. And I would also say the same thing about our Del Taco brand, which you'll see the fresh flex right here, both images are getting tremendous guest response. Next, we are building excitement of premarketing and awareness prior to opening. That's part of our playbook. And launching with menu and operational simplification for the first few months, in essence, no digital, no LTOs and a simplified menu. Simplification allows us to offer the best experience possible to our guests, and as I see the line of cars and people lining up at our restaurants in our new stores, it makes me very happy, but nothing makes me more happy than if we provide guests with a very excellent first experience in our restaurants. And lastly, we are making sure that this playbook is scalable, it's repeatable and so we can apply it to future markets and future new restaurants. Whether it's Utah or Florida, Montana, Wyoming or Mexico, we want to make sure that we can repeat this over and over, and it's an executable and proven plan. So now let's go deeper. I know there's a lot of questions about Del Taco. And my belief is that only more than one brand, and in particular, Del Taco will help us achieve our ambition but also create shareholder value. The bottom line is we can grow faster, achieve our synergies, innovate more rapidly and get Del to asset-light faster if we're together than apart. We built the capabilities at Jack, we'll apply them to Del, but we also have capabilities at Del that we're already applying to Jack. So now we are the #2 player in QSR Mexican with the ability to scale and pursue the #1 player in the category of Mexican QSR. And we all know we need a strong #2 in the category with a better quality product, and we believe Del has that. Scale and centers of excellence are also a competitive advantage, and we are on track to achieve $50 million in synergies and we'll continue to pursue even more. We've been -- we've invested in our leadership team, and I'm excited you're going to get a chance to hear from them today. Because when we build this leadership team, we wanted to make sure that we had a capable leadership team that had experience managing dual brands so they could apply that knowledge to the Del Taco acquisition and leverage and develop them. As it relates to refranchising development, we are on our way to becoming asset-light at Del Taco. We started at 50% franchise. We're now at 70% franchise, and we're on our way to 90%. Refranchising is a growth opportunity. We are attracting qualified operators known to us already developers to acquire restaurants at attractive multiples and signed for additional development opportunity. Jack franchisees wanted, as I mentioned earlier, the opportunity to grow and expand their existing markets. They couldn't go with the Mexican QSR and now they can versus building other concepts. Most of our franchisees have multiple concepts. So we want to make sure that they're going to invest capital, let's invest in Jack and Del Taco. Both brands are investing in technology. Now we can scale, we can consolidate, we can move faster together than on our own. For example, having a common martech stack data, capabilities, loyalty, POS and help desk. All that is in our future, some of it has already occurred. Doug will talk more about that, including -- what I would say is the most important, that's shared knowledge, whether that's AI drive-thru and kiosk at Del Taco that we can incorporate at Jack or its automation and digital pickup that we're doing at Jack that we can incorporate in Del. We have plenty of examples where we shared knowledge back and forth and taken advantage of each other's capabilities. And so when it comes to operations and margin improvement, we see a sizable ROM opportunity at Del, which was appealing in the acquisition. Tom will share margin enhancement program today where we are -- that we are implementing at Del, similar to what we've talked about to you that we've done at Jack in the Box. I'm really proud of this leadership team that we've built in the last 4 years. And I'm excited you're going to get a chance to talk today, hear from them and present our story. I'm often asked by investors what part of our story is underappreciated by the Street. And I typically point to 2 key things. And the first is people and culture. I believe these are what drive performance. And I'll put this leadership team up against any in the industry, and I'm excited that you'll get a chance to meet him today and hear from them. And as an investor, I typically, myself, personally bet on leadership teams that have a clear strategy, and they know where they're headed. I think you're going to get a good understanding of this team, and you're going to get a clear understanding of how we're aligned. And I also think you're getting a good feel for how well we work together. Next, I think the second thing that's underappreciated is just the business transformation that was necessary, along with required investments to transform both of these brands from being consistent performance to a real growth story. We have tremendous progress in this team. I will give them tremendous credit for what we've accomplished so far and what's in front of us. Lastly, we are supported by a great Board of Directors. We have a few new faces, new capabilities that will support our ambition. And one last note before I turn it over to our team, we're putting together our first ESG report, which will be sent out over the next week. With that, I'm going to turn it over to Ryan Ostrom.

Thank you. My name is Ryan Ostrom. I'm the Chief Marketing Officer for Jack in the Box, as well as the Chief Digital Officer for Jack and Del. I was excited to meet a lot of you last night. And as we look at our ambition, you look at net unit growth, AUV digital sales and our 4-wall EBITDA. I truly believe that continuing our CRAVED strategy will help us reach our ambition in the coming years. There's 4 areas I'm going to dive in deeper, from marketing, innovation, value and digital. And so I'm going to dive in each of these and make sure you have the same confidence we do and what we think we can achieve. Let's start with marketing and making Jack more CRAVED. CRAVED is a barometer that we measure everything we do from, our creative, our stores, to our uniforms. And basically, what that stands for is it's an acronym that stands for cultural, relevant, authentic, visible, easy and distinctive. Are we being cultural with what's going on around us? Are we being relevant in our category to our guests, to the trends? Are we being authentically Jack or being visible with the right message to the right people, to the right time, be easy to buy, easy to get, easy to find? And finally, in this world is saying this sometimes, it's QSR, are we being distinctively Jack? But instead of kind of diving into each of these a little bit more, I'm going to do what all marketers do and just play a nice little sizzle reel that kind of sums it all up. Here we go. [Presentation]

Hope that gives you a little bit of sense, that last song actually, I think we're the only brand that we have a song by Ice Cube called Jack n the Box. That's about a 20-year-old song. So that just shows how part of culture we are across California. And what I do want to do is take you back about 3 years. When we -- when I first got here, we took a second to understand the guest, redo our segmentation and really understand what we're doing well and what we have improvement on from a guest perspective. And what we heard was guests really didn't know who we were fully. They didn't know what we stood for. And we definitely were called out for losing our edge and our attitude that made Jack famous in the late '90s and early 2,000s. So what we did was we redid our positioning, we set our communication pillars to be all about late night or variety and all day everyday menu. But we also decided to create this mantra and live it every day about being unapologetically Jack. Bring that challenger brand mentality back to this brand. And why it was important is because it set a foundation to help us set a tone to take the brand to the next level. And that is to make Jack a more cultural brand. And what this did was allow us to free up our ideas, how we express this and bring that attitude, that unexpectedness, an unapologetically Jack to the market in every single execution we do. But also make us more of a cult-following brand because that's what all brands want to do. We want a cult following. And so here are some of the fun things we've done. You saw that in the video. But I mean we created a 7-minute long short during the Hollywood strike using all the top producers and writers, at cost mind you, because they love our brand so much in this town. We have a lot of fun with creating unique, culturally relevant product. This is our Pineapple Express shake for $4.20, if you know, you know. And if you laugh then I know you know. We do this a lot throughout the year. We do some out-of-the-box executions with Ryan Reynolds, putting 2 sexy CEOs together. We do more in box that people expect us to do with Snoop Dogg, resonating with our guests across all our markets. I think one of the things you really leaned into is in our CEO, you saw it when we launched the start of this with Jack Box talking, but he is a cult icon. And I recommend all you guys just follow us on social, if you have some free time. I mean there is some interesting comments about our leader, Jack Box, that will make anyone blush because he is a s** symbol now, and so we lean into that. And speaking of social, what we're very proud of is we consider ourselves a best-in-class social brand. This has been our road over the last 3 years to really push who we were, creating 3x more content authentic, real distinctive content. We're not just a Me Too brand. We're defining who we are that unapologetically Jack. And it has driven benefits. We're the #2 most engaged brand on TikTok. We're the #1 most engaged brand on X, I almost called it Twitter, close enough. What this shows that we're outpunching our weight. We're matching the bigger players because we know clearly who we are and who we want to be. And all this is really paying off and you start looking at our consideration rates on core guests. We're driving more Gen Z. We're driving more Latinx community. But most importantly, we're not alienating our core guests. We're staying in that box enough that people that love us today, love us even more. We're continuing to build these visits and build the excitement. Now what this room should be excited about is we're 3 years into this journey. And you've seen some of the sets that we have done. You're going to hear from Sarah and Tom, they're just starting this journey. They're just starting the segmentation and the guest research to define who Del wants to be over the next 4 to 5 years. But CRAVED goes beyond just marketing and social. It's also about our stores. I mean I can't -- that is an ugly baby, that's all I'm going to say, I'll be straight bun about it. It's mustard and ketchup on a wall with some gray. Compare this to our new CRAVED design, ownable, distinctive, relevant. Our CRAVED strategy basically designs our store. We have the purple and red. We are the only 2 with those 2 brand colors combined. Now look at late-night, you start seeing the big box, very visible inviting bringing people to the store. But with the other aspect, I want to call out here is that we're actually bringing the brand to the store. When I got here, we had those first stores on the left. They never talked about the brand. Now you look at it, we mentioned open late-night, reinforcing our late-night leadership. We're talking about on that sign, the best burger joint famous for its Tacos. You drive by and you see that, you sense variety. There's something different here. They're not just a regular QSR. So bringing these messages to life are key. And as we get into our remodel program, that's really led by Tim, I just get -- lucky enough to speak about it. We are seeing, on average, 16% same-store sales growth and upwards a 24% same-store sales growth in our second year. Now we haven't rolled out enough of these CRAVED images yet, but we're excited and truly believe it's going to perform, if not outperform those numbers as we roll those out. But we're more than just about remodels, we're about growth. You heard what Darin was talking about. We know that this is key to everybody in this room opening new stores. And we've all sat down as a collective leadership and created a playbook that we have seen very successful in Louisville, in Salt Lake City. And from a marketing standpoint, what we've done is we've gone on in these markets to understand the guest, what they know about us, what they need to know about us, how they think about us. We then introduced a brand that is more about those pillars, late-night, variety, all day everyday menu. We're not getting overly complex. We're keeping the menu simplified, but still maintaining our variety. But I think the biggest change is this last one, sustaining the market. What we used to do with Jack in the Box was we rolled out a new market, new store, we have some balloons and some streamers. Two weeks later, we walk away and go to the next store. That isn't how you sustain a market or how you sustain a brand. So what we do now is to use analytics to understand what is the right amount of stores to sustain via marketing investment in a market. So in Louisville and South Lake City, we have those targets, we will invest as a company until we reach those minimums to keep it self-sustained, which keeps the buzz going, keeps the excitement, keeps the traffic, keeps the sales. You'll hear more about the success of this through the rest of the executive team. But this playbook is going to get worn out because it's going to get used a lot. We have 80% awareness across the United States. This is a big number for us. And one of these reasons why it's even more now than I think it's ever been is because of our strength on social. Social now has broken down barriers that the brand has never been able to do. We have followers across the whole East Coast. We also have some interesting stats where we have mid-90 awareness in Wyoming. We have 90s awareness in Illinois. And then if you do follow us on social, in Florida, we cannot host a comment on any social media channel without people from Orlando, Fort Lauderdale, and Miami, commenting on why are you not here yet. I think there's a lot of California as I live in Florida, so they're demanding. We get there as soon as possible. But being CRAVED also means we have to talk about our product. We're a food brand, of course. And I am blessed as a marketer to have, I think, one of the most iconic lineups of food in the industry. Everyone tries to copy us, to be honest. We have things like the Sourdough Jack, the Bacon Ultimate Cheeseburger. We do over 60 million Tacos a year. Spicy Chicken, I've heard rumors that we are the leading seller of chicken amongst the QSR players in burgers. So we sell more chicken than them. And your eyes aren't deceiving you, that's an egg roll. You will be trying our famous Egg Roll today as well, I made sure that was on the menu. It tastes amazing in our homemade range. You haven't tried it yet? Our shirts actually say that on the back. I get my Egg Roll in ranch, our employee shirts. We have a lot of fun with our brand, but we also need to go beyond our iconic brand, our iconic products and really lean into our innovation. I think this is something we are famous for. We were the first QSR to introduce a breakfast sandwich. We beat McDonald's at it. We were the first to do affordable salad in QSR. We rolled out the Buttery Jack, Popcorn Chicken, Tiny Tacos, and we're not done. Last year, we rolled out in new categories, new innovation, which we haven't done in a long time with the Red Bull infusions. And even a few months ago, we rolled out Boba drinks for coffee and tea, the first of its kind in QSR. We're still pushing the limits. Now I wanted to tease out someones we really think are great, which is, we tried chicken wings a few windows ago. We're really excited about the opportunity to continue our chicken leadership. But then also, we've learned from our partners at Del and this is where the shared knowledge between the 2 brands come into play. You'll hear about their success from Sarah Birria. And we said, how do we be authentically Jack with Birria? Well, our Tiny Tacos and Birria make a great combination. And we have a strong pipeline that we're going to rely on for the next few years. We have over 500 items in our pipeline from ideation, all the way to commercialization. But no more, none of those are as more important as our latest innovation, which I talked to you a few last night, you've all heard about, which is our Smash Jack. This burger took over 2 years of development, exclusive equipment, our own proprietary blend of meat, U.S.-based meat. And it has freshly grilled onions, fresh pickles and our own Box sauce. During our first day, we sold over 70,000. We had a store in 1 week sell over 1,000. And we had one order that someone ordered 27 of these. I actually think it was a competitor trying to get some insight for you or something. The good news and bad news is we sold out during the soft launch with zero marketing in 2 weeks. The good news is we have some here for you to try later today. So each get to try some, and hopefully you like it as much as the guests do. Let me play the commercial. This is a sneak peek that not many people in this room have seen, even the executives, just for you to get a sense on what the brand is going to be launching in the next month. [Presentation]

That's just a glimpse. Our old campaign, we used real people who do not like us. They do not eat us. You saw some of the words they call us. And we have changed their opinions in blind taste tests. That's how good this burger is. It's something we are so proud of, a rollout to the industry and to our guests. But beyond innovation, we also have to talk value. We know the current economy, where we need to go. I talked to a lot of you last night, value is on top of everybody's mind. We firmly believe we have a competitive advantage in value because of our variety. We have a wide range of products that we offer that nobody else does. Let's start with our iconic $0.99, Two Taco deal. That is famous at Jack in the Box. It's exclusive on the app. And you're going to see us continue to drive exclusive offers on the app, we know this is where the value wars are going to get really heavy, if they haven't already, offering exclusive targeted value offers to our guests, using customer data to drive one more visit. But you can also see the wide amount of value offers we have across our menu from our $3 Jack Wraps, our $5 Jack Pack, our $10 Fan Favs box, which I can update every single month because I have jalapenos, churros, Tiny Tacos, Regular Fries, Curly Fries, that variety allows me to keep that fresh. And then also our $12 Munchie meals. And even though it's $12, this is still value because it's value for your money and you get a lot of food and this does satisfy those late-night cravings, but we still have opportunity and value. You look at our Jack's deals, we haven't touched our everyday value offering in many years. And I think we have an opportunity to make this pressure and more aligned. Learn from our sister brand at Del. And so we're testing a few different options today and look for this to be improved in the coming year. But we're going to continue our hook-and-build strategy. You guys are probably tired of hearing about the hook-and-build strategy. We say it every time we talk because it is a strong leader of our success in our business. And where this comes from is when we did our segmentation, we learned that we had a value guest and a premium guests. We need to satisfy both of those individuals. We don't want the valued guests to be priced out and we don't want the premium guests to trade down. So every time we launch an LTO, we really think through this execution, we try to get what is that value that drives transactions, it drives excitement. And what does that premium offer that partners with it that maximize ticket and profitability? You look at the 2 options here, you have our 2-piece snack box. And when you get to the store, you can buy that, but you can also buy a 3 piece and a 5 piece. They've got our Cheddar biscuit. We do 2 for 6, but then we offer the chicken version of it. And we're seeing high percentage rates of trade-up in each of these every time we do it. And what does that mean? That means more profitability for the franchisees. Now speaking of profitability, one of the areas you've really been focused on is providing more pricing support for our franchisees. We have a dedicated pricing team. We have dedicated analytics on pricing. We provided the tools for our franchisees to measure their price by market, by item, by store, the competitors around them where they can make smart pricing decisions. I want to restate that, smart pricing decisions. I think historically, we had a lot of franchisees make blanket increases. We're going to take 2%, 3% and do it across everything. What we found is we can take that same 2% to 3% and put it on the right items to still maximize transaction, still maximize profitability. Some of these examples are, we realized that we had a lot of guests trade into our large shakes but the profitability of that shape was significantly less than our regular shape. Well, we look at competitor pricing. We analyzed the market. We were able to take upwards of $0.50 on that large shake, make more money for the franchisees. And we actually somehow increased our upsell rate on that. On our combo pricing, we generally like a 10% to 15% discount on our combos. We had some franchisees, 20%, 30%, 40% on their discount. They had room to go because as you look at competitors, we were underpriced. We were able to get to the right place where we're still at the value, but being able to raise upwards of $0.75 to $1 on certain combos and still maintain that transaction and value scores. These are what these tools provide us a clear look into what's going on around their stores to make smarter pricing decisions. And the last area I'm going to talk about is digital. I'm also Chief Digital Officer, which means we have a center of excellence across both Jack and Del. And why this is important is we sell -- all right, we share ideas, best practices, platforms. And it's been working because of -- you just look at this chart from 2020 to 2023, we've had over a 400% increase in digital. Jack was actually considered one of the top fastest-growing QSR brands in the industry over the last few years, but we have a lot of runway left. We think we're going to reach over $1 billion in sales, which will get us close to our 20% aspiration, our ambition. But let me break this down in some components on why we're very confident that we can do this and why we want to do this. The first area is we're going to accelerate first party. The first point on there is we're going to further invest in the Jack. Have you heard Darin talk about the walk? We're going to invest in digital and technology, and we're going to make our app best-in-class because it is not today. Our customer journey is not fluid. It's not seamless. It's not frictionless. We don't have consistent upsell as the guest goes through the purchase rates. We don't even have digital payment? When's the last time you used an app, didn't have digital payment. These are one-on-ones of apps today, and we're still driving significant sales. We're going to increase this. And what you'll eventually see with us is we're going to use this same app and platform across both brands. We're going to get it right for Jack and then quickly slide it over to Del to maximize investment and maximize use. The other area to talk about is loyalty. Talked about that customer journey. We also don't have our loyalty seamlessly integrated through the app to do those targeted offers that seamlessly want, seamless redemption. But we're still driving tons of customer data. We know how to use it to drive one more trip and you start seeing our acquisition and engagement rates of 2023, very successful. And one of the things that drove this success is because of the new center of excellence, the digital team is more connected to the marketing teams than it's ever been. We've been able to create unique campaigns that really drive sales and transactions for the brand. Del Taco kind of led this with Oktoberfest, 31 days of Taco deals in October. And then Jack, we followed us with Jackmas during the Christmas time, our peak time frame, targeting those value guests with the right offer at the right time. Now what I do want to point out is that percentage of sales at the bottom. And this shows one of our bigger opportunities across both brands. Del has a more seamless cross-channel loyalty program as this is what this measures. What is the amount of sales that were impacted by earn and burn, in-store and online? You can do both on Del. Jack, due to our current platforms and technology, we mainly do online. And if you want to earn in-store, you literally have to get your phone in scan on your own receipt. It's not frictionless. It's not easy. So as we -- you hear from Doug and some of our new technologies and our plan for the future, we have tons more opportunity to affect 2% to 3% percent at Jack through targeted offers using that data to drive one more visit, especially in-store transactions. We also have third party. You saw that growth from 2022 -- or 2020 to 2023. That was mainly driven by a third party. We went from 0 to 60, and technically, we broke our operational processes. This is going to be our focus in the next year is fixing those. How we broke these is because both brands are late-night brands, what tends to happen is the driver on third parties gets in our drive-through. They're in the same drive-through, as our guests who want to meet late night, he drove to our stores. We get back up, speed of service slows down. Sales are impacted as well as third parties turn us off and penalize us for 30 minutes. We're leaving money on the table. What we're really focused on is in really improving this entire touch-point experience, especially for drivers. So recently, we tested pickup windows in a few stores, and we've seen some strong results. We have reduced our speed of service at night by 30 seconds. That's big in our brand. But it also gets those drivers outside picking up the order and we get turned off less, which means more digital sales on third-party, better operational scores. So look for this to be something we continue to push over this next year and implement. And the final piece, which you're going to hear Doug talk about, you even heard Tony talk a little bit, is continue to invest in future innovation. We look at kiosks and AI. Del is a little bit ahead on us. They do have kiosks out in-store, looking to how to roll those out in the near future. But for Jack, we're going to still rely on the new POS, no point to do this heavy right now while we bring a new POS in because they have to be a seamless network. And so you'll see us roll out more kiosks, more solutions. You'll hear this from Doug in the future, but this is key for us to get to over 20% of sales, because you think about modern technology, it helps the ordering experience as easy as possible as frictionless as possible. So I know I covered a lot, as marketing guys like to talk. As Tony, who's next, we'll tell you. But really shared about why we're confident about reaching our ambition through marketing, innovation, value and digital. We have a clear strategy to reach our AUV growth as well as our margin improvement. And I'm excited to be here in front of you and pass the mic over to Tony, who will talk about operations.

Thank you, sir. Again, I'm Tony Darden. I'm the COO here at Jack. I've been here a little over 2.5 years. And before I get started, I want to just take you back to our ambition. So if you think about us achieving our ambition, what happens within the 4 walls of our restaurant really matters. It really does. This is where everything has got to come to life. And so today, what I'll do is I'll take you through what got us to where we are today. We did some really some foundational work to strengthen our foundation from an operations perspective. And then what I'll do then is give you a glimpse into the future, right, as we prepare to unlock growth as a brand, give you a glimpse into the future in terms of what that looks like from an operations perspective. Okay. So as I mentioned, our focus over the last 18 months has been to solidify our foundation as an operating team in 3 key areas. One is financial fundamentals, right, really institute a financial acumen across the organization; two, build our people capability, starting through training. And then third would be to execute consistently across all the geographies that we're in. And what I'll do is take you a little bit deeper into each of those. So from a financial discipline perspective, and at the core of this, right, when we started down this path 2 years ago, at the core of this was to instill a rigor in our corporate team to continuously look ways -- look for ways to pull out costs from the system without materially impacting the team member experience or the guest experience. And through this path, we've really identified this path to a 15% franchise EBITDA. And then within that 15%, we've identified $100,000 in savings across the system. If you think about that $100,000, it's really for us, when we're looking at it from an operations perspective, it's focusing in the buckets of people, the process and through innovation. So again, I mentioned we've got $100,000 in savings that we've identified through people, process or innovation. And of that, right now, 40% of that is available for our system. 40% of that is out there and available for our system to participate in. And as you think about the runway for that, the other $60,000 will then layer in over the next 12 to 18 months. And the outcome of this, as you think about this financial discipline, even in the face of the inflationary headwinds that we've had and we're coming out with the supply chain opportunities, our franchisees are making more money. They're making 40% more money now than they did before COVID came. And so we're certainly proud of that. And obviously, in service of our franchisee profitability, we'll continue to push, to pull costs out of the system. And then from a corporate store -- corporate restaurant perspective, we're seeing the same sort of restaurant-level margin improvement in our company-owned restaurants. And then really great to see. And then the one note that I would tell you here is, as you think about these initiatives, we always start with this group of restaurants. Everything we do, we prove out, we test, we drive the ROI. And then from there, we'll take it to the franchisees. And the other thing I would point out is that of these $100,000 in savings, I mentioned 40% of that's available in the system. All of those are implemented in our corporate restaurants, right? It's not an option, right, for our corporate restaurants to participate in that. The second piece that we focused on over the last 18 months is really to build our people capability and really drive this foundational training across our system. And the first thing we did is we modernized our training platform. We didn't have any learning platform. We instituted a new e-learning platform that's really made it much more easy for our team members to go through the training and certification process. But the thing that happened is when we implemented this and we really went narrow and deep on how we're training and certifying our folks, our team members in the restaurant is that, what we realized is that 2 years ago, about 3% or 2% of our system have been trained and certified appropriately the way that we would be appropriate, right, from a brand standard perspective. And so obviously, we've been narrowing deep on this for 2 years. And fast forward to where we are today, 95% of our team members have gone through the appropriate training and gone through this new modernized training platform. So we feel great about what's going on from a people perspective. I mean it's so great that it's allowed us, I mean, because we started with our frontline team members, but the success we saw there, it's allowed us to move on to our above-restaurant leaders or those multiunit managers and really start to drive the leadership development of that group, right? We took them through leading with heart and we took them through success routines in 2023. We then took them through unlocking growth, was really -- was focused on how do we execute from a digital perspective. And then in 2024, we'll really start to drill in on building that business and that financial acumen of that group. So we feel great about where we're at from a people capability perspective. And obviously, the reason we're doing this is we feel like by providing this great team member experience and giving them the tools, we feel like it's created this workforce of motivated and engaged individuals that ultimately are going to drive a differentiated guest experience in our restaurants. Third area we focused on was consistent execution. First thing we did there was we created a guest experience review. And so if you think about it, think of like a brand standards audit, but what we did is kind of invert that process a little bit, and we started with the customer journey. And so every touch point that our customer goes on, we created this review process to ensure that at every inflection point that our customers go through that we're executing and we have the ability to have visibility into how we're executing with that. And those occur, we partner with a third party. They occur on a quarterly basis. And the kind of the extra layer that we've added is we've changed the way that our field restaurant leaders interact with franchisees. So the sense we've created this consultative approach, but really think about this as an additional layer of accountability to our franchisees, which is not something that we've had before. So on a quarterly basis and then on a monthly check-in basis, our field leaders are checking in with franchisees to ensure that areas that we might be not executing, that they're having those conversations, right? And then visibility comes all the way up to the executive level to ensure that we have alignment in terms of how we want to execute and we have consistency in terms of how we execute across all of the geographies that we're at. And maybe the outcome of this is we feel like it's working, right? We are driving a better guest experience. From a speed of service perspective, you see we've had sequential improvement in speed of service. And I think the cool thing about -- 2 cool things about this is, one, we didn't focus on speed. We simply focused on process, the execution of a process. And the other thing that's great is we know from our perspective that every 5 seconds at speed gives us about $8,000 in the top line, right? And so we feel like we've got a lot of room to continue to improve speed. So as you think about growing top line and getting to that AUV, continuing to move speed of service forward is really going to do a nice job of driving that top line. The other thing we're seeing is historic lows and service alerts, right? Obviously, if you're going to give a better experience, your team members are taking care of your guests, speed's a little bit better. We're seeing lows in-service alerts, which is great because it's certainly -- that's the barometer for us in terms of the experience that we're -- that our team members are giving in the restaurant. And then the really cool thing is we're starting to gain share within the QSR segment. So I don't know if you guys know this or not, but we -- QSR Magazine does an annual drive-through study, right? We haven't participated in at least in the more recent time. And so we chose to participate in it this year. Now we didn't make the data public because we didn't know where we're going to rate. We simply wanted to benchmark ourselves against competition, right? And actually, we're pretty pleased with the results, right? We came out #1 in order accuracy, #2 in overall satisfaction and #3 in food quality. And so we feel like that this is a product of the foundational work that we've done to really materially improve the team member and ultimately, the guest experience. The only thing I will tell you where we didn't rate really well is speed. Even though we've seen sequential improvement, we didn't rate in the top 5 in speed. And while certainly, you would like to be better. The thing I would tell you about that is this is -- there's some intentionality to what we're doing, right? You can't focus on speed without materially improving the guest experience. So this is kind of the way that we wanted this to go, make our team members better, be accurate, make the food right, treat people well within the restaurants. And now what we can do is we can start to materially move that speed of service forward and really start to focus on that without losing the quality cues that we gained within the 4 walls of the restaurant. All right. As we move into our next chapter of growth, we feel like -- we really feel like we're in a position of strength to leverage these key levers of growth that we have, right? One being the new restaurant and marketing opening playbook, Darin talked about it, Ryan talked about it. And the other being to leverage the technology that's going to start coming into the restaurants and Doug will take you through here in a little bit. With regards to the new restaurant and market opening playbook. Really, for us, from an operations perspective is really 2 things we did different here, right? One is applying our learnings from simplification. And by simplification meaning, you've heard about a simplified menu. Makes it easier for our team members to execute. It also makes it easier for our guests to order, right? It's not such a broad menu where it kind of bogs down your speed of service. Simplification from equipment, right? These restaurants in these new markets have all the new equipment that we've been testing. From a digital perspective, Ryan talked about that, how do we market it from a digital perspective. But the other thing that we've done differently too, is really start to move ourselves to a digital forward organization to make sure that we can execute from a digital perspective. And then last, marketing, Ryan talked to you a little bit about it, but not only like do we do LTOs or do we not do LTOs, right, to make it a little easy on our team members, but what is that -- what is the pace and sequence of marketing? And how does that pace and sequence over the course of time versus just stopping after 2 weeks or 4 weeks, right? So really thought differently about that. And then the other thing we did is we start differently about how we staff the restaurants, how we train the restaurants and how we support the restaurants. In the past, it wasn't a super robust training program. It wasn't a super robust support plan. And so I mean, you guys have -- you've heard, right, these restaurants are doing record volumes, right? And so we've got to have the ability to execute for these guests in these markets over the course of time to really minimize that J curve or minimize that dip you may see from a honeymoon perspective with the sales. And again, we're seeing -- we're continuing to see amazing sales in these restaurants. From a technology perspective, what technology does is it allows us to innovate really in 3 areas, right? And the way we think about automation is through kitchen, through service, and through management, right? And I'll take you quickly through each of these. Automation for us, it's more about -- I want you to think about it in terms of task elimination, right? What automation does, it allows us to eliminate tasks that our team members have to do to allow them to be able to make a bigger impact on their guests or their team members, right? And so what you have here is -- this is an example of our Fryer station. I've got a video to show you this robotic Fryer station on the next slide. But what you have here is our Fryer station. And for all intents and purposes, this is the most difficult station that we have in our restaurant. The hardest station to work, right? And so what you've got on the screen is you got this AI, demand-driven, build to chart, right, with a connected piece of equipment that -- with a connected piece of equipment that recognizes the demand needed and then automatically goes and starts to prep and make these items without any team member involvement. So I'll show you a quick video of it and then come back to you. [Presentation]

Just a funny little anecdote. I always joke that I always have to follow marketing, right, because they got the sexy videos and all that stuff. So it's not Ryan Reynolds, but that's probably as sexy as we get from an operations perspective, is a robotic Fryer station. The second area that we're looking at from a service perspective from automation is really 2 main areas, drink automation and then voice AI in the drive-thru. And obviously, you can see the drink automation there. But the thing I would speak to specifically would be on the voice AI and the drive-thru. We don't currently have it in our restaurants, and we won't be able to get it until we get a new POS. But the one thing that the leverage that we have with Del Taco is they've been using it. So we have the ability to learn from them. And so as we implement our new POS, we will certainly be a fast implementation of voice AI and the drive-thru. We know, and again, working with our partners at Del Taco, we know, one, the consistency level of the service experience, two, we know the check building qualities, they come when you have voice AI because you've got suggestive selling, and there's really not an option, right? You're going to get that suggestive sell, which again is going to build the check. So again, we're super excited about that. And then from a -- from our -- for our guests, it's really about driving a frictionless guest experience no matter how they want to use them, right? And for us, being a more digital forward organization. A good example, well, you got 3 examples, right? One is the kiosk, so the kiosks, which again, Doug will talk about. But as we go into a new POS, that's part of the base package for us, right? Is this POS? Is this kiosk? The other thing is food lockers. And this is a great example. Ryan spoke to this a little bit, but as you think about a key unlock for us, it's really that 10:00 p.m. and overnight. Like we have so much room to grow sales, after 10:00 p.m. when our dining rooms closed. As Ryan mentioned, everything gets funneled through the drive-thru. So a big initiative for us is how we pull those delivery drivers of those off-premise orders, how do we pull those out of the drive-thru after 10:00 p.m. Food lockers is one way, pickup windows. You're going to see, Ryan talked about that. But really, we feel like we've got so much upside from a top line sales perspective by driving that overnight. And then last, from a team member perspective, deployed technology will allow our restaurant leaders really spend less time in functions and more time being able to impact their team members or being able to impact the guest experience. So you see forecasting scheduling digital checklist, AI vision sensors in the drive-thru that tells you how many cars you got, how many factors you have because we don't have any visibility to factors in the drive-thru right now. And then -- so it certainly helps us out from a drive-thru standpoint. And one thing I'll call out is digital checklist, that's already been rolled out. Like we've got that across the system, really digitizing success routines and digitizing the things that our managers do on the restaurant. But what getting technology, what Doug is going to bring is really going to help us take that data and be able to use that data and what we're seeing in these digital checklists, can really drive a better, more differentiated team member's awareness. Last thing I have, today, we've talked a little bit about equipment, but just so you know, some of the things that we've got in our new restaurants that we're going into new markets with, semi-automated drink system. The [indiscernible] holding ban, which again might not sound sexy, but really is game-changing for us in terms of having the ability to hold food, hold it at high quality, hold it for an extended period of time to really allow us to get through the peak periods of where we open up the bottlenecks that sometimes we see. And then digital station in our new restaurants. But again, I talked about being a more digital-forward organization. And for us, it's, okay, how do we take, how do we make? How do we bag, how do we stage these digital orders and how do we make it as frictionless as possible for the end consumer? So that is all I have for you today. I appreciate you all being here, and I'm going to turn it over to Sarah and the Del Taco team. Thank you.

Thank you. I'm Sarah McAloon. I'm the Chief Administrative Officer for Del Taco. 2 months in the role and I'm so honored to be here. On the Del Taco brand, we have Tom Rose, our President. And the other members of the executive team of Jack in the Box. I've been in QSR since college, so a number of years. I'm not going to disclose how many. And I worked on 2 continents, for brands like McDonald's, Pizza Hut, Costco Coffee, Sbarro Pizza and CiCi's Pizza. Tom and I will be sharing our initial thoughts on how we're going to achieve our ambitions on AUV and EBITDA down. So we've identified 4 initial pillars from our initial thinking for growth. I'm going to take you through the first 2, which are the CRAVED marketing strategy and our development of it. Premium and value. And then Tom will take you through the last 2, which are menu optimization and operations excellence. As far as the CRAVED marketing strategy goes, we've already made a lot of progress on this pillar. We transitioned to a new media agency 12 months ago. We have at Del, an independent agency kind of a mom-and-pop, and so we moved agencies. We did an RFP. But in the end, we moved to the same agency as Jack. That enabled us to fill our resources and we are able to save around $8 million, about 5 and change on the Del side, and Jack also got 2 and change on this. So that just shows you the immediate efficiencies that we could get by joining forces. That change to the media agencies and the efficiencies that we got actually enabled us to expand our really important Lakers partnership. So we already had a partnership, but through that transition, we were able to double our impressions and add digital for that platform. In addition, it also allowed us to create a brand-new partnership with the Dodgers. So we're really happy with those immediate gains that we got. There's still significant opportunity in media. We definitely need to look at our window promo lengths, how many promotions we have over the course of 12 months, our TRP levels and our tapering levels. So there's still more to come and the benefits that we can get from media. We've also completed our Mexican segmentation study. As Ryan said, this is the stuff that they did 3 years ago. So we're following in their footsteps. And so right now, we just finished a QSR -- Mexican QSR segmentation study. We've identified 2 high ROI targets and we've definitely confirmed our brand strengths. Brand strengths, for sure, are fresh quality ingredients and value. No surprise, but it's really great to get that validation. We've also -- moving into projects that we're just starting. We've just moved into a brand positioning project that kicked off this week, and we aim to be finished in February. And that brand positioning projects will give us a clear definition of the CRAVED marketing strategy. Ryan took you through what that meant, but it's cultural, relevant, authentic, visible, easy and distinctive so we'll have clear definitions of what that means for Del. Because Jack and Del are a bit on this playbook, it means that we can rapidly progress along CRAVED, they got a lot of learnings for us, and we'll learn from them where appropriate. So in the end, after we've finished this brand positioning project, we'll understand the new expression of Better Max, what that means to our guests, what that means to our core products and new product innovation territories and what that means to our interior store design. Our people strategy for in-restaurants, and also, it will give us a red thread to weave through all of our advertising and communications, which means that our media works even harder. On the second pillar of value, we've done a lot of research. So with the first-party research, we've also looked at the third-party research. So we know Tom, and basically on every metric, Del wins on value. But the way we would define in value internally was quite narrow. So we have defined it as low prices. And Tom and I firmly believe that we can expand that definition to not always be always the lowest price. But in some areas, we will be the lowest price. But even in those, we think there's some room to close that gap compared to our direct competitors. We can also expand our definition of value beyond low prices to more food for the money. So this is something else that the segmentation study has shown us. There's a large group of customers within the market without just defining value with low price. So they want more bundles, larger combo deals, family packs, et cetera. We have been underserving that category, and we can definitely do more to offer those types of value on our menu. So Tom and I agree that there is a large opportunity to expand on value. And in addition, we can execute smart tactics like hook and build, where we have low prices in our communication, and we upsell with larger items and upgrades on our drive-thru menu. We have a ton of opportunity to expand our definition of value, while still retaining our leadership. Moving on to premium. Birria was our most successful promotion to date. And that's no surprise when we looked at the results of our segmentation study. The 2 high ROI segments told us they wanted more products like this. They want premium items that are more authentic, real and flavorful. So at the same time we were learning from our first-party research, Birria was launching and taking off. So we've really got some good data pipes. We have great capabilities to develop more promotions in premium like this. And our guests are telling us, go further, go beyond the basics, go beyond what your competitor is doing. It's the best promotion we've had in years with 7% same-store sales growth and even driving positive traffic. In addition, we've done some more work separately on menus. And we found out that we have the opportunity to add more items, particularly on Tacos, which we should have, in the $4 price point and above category. Our competitors are already offering Tacos in this price range and we're not. So we have a ton of opportunity in premium as well as in value. Okay. So we are -- in summary, before I hand over to Tom, we are very excited about the opportunities that we've got just in our initial learnings. It's actually great that we're behind Jack. They've got 3 years of -- more of experience, and we'll follow that to run rapidly. To meet our opportunities. We -- I know that just from my 8 weeks here that we have great products. I've beaten a lot of it, probably too much. And [indiscernible] told us that not only go -- that our own segmentation, so they say we have great product. But we actually win on craveable tacos and craveable burritos. So we have great product. We win on value, but we think there's opportunity. We know there's also opportunity in premium and it's been proven by Birria already. What I've learned as I've gotten to know our team at Del Taco is that we have a bunch of great people who have got really long tenure. That means that they know the industry, hence they know the brand. And together, I'm really excited to meet our ambitions. Tom will talk about our next 2 platforms. Thanks, Tom.

Thanks, Sarah. Thank you. I'm Tom Rose, I'm Brand President for Del Taco. To tell you just a little bit about my background. I view my career kind of in thirds. All of it has been spent in foodservice. The far majority of it is in quick service. I started with Yum! Brands, actually, even before it was called Yum! Brands, I was talking to someone last night, when I was there, it was Tricon. But I spent the first number of years with both the Yum! Brands on the offside, where I learned a great deal about quick-serve and how to operate. I then left and joined the company that was also in foodservice, predominantly on the convenience store side and ultimately, it became part of the cold bird portfolio. At that point, I was elevated to COO and a member of the Board. And that gave me my executive experience. At some point, there was a transaction I was able to cash out and I became what I ultimately always wanted to be, was a franchisee, went back to Yum! and began by acquiring Yum! Brands. The major focus was KFCs and Taco Bells. My focus was on acquiring distressed organizations and fixing them. That's what I realize Montreal. And ultimately, ended up having market up through the end of the East Coast from a number of 6 markets from Miami all the way up to Syracuse, New York. And I love it. The sign ultimately, it was time to slow down, and I had, until Darin called. Darin and I have a 23-year friendship. We always stay in touch with each other. And he called me and said, I've got something I think you might enjoy. And that's led me here. You've heard Sarah talk about our advantage to Taco Bell on quality and value. One of the main questions, and I guess I have a bit of a unique vision, because having been a Taco Bell franchisee, of what some of the challenges and opportunities might exist for us. But value is clearly one that Sarah and I have spent a lot of time talking about it, how big of a gap do we really need on value? What falls on top of that, we've got quality. What falls just a second and let you all know that are here, you're getting ready to be able to try our main Del Taco. And when you do try it, try not to devour it all immediately, try and look at it and see, just how meat -- how much meat and cheese we loan on these tacos. And no, that's our base taco. And compare that to a Taco Bell taco, there's no comparison. And again, we're -- those 2 tacos are priced at parity. So huge opportunity, particularly because of the quality side. In fact, that's what gives us what we believe the pricing headroom to be able to improve both the bottom line and keep that value perception going. So we're doing it on 2 levels, is how we're beginning the process. One, certainly creating marketing around promoting not just our value but our quality as well. But we also have to communicate to the customers in the restaurants. And that is also another huge opportunity. What you're seeing here is our existing menu boards today. And if you're anything like me, the very first time I saw Del Taco menu boards, I had to step back and look at it for minutes before I could step up and begin to order. So it's very complex. And it's also not getting our guest's eyes where we want them to be. Clearly, the yellow was a massive draw. So we ran financial, operational and guest research on our menus. And not only that, we also conducted eye motion study. And of course, the eye motion study confirmed what common sense told us all, the [ 2002 ] had overwhelming influence on the guest view, which the issue is, it draws our attention to lower price and some of our lowest margin items. What we've done is we've initiated a recreation of our menu boards. We're launching -- actually it just launched this morning, in 15 California stores, 5 different versions of a new menu board. We're beginning to test that. Actually, the idea is that not necessarily we pick one of the menu boards as a winner. The idea is where you're going to choose what from each of those boards has been well received by the guests, and it may not look anything like 1 of the 5 we currently have in test. We chose 4 goals, specifically that we wanted to achieve with menu board. Obviously, it's drive strong margins and sales. Also improved speed of service to increase the labor efficiency and create a more simplified back of the house, while also staying aligned with our core strengths of freshness and value. And finally, what's most important, is make it easier for the guest to read. Our concepts that we're testing include a reintroduced [indiscernible], revised meal formats, boost attachment rates for drinks, prices and deserves, streamline the value menu to optimize for better margins and reduce back-of-the-house complexity. We're excited about it. and we'll be monitoring this daily as this goes along. So as you may have heard, I spent the majority of my career leading underperforming organizations and turning them into high-value assets. I don't know that I've seen a better opportunity for that to occur than with Del Taco today. It's been decades to literally multiple decades. Since the brand has evaluated its production flow, workforce deployment and its current operating system. So we've already formed a team that's beginning the process of basically reimagining how the kitchen is going to operate going forward. But, again, I have a 2 limitations. First, it has -- whatever they develop has to operate within our current 4 walls. And that means all the different style stores we have. Second and more important, is it can't affect quality. We have to maintain that. Short of those, we're examining everything that we use currently in our stores, and nothing will be left undiscovered. We will introduce those results in 2 phases. First, those that offer the best EBITDA results to improve margin and the simplest to execute. In fact, last week, we did just introduce our first one around shipped accountability that kind of, frankly, is almost a basic, you must operate this way, but Del Taco have been operating with shipped accountability. Huge opportunity that we believe in short term, we can see some significant margin improvement, but more of them will become. And then longer term, the initiatives that will introduce longer term will have a smaller impact on EBITDA or be a little bit more complex to execute. But either way, we see a huge opportunity for margin improvement. Some of it, instead of low-hanging fruit, some of it literally is picking the fruit level. And then I think I've got another note here. Talk about digital a second. You -- not really managed the way it -- as you can tell I'm really enthused about this. I want to talk about digital. You heard Ryan mention we've got kiosk. We do have in 4 stores that we were trying to make sure we could prove that it would work through our data systems and then would be seamlessly operated. We've been able to prove that, thanks with Doug's help. Next, we're launching another 4 stores to also focus now specifically on placement and marketing to make sure that the customers are more engaged with the kiosks. We're taking these learnings in preparation to eventually launch system-wide, but we're also sharing them with Jack in the Box as well, on what we learned. Second digital piece that we're really excited about, both Sarah and I, is catering, specifically app-based catering because it requires no capital investment. And it's kind of what everybody is used to at this point or they're going to it. But Sarah has significant experience in this field, I've got some limited experience and both of us realize, it could have a really good impact on us. The nice news is whatever we get on it is 100% incremental because we don't exist in it today. And also Mexican is just perfect for catering. So we're in the process of developing that now and hope to have it launched sometime in the next 2 or 3 periods as a test. So I was introduced to the Del Taco franchise community at the Del Taco conference, 5 weeks after I first joined Del Taco. Of course, I had -- all I had been doing was going on the listening tour and trying to listen and learn what the focus should be. So I didn't have any strategy to share with them. So instead, what I was able to share is I learned 2 things. It had to improve the relevance of the brand and absolutely a must. We had to improve their economics and profitability. So what you've heard today from both Sarah and I, is our initial thoughts on how to get to relevance and improve profitability. Sarah and I have been moving fast, but with discipline, and that's how we're going to continue to operate. We cannot be more proud to be the leader brand, with a 60-year legacy of quality and value into a more promising future. Same with the talent, knowledge and resources at both Jack and Del, we view that the next 5 years is going to have huge growth potential. Back to Chris?

Thanks, Tom. I was going to say, let's go devour some food, but you said don't devour anything.

Well, you can devour and after, we'll get. Now get ready.

So at this point, we'll take a break for those in the room, we're going to head out this way to Jack's Jack restaurant and try some food. And for those of you on the webcast, we will be back on at 10:45 Pacific, 01:45 Eastern, so about a 20-minute break. And we'll start that now. Thank you. [Break]

Welcome back, guys. Hopefully, you guys enjoyed that little snack or lunch or brunch. I don't know what you guys like the best, but my favorite menu on [indiscernible] for executive boxes, the tacos they have. How many tacos out there. I'm a taco guy. I don't know. There was a time in my life that I could eat 10 of those tacos. That was a long time ago. Anyway, thank you for -- again for sharing your time with us. My name is Tim Linderman, I'm the Chief Development Officer for Jack in the Box and Del Taco. I've been with the company now for 3 years. I've been in the industry for a little over 20 years. Absolutely love the business. I'm excited to share with you the development strategy and how it supports our vision of achieving the 5-year payback in a 2.5% net unit growth. It's clear looking at this map that there's a ton of opportunity available for both brands, even with Jack in the Box at 2,200 units nationwide, there's still room for growth in our mature markets, our emerging markets and more importantly, our new markets. We've demonstrated that over the past 3 years and all the development agreement signings that we've done in these markets. Today, we have over 80 development agreements worth 340 commitments with Jack. And we had over 30 development agreements with 200 commitments for Del Taco. And that was after the acquisition and with help of some of group [indiscernible] done. Keep in mind, and what Darin had mentioned earlier, we are the #2 player in Mexican QSR, with 600. So there's definitely a runway for us to grow the Del Taco brand even more. We opened 2 markets at Jack in 2023, which are the first that we've had in a decade. Jack has signed agreements in 6 new states, including one international market, Mexico and Del has signed agreements in 7 new states. The idea is to get into these markets, build them out using our new market playbook. And then we obviously want to build to awareness levels versus the 1s and 2s like we've done in the past. 2.5 years ago at Investor Day, Darin laid out the three-pronged approach to market expansion. The approach really hasn't changed. We still utilize all 3 avenues for growth, focusing on our most 2 recent markets, Salt Lake City and Louisville. Salt Lake City performs really well. It's our wagon wheel market with 5 stores in it currently. And we're expecting to expand that to about 15 in the next couple of years. Louisville is our true white space market. It has 2 company stores that are currently open. We think that we'll get somewhere around 10 to 15 in the next 2 years. Orlando. Orlando is our next white space market that we're looking at. Very excited about the opportunities there. Last year, we signed a franchisee to a development agreement there. We are also developing there. We're codeveloping that market. Just recently, we're going to open within the next year there as well. We just secured our first piece of real estate in Kissimmee, Florida. But more excitingly is -- or more exciting, is that we signed a franchisee, a new franchisee to a 10-store development agreement last week. And as you've heard from others today, we're going to take the same systematic new market playbook, and we're going to replicate it over and over and over into these future markets. We produced a strong pipeline and signed agreements that support our growth additions. We have 370 total for both brands, all of which are committed to open by 2027. This graph doesn't show the 200 additional commitments that we have for openings beyond 2027. And that number is going to continue to grow as we continue to sign development agreements in new markets. And then last year, we signed over 100 commitments for both Del Taco and Jack in the Box. So we're hoping to continue this trend of moving this business forward. The exciting part is the overall pipeline is translating to openings. We've seen an increase in openings over the past 3 years with Jack and the past year with Del. 130 of the commitments are sites that have been approved and are moving into the construction phase. This means that leases are getting signed. They're either in planning, they're permitting or they're already under construction. Once the deals get to this stage, we feel pretty confident that they're going to get open. We have a strong plan that accelerates each year to support that unit growth goal. Brian is going to go into detail on the numbers in his section. But for the development, our focus is still on identifying those markets, recruiting franchisees, finding sites and reducing that time line and that development cost. As far as enablers to support the growth, we're proactive in filling the funnel with franchisees, development agreements and sites, something that hasn't been done in a long time. And as we continue to -- we're going to continue to improve the efficiencies of that development process. And last, it's important to further reduce the build cost. And we're doing that through value engineering and synergies that we're finding between the brands. Our growth is supported by newly optimized and accelerated development process. First, we offer a compelling development incentive program. Second, we're proactive in site selection in the permitting process. So no longer are we waiting for franchisees to bring real estate to us. We're going to find that real estate. We're going to take it to them. And if they decide they don't want to do it, then we have an opportunity as a company to go ahead and build that store. We're also engaging political consultants, expeditors where possible to speed things up. Third, we've standardized the construction of best practices such as managing equipment ordering lead times. We've also partnered with our -- with key vendors, such as our signed vendors, our kitchen vendors to help improve procurement and installments. And fourth, we've value-engineered 3 prototypes, for Jack and for Del each, using the CRAVED and the fresh flex images. Here's our Jack value-engineered restaurant prototype and what it looks like. We have the walk-up drive-thru. We have the 2,300-square-foot building, and we have the 2,000-square-foot building. The walk-up drive-thru was a first company store that we opened in Salt Lake City, and it was a result of the learnings that we had in Tulsa, Oklahoma, the 2,300-square-foot building was a result of the learnings we got when we acquired Del Taco. We use their building and we drop our kitchen into it. The 2,000-square-foot building was a request from our franchisees, and it's sort of a hybrid between the first few prototypes that I spoke about. And we really feel that this 2,000-square-foot prototype will be the choice prototype for our future restaurants. It has a better economic model, and it should lead us to that 5-year payback in that $1.9 million investment. Similar story here with Del Taco restaurant prototype, we have the walk-up drive-thru. We have the 2,300-square-foot building, and we have the 2,000-square-foot building. They began with the 2,300-square-foot building that opened up in Kissimmee, Florida last year, and Jack utilized the shared learnings from this building as I just spoke about. And then we have the walk-up drive-through that just opened up in Albuquerque, New Mexico, which utilized the shared learnings from Jack. And like Jack, the 2,000-square-foot prototype, should also lead us to that 5-year payback in that $1.8 million investment. So part of our strategy is also getting these restaurants build faster and more efficiently. We built the team, we built that process, and now we're just laser-focused on shortening that time line. The biggest opportunities that we see in this process is the real estate and the planning and permitting. We're already starting to see results over the past couple of years. In fiscal year '22, we were over 30 months. Fiscal '23 last year, we were down to 25 months, and then this year, after our first 6 openings with Jack in the Box, we're already down to 21 months. So we're moving in the right direction. As you've heard, the team is driving the AUVs and improving margins. Our role in development continues to be picking the right markets, bringing the right franchisees on board and building that pipeline. And we're doing that. The good news is the market -- the new market playbook is working, and we see a substantial increase in sales in these new markets, as you guys have seen as well. So the synergies are coming together, and we're excited about it. So with that said, let me introduce Doug and he's going to talk to you about technology.

Thank you, Jim. Good morning, everybody, here in the room and on the webcast. Thank you for being here. My name is Doug Cook. I'm the Chief Technology Officer for Jack in the Box and Del Taco. I joined the business about 2.5 years ago. I've had the privilege and the opportunity to serve as brand technology leader for multiple or several multiunit have franchise, quick-service restaurant brands. Most long-standing in my time, almost 2 decades with Sonic Drive-in, helping that business digitally transform. Like my peers, I couldn't be more excited about the business of our 2 brands and our ambition. And so this has already been introduced to you many times. What's unique about technology is that as we dive into our technology strategy and plan for the next few minutes, technology supports the whole of our ambition. All of these goals are unlocked in so many ways by technology. And so when we think about EBITDA improvement, and we think about restaurant expansion, doubling our digital sales and AUV growth, these outcomes, technology is critical. I think we all agree in this room. It's essential to realizing these business outcomes. Now before I get into this, let me just say this, first of all. In my first few months on the job, it became obvious to me. Our technology, our key systems were old, we're outdated, hard to change and difficult to secure, and oftentimes, unreliable and unstable, getting in the way of operators serving our guests. Well, that in large part was due because of a lack of ongoing investments, many years of not investing in technology. So it was no wonder, of course, it was nearly impossible for us to respond to new ideas and rapidly innovate in order for us to compete with our peers. Now back to this slide, you might notice, I brought forth this paradigm that was in Darin's presentation, this idea of crawl, walk and run. Why did I do that? Well, in so many ways, the technology environment, the technology landscape, should I say, mimic the business environment that all of this management team walked into. Crawl, I think of it as stabilized. Walk, for us is modernizing the technology. Where we all want to be is running, and that's innovating, being to cutting-edge, catching up to our competition. It's not really catching up, more leapfrogging, right? And so what do I mean when I say stabilize? Well, when I think about stability and stabilizing technology, I think about uninterrupted operations. Our technology should never be in the way of taking, making, paying for or delivering the guest order, which should never interrupt daily business operations. But we were focused on stability, we're talking about our key systems and their performance and their availability. We're talking about attacking vigorously escalating help desk call volumes, things like reliably processing guest credit card payments and mobile orders not getting to a point of sale system. And I would all agree, right, that's just unacceptable and an unacceptable guest experience as well. So the good news is this, this is largely behind us. We've improved system stability over the last 2 years. In the last 12 months, we're now into the second phase of our technology plan and that's modernizing our technology. We'll spend the bulk of our time, the rest of our time talking about that. Now when we think about modernization of our tech, I think about rebuilding the foundation. A solid foundation that we can innovate upon. I'm thinking about increased quality through automation. I'm thinking about optimized IT cost. I'm thinking about a reduction in the variety of systems and tools that's required to run the business every day. Over the last 24 months since we joined the business, we've now assembled a strong technology team with really deep restaurant and digital technology experience. And that team has created a multiyear, as Darin said, a multiyear tech roadmap. It's like the headline says here, now have we created it, we're now executing on that technology modernization plan. Why do we modernize? Well, we're modernizing so that we can innovate. I just mentioned that we're aiming to catch up to our competition with technology. I don't want to catch up again, we want to be leaders. We will be leaders. And when we think about innovation, it's about introducing new business capabilities that allow us to accelerate enterprise value. Some of those ideas, Ryan has mentioned and Tony has mentioned, these are things like digitizing the drive-thru. Talked a lot today about AI voice ordering, computer-assisted voice ordering. So we can better, more rightly deploy labor in the restaurant. It could be paying the pedestal for speed of service. It could be digital menu rooms. It could be a lot of things, as we look to digitize our drive-thrus. It also could be AI, machine learning models to help predict guests and team member experiences. And like we saw earlier from Tony, the Fryer robot that helps us automate labor, may be optimize labor deployment. This is what we think about when we think about innovation. The modernization of our tech plan has to happen first. Okay. So how are we going to do this? How are we going to modernize our technology? I'd like to think of it as again, rebuilding our foundation, and we're going to do that through the enablement of what we call a unified commerce engine. This unified commerce engine really is supported by 2 key foundational platforms. Our new app really, our new digital ecosystem. You see the new app here, but really underpinning that app also is a martech stack. It's really a set of integrated marketing tools and data that flow off the app and our new POS system that allow us to unleash the power of data through our enterprise. Now many POS platforms -- excuse me, our POS platform is not like a traditional POS system that you might see in a brick-and-mortar restaurant location. It's different. It connects all of our ordering channels, both first-party and third-party, in-store and off-premise, and it'll be prepared for the next ordering channel that comes around the corner. It enables and unlocks loyalty. It also builds upon production-level guest experiences for our businesses and for our restaurants. It really puts the operator right back in the driver seat. So they can focus on delivering delicious food for our hungry guests. It simplifies that complex technology ecosystem, that menu ecosystem, multi-brand and multichannel menu environment. It helps our operators attain higher profits by using this platform that we're constructing. So I'm thinking about taking and receiving orders rapidly, and making orders accurately paying for orders reliably and delivering orders and serving guests wonderfully. You heard Darin say it earlier, everything we're doing in technology is no different, stands in support of this approach of being top-tier AUVs, doubling our digital sales. and improving store-level margins. Now let's go down a little bit deeper here and talk about each of these components. We're rebuilding, as I said, our digital ecosystem. Let's start there. We're not doing that just for technology sake. We're doing that to grow our digital sales to 20% and beyond. We're going to do that in a large way due to the strong technology capabilities that we've been able to assemble and a sound digital strategy that Ryan has set forth. We're taking our brands into the future with technology, starting with all new Jack in the Box apps, built on industry-leading design principles, supported by, underpinned by a digital platform. I want you to think of that as digital infrastructure that allows us to go faster and accelerate delivery over time. And we all know in this room, there's no shortage of new ideas, right? There's no shortage. The real question for us is how fast can our technology respond to those new business opportunities. With new apps and new integrated marketing tools and data, we're aiming to accelerate growth. Growth with increased acquisition, retention, sales. Based on reusable components, our technology approach encourages it invites incremental improvement, iterative improvement, test and learn mentalities, fail fast approaches and rapid innovation, and it readily supports not only Del Taco but any other brands we might acquire in the future. To achieved this, we've assembled a top-notch team with full control and full ownership, not only over the guest experiences, but also the underlying technologies. We're on an exciting journey here. We're creating world-class digital experiences, and we're repositioning, should I say, for reshaping our digital presence to be as cool as our iconic brands and more importantly, to unlock our ambition to grow digital sales to 20%. Now as I just mentioned, we're rebuilding, enhancing our digital ecosystem. We're also rebuilding our restaurant technology platforms. That's highlighted by our point-of-sale system and our restaurant network as well. Now these innovations that you see here, many of them have been highlighted by Tony, and Tom, all of these innovations, I've been talking so fast, I couldn't move the slide over. These innovations that you see here, we've been piloting and working with these innovations for months now. I think I already mentioned, Tom said was kiosk and voice AI ordering. We're actually learning from Del Taco's implementations. Those operational learnings and those technology learnings , for me are being incorporated into our technology roadmap. But here's the point. All of these innovations that you see here food lockers to get our drivers and our guests out of the drive-thru, whether it be, again, robotic fryers or the intelligent reordering or smart employee scheduling, whatever these innovations are, they become a reality. They become a reality with this new modern cloud-based POS platform. Now, we have, and we're excited, just to tell you that we've selected a new POS provider. At this stage, we're finalizing the agreement and then very shortly thereafter, we will start the implementation, the deployment of the system. And we're happy to also tell you that we are on schedule, and we are on track to complete that implementation of the POS at Jack in the Box by the end of 2025. And then we have all the intention to move into Del Taco shortly thereafter. What you see behind me is our business technology roadmap, a set of milestones that by 2027, will allow us to have a unified digital environment, ecosystem that's integrated with a fully scaled point-of-sale system for both brands, and also be supported by shared, consolidated corporate back-office systems. Now I don't have to tell you this, there's lots of work to do. And there's lots of investment to make, which I'm happy that we're doing and excited about. Brian will tell you more about that here shortly. Just 2 things that I want to leave you with. Number one, we're hearing from our franchisees a much different set of feedback. Early on, with some challenges with technology. Now we're hearing that technology is improving. We're on the right path, and they're in full support of our plan. And for me, with franchisees, that's music to my ears, excitement, buy-in and alignment. Also, when I walked in the door 2.5 years ago in the summer of 2021, I could clearly see that our technology was not competitive. As a matter of fact, it was holding back our business. I stand before you here today, I feel much differently. I feel it's different, and I'm excited about the future and our strong technology investments. And I look forward to us becoming a formidable tech competitor. Thank you. Let me turn the presentation over to our Chief Financial Officer, Brian Scott.

Thanks, Doug. I just want to reiterate our appreciation for everyone taking the time to come here to San Diego. For those listening on the webcast, we really appreciate that you take the time for this. We're really excited. Hopefully, that comes across, about our future here. I also just want to thank Chris and the entire team, the restaurant employees, our IT team, so many others that are involved in helping to put this together and orchestrating it. They've done a gentleman's effort and really excited about this event. So with that said, I'm Brian Scott, I'm the Chief Financial Officer. I joined the organization about 5 months ago now. I'm new to the industry, got up some of my entire career in accounting and finance. Most recently, I was the CFO of a public company for about 11 years. During my time there, we went from about $400 million to about a $4 billion revenue company. And really, our success in growing the business was built on having a great strategy, great systems and ultimately, a great team to execute. And so hopefully, you've heard today, just a small sample of our leadership team, how confident I am in our ability to execute and grow this business. And they're just a sample of this entire organization with expertise, passion and a vision towards growing this business. So I'm going to get into the numbers. I promised -- everybody is looking for some updates on operations and some of our financial targets. But I -- again, we have a clear ambition as an organization. We wanted to have that North Star and some of our targets for the long term. But why we're confident in our ability to execute on those? You've heard about a lot of that today. We have a great strategy. We got an excellent team to go execute against that now. And really, over the last couple of years, Darin and the team have put together a series of initiatives that we are not executing on to achieve these ambitions. CRAVED, you heard about. We think it's a differentiated approach in how we think about our menu, pricing and the way we serve our guests. And we're excited to roll that out to our Del brand as well. Tony talked about the tremendous opportunity we have to continue to improve our operations, unlock more value and more profitability for our franchisees. Doug just talked about our tech roadmap. I think we're moving to this point now where we can really invest in growing this business. We've got to underpin that with world-class technology, and we're on our way to achieving that. Del Taco, great assets, been with the organization, about 2 years now. And really, we're just starting to see the opportunity to drive that business forward, and we're primed for moving into years of growth. From a unit growth opening, the work that's been done over the last several years to really build that development pipeline is now really turning into new restaurant openings. And we're confident as we go through the next several years, we're going to grow that more, and we'll talk a little bit more about that in a couple of slides here. And ultimately, from our capital allocation plan, we are pivoting more to a growth mode. We talked about it on the earnings call, we're investing more in our systems, building restaurants and our teams. And so that's a really important part of our strategy is pivoting to growth. And ultimately, all of this is about delivering more value to our shareholders. So let me frame this up a little bit. You've heard about our ambition today. And a way to think about that is these are the North Star for us and how we're going to try to -- we're going to drive towards successes of business. Some of those targets are going to take longer to get to, but we want to make sure that everybody in the organization has clarity on where we want to get to and what success looks like. We provided our guidance several months ago for fiscal '24, which you see on the slide. I wanted to also give you a marker in between where we think is a very reasonable and achievable target for us by 2027. Some of these will move us very close to -- or achieve our vision. Others may take a little bit longer, but at least it frames it up for you is where we think we can be here over the next 3 years. From a same-store sales perspective, the last several years have currently been impacted by inflation and supply chain issues. And we're still feeling some effects in our fiscal '24 along with our friends in California making some legislative changes. But as we roll forward in the next several years, we think it's very realistic for this business to have a consistent, sustainable 2% to 3% same-store sales growth, you couple that with a new unit growth expectations that we've got, we think we can drive really strong system-wide sales growth to achieve our ambitions. Always focused on profitability, particularly for our franchisees, really starts with our restaurant -- with our restaurants, as Tony mentioned, the things we implement there, improve margins and then we roll those out to our franchisees. You see our restaurant-level margin guidance for 2024. We know there's more we can do. And so if you look to '27, we can get -- we think we can get to 23% to 25% on -- the Jack side, that gets us very closer to our ambition. Del Taco has more opportunity, but they also see those opportunities are going to execute against them, and we expect to get those margins to continue to increase over the years. From a G&A standpoint, we've invested in our talent and our teams. We brought in more folks on the development side on the technology side. So we feel like we've got a great foundation to build off of now. We've also been able to achieve a lot of synergies from the Del Taco acquisition. And so at this point forward, we felt we can leverage the team that we have. We'll invest where we need, but we know we've got opportunity to continue to drive our G&A down as a percentage of our total revenue. And then again, I'll talk about our net new unit growth, but we have a clear vision and a path to get to that 2%-plus net unit growth by fiscal '27. And ultimately, that digital that you continue to hear about, we think we can get close to that 20% by '27 as well. So I'll just touch briefly on Del Taco again. We talked about this a couple of weeks ago at the ICR Conference. I just want to reiterate again, our strategy towards getting to an asset-light model for Del Taco. Darin mentioned earlier, we've already gone from 50% to 70% by refranchising 111 of our nearly 600 restaurants last year, and we have conviction and clarity on how we can move to a plus 90% franchise model by no later than fiscal '26. We've got very interested franchise partners both existing and new, that want to have access to this incredible iconic brand. And with that, we want to bring partners in, they're going to build with us as well. So we have a great strategy. We're very confident we can get to that level over the next couple of years. On the synergy side, Darin mentioned, the $15 million, that was the original target, being like we're actually on track by the end of the year to be run rating at closer to $20 million or more of G&A savings, cost savings overall. And I think the other really key point is we've delivered a tremendous amount of value to franchisees at both brands through all the supply chain and bulk purchasing power we have in marketing, commodities and other areas, that it's dropping straight to their bottom line, and we'll continue to focus on more ways to bring synergies to both of our brands. So capital allocation. I'd say again, with this pivot we're making see driving growth. We always want to have a strong balance sheet but also continuing to bring value back to our shareholders. I think that -- we've been able to reflect in the last 4 years, we've been able to return about $600 million to our shareholders through both share repurchases and dividends. Our dividend is currently at about a little over 2% yield at the current share price. And that will still be part of our strategy. But the order of priority to see is, first off, investing in growth. We spent the last several years building the team and the strategy to go after growth and now we're primed to do it. And so that is our #1 priority. We talked about in the last call, increasing our investments capital, building restaurants and CapEx and technology, and I'll cover that more in a couple of slides. We always want to operate from a position of strength as well. We have a strong balance sheet. We continue to make sure we have that. We have proper -- appropriate level of debt and leverage. And then ultimately, again, we generate strong cash flow, and we can do all of these things at the same time, and we'll continue to be able to operate with our dividend and also return capital through share repurchases as we seek excess cash flow to do that. We had noted on our last earnings call for fiscal '24, we intend to repurchase $70 million to $80 million of shares. We're not expecting any changes in that strategy and also with our refranchising using the proceeds from that to also repurchase shares. So we have a balanced approach, a growth mindset, and we'll continue to evolve our capital allocation strategy as they progress. So just touching on our debt. As you're aware, we have a little under $1.8 billion of debt. Team's done really good job of putting this in place, very interval rate of about 4% overall, and our maturities are staggered in a way that gets a lot of flexibility. Over half of our debt is maturing in 2029 or later. So again, we feel like we're in a great place from a debt standpoint. We also, to the extent that we need access to capital in the near term, we've got about $200 million of borrowing capacity through our variable funding note and let our credit that are currently undrawn. We don't currently see a need for it, but to the extent that we do need access to capital, we have it available. From a leverage ratio point of view, we think it's appropriate for the business right now to be in a 4 to 5x leverage ratio range. We ended the year in fiscal '23 at about 4.6x, we expect we'll be right around 5x through this year. And so we feel like we're in a really healthy place, but we're going to be mindful of trying to stay at or around that range as we go forward, and we'll continue to evaluate the credit markets, the operating environment. But again, we feel like we're in a great place now, but we think that range of 4 to 5x is the right for our business. So to kind of piggyback on what Tim was talking about, he really laid the foundation there, all the work that's been done over the last several years, Tim really built that development pipeline, and that's now transitioning us into opening more restaurants. We had positive unit openings in fiscal '23. We intend out the same at '24. But really, the momentum is building as we look out for the next couple of years. We have development agreements. We have more and more permitted restaurants, and we feel confident that we continue to grow our new openings. We've got a compelling set of brands here, strong margins, strong AUV they're building and a lot of white space to grow into as well. And so as you see here as we laid it out here over the next several years, we believe that by '27, we could be up over that 2% as we look to strike to that 2.5% net EBIT growth in our ambition. So diving in, I talked a little bit after the call about our investments in capital, and you hear more today about why we're making these investments. We need to modernize our systems. We need to put our capital forward to help invest in growing in new markets and we make sure we have modern, relevant brand or restaurants. And so we want to make sure we're remodeling some of our older restaurants, both the company and helping our franchisees to the same. So you see the step up in fiscal '24. Again, our priority is they are really starting to build more company restaurants, and I'll touch more on why we think that's the right strategy, predominantly for new markets, but also even to support in existing markets. The investments we're seeing in tech going up to about $35 million projected for fiscal '24. You heard from Doug, a lot of the areas we're going to focus -- actually heard from everyone about the different things we're going to do. And I'll touch -- I'll go a little bit deeper on the next slide as well. We're now starting to get -- make progress on remodeling some of the older company restaurants. And we're also seeing more traction now partnering with our franchisees to help them remodel some of their old restaurants as well, whether it showed a modern brand image across the entire franchise. So when you look at this kind of $110 million to $120 million that we guided to in November, we think that's a good run rate going forward. At that level, we can sustain this growth strategy for the next several years. So I kind of gave you an example of where we think we'll be in fiscal '27. The point of this is '24, '25 through '27. We think that amount of spend will allow us to achieve all our objectives and work towards our ambition. And this doesn't even really contemplate a strategy I'll talk about whereas we build more company restaurants in concert with franchisees, ultimately, the Jack in the Box restaurants, we're going to want to re-franchise those as well, and we can take those proceeds, pull back in, and reinvest in the business again as well. So on the tech front, Doug kind of went through some of the areas that we're investing in today. So if you take that kind of $35 million, they were spending in fiscal '24, what I want to point out is it's almost equally split between digital marketing technology and our store operations. And then the other half is really still focused on some of our corporate systems. We need to modernize across the board. So as we're integrating Del, we're upgrading all of our corporate systems and infrastructure. It also includes the investment they make in our company restaurant POS's, but as we move forward over the next several years, we're going to be able to ship more and more of that tech investment directly into digital and store operations, and ultimately, a lot of the innovation you heard about today. So we think that's going to really help accelerate the business to move forward as well. So this idea about us building more company restaurants. We are predominantly a franchise model here, but we're also shifting the mindset of this business, getting back to growing restaurants. And so as we're going into new markets, we think it's a really smart use of our capital to be the leader in that in many cases. And we've demonstrated that already, as we talked about today, Salt Lake City and Louisville. And next, we're going to be going into Orlando. And we're pulling franchisees. They're getting excitement. They're seeing the results from that. But by putting our capital forward, we think we can accelerate our entry into new markets. Now, as those franchisees are one to join in, we can partner with them, drive down our operating costs, be more efficient in how we market in those -- how we use our marketing in those markets. And ultimately, as we get a couple of years out, we can resell those restaurants back to either those partner franchisees or others, and take that capital, redeploy it again. So we think this playbook one is the right thing to do for the business, and it's a great one because it's repeatable over and over again. It's also just from a shareholder perspective, we think it's a really smart way to invest capital. If you think about how we deployed excess cash over the last several years, share repurchases, we have been accretive providing that to our shareholders, but actually investing more in the business and the EBITDA we can generate from that, that it can actually drive more enterprise value and ultimately more value for our shareholders as well. The good news in this case, this isn't an either/or. We're going to continue to increase that investment in building new restaurants. But we'll, again, still be able to use excess capital to repurchase shares as well. I'll wrap it up here just talking a little bit about that payback period target of getting under 5 years. I think we've already demonstrated, as you heard today. We've got a compelling set of brands here. We've got very strong franchisee network, it's building. We have franchises that want to build with us today based on our unit economics. But we know that there's even more opportunity to be a leader in the space and really having the most compelling opportunity for franchisees. We're going to do that through what you heard today, bringing down the build cost with these really modern vibrant concepts, several different options depending on the market, bringing down that development timeline and having this tremendous white space opportunity. It is very unique in our industry. And then the focus we have on continuing to grow our AUV and margins. And so as you look at the AUV opportunity that we look ahead, the margin improvements that we can go after here for our franchisees. And if you continue to bring that build cost, we're confident that we can get to that sub-5-year payback period, which I think will be very attractive to continue to build our franchisee network. So with that, again, we really appreciate everybody being here. Obviously, hope you've heard today, our excitement and enthusiasm about this business and our opportunity and our confidence that we can achieve these ambitions. And with that, we're going to turn it over to Q&A.

Thank you, Brian. I always tell Brian, I don't know how you managed to sound like someone who's been here for 5 years when you've been here for 5 months. But today was no exception, good job, Brian. We are going to bring the team up and set up for Q&A. And kind of the way this will run is just raise your hand if you have a question. I'll kind of point to you a call on here. So that's clear. And if you could just identify yourself for the webcast, that would be great. And once everybody is comfy, we'll get going here. Yes. All right. Are you guys ready? Okay. Who's got a question? Alex, go ahead.

Alex Slagle from Jefferies. What really stood out to me the awareness of the Jack brand in so many different kinds of markets, whether it's markets you've been in or new markets that you haven't been to or just getting into. And it just feels like, I mean, the success of the social and the brand and getting out to what Jack really is all about and even beyond just the new market playbook, it just feels a lot different. I'm kind of curious how that level of awareness compares to what it was like in the past, when you were trying to go to new markets, less like for other regional brands that maybe want to go national, get a little bit further out and then probably extend that to the Del Taco as well. And just impressions on where awareness is now? Where that could go? What the pathway looked like?

Will you take that Brian?

Yes. I think, for us -- I kind of mentioned in my presentation, I think us just taking the time to understand who we are, being authentic to our brand has allowed us to expand and get our awareness across the United States. I mentioned with Del Taco a little bit, they're on the same journey. And so the excitement we are seeing across the United States on our brand, the demand we have in states, and to be honest, globally. We do this socially now. It is like I've never seen. I can't speak about before in the past, I wasn't here, but I just know with the focus of us here to really bring that brand consistency across everything we do is working. And I think Del is like just starting that plan for themselves. And I think there's nothing but runway for them.

Yes, we actually. You have access to the same data that they showed a year later. We don't pull out anything. We just requested that information with Del, so I'm going to get, but I won't probably mix up.

A couple of years behind that. Our focus is trying to build our relevance and reach down there. We actually would...

Great. Thanks, Chris. Thanks to the team. Great event. Wondering if you could talk a little more about the Jack in the Box restaurant growth opportunity. Maybe where it's coming from as we think about those sort of 3, 4 buckets, even existing franchisees versus prospective new ones. Any sense, Darin and team, on how that looks going forward over the coming years within the context of those stores...

When you say 3 buckets, you are talking about fortressing new markets and wagon wheel?

Yes.

Okay. I'll let Tim get into that. But as far as existing and new franchisees, our focus out of the gate was how do we make sure that we get our existing markets, map them, understand what the opportunity is, build an inventory list, what are all the trade areas we should be in our existing markets. Then go to our existing franchises and say, time to sign up now, and those of you who want to develop at this time. Otherwise, we're going to open this up to the world and corporates start developing. And as Tim said, we're -- the changes we're being proactive. We're going out with our real estate team. We're working with franchisees hand-in-hand, identifying real estate and saying, if you don't want to do it, that's fine, even if you have a development agreement. But the next franchisee over, just close this, we'll do it. If you don't, and if not, we'll do it. So that's a very different approach than no development agreements, no inventory list of what all trade areas we should be in and not a proactive development process. So that's a big shift that we've made over the last few years on how we approach it. So the majority of the early signings were existing. Now we're transitioning to still some existing based upon right side, right time, right area, and more getting into new franchisees. As Tim said, we just signed a new deal this week with Orlando, 10 stores out of Orlando. So a lot of the ongoing development will be with new franchisee at Jack, specifically.

And just to expand on that, as far as your 3 buckets as well between mature ones, emerging markets and new markets. What we see are pipeline of a request for franchises -- franchise coming in, we're seeing it almost equally, like, for instance, that's at our #1 and #2, #1 for Jack, #2 from Dels out of Florida, but then we -- California is in there as well. So we have interest all across -- in all 3 of those buckets, should grow the brand.

The focus is, fill in existing, specifically for Jack, because that was our approach to start, start to edge into the other markets, the wagon wheel and then approach 2 or 3 new markets. We didn't want to go just open up all the U.S. for new. We are going to do it in that kind of order. And then for Del, the same thing, part of the AUV at Del, the opportunities, go ahead and build existing markets to their full capacity. That's one of the things why AUVs aren't as strong as they are our nearest competitor is because we don't fully develop in, say, where we're most penetrated. L.A. is an example. We have tremendous growth still in L.A., and then awareness levels go up. So whereas at Salt Lake City or Las Vegas, where we have a high penetration level compared to the opportunities and more cost for marketing TRP, guess what, sales are high. So we know there's a huge opportunity there to go fill in existing markets with Del.

Andrew Charles from TD Cowen. Thank you for the important day, for all the work behind it. Brian, a question for you. The goal to get to 23% to 25% Jack company-owned restaurant margins, can you talk about the drivers behind that? 2%, 3% same-store sales growth leaves more that needs to help lever the margins. So if you kind of help put a magnitude of order behind it, is it the remaining -- I think the company-owned stores around 60% penetrated towards the 200 basis points of target, is that kind of the highest order of magnitude? If you could just help us kind of fill in how you plan to get there?

Yes, and it's multipronged. So I think those operational improvements we've already identified. There's still more. We'll roll those out completely. That's going to be an element of it. And there's more, though, as we talked about. As we implement better technology platforms, we can drive more innovation in the front of house and back of house, which we know will bring down food costs, it will improve our labor efficiency. So all of that is really just -- it's just we got to have the right platforms in place to be able to execute. And so over the next couple of years, we'll be able to do that as well. And then, as we drive up our AUV, we're just -- we're going to get more labor efficiency, more efficiency on rent and other areas. So it's kind of that multipronged approach that we go over the next couple of years, have those technology pieces in place, we can continue to roll those out.

And a quick follow-up. Just on the development side, the plan to get to less than 5-year cash paybacks. If I just take the $203,000 of franchisee cash flows disclosed for '23, taking that it's probably about $1.9 million for new store. It's more than that. And so what are kind of the key steps that you're doing to help you get from roughly 10-year...

Yes. Let me also clear about that, well, $200,000. You can jump in here.

$200,000 is the existing base of stores that have -- as we re-franchise, we have a high rent capacity on those because we get spread rent. So that's not your typical new build, right? So new build is going to be higher potential EBITDA just because of the rent alone, and then the volumes are higher as well. So its flow through is higher. So when you look at a payback period, currently with what has happened over the last couple of years, inflation, increase in costs, we know we've taken some through value engineering up. Through a smaller box, we made up for that inflation, and we still think there's more opportunity. So overall, we're probably running now from a 5- to 7-year payback, and we think we're getting closer with some of these recent bills under -- I mean, obviously, we have Salt Lake City volumes. It will be less than 5 years, maybe more like 2, but -- and we hope to have more of those. But hopefully, that answers your question.

Jake Bartlett on Truist Securities. My first question is about just the target for unit growth, so 2% to 2.5%. And Darin, 3 years ago, you even talked about 4%. So one is the 2% to 2.5% is both brands combined. So I'm wondering whether how much that's kind of -- whether Jack in the Box is faster or Del Taco is slower, it just happened, but what are the main drivers in your mind as you've gone out in the last 3 years that surprised you given the more limit growth that you're seeing?

I think to kind of step back, we said 4% is the ambition, right? That was more like it. We go aggressively, we think we can get to 4%. The reality is this new team, new knowledge of the system, new knowledge -- what is the trend in history. We were looking at trends. We didn't have a lot of deep knowledge on how consistent the pipeline was, how consistent the franchisees were developing, what capability they had to develop. And so what we found out was we were further behind than we realized, on not only having a pipeline because that pipeline had dried out from the lawsuit. And so that trend -- that historical trend of 16 to 18 restaurants per year wasn't there. There wasn't a pipeline that has not been searching for real estate. We didn't have the capabilities in hand. And so that was something we underestimated as we looked into our business and just didn't know because we were so early on in the process. And the more we got into it, we're like, okay, we have to build this from scratch, we have to get aggressive. We have processes that were broken. For example, we didn't have development commitments. Those development commitments were more a franchisee raised his hand, and we had a policy in place that if you were the closest franchisee to a trade area or a site, you have first right. My first year, we lost 5 sites because a franchisee brought it to the table and the other franchisee nearby said they want to do it and they never did it because there weren't development commitments. So those were things that we learned as we were in the middle of it, saying, 4% probably wasn't realistic, and then, we had a lot of headwinds come, inflation, COVID, all the things that happened, and it disrupted the pipelines. Now, we have a better understanding of where we are. We've built a pipeline that has solid data behind it that says we've got sites coming, we have development commitments. And so that's the majority of it. So we're further ahead at Jack, but we're rapidly getting there with Del because of re-franchising. And we knew we already had that built up demand internally for Jack with capable developers, people we knew in our system that we're going to develop or already developing. So we feel that Jack is out in front of Del on a percentage basis. What did we say, probably, roughly a percentage of Jack versus Del?

It's around 70-30.

Yes, 70-30. And then we see Del catching up very quickly.

I mean, purely on the net unit growth, the percentage is going to be a little bit higher than Del because the base [indiscernible] of restaurants is so much lower. But Jack is going to be a much larger contributor overall, and they're -- it's not materially different than -- if you just talk about Jack separately, we still have the ability to get to that 2% plus.

I had 2 questions. The first was just -- I think it might probably be for Brian, the first one is within the 2% to 3% long-term -- sorry, long-term comps, what is the traffic and check assumption within that 2% to 3%? And then I have a second question.

So I think it's -- I'll try to [indiscernible]. It's going to be -- I think pricing is going to be still a strong contributor just with the menu innovation and some of the things we are guiding on the Del side. Yes, traffic is still a bit of an unknown. We think it has -- it will improve over time, but we think it's going to be more pricing than traffic.

And we're not providing guidance around traffic or...

My other question was just -- you touched a little bit in terms of how much capital you're spending on both company remodels and also contributions of the franchisees. Where do you think the asset base stands today? And then, if you look out the next 5 years, how much of the system do you think gets reimaged? And how much of -- like what does that cost and how much of it is you guys versus the franchisees in terms of who's spending that money?

Yes. So we haven't set a mandate in place to say we want the whole system remodeled by certainty. That was not our focus. Our focus is to show that we have a good return, we've done that, I think, with our initial step, which last year's remodel -- when 2 years ago was designed to those 400, what we call, ugly babies, let's focus on those 400 that are really outdated and try to get a significant amount of those refreshed. That was an initial program before we had the CRAVED reimaging. How many of those have signed up so far...

114, will be that from our side.

That are already in permitting process. More than that have signed up, but the amount they've already permitted is the 114, correct?

Correct.