Jack in the Box Franchises Make $216k Profits (+ 2022 Costs)

With over 2,100 stores across the US, Jack in the Box are very popular fast food franchises. But with an investment north of $2 million, it isn’t cheap either.

So is Jack in the Box a good investment as a franchisee? Should you start a Jack in the Box franchise?

In this article we’re looking at how much profits you can make with such a business, how much it actually costs and, more importantly, whether you should invest in a Jack in the Box franchise.

Let’s dive in!

Jack in the Box: key figures

Franchise fee	$50,000
Royalty fee	5.0%
Marketing fee	5.0%
Investment (mid-point)	$2,195,800
Average annual sales	$1,755,503
Investment to sales ratio	0.8x
Investment payback*	12.5 years (mediocre)
Minimum net worth	$1,000,000
Minimum liquid capital	$250,000

What is a Jack in the Box franchise?

Jack in the Box is an American fast food restaurant chain known for its signature “Jumbo Jack” burger and a waffle breakfast sandwich.

Headquartered in San Diego, California Jack in the Box was founded in 1951 by Robert O. Peterson.

It serves a variety of chicken tenders and French fries. Also, it offers hamburgers, cheeseburger sandwiches, and international-themed foods such as tacos and egg rolls.

Jack in the Box began franchising in 1982 under the brand name Jack in the Box, Inc. Today, it has grown steadily and has more than 2,100 stores in the US and globally today. The vast majority of these stores are franchise-owned (1,940 in 2021).

Jack in the Box franchises: pros and cons

Before starting a Jack in the Box franchise, it is important to know its advantages and disadvantages.

Pros

• New market potential: The chain is fast growing in the U.S. and globally. Franchisees are offered opportunities in potentially growing markets and locations. For instance, would-be franchisees can access 3,750 potential locations in new and existing markets in the US. It also offers incentives for franchisees who wish to operate multiple unit stores.
• Digital marketing: Jack in the Box encourages entrepreneurs to think outside the box. It has adopted online ordering through its mobile app. This offers customers efficiency and rewards loyalty.
• Innovative menu: Jack in the Box is well known for its bold and varied menu. They have updated their menu to meet customer tastes and trends, giving them quality and diversity. For instance, their best-selling products are the Sourdough Jack and Jumbo Jack, along with tacos, salads, and chicken sandwiches, as well as fried rice and eggrolls.
• Convenience: The chain emphasizes its drive-thru experience for new franchisees to implement in establishing new restaurants. It also provides a 24/7 breakfast and menu, which ensures customers grab their favorite food at any time, day or night. This convenience sets them apart from their competitors and appeals to a large number of customers.
• Excellent corporate support: The franchisor’s assistance to its franchisees is critical for their success. As a result, Jack in the Box provides solid support to new franchises in their operations. Franchisees get everything to help them grow and become profitable—from the research and development of the restaurants to operations, effective technology systems, marketing, and 24/7 desk support.
• Financial assistance: In some instances, Jack in the Box offers franchisees financial assistance. This is in the form of “built-to-suit” arrangements to assist franchises in constructing their restaurants. They may also offer a loan of $150,000 at a zero-interest rate towards development costs.

Cons

• Intense labor requirements. The chain restaurants run on a 24/7 service system. This, although it is an efficient system, can be very demanding for the franchisees. They need to incur extra costs as well as staffing and training requirements to operate 24 hours a day.
• Unhealthy menu: Despite having a wide variety and an innovative menu, Jack in the Box food may not be that healthy. Some of its menu items contain a lot of calories, which is a drawback for customers looking for healthy eating options.
• Competition: Jack in the Box faces some stiff competition from top leaders like Burger King, McDonald’s, and Wendy’s. In addition, changing customer tastes and eating trends affect franchisees’ growth and profitability.

How much does a Jack in the Box franchise cost?

You need to invest on average $2,195,800 to start a Jack in the Box franchise.

The investment amount is an estimated average that can vary based on several factors (location, current market price, etc.). The investment ranges from $1,697,000 up to $2,694,600.

In addition to the initial franchise fee of $50,000, the investment cost should cover all the expenses below:

• Formation costs are those costs required before starting the operation of the business; for example, fees for trade area survey analysis, architect fee, environmental assessment, on-site improvements, building improvements, furniture, equipment, pre-opening training, uniforms, business licenses, etc. 
• Operating expenses are those costs which needed in operating the business; for example, Initial inventory, additional funds for the first 3 months as working capital, etc.

Type of cost	Investment amount
Initial franchise fee	$50,000
Formation costs	$1,468,500 – $2,163,000
Operating expenses	$178,500 – $ 481,600
Total	$1,697,000 – $2,694,600

How much can you make with a Jack in the Box franchise?

On average, Jack in the Box franchises make $1,755,503 in sales in a year. This amount is the annual median sales of 1,940 franchises operating in 2021 in the US. 

Here’s the breakdown of the 1,940 franchise-owned restaurants:

How profitable is a Jack in the Box franchise?

If you’re considering opening a Jack in the Box franchise restaurant, then you’re in luck. Unlike most other franchises, the franchisor discloses a lot of helpful financial information.

For example, Jack in the Box provides a profit-and-loss for all its 1,940 franchise stores which we have summarized below.

All in all, as a Jack in the Box franchisee you would make $215,927 in profits per year. This corresponds to a 12% EBITDA margin.

This is slightly below the industry average for fast food franchises, mostly because of the high rent costs (11.7% of sales on average vs. 7-8% for industry) as well as high royalty and marketing fees (10% vs. 7-8%).

Here’s the full breakdown:

Profit-and-loss	Amount ($)	As % of sales
Sales	$1,755,503	100%
COGS	$(475,741)	27.1%
Labor	$(507,340)	28.9%
Rent	$(205,394)	11.7%
Royalty + marketing fees	$(175,550)	10.0%
Adjusted EBITDA	$391,477	22.3%
Utilities, other	$(175,550)	10.0%
EBITDA	$215,927	12.3%

Is a Jack in the Box franchise a good investment?

Now, you may be wondering whether these $215,927 profits per year are worth the investment cost of $2,195,800.

In order to find out, we need to estimate net profits (and not EBITDA). Net profits are the profits after all expenses have been paid (including non-operating costs, taxes, debt interest, etc.).

Assuming net profit margin is 10%, this means the average Jack in the Box has a net profit of $175,550 per year. Now, if we compare this to the investment cost, we can easily calculate the payback period: the time it takes for a franchisee to reimburse her/his investment.

We found out that it takes over 12 years for a Jack in the Box franchisee to recoup her/his investment: no need to tell you this isn’t a good investment. Think about it, you would have to wait 12 years to finally make a profit out of your business. As per our intelligence, anything below 4 years is good for similar franchises and a payback period of 5+ years is mediocre.

Yet, note that this is based on the average of the 1,940 Jack in the Box franchises. Therefore, your restaurant may be more profitable than the average, and a better investment. In any case, before you apply we recommend you look at your financial projections to find out what’s your payback period.

How does it compare vs. other franchises?