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JACK IN THE BOX TRANSFORMS TO TECHNOLOGY, TRAINING, AND RESEARCH TO EASE ITS LABOR SMALLAGE

Dec 14

Jack in the Box just finished a quarter in which the labor shortage both hurt sales and reduced margins at its sites. The outlook for next year is not much better.

Executives at companies say that fixing this problem will require several strategies. It will not be about how much restaurant workers get paid, even though that is on the rise.

Darin Harris, the CEO, stated that attracting and retaining talent, will require more than just money. "We will offer competitive pay, better training, and most importantly, a strong cultural environment that offers career opportunities and an environment that inspires people to work in Jack in the Box.

All types of restaurants have experienced labor shortages. Restaurants are not uncommon to close or reduce their services temporarily. Restaurant operators are looking to increase wages in order to attract employees.

Jack in the Box believes that labor shortages caused a 3% drop in sales in the quarter just before. It is not optimistic that the company's sales will rise next year. The company predicts that wages will rise by between 8% and 10% in the 2022 fiscal year. The year started on October 4.

This has led to price increases and lower margins than the average. The company said it expects to increase menu prices in the "mid-to-high-single-digits. "

In order to meet the shortage, operators have had to develop many strategies. Many of these strategies focus on recruiting.

Instead of having managers oversee the process, the company uses app-based and mobile portals to speed up and select employees. To attract employees to its restaurants, the company uses social media channels and online channels. Restaurant workers are increasingly demanding daily pay as a condition of employment.

Jack in the Box uses shift differential pay to lure workers to the late-night hours where the chain has had the most problems. Darin Harris, CEO of Jack in the Box, stated that this has led to a 25% increase in operating hours and is now stabilizing.

Technology that improves operations is also an issue. Technology has been used by many restaurants to make their jobs more enjoyable, less stressful, and more efficient.

Jack in the Box CFO Tim Mullany informed investors that the company would be testing robot fryers. It also plans to test automated drink machines and self-cleaning milkshake makers. Doug Cook, chief information officer of the company, has been appointed to help restaurants better manage labor. He has ideas for artificial intelligence.

Despite the challenges, the majority of Jack in the Box's 2,200 U.S. franchisees remain financially sound. The company's executives are optimistic that they will continue to invest in labor.

Harris explained that he shared his financial strategy with franchisees. Harris highlighted areas where technology can be used to lower costs. Harris stated that there was a positive discussion about ways to take on more labor points. Franchisees are in great health. They have strong cash flows.

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