Skift Take
If you're going to pay people a fair wage, you can't sell food for less than it takes to source, prepare, and serve. Rising prices are good in the long run.
— Jason Clampet
Taco Tuesday just got more expensive, at least for diners in the Golden State.
Jack in the Box Inc. says its franchisees have hiked taco prices at some locations due to wage increases taking hold across California. The San Diego-based fast-food chain is largely concentrated there, where the minimum pay was raised to $11 an hour this year for large employers, compared with $10.50 a year ago.
Tacos used to be two for 99 cents at Jack in the Box. Some menus now list two for $1.29, and a customer’s online petition is looking to reverse that.
“We did allow the lid to lift on taco pricing,” said Carol DiRaimo, head of investor relations at the chain, during an investor conference Wednesday in New York. “As minimum wage in California started to creep up toward the $15 mark, it doesn’t necessarily make sense from a profitability perspective for our franchisees to continue at that price point.”
As it has raised menu prices, Jack in the Box has lost some of its budget-conscious customers to competitors including Hardee’s, Carl’s Jr. and Taco Bell, DiRaimo said. They’re seeing more competition from value offerings at rivals, like Taco Bell’s recently advertised $1 nacho fries.
In its latest quarter, Jack in the Box same-store sales fell 0.1 percent, its fifth straight quarter of declines. That’s driven the company’s stock down about 25 percent in the past year.
©2018 Bloomberg L.P.
This article was written by Leslie Patton from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected].
