Construction Essentials Every Franchisee Needs to Know

Are you thinking about investing in a Jack in the Box franchise? Then you're probably interested in how the construction process works once you get started.

The journey from a promising piece of land to a bustling quick-service restaurant (QSR) can seem daunting, but it doesn't have to be. Mike Wahrer, Jack in the Box's VP of Design and Construction, is here to demystify the process.

In this podcast, we will tap into Mike's decades of experience in the QSR industry. His insights offer a clear roadmap for both first-time and experienced franchisees.

The Changing Landscape of QSR Construction

The QSR construction industry has evolved significantly over the years, with recent changes accelerated by the COVID-19 pandemic. Two key factors now shape the landscape: inflation and a labor shortage.

• Inflation and Cost Pressures: Since the pandemic, there has been a noticeable spike in the cost of labor, materials, and land. This means that a project's budget and timeline need to account for these increased expenses.

• A Decline in Experienced Labor: Many skilled tradespeople—from plumbers and electricians to city and municipal employees who handle project approvals—retired during the pandemic. This has created a gap in experienced professionals, which can lead to longer timelines and a need for careful contractor selection.

Despite these challenges, Mike emphasizes that it's still possible to build a successful restaurant. The key is to be prepared and work with the right team.

Our Flexible and Supportive Approach

One of the unique benefits of franchising with Jack in the Box is the flexibility and robust support system provided to franchisees. Unlike some brands that might dictate which contractors to use, Jack in the Box is open to collaboration.

• Your Preferred Professionals: If you have an existing relationship with an architect or a general contractor (GC) you trust, Jack in the Box will work with them. The only requirements are that they have experience in QSR drive-thru development and are properly licensed.

• In-House Expertise: For those without a preferred team, Jack in the Box maintains a list of pre-vetted architects and GCs who have a proven track record. The company's in-house team of design and construction managers will guide you every step of the way, from training your chosen architect on Jack in the Box's fully engineered prototypes to helping you navigate the permitting and construction phases.

• Streamlined Project Management: The process is managed using a sophisticated project management system. This system is the central hub for all communication and scheduling. It allows Jack in the Box to track your project's milestones, ensuring all necessary vendors—from kitchen equipment suppliers to marketing teams—are notified and ready to support you at the right time. This coordination is critical to a project's success and helps avoid costly delays.

Common Misconceptions and Key Considerations

For a first-time franchisee, the process can feel overwhelming. Mike highlights three common misconceptions people have when they begin a new build.

• The true cost of development. Many people underestimate the total cost of a new build, which goes beyond just construction. It includes everything from site selection and land costs to "soft costs" like architectural fees and permits.

• The overall timeline. While a conversion might be faster, a ground-up build can take up to two years from site selection to opening day. It's crucial to understand that a significant portion of this time is spent on due diligence, design, and navigating complex municipal permitting processes.

• The ideal size and shape of the property. Not every piece of land is suitable for a QSR. Even if you find a location in a prime spot, a key red flag is a lack of space for two critical operational elements: a delivery truck and the drive-thru lane.

How to Select a General Contractor

Choosing the right general contractor is one of the most critical decisions you'll make, and it's essential to do your homework. Mike offers a checklist of what to look for beyond a good price:

1. Financial Stability: Check their financial standing through a Dun & Bradstreet report to assess their financial risk.

2. Reputation and History: Look up their track record with the Better Business Bureau for any complaints and how they were resolved.

3. Insurance and Bonding: Request a copy of their insurance certificate and a letter from their bonding company. A bondable contractor has been financially vetted by a third party who is willing to stand behind their work.

4. Check References: Don't just ask for a list of past projects—actually call their references. Speak with former owners and other subcontractors to get a full picture of their communication, professionalism, and ability to stay on budget.

"You get what you pay for" is a saying that particularly applies to QSR construction. Hiring an experienced, highly qualified team is an investment that can significantly impact a restaurant's long-term success.

New Builds vs. Conversions

When evaluating a potential site, you'll likely consider a ground-up build or a "second-gen" conversion of an existing building. Both have pros and cons.

Pros of a Conversion:

• Zoning Advantage: A huge benefit of a conversion is that the property is often already zoned for a drive-thru, bypassing a potentially lengthy and complex entitlement process with the city.
• Shorter Timelines: If the existing infrastructure is in good condition, a conversion can have a much shorter timeline than a ground-up build.

Cons of a Conversion:

• Infrastructure Challenges: You might face hidden issues with old plumbing, electrical, or structural components that don't meet current codes, which could increase costs.
• Layout Limitations: The existing building may not accommodate Jack in the Box's specific "kitchen engine" layout, which can be critical for operational efficiency and drive-thru service.

At the end of the day, Mike and his team are dedicated to finding the most cost-effective solution that sets you up for success. Whether it's a small pad site or a freestanding location, Jack in the Box's flexible design and hands-on support make it possible to fit a restaurant into a wide variety of scenarios.

A Personal Guide Through the Construction Process

So you've found the perfect site for your new Jack in the Box. What happens next?

From the moment a site is approved by the corporate team, you're not alone. We assign a dedicated Construction Manager (CM) to your project, who will serve as your personal guide through every step of the development process.

The journey begins with a kick-off call. This meeting is designed to get the project started on the right foot, ensuring all the key players are aligned from day one. On this call, we'll help you:

• Finalize the Site Plan: We'll review the site plan and provide feedback to ensure it's laid out correctly for a Jack in the Box restaurant.

• Select the Right Prototype: Jack in the Box offers various prototype buildings. Your CM will help you choose the building that best fits the needs of your property, your desired throughput volume, and the overall look and feel you want to achieve.

• Confirm Your Team: We'll work with you and your chosen architect to get them up to speed on our systems and processes.

Once the project is underway, your CM will be your consistent point of contact. They're not there to micromanage, but to walk side-by-side with you, offering guidance and support tailored to your needs. They'll check in every few weeks to:

• Track Milestones: The CM will help you stay on schedule, monitoring key dates for everything from your LOI negotiations to submitting architectural plans for permits.

• Ask the Right Questions: For first-time franchisees, the CM acts as a development partner, helping you ask the right questions to consultants, surveyors, and city officials to ensure you're not missing any crucial steps.

• Coordinate with All Departments: Using our project management system, your CM will keep every internal department at Jack in the Box—from kitchen equipment to marketing—informed about your progress. This "just-in-time" approach ensures that everyone is ready to support you when you need them, preventing unnecessary delays on the back end.

For experienced operators with their own development teams, the CM can take a more hands-off approach, simply tracking dates to keep internal teams updated. But for those who need more support, they'll act as a constant resource, ensuring all touchpoints are covered and the process runs as smoothly as possible.

One Tip for Your Construction Journey

There's one common regret we hear from franchisees after they complete their first project: "I wish I had done more research on my general contractor."

When you're gathering bids from contractors, it's easy to get sidetracked by the lowest price. But it's crucial to look beyond the initial number. Here’s a tip to help you avoid surprises down the line:

• Read the Fine Print. Along with their bid, most contractors will submit a list of inclusions and exclusions. It's often buried in a separate attachment and written in fine print, but this is the most important part of the bid package. Read through it carefully and compare it across all the bids you receive.

• Ensure an Apples-to-Apples Comparison. One contractor might exclude something you need, while another includes it. The one with the lower initial bid might end up costing you more in the long run through change orders. It is always much cheaper to get something included in the original bid than to pay for a change order later.

Take an extra week if you need to. Go through every line item and ask questions to make sure you're getting an apples-to-apples comparison. The contractor who seemed more expensive upfront might actually be the most economical choice once you factor in everything that's included in their bid. Doing your due diligence now will save you a significant amount of time and money down the road.

Check Out These Additional Resources

We hope this podcast gave you a better understanding of how the franchise construction process works.

At Jack in the Box, we work with our franchisees every step of the way in order to get their restaurants up and running.

Here are some additional online resources you may like to check out:

• Is Now a Good Time to Become a Franchisee?
• How Much Does a Jack in the Box Franchise Cost?
• Owning vs Leasing Real Estate: Pros & Cons

If you have any questions, please contact our franchise sales and support team.