Jack in the Box's New Initiatives Help Increase Sales

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Jack in the Box's New Initiatives Help Increase Sales

SAN DIEGO -- Jack in the Box Inc. reported its net earnings totaled $21.8 million in the second quarter ended April 16, 2006, compared with $20.7 million in the same quarter a year ago. Year to date, net earnings totaled $47.0 million compared with $46.1 million for the first half of fiscal 2005.

"Our restaurants continue to benefit from our holistic approach to reinvent the Jack in the Box brand, especially in the areas of menu innovation and service," said Linda A. Lang, chairman and CEO. "We're doing a better job of meeting the expectations of our core customers and are attracting new customers to our restaurants, which we attribute to the addition of high-quality products, like our line of entree salads and ciabatta burgers and sandwiches."

The company's system total is composed of 2,055 restaurants in 17 states. The company also operates a proprietary chain of convenience stores called Quick Stuff, with approximately 50 locations, each built adjacent to a full-size Jack in the Box restaurant and including a major-brand fuel station. Additionally, through a wholly owned subsidiary the company operates and franchises Qdoba Mexican Grill, an emerging leader in fast-casual dining, with more than 280 restaurants in 40 states.

Same-store sales at Jack in the Box company restaurants increased 4 percent in the second quarter, with an increase in both average check and transactions, on top of a 3.1 percent increase in the second quarter of 2005. Year to date, Jack in the Box same-store sales increased 4.9 percent on top of a 2.6 percent increase for the same period in 2005. For the second quarter, system same-store sales at Qdoba Mexican Grill increased 5.6 percent on top of a 14.6 percent increase in the second quarter of 2005. Year to date, system same-store sales at Qdoba increased 6.8 percent on top of a 13.5 percent increase for the same period last year. Qdoba, which has experienced 27 consecutive quarters of positive comparable sales growth, continued to be accretive to earnings for the quarter.

The company continued to effectively execute its strategy to reinvent the Jack in the Box brand by focusing on menu innovation, upgrading service execution and reimaging the restaurant facilities, including:

• The opening of 40 to 50 company and franchised Jack in the Box restaurants, including 10 to 12 with new Quick Stuff convenience stores. Jack in the Box lowered by five the range of its forecast for new company and franchised restaurants due primarily to construction delays and the timing for entering new contiguous markets, which is now planned for 2007. Guidance for new company and franchised Qdoba restaurants is at 80 to 90 locations, five fewer than previously forecast due to construction delays.

• On menu innovation, Jack in the Box introduced two premium sandwiches in the second quarter: the Sourdough Ultimate Cheeseburger and the Chipotle Chicken Ciabatta Sandwich. The Sourdough Ultimate Cheeseburger features two jumbo beef patties topped with mayo-onion sauce, mustard, ketchup, and American and Swiss-style cheese -- all served on the chain's signature sourdough bread. The Chipotle Chicken Sandwich features a choice of grilled or spicy crispy chicken with green leaf lettuce, sliced tomatoes, bacon and real cheddar cheese topped with a smoky chipotle sauce on the chain's signature hearth-baked ciabatta bread. Jack in the Box also added an Orange & Cream Shake to its lineup of real ice cream shakes.

• On upgrading service execution, the company continues to build upon several initiatives rolled out during the past two years. These include new training and tools to increase engagement among restaurant team members, as well as new internal-service programs to attract and retain high-caliber employees.

• On enhancing its restaurant facilities, the company began a market test of a comprehensive reimaging program that includes a new exterior and interior paint scheme, upgraded decor and furnishings, music, uniforms, menu boards and landscaping. The new program, introduced at the company's 17 restaurants in Waco, Texas, is intended to create an inviting atmosphere that reflects the personality of Jack, the chain's fictional founder and popular spokesman.

• Through new restaurant development and the sale of company restaurants to existing franchisees, Jack in the Box is executing its strategy to expand franchising to generate higher returns and higher margins, while mitigating business-cost and investment risks. Additionally, the second-quarter sale of 13 company Jack in the Box restaurants to franchisees increased the percentage of franchised restaurants to 27 percent of the Jack in the Box system at quarter end compared with 24 percent a year ago.