Jack in the Box Inc. reported results for its 4th quarter ended Oct. 3, with net earnings of $4 million, or 7 cents per diluted share.
This is compared to $40.6 million, or 70 cents per diluted share, for the 4th quarter 2009.
Fiscal 2010’s net earnings dropped more than 40 percent from last year, totaling $70.2 million compared to $131 million from FY09.
Numbers were affected by food and packaging cost increases, commodity prices up approximately 3 percent, payroll and employee benefits costs up slightly, and higher occupancy costs.
The 90 percent decline from last year, however, is mostly attributed mostly to the cost of closing 40 units. According to the company, these closings cost $28 million.
“Jack in the Box company same-store sales declined 4 percent in the fourth quarter and continued to be impacted by high unemployment in our major markets for our key customer demographics. With that said, we believe the investments we have made around service consistency and making noticeable quality improvements to some of our signature products are beginning to resonate with our guests,” said Linda A. Lang, chairman, CEO and president of Jack in the Box Inc.
Among those improvements include the completion of the re-imaging program systemwide, which is expected to end next year.
The company’s 40 closings were offset a bit by the opening of 14 units during 4Q, including two franchised locations, compared with 15 new restaurants opened system-wide during the same quarter 2009, of which 7 were franchised.
Also, 108 company-operated Jack in the Box restaurants were sold to franchisees during this time period. Despite the sharp decrease in earnings, distribution revenue increased 54 percent and franchise revenue was up 30 percent.
“Refranchising is a critical element in transforming the company to a business model that is less capital intensive and not as susceptible to cost fluctuations,” Lang said. “Over the last five years, we have refranchised 680 restaurants and increased franchise ownership from 25 percent to nearly 57 percent of the system.”
The company’s goal is to increase the percentage of franchise ownership in the Jack in the Box system to 70 to 80 percent by the end of FY13.
The company is also planning to expand the brand into new markets. Earlier this month, for example, the company opened the first of several units planned in the Kansas City market.
As of the beginning of October, the company’s system total included 2,206 Jack in the Box restaurants; 1,250 of which are franchised locations.
