News

Jack in the Box Inc. beats expectations

February 23, 2011

Jack in the Box Inc., parent company of Jack in the Box and Qdoba, reported its first quarter earnings for fiscal 2011, ended Jan. 23. The company reported net earnings of $32.4, or $0.61 per diluted share, compared with $24.2 million, or $0.43 per diluted share, for Q110. 

Revenue dropped 2 percent to $664.7 million; However, analysts predicted a drop to $622 million.

Gains were made from refranchising efforts, which contributed $0.34 per diluted share for the quarter as compared with approximately $0.11 per diluted share in the prior year quarter.

Also, operating earnings per share were $0.27 per diluted share compared with $0.32 per diluted share in the prior year quarter.

Jack in the Box highlights

Same-store sales for Jack in the Box were up 1.5 percent for company-owned units; 0.9 for franchised units; and 1.1 percent system-wide.

Linda A. Lang, chairman, CEO and president, said Jack in the Box’s sales increase was driven primarily by transaction growth and a strong performance in the California market.

“We believe the investments we have made around service consistency and making noticeable quality improvements to some of our core products are beginning to resonate with our guests,” she said. “We remain focused on enhancing the entire guest experience, including the substantial completion of our restaurant re-imaging program system-wide, which is targeted by the end of 2011.”

Qdoba highlights

For Qdoba, same-store sales were up 6.4 percent compared to 1.7 percent for the first quarter 2010. Lang said the sales momentum for Qdoba was driven largely by transaction growth and higher catering sales.

Also, before the end of Q1 2011, the company acquired 20 franchised Qdoba restaurants in the Indianapolis area for about $21 million.

“Subsequent to the end of the quarter, we acquired 20 franchised Qdoba restaurants in the Indianapolis area, consistent with our strategy to opportunistically acquire franchise markets where we believe there is continued opportunity for development as a company market,” Lang said.

Consolidated restaurant operating margin was 12.6 percent of sales in the first quarter, compared with 14.3 percent of sales in the year-ago quarter.

Restaurant openings

Eight new Jack in the Box restaurants opened in the first quarter, including 3 franchised locations, compared with 17 new restaurants opened system-wide during the same quarter last year, of which 8 were franchised.

In the first quarter, 20 Qdoba restaurants opened, including 14 franchised locations, versus 6 new restaurants in the year-ago quarter, of which 4 were franchised.

As of Jan. 23, the company’s system total comprised of 2,213 Jack in the Box restaurants, including 1,340 franchised locations, and 542 Qdoba restaurants, including 348 franchised locations.

Second quarter 2011 predictions

For the second quarter, ending April 17, the company expects the following:

• Same-store sales are expected to range from flat to down 2 percent at Jack in the Box company restaurants versus an 8.6 percent decrease in the year-ago quarter.
• Same-store sales are expected to increase approximately 3 to 5 percent at Qdoba system restaurants versus a 3.1 percent increase in the year-ago quarter.
• Same-store sales guidance reflects trends experienced during the first four weeks of the second quarter, including the impact of inclement weather for both brands.
• Commodity costs for the quarter are currently expected to increase by approximately 5 percent, driven by recent increases for several items, including produce costs, which have spiked as a result of harsh weather in many growing regions.
• Due to the greater than expected number of transactions completed in the first quarter of 2011, refranchising gains are expected to be lower than the second quarter of 2010. The company’s full-year guidance related to refranchising remains unchanged.