What is in this article?:
- Jack in the Box: Qdoba brand under further review
- Targeting key markets, customers
The company has hired a consulting group hired to help determine future brand positioning.
Following the closure of 62 Qdoba Mexican Grill locations in the third quarter, parent company Inc. said Thursday the fast-casual chain is undergoing a comprehensive brand review to reset plans to move forward.
In an earnings call with analysts following the report of third-quarter results, Linda Lang, Jack in the Box Inc. chair and chief executive, said the previously announced closures of the underperforming locations have improved the unit economics of the remaining 592 locations.
Qdoba’s systemwide same-store sales rose 1.3 percent during the quarter, and the expectations for the year of a zero- to 1-percent increase remains unchanged, despite the significant loss of revenue from those units.
Average unit volumes at company locations improved by about 10 percent, from about $1 million to $1.1 million, the company said.
And Qdoba’s margins also improved by about 4.1 percent during the quarter to 17.9 percent, despite increased labor costs as the company held on to managers from the closed restaurants and redeployed them at existing locations — a move that Lang said would further improve guest-service execution.
The San Diego-based company has said it will close a total of 67 Qdoba units before the end of the year. During the fourth quarter, three Qdoba units were sold to an existing franchisee and two more will close when their leases expire before the end of the calendar year.
Jack in the Box Inc. took a $36.7 million hit in charges related to the closures, recording a net loss of $5.7 million, or 13 cents per share, for the July 7-ended quarter, compared with net income of $11.6 million, or 26 cents per share, a year ago.
The company’s report from continuing operations offered a better picture: a 37-percent increase in earnings to $17.3 million, or 38 cents per share.
Largely as a result of the closures, however, the company upgraded its outlook for the year, expecting earnings to be between $1.72 and $1.78 per share, increasing from a previous projection of $1.55 to $1.65 per share.
“By optimizing our company footprint, we believe we can be more effective in focusing our advertising and marketing resources to support existing and planned restaurants and markets where we have a high level of brand awareness,” Lang said. “And we expect to provide an even better dining experience for our guests as our operations team concentrates its efforts on supporting these markets.”