Jack in the Box 1Q profit increases 73%

Jack in the Box Inc. reported on Wednesday first-quarter net income that was nearly double that of last year, indicating that restructuring efforts are taking hold.

Like several other restaurant companies reporting this week, however, Jack in the Box officials said sales dropped precipitously in January as consumers faced higher payroll taxes, delayed tax refunds and higher gas prices.

However, in a call with analysts Thursday, Linda Lang, the company's chair and chief executive, said the slowdown is already showing improvement and that sales will pick up later in the year. “We think consumers will adjust,” she said. “We’re confident that the macro impact is temporary, though that is uncertain.”

Over the past few years, Jack in the Box has worked on its menu, upgrading the quality of core items, improving speed of service and promoting the value of bundled meals instead of battling with competitors in the dollar-menu wars. The company has also been restructuring its business, refranchising 650 company-owned locations over the past three years, outsourcing the distribution business and cutting costs.

Though traffic was roughly flat for the quarter, Lang said the Jack in the Box chain’s systemwide same-store sales rose 1.9 percent, which exceeded the quick-service sandwich segment trends, according to NPD Group’s Sales Track Weekly.

Jack in the Box's same-store sales rose 2.1 percent at company-owned restaurants, and they rose 1.8 percent at franchise locations. Lang said the same-store sales increases were across all dayparts, with breakfast showing the largest year-over-year increase.

At sister brand Qdoba Mexican Grill, systemwide same-store sales increased 1 percent, rising 1.5 percent at company restaurants and 0.5 percent at franchise units. The increase was driven by growth in both transactions and in catering, the latter now accounting for about 6.5 percent of sales. “We believe we can significantly grow this part of our business,” Lang said of Qdoba catering.