Jack in the Box’s same-store sales took a better-than-expected upswing in the third quarter on improved traffic and a growing average check, but the company’s earnings reported Wednesday fell short of analysts’ expectations.
For the third quarter ended July 10, the San Diego-based Jack in the Box Inc., parent of the Jack in the Box and Qdoba Mexican Grill brands, reported net earnings of $18.7 million, or 38 cents per share, down 23 percent from $24.2 million, or 44 cents per share, for the same quarter a year ago. Analysts polled by Thomson Reuters had expected 40 cents per share.
Earnings included gains from refranchising of about 13 cents per share for the quarter, compared with 26 cents per share in the prior year.
Consolidated revenue totaled $519.3 million for the quarter, down 0.8 percent from the prior year.
For the Jack in the Box chain, same-store sales rose 4.7 percent, which Jack in the Box chief executive Linda Lang attributed to investments made in recent months to enhance the guest experience at the quick-service concept.
Over the past year or so, Jack in the Box has upgraded core menu items, such as its coffee, fries, bacon and tacos, as well as improving service. This summer the chain rolled out new easier-to-navigate menu boards and has focused on value-oriented bundled meal promotions.
Qdoba reported same-store sales up 5.1 percent systemwide, which Lang said was driven by a combination of increased transactions, pricing and higher catering sales.
Overall commodity costs also were higher during the quarter — up 6.7 percent — largely due to beef, cheese, dairy, eggs and shortening, the company said.
Given improving performance, Jack in the Box Inc. slightly upgraded its expectations for the year.
Same-store sales for the Jack in the Box chain are expected to increase 2 percent to 3 percent for the year. Earlier, company officials had projected an increase of 1 percent to 3 percent.
For Qdoba, the company now expects same-store sales to rise 5 percent to 6 percent, compared with earlier estimates of 3 percent to 5 percent.
Overall commodity costs are expected to increase 5 percent for the full year.
Earnings are projected to be between $1.46 to $1.60 for the year, the company said.
Five new Jack in the Box locations opened in the third quarter, including one franchised outlet. Qdoba saw 17 locations open, including 11 franchised units. At the end of the quarter, the company operated or franchised 2,220 Jack in the Box and 564 Qdoba restaurants.
For the year, the company is projecting 30 to 35 new Jack in the Box locations, of which 16 will be company owned, as well as 60 to 70 new Qdoba restaurants, of which 25 will be company owned.
Contact Lisa Jennings at [email protected].
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