The parent company to Del Taco is seeing sales pressure on both brands
A cautious consumer continues to put pressure on sales at both Jack in the Box and Del Taco, the interim principal executive said Tuesday.
The San Diego, Calif.-based quick-service Jack in the Box Inc., which owns both brands, released earnings for the first quarter ended Jan. 19, and executives spoke with analysts Tuesday.
“As with others in the industry, traffic and macro pressures persist, so it likely won't come as a surprise to hear that there are more headwinds and tailwinds for us thus far in the second quarter,” said Lance Tucker, who was named Monday as interim principal executive to fill in for resigning CEO Darin Harris.
“We are running negative quarter-to-date and expect a negative Q2 same-store sales result for both brands,” Tucker said. “With that said, we have a strong marketing calendar and will stay the course in executing on our barbell strategy, value leadership, and digital evolution to drive sales.”
Tucker later said other consumer indicators are shaky. “I think without going into tremendous detail, the consumer is showing you that they are a little bit nervous,” Tucker said, citing a consumer confidence report this week that “very much emphasized that the consumer is just being a little bit cautious.”
The company refranchised 13 Del Taco restaurants in the first quarter, taking that division to about 80% franchisee-owned, Tucker said.
Jack in the Box executives, in guidance, said the company would be pulling back from share purchases for the remainder of the year.
The company repurchased 100,000 shares of common stock for an aggregate cost of $5 million in the first quarter. As of the end of the first quarter, it had $175 million remaining under a board-authorized stock buyback program.
“When I came into the role at CFO, job one was to look at capital allocation, where are we spending our dollars,” Tucker said. “Obviously, only having been on board a little bit over a month, there were a couple of fairly quick decisions that could be made to slow [capital expenditures] down just a little bit, move away from additional share repurchases right now when in my mind we should have some higher priorities.”
For the first quarter ended Jan. 19, Jack in the Box reported earnings of $33.7 million, or $1.75 a share, compared to $38.7 million, or $1.93 a share, in the prior-year period. Revenues slipped to $469.4 million from $487.5 million in the same quarter a year ago.
Jack in the Box same-store sales increased 0.4% in the first quarter, comprised of a franchise same-store sales increase of 0.5% and a company-owned same-store sales decline of 0.4%. Del Taco same-store sales declined 4.5% in the first quarter, comprised of a franchise same-store sales drop of 5.1% and a company-operated same-store sales decrease of 2.5%.
As of Jan. 19, Jack in the Box had 2,190 restaurants across 22 states, and Del Taco had 589 restaurants across 17 states.
Contact Ron Ruggless at [email protected]
Follow him on X/Twitter: @RonRuggless
Read more about:
Jack in the BoxYou May Also Like
