Industry News | February 26, 2012

Despite Commodity Increases, Jack in the Box Has Big Q1

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Despite a steep spike in beef prices in 2011, Jack in the Box was able to lay the groundwork for a successful beginning to 2012, said Linda A. Lang, CEO and president of the company, during the firm's first-quarter earnings call on February 23.

Lang told investors that same-store sales were up 5.3 percent in the first quarter due to a mix of strategic initiatives the company had employed in 2011. The surge in sales far exceeded the 1.5 percent bump for the same quarter in 2011.

Lang also credited the company's holistic approach to restaurant service improvement. The strategy involved an increased focus on cleanliness and quick service, as well as enhancing core products.

"Our latest initiative in this area, which we introduced during the first quarter, focuses on several enhancements to our classic burgers," Lang said.

The 3.3 percent price hike implemented in corporate-owned restaurants helped offset beef inflation, which increased 16 percent over the past year, said Jerry P. Rebel, CFO of Jack in the Box. In total, commodity costs are expected to increase around 5 percent for the coming year, he said.

Despite "significant headwinds from commodities," Rebel said the company's franchisees "completed a significant number of reimages during the quarter, and are now at about 95 percent with their reimaging efforts."

At company-owned stores, average weekly sales rose 12.6 percent in the quarter to $29,200, Rebel said.

Jack in the Box also continues to focus on Qdoba Mexican Grill, Lang said, and intends to "aggressively build out" the number of company Qdoba Mexican Grill locations over the next several years through both new unit growth and acquisitions of franchised locations. Qdoba's same-store sales increased 3.8 percent during the first quarter system-wide, Lang told investors.

Fifteen Qdoba Mexican Grill restaurants opened in the first quarter, and the concept now comprises 28 percent of company-owned stores, she said.

By Jan Fletcher

News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.