Industry News | February 19, 2003

Jack in the Box Announces Net Earnings

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Jack in the Box Inc., which operates and franchises Jack in the Box restaurants and Qdoba Mexican Grill, has announced net earnings of $21.2 million, or 56 cents per diluted share, in the first quarter ended January 19, compared with 55 cents forecast and 67 cents in last year's first quarter.

"While other chains are discounting aggressively to drive customer traffic," said chairman and CEO Robert Nugent, "Jack in the Box remains committed to improving quality, value, and service. During the quarter, we significantly increased the size of our regular hamburger patty and added four new products, including two with the new patty. Each of these products performed well despite the competitive environment."

New product introductions included the Chipotle Chicken Sandwich and Philly Cheesesteak Sandwich, as well as the value-priced Chili Cheeseburger and Jr. Bacon Cheeseburger.

"As we continue developing new products and marketing plans aimed at increasing sales, we're pleased with the progress we've made toward achieving our long-term goal of becoming a national restaurant company," Nugent said. "In January, Jack in the Box entered the fast-casual restaurant category by purchasing Qdoba Restaurant Corporation. And we remain on pace to build eight new proprietary Quick Stuff convenience stores adjacent to Jack in the Box restaurants in 2003. Experienced management teams are in place to guide these operations, both of which were profitable last year, so that we can focus our attention on improving our core business. Additionally, we're continuing with our plans to increase franchising on a disciplined, value-added basis."

First-quarter company restaurant sales were $559.4 million, compared with $552.5 million a year ago. Same-store sales decreased 2.6 percent from last year's first quarter, due, according to the company, to continued aggressive price discounting by competitors and soft economic conditions, especially in the West where the majority of company restaurants are located.

Other revenues increased to $8.3 million versus $7.6 million forecast and $3.8 million in last year's first quarter, primarily related to the sale of nine company restaurants to franchisees compared with three last year. Total revenues increased to $613.3 million compared with $594.2 million last year.

Gross profit rate was 18.4 percent of revenues, slightly higher than forecast but down from 19.4 percent in 2002, primarily, says the company, as a result of higher occupancy, insurance, and POS-system upgrade costs, as well as reduced leverage on fixed costs from lower same-store sales. Restaurant operating margin was 16.8 percent versus 18.3 percent in last year's first quarter.

SG&A expense rate was 11.5 percent of revenues, slightly higher than forecast and up from 11.1 percent last year, due to higher pension costs and to reduced leverage from lower same-store sales.

Jack in the Box opened 22 new company restaurants during the quarter, for a total of 1,515 units. Total systemwide units at January 19 were 1,880 compared with 1,797 units at quarter-end last year.