All per share and share amounts in this report reflect the 2-for-1 split of the company’s common stock, effected in the form of a 100 percent stock dividend on Oct. 15, 2007.
“Our overall business is strong despite a challenging environment in which commodity costs remain high and economic pressures are impacting consumer spending,” says Linda A. Lang, chairman and CEO. “Looking ahead, we have a long line of innovative products in our development pipeline and a great marketing calendar planned for the remainder of the year.”
First quarter financial highlights
Same-store sales at Jack in the Box company restaurants increased 1.5 percent in the first quarter on top of a year-ago increase of 5.6 percent. The increase marked the chain’s 18th consecutive quarter of comparable sales growth. The company had forecast an increase in the range of 2-3 percent.
System same-store sales at Qdoba Mexican Grill increased 4.5 percent in the first quarter, as forecast, on top of a year-ago increase of 4.1 percent. The increase represented Qdoba’s 34th consecutive quarter of comparable sales growth.
Restaurant operating margin was 17.1 percent of sales in the first quarter. Food and packaging costs, which were at 32.8 percent of sales, were consistent with costs incurred in each of the previous two quarters but were 170 basis points higher than the year-ago quarter. Costs continue to run significantly higher than last year for cheese, eggs and shortening. Produce costs were also higher than last year due to inclement weather. Labor management and control of other restaurant-related costs partially offset the impact of higher commodity costs compared with last year.
SG&A expense rate in the first quarter improved to 10.0 percent of revenues compared with 10.4 percent last year, with the decrease due primarily to leverage from higher revenues, the impact of the company’s refranchising strategy, and effective management of field and corporate G&A. SG&A in the first quarter included facility charges primarily related to accelerating the Jack in the Box restaurant re-image and kitchen enhancement programs. These facility-related charges, along with a first-quarter impairment charge, were approximately 3 cents per diluted share higher than similar charges last year.
Jack in the Box opened 10 new company and franchised restaurants in the first quarter, the same as last year, while Qdoba opened 25 company and franchised restaurants versus 29 locations last year. At Jan. 20, the company’s system total comprised 2,138 Jack in the Box restaurants, including 726 franchised locations, and 414 Qdoba restaurants, including 320 franchised locations.
Gains on sale of 28 company-operated Jack in the Box restaurants to franchisees totaled $16.8 million in the first quarter compared with $7.2 million in the year-ago quarter from the sale of 15 restaurants. The difference in average gains is related to the specific sales and cash flows of restaurants sold.
Capital expenditures were $58.0 million in the first quarter compared with $39.6 million in the same quarter last year, with the increase due primarily to investment in the Jack in the Box restaurant re-image program and kitchen enhancements.
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