Jack in the Box: Brand reimaging efforts driving sales

<!--paging_filter--><p>Despite commodity pressures and reduced first-quarter revenue and profit from refranchising efforts, Jack in the Box said Thursday a &ldquo;holistic&rdquo; approach to its brand efforts is driving sales improvements.</p>
<p>In a call to analysts Thursday following the San Diego-based <a href="http://nrn.com/article/jack-box-profit-falls-63-1q">company&rsquo;s first-quarter results</a>, Linda Lang, Jack in the Box Inc.&rsquo;s chair, chief executive and president, said same-store sales rose 5.3 percent at company-owned locations, reflecting a 2.8-percent increase in traffic and a 2.5-percent increase in average check.</p>
<p>Lang said the improvement in traffic was the result of investments made over the past year at the 2,200-unit quick-service chain, which have included programs to improve service, food and restaurant design.</p>
<p>Lenny Comma, Jack in the Box Inc.&rsquo;s executive vice president and chief operating officer, said a comprehensive look at the brand has driven sales success.</p>
<p>&ldquo;Winners are looking holistically at their brands,&rdquo; he said.</p>
<p>Service improvements, for example, have included efforts to boost staff friendliness and restaurant cleanliness, she said, as well as improving order accuracy and speed of service.</p>
<p>Improvements also include a remodel effort that is nearly complete, Lang said. Last year, the chain also rolled out new menu boards and new uniforms for employees.</p>
<p>On the menu, Jack in the Box has upgraded core menu items, such as its coffee, French fries, tacos and bacon. In the first quarter, the chain&rsquo;s burger line was upgraded with enhancements that included reformulated patties, improved buns and new saucing procedures.</p>
<p>Lang said restaurants are reporting higher sales on all of the revamped products.</p>
<p>In addition, promotions &ndash; like the chain&rsquo;s recent offer of a bacon milkshake that went viral &ndash; have helped draw attention to the menu upgrades.</p>
<p>The first quarter marked the sixth consecutive quarter of sequential improvements at Jack in the Box, though profits were down in part because of an 8-percent increase in commodity costs during the quarter and ongoing efforts to refranchise the quick-service brand.</p>
<p>Lang aims to see Jack in the Box move to a 70 percent to 80 percent franchised system.</p>
<p>At the same time, the company is building ownership of the 597-unit sister brand Qdoba. During the quarter, the company acquired 11 franchised Qdoba locations for $6.2 million in two markets, and subsequently also purchased another 25 franchise locations for $33 million in two other markets.</p>
<p>In addition, 15 Qdoba locations opened during the first quarter &ndash; six company-owned and nine franchised &ndash; and the company said 70 to 90 new Qdoba locations are expected to open in 2012, about half of which will be company operated.</p>
<p>This year, between 30 and 35 Jack in the Box units are planned, including about 15 company-operated restaurants. Another 80 to 120 company-owned Jack in the Box units will be sold to franchisees.</p>
<p>Contact Lisa Jennings at <a href="mailto:lisa.jennings@penton.com">lisa.jennings@penton.com</a>.<br />
Follow her on Twitter: <a href="http://twitter.com/#!/livetodineout">@livetodineout</a><br />
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