The headline Jack in the Box Chairman-CEO Lenny Comma offered during Thursday’s Q3 earnings call was insightful but too long to use: “So the headline is, ‘LTOs drove [Jack’s] success in the past; in the future, core menu items should drive sales with LTOs as the gravy.’”
Jack’s Q3 numbers were impressive: a 5.5% jump in same-store sales at company units and a 7.9% rise at franchised, yielding a 7.3% systemwide increase. Growth at both its Jack in the Box and Qdoba brands brought a 17% increase in operating earnings.
Increased sales at breakfast—now 23% of total revenues—and late night (now 16%) helped drive prices. Two LTOs—a Black Pepper Cheeseburger and Steak & Egg Breakfast Burrito—did well, but as Comma’s suggested headline indicates, the brand is changing its menu thinking. Jack has introduced comparatively few new products this year, he said, choosing instead to focus more on core products, including the Buttery Jack burger line added in January. Advertising, too, has shifted, focusing more on food, which “sometimes played second fiddle to Jack’s personality” in the past, Comma said.
Those strategic shifts were the result of customer feedback that the company has discussed previously. It isn’t finished with changes, however: Jack in the box will “aggressively change” its whole core burger lineup (including the Sourdough Jack and Jumbo Jack) in early 2016. It also is exploring “new ways to use media bring attention to the brand,” he said.
The Black Pepper Cheeseburger came out at $4.39 and Comma reaffirmed his determination to not offer “low-price items and freebies.” In answer to an analyst’s question, he said that because always has had 24-hour breakfast, it has seen no impact in San Diego from McDonald’s all-day breakfast test. But said later that “if McDonald’s figures out its positioning, that would have an impact on the entire industry.” But Jack’s upscale premium-tier rather than value-focused position would minimize that impact, Comma said.