SAN DIEGO — Rising competition hasn’t bitten into breakfast sales for Jack in the Box. The fast-food chain said the day part’s performance improved during the company’s past quarter, even with Taco Bell’s national breakfast launch in March.
An all-day a.m. menu and fresh product preparation drive a strong breakfast program for Jack in the Box, said Lenny Comma, chairman and chief executive officer, during a May 15 call with financial analysts to discuss second-quarter earnings.
“Breakfast is 22% of our mix,” Mr. Comma said. “It’s a strong day part for us that we think is driven by those differentiators. I can only assume that folks that are selling more heat-and-eat and not freshly prepared foods are getting impacted by Taco Bell, more so than the ones who are serving more freshly prepared foods. At this point, we’ll have to wait to see how that shakes out in everyone’s results, but that’s sort of the assumption.”
An increase in discounting and value promotions driven by competitors during the quarter pressured performance for the chain, but the company said with sales rebounding in the third quarter, it has no plans of pulling the pricing lever.
“Ultimately, what we didn’t want to do, is create so much focus and primary messaging around deep discounting that we sacrificed our margin,” Mr. Comma said. “We are making a choice to manage margin and manage sales. If we feel at any time that the competitive set is doing things that is sustainable and will, essentially, take our business away over the long term, we know that we can pull that lever of more aggressively promoting value items and we do know that it will favorably impact our sales, but we do know that it will come at the expense of margins. It’s a balancing act. We think we are in the right place. I think that kind of sums up our approach.”
Menu innovation also figures into the brand’s approach. During the quarter, Jack in the Box introduced for a limited time the Bacon Insider Burger, featuring a bacon and beef patty between layers of bacon and creamy bacon mayonnaise on a brioche bun, and extended its Monster Taco line with two new flavors: bacon ranch and nacho. Additionally, the chain added Jack’s Blazing Chicken Sandwich, made with a hot ghost pepper ranch sauce, plus two new flavors of iced coffees and a Reese’s Peanut Butter Cup pie, both of which Mr. Comma said are great check builders.
“Speed of service remains a key priority of ours and we continue to make progress during the second quarter, with both company and franchise restaurants gaining traction,” Mr. Comma said.
Net earnings for the quarter ended April 13 increased 19% to $15,801,000, equal to 38c per share on the common stock, which compared with $13,290,000, or 30c per share, in the prior-year period.
Revenues for the quarter totaled $340,870,000, down 1.8% from $347,223,000 in the comparable quarter.Company-operated same-store sales increased 0.9% during the quarter for Jack in the Box and 7.2% for Qdoba Mexican Grill.