San Diego-based hamburger chain Jack in the Box has announced that sales from company restaurants opened longer than a year fell 1.1% during the four-week period ended 9 June, compared with a 3.6% increase during the same period a year ago.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Through the first nine periods of fiscal 2002, same-store sales decreased 0.1% after a 4.1% increase last year.
Despite softer sales, the company reported that it now expects to earn US$0.6 in the third quarter, three cents more than previously forecast, due to the favourable resolution of a long-standing tax matter, continuing benefits from its Profit Improvement Programme (PIP), and a modest increase in restaurant conversions to franchisees. For the full year, these same factors, along with improvements in restaurant operating margin, are now expected to increase earnings per share to US$2.39 from US$2.27 as previously forecast.
“We aren’t satisfied with our current sales performance, but we do believe that the lineup of new product and marketing initiatives planned for the remainder of the year is strong and will help us build momentum,” said Robert J. Nugent, chairman and CEO.
“During the period, same-store sales remained soft due to ongoing competitive pressures and challenging economic conditions,” he said. “Consequently, we now expect Q3 same-store sales to decrease around 1.2% compared with a 4.3% increase last year, resulting in total company restaurant sales of about US$430m versus US$437m in our prior estimate.”
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“We are aggressively refocusing our marketing efforts and strengthening our promotional calendar with a variety of new initiatives,” he said. “During the remainder of Q3, new advertising will showcase our value menu. And 1 July, we will offer as a premium with our Kid’s Meals, action toys from the Powerpuff Girls Movie.”
Nugent continued: “In Q4, the company will introduce the most significant quality-improvement initiative for our sandwich line since our successful Assemble-to-Order programme in 1999. New advertising will support this introduction, which begins systemwide in July. The company will also begin offering customers three combo sizes instead of two. Finally, a new product introduction is also expected to help drive sales.” As a result, Nugent said Q4 same-store sales are now forecast to increase 1.9%.
The company also continues to convert some company restaurants to franchised units as part of its initial plan to expand franchising as a potential growth opportunity. “We plan to convert ten restaurants for the balance of the year, three of which are additional opportunistic packaged sales, for an approximate total of 19 units for the year versus 13 last year, or about 1% of our total company restaurant base,” Nugent said. “Restaurant conversions are expected to represent most of the approximately US$18m in other revenues estimated for the year, compared with US$9.1m last year,” he added.
“Despite a year of soft sales and a challenging economy, I remain confident about our growth strategies and our future,” Nugent said. “Our PIP is helping us raise the bar for return on investment. We continue to actively invest in new initiatives that we expect to drive our business by improving the guest experience.”
