Jack in the Box Inc. said that it has hired an adviser to potentially sell Qdoba Mexican Eats amid concerns that operating two different brands is hurting the company’s value.
The company has hired Morgan Stanley & Co LLC to assist in evaluating alternatives with respect to Qdoba, Jack in the Box CEO Lenny Comma said in the company’s quarterly earnings release on Tuesday.
“At our investor meeting last May, we said one of the factors that would cause us to reconsider our strategy with respect to Qdoba was valuation,” Comma said in the release. “It has become more apparent since then that the overall valuation of the company is being impacted by having two different business models.”
Qdoba has struggled to generate consistent sales of late, even last year as its primary competitor, Chipotle Mexican Grill Inc., suffered steep sales declines.
System same-store sales fell 3.2 percent in the company’s fiscal second quarter ended April 16 — including a decline of 5.9 percent at company locations. By comparison, Jack in the Box same-store sales fell 0.8 percent.
Jack in the Box stock surged 10 percent in after hours trading on the news Tuesday.
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