SAN DIEGO Jack in the Box Inc. on Tuesday reported a nearly 22-percent slide in first-quarter profit, in part because of higher beef and packaging costs. However, the company's namesake quick-service chain saw some improvement in the economically hard-hit regions of California, Texas and Las Vegas, officials said.
For the quarter ended Jan. 18, Jack in the Box reported net income of $28.4 million, or 49 cents per share, compared with $36.3 million, or 60 cents per share, in the year-ago quarter. The company's earnings fell short of the average analyst estimate of 52 cents a share, according to Thomson Financial.
First-quarter revenue fell slightly to $776.7 million, compared with $777 million a year ago, Jack in the Box reported.
Systemwide same-store sales rose 1.7 percent at company-owned Jack in the Box restaurants, which beat a year-ago increase of 1.5 percent, the company said. Officials credited brisk sales of the new Teriyaki Bowls during the quarter in major markets, as well as a $2.99 Jumbo Deal across the system for the final three weeks of the quarter.
“Sales continued to improve in many of our major markets,” said Linda Lang, Jack in the Box chairman and chief executive. “California, Texas and Las Vegas posted positive same-store sales during the quarter. And although still negative in Phoenix, same-store sales improved versus the prior quarter.”
The company's beef costs were about 20 percent higher during the quarter compared with the same quarter last year, and food and packaging costs overall were up 8 percent, officials said, though the company is expecting lower food-cost inflation and declines in utility expenses for the rest of the year.
Same-store sales at Jack in the Box’s secondary brand Qdoba Mexican Grill were down 1.1 percent during the quarter, compared with a year-ago increase of 4.5 percent. Officials blamed the difficult economic climate, saying consumers are cutting back on spending at restaurants with higher check averages, like the fast-casual Qdoba.
Jack in the Box continued refranchising efforts, on pace with expectations, with the sale of 29 company-operated units to franchisees for a total of $18.4 million during the quarter. Jack in the Box is now 39 percent franchised, versus 34 percent a year ago, and company officials plan to increase franchise ownership to between 70 percent and 80 percent by 2013.
During fiscal 2009, about 50 franchised and company-owned Jack in the Box locations are expected to open, up from the previous forecast of 40 to 45 new units, officials said. The Qdoba chain will see an additional 60 to 80 new stores.
Jack in the Box, based in San Diego, operates or franchises 2,170 namesake restaurants, and 470 Qdoba units.
For the second quarter and for the year, company officials said they expect same-store sales to range between flat and a 2 percent increase for both the Jack in the Box chain, and flat to down 2 percent for Qdoba.
Jack in the Box said results for its Quick Stuff convenience store chain, which it plans to sell, were included under discontinued operations for the quarter.