Improvements to the core menu at Jack in the Box continued to drive momentum in the third quarter as sister brand Qdoba Mexican Grill worked to build a new audience less focused on value, company officials said Thursday.
During a call with analysts on Wednesday, Lenny Comma, chair and CEO of San Diego-based parent Jack in the Box Inc. attributed a 7.3-percent increase in systemwide same-store sales for the quick-service brand simply to its offer of “better burgers."
New products and promotions at breakfast and late night have helped, but Comma said the headline for Jack in the Box is that the chain has shifted from its dependence on innovative limited-time offers to a stronger core menu, “with LTOs as the gravy.”
The introduction in January of the Buttery Jack Burger, a quarter-pound patty drenched in melted garlic-herb butter with various toppings on a signature bun, was the chain’s most successful product launch in recent memory, and continued to perform well in the third quarter, Comma said.
Last month, another version debuted — the Portobello Mushroom Buttery Jack. Upgrades to the core menu will continue, along with marketing that will focus more on improvements to the menu and flavorful ingredients, rather than the traditional ads that spotlighted the humor and personality of the big-white-ball-headed character known as Jack, Comma said.
Among company locations, the 5.5 percent increase in same-store sales during the quarter included a 1.6 percent increase in transactions, along with 1.9 percent attributed to menu mix and 2 percent in pricing.
Jack in the Box Inc. is based in San Diego, where McDonald’s Corp. is testing the offer of breakfast all day, at least with a limited menu. But Comma said McDonald’s’ test has had no impact on Jack in the Box units there.
“It’s probably impacting some competitors in this market, but we’ve been so traditionally 24/7 with our breakfast offering, we haven’t seen an impact,” he said.
During the third quarter, sister brand Qdoba’s systemwide same-store sales increase of 7.7 percent was attributed to the ongoing benefit of a shift last year to a simplified pricing structure built around the choice of protein, so guests are no longer “nickeled and dimed” with additional charges for adding guacamole or queso sauce.
The 6.6 percent increase in same-store sales at Qdoba company-owned locations consisted of a 6.4 percent rise in average check, and 1.3 percent attributed to higher catering sales, both of which offset a 1.1-percent drop in transactions.
Comma said the company had expected that decline in transactions to show itself much sooner as the chain lost students and other more value-oriented guests who only came in when discounts were offered.
“We knew there would be a percentage of guests we would lose that were focused on discounting,” Comma said.
Instead, Jack in the Box Inc. has focused on replacing those value seekers with guests looking for “freedom of choice” to add guacamole and queso, menu quality and bolder flavors, which “are a more profitable consumer base,” Comma said.
To better reach that new consumer base, the company is planning more menu innovation along with the use of a new digital platform to launch in 2016, though Comma did not offer details.
Catering, which is increasing in sales at a higher rate than other revenue generators, is also an opportunity for the brand, Comma said. Qdoba has been working on improvements to its catering call center, as well as adding new technology to allow guests to order in different ways.
Qdoba is also testing a new prototype design that seeks to marry the bolder “in-your-face” flavors on the menu with a bolder design.
To allow for more time to evaluate the various elements of the new design before rolling it out, the company may push some restaurant openings into the next fiscal year, Comma said.
Contact Lisa Jennings at [email protected].
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