Jack in the Box has adjusted its same-store sales down sharply for the second quarter, ended April 12, in the wake of the COVID-19 pandemic and has withdrawn its guidance for the fiscal year.
The quick-service burger chain said same-store sales for the quarter are projected to have fallen by 4.2% despite a 5.2% increase in the quarter-to-date through March 8.
The chain based in San Diego, Calif., said that virtually all of its approximately 2,200 domestic units have remained open during the crisis, obviously only offering off-premise sales.
Jack in the Box Inc. said it has implemented an emergency paid sick leave program at its roughly 140 company-owned restaurants, which extends coverage to employees who are in quarantine to care of themselves or a family member.
Protective masks and thermometers have been provided to all company-owned and franchised restaurants, the parent company said.
To help shore up the financial positions of its franchisees, Jack in the Box Inc. has reduced April marketing fees to 4% from 5% of gross sales and postponed collection of those fees.
“Marketing fees will be collected over the course of 24 months to commence at a future date that will be determined by the company,” it said in a business update.
It also has postponed rent collection of around 40% of its franchisees, to be collected over three months beginning in July.
It has also delayed all franchise development agreements for the year ending Sept, 27, 2020, by at least six months and has suspended other capital investments required of franchisees.
The parent company also said it was negotiating payment terms on property in which it was the primary lessee and would pass on any savings to the franchisees involved.
For the parent company’s own financial position, it said it had paused its share repurchase program and did not buy back any shares in the second quarter. It also drew down the remaining $8 million available under its credit facility, on top of the $100 million it had previously drawn down.
As a result, it said it expects to report more than $165 million in cash on its balance sheet as of the end of the 2nd quarter.
"While we navigate through this time of uncertainty, Jack in the Box remains committed to operating our restaurants with integrity, providing great guest service, and most importantly, protecting the health and safety of our employees and guests,” chairman and CEO Lenny Comma said in a release announcing the business update.
"We thank our franchisees for their partnership in upholding a variety of rigorous safety procedures, including implementing heightened sanitation requirements, practicing employee social distancing, and adhering to glove and mask protocol for all patrons and workers. We are cognizant of the economic burden on our franchisees as a result of this pandemic and want to ensure their financial health during these difficult times.
"We thank our employees, franchisees and partners for their tireless efforts to keep our drive-thrus open so that we may continue to serve our communities. We entered into this crisis in a position of strength, and we intend to emerge out of it even stronger."
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