Adding to the pattern of challenged restaurant performances during the COVID-19 pandemic, Jack in the Box reported a same-store sales decrease of 4.2% for the second quarter ended April 12, 2020, driven by a decrease in transactions of 10.5% and offset by an average check growth of 6.4% as more families order meal kits and bundles. But the San Diego, Calif.-based company is seeing improvement in the beginning of the third quarter, with an 8% positive same-store sales trend during the first three weeks of Q3.
“Our outlook moving forward remains cautiously optimistic,” Jack in the Box CEO Lenny Comma said during Thursday’s earnings call. “Despite challenges [related to the pandemic], our business was on a positive sales trajectory in the second quarter and was on track to be the second strongest quarter since Q3 2015.”
Comma reiterated that the start of the second quarter’s same-store sales growth of 5.2% was boosted by the popularity of the new Tiny Tacos menu item, which was introduced in January.
During Q2, the company’s sales trends shifted, understandably from on-premise occasions to mainly delivery and drive-thru purchases. During this time delivery sales more than doubled and Jack in the Box saw a “record-high usage” of their mobile app. Purchasing trends have also shifted from a normally robust breakfast daypart to consumers placing larger breakfast orders later in the day as they continue to work from home.
While in the short term the company’s performance is being impacted by factors like unemployment and stimulus checks, Comma predicts that their sales trends will continue to evolve as the crisis (and subsequent economic recovery) changes the way consumers think about their restaurant spending:
“The consumer is starting to see value in a broader way,” Comma said. “They’re looking at safety as a component of value now, and family bundle deals that can be bought through drive-thru or delivery in a safe manner is all on the table. […] We’re going to have to pivot the way we think about the brand and about consumers rapidly evolving needs.”
This will be Comma's final earnings call as CEO as he announced that he would be leaving the company in Dec. 2019, and his replacement — former CiCi's Pizza CEO Darin Harris — will take over as chief executive in June.
Despite a promising start to the third quarter, Jack in the Box has decided to withdraw its 2020 and long-term fiscal guidance.
Revenues for the second quarter increased marginally to $216.157 million, from $215.727 million in the same period a year ago. Net income decreased 54% to $11.5 million, or 50 cents per share, from $25.1 million, or 97 cents per share in the same quarter a year earlier.
Jack in the Box currently operates 2,246 restaurants in 21 states and Guam.
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