Jack in the Box Inc., which had been looking at strategic options since December, said Wednesday that it was taking itself off the market and pursuing a capital restructuring in the form of a securitization.
The San Diego-based quick-service burger brand said in a statement that it had “explored various financing alternatives, and the board and management team have concluded that implementing a new capital structure in the form of a securitization is the best alternative for driving shareholder value at this time.”
The company’s board also issued an endorsement of Lenny Comma, the CEO and chairman, who had come under criticism from franchisees.
“With this evaluation behind us, we are dedicated to moving the Jack in the Box brand forward,” said David Goebel, lead board director, in a statement. “The board of directors unanimously and wholeheartedly supports chairman and chief executive officer Lenny Comma and the entire management team as we collectively pursue a strategic plan focused on value creation as a standalone company.”
The review of strategic alternatives, including a sale, had come amid growing unrest among a majority of the chain’s franchisees. The National Jack in the Box Franchisee Association issued a vote of no confidence of CEO Leonard Comma in 2018.
The franchisee group also filed a complaint with California regulators about the chain’s restructuring of its real estate portfolio. The restructuring was being done reportedly to increase the chain’s credit worthiness and to secure new financing.
The strategic review also came after Jack in the Box earlier in the year sold the fast-casual Qdoba Mexican concept in a $305 million cash deal with Apollo Global Management.
For the second quarter ended April 14, Jack in the Box’s net income was $25.1 million, or 96 cents a share, compared to $47.6 million, or $1.62 as share, in the same quarter last year. The company sold Qdoba in March 2018. Revenues were up 2.8% to $215.7 million from $209.8 million in the prior-year quarter.
Jack in the Box operates and franchises more than 2,200 restaurants in 21 states and Guam.
Clarification May 16, 2019: This story has been updated to clarify the franchisee association representation.
Contact Ron Ruggless at [email protected]
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