Jack In The Box Profit Up

The chain, which has extended its brands to include new concepts like Qdoba Mexican Grill, JBX Grill and Quick Stuff convenience stores, also reported higher same store sales and touched on its remodeling plans.

For the quarter, the company reported net earnings of $23.9 million, or 66 cents per diluted share, compared with $20.7 million, or 56 cents per diluted share, in the same quarter a year ago. Jack in the Box said the 2005 results included "approximately 6 cents per share from the resolution of a prior year's tax position," which reduced the company's third-quarter tax rate.

The higher profit came on sales that climbed to $590 million, versus $541 million in the same quarter last year. Same-store sales increased 2.8% on top of a 3.9% increase in last year's third quarter.

Company executives commenting during the chain's quarterly conference call with financial analysts Wednesday cited a number of reasons for the improved quarterly performance, including menu changes and "higher levels of guest service." Robert Nugent, chairman and CEO, said the company achieved the results "despite escalating beef costs."

In addition to introducing the new Qdoba and JBX Grill concepts, the company has been reviewing new interior and exterior designs for its existing Jack in the Box restaurants. It says the remodeling changes are aimed at creating "a more contemporary atmosphere" and "promoting more in-restaurant dining." In response to questions from analysts, Linda Lang, president and chief operating officer of Jack in the Box, said in Wednesday's conference call that the remodeling schedule has yet to be set.

The company is still reviewing different design concepts, Lang said, and wants to be sure it has a design that works before it rolls out changes throughout the chain. "We've looked at different roll-out scenarios, and if it proves out and meets our return expectations, we can ramp it up fairly quickly. But it's just too early to say what those numbers would be or what the roll-out would look like," Lang said.

Nugent, commenting on the company's strategy of expanding via franchises, said that franchisees now represent nearly 25% of the company's stores, compared with 20% at the beginning of fiscal 2004. He called franchising "a key component of our long range strategic plans," saying that "In addition to improving operating margins and returns on capital, a goal of our franchising strategy is to accelerate cash flow that we can use to expand our system, reinvent the Jack in the Box brand, buy back shares and pay down debt."

New stores opened during the quarter included 10 company and franchised Jack in the Box locations, 15 new company and franchised Qdoba Mexican Grills and 4 new Quick Stuff stores. The company has nine JBX Grills, considered test locations, in Boise, ID and Bakersfield, CA. Counting the new stores opened in the quarter, Jack in the Box operates and franchises more than 2,030 restaurants in 17 states. Its Qdoba Mexican Grill subsidiary totals more than 220 restaurants in 33 states.