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loss last week of its ad agency,

TBWA Chiat/Day

, shouldn't send investors running for their Maalox, even though the agency came up with hilarious ads that are credited with reviving the company's once-left-for-dead

Jack in the Box

burger chain.

Three analysts who track the company agreed that the ad agency loss will register as a mere blip in the improving turnaround story at Foodmaker.

How hot is that turnaround? At a presentation to potential investors at

Montgomery Securities'

restaurant conference at the Pierre Hotel in New York last month, no one grinned wider than Robert Nugent, Foodmaker's president and chief executive.

He was showing a reel of the television ads, which feature huge-headed, briefcase-toting Jack, the chain's fictitious and irreverent founder. The audience was eating it up. Maybe all he had to do was play the ads and they'd plunk down their money.

Nugent, a longtime executive with the 1,250-unit San Diego-based company, has had plenty to smile about lately: seven consecutive profitable quarters in a cutthroat segment, new coverage as of March 4 from a big-name firm --

Morgan Stanley

with an outperform rating -- and the award-winning commercials that have helped the company recover from a nightmare food-poisoning incident in 1993 that left four children dead and hundreds of customers sick. Morgan Stanley participated in Foodmaker's 1992 IPO.

TBWA Chiat/Day, without warning, dropped the chain's $40 million account Wednesday to take on bigger fish -- the creative work for the $200 million account for

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Brad Haley, vice president of marketing for Jack in the Box, says the loss won't derail the two-year-old campaign, which has inspired a cult following among West Coast fast-food fans who have shelled out $2 million to buy Jack character car-antenna balls over the past two years.

Haley says Dick Sittig, who created the campaign at TBWA Chiat/Day and has written and directed all the ads, will stick with the account. He's the guy who created

Eveready Batteries'

Energizer Bunny.

Foodmaker wants to bring the ad work in-house with Sittig on contract -- a change that may shave a few dollars off ad costs that can be diverted to buying more air time, Haley notes.

David Rose of

Jefferies & Co.

, who has a buy recommendation for Foodmaker, called the agency pullout a "nonevent."

Since the news hit the papers Thursday, the stock has remained unchanged at 10 1/8.

Rose, whose firm has not participated in any stock offerings for the chain, calls Foodmaker a "great turnaround story with a lot of growth."

Johnson Rice & Co.

of New Orleans apparently concurs. It initiated coverage with a buy rating in December and also hasn't done any underwriting for the restaurant company, which has Jack in the Box as its sole business today. It shed its


Mexican chain in 1994.

Foodmaker finished the fiscal year ended in September with earnings of $20.1 million, its first profitable year since it went public in 1992. The stock's historical low point was two years ago, when it traded at 3 1/4 on March 10, 1995.

For its first quarter ended Jan. 19, Foodmaker reported earnings of $9 million, or 23 cents per share, almost double earnings of $4.7 million, or 12 cents per share, for the same quarter a year ago. Comparable-store sales at company-owned restaurants -- the chain franchises only about one-quarter of its units -- rose 6.5% for the first quarter, on top of a 10.9% increase in the same quarter a year ago.

Johnson Rice said in a Dec. 30 report it expects continued growth in same-store sales and continued margin expansion for the chain. Noting that the chain paid down $43 million in debt during fiscal 1996, the firm said Foodmaker is in "its strongest financial position since its IPO in 1992." Rose predicts earnings growth this year between 20% and 25%.

While Jack has weathered the food-poisoning crisis -- it put the dread E. coli bacteria into the national consciousness -- the public may be reminded of the disaster this July. That's when a trial is slated to begin in a suit Foodmaker filed against

Vons Cos.


, the Arcadia, Calif.-based supermarket chain that processed some of the tainted meat linked to the outbreak. Vons has filed a cross complaint.

Also, Jack will face increased price competition when


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kicks in its much-ballyhooed promotion of 55-cent Big Macs late next month. Rose says the trial and the cheap burgers shouldn't trip up Jack. Foodmaker "comes out with a new product or sandwich about once a quarter," he says. "It is so diverse it hits all consumer tastes."

By Louise Kramer