Jack in the Box Profit Falls

The fast-food chain, however, reports a rise in same-store sales.
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Jack in the Box

(JACK) - Get Report

on Tuesday reported fiscal first quarter earnings of 49 cents a share, a decline of 11 cents from the year-ago quarter.

The San Diego-based fast-food franchisor posted earnings $28 million, compared with $36.3 million in the quarter one year ago. Analysts polled by Thomson Reuters expected a profit of 52 cents per share. Revenue fell to $776.7 million from $777 million. Analysts had predicted revenue of $749 million.For the full fiscal year, the company expects EPS of $2 to $2.20 a share. Analysts are expecting $2.09 a share.

Same-store sales increased 1.7% in the quarter on top of a year-ago increase of 1.5%. Jack in the Box also noted that its beef costs rose 20% in the quarter.

"Our new Teriyaki Bowls, which were launched in the western U.S. in October, helped drive sales in the quarter, especially in some of our major markets," said Linda A. Lang, chairman and chief executive officer. "In addition, we offered a $2.99 Jumbo Deal across the system for the final three weeks of the quarter, which offered guests great value.

"Sales continued to improve in many of our major markets," Lang said. "California, Texas and Las Vegas posted positive same-store sales during the quarter. And although still negative in Phoenix, same-store sales improved versus the prior quarter."

Same-store sales at Qdoba Mexican Grill fell 1.1% in the first quarter vs. a year-ago increase of 4.5%, as the economic environment continued to pressure consumer spending at restaurants with higher check averages.

The Jack in the Box system is now 39% franchised vs. 34% a year ago. "Refranchising is an important element in our long-term goal to increase the percentage of franchise ownership in the Jack in the Box system to 70 to 80 percent," Lang said. "We remain on track to evolve our business model to reach our franchise ownership goals by the end of fiscal year 2013."

Sixteen new Jack in the Box restaurants opened in the first quarter, including 12 company locations, compared with 10 new restaurants last year, six of which were opened by the company. Along with the company opening the first Jack in the Box restaurant in Victoria, Texas, franchisees continued expanding into new contiguous markets during the quarter, opening the first restaurants in Colorado Springs, Colo., and two Texas cities, Abilene and Wichita Falls. The Colorado Springs location set an opening week record with sales of more than $130,000.

"We now expect to open approximately 50 company and franchised Jack in the Box restaurants during the year versus our previous forecast of 40 to 45," Lang said. "We were able to accelerate the number of Jack in the Box restaurants that we opened in the quarter and continue to have a pipeline of company and franchised sites in various stages of planning and development."

In the first quarter, 17 Qdoba restaurants opened, including 15 franchised locations, versus 25 new restaurants in the year-ago quarter, 21 of which were franchised. Three of the new franchised restaurants are located in new markets in Delaware and Minnesota. With the opening in Delaware, Qdoba now has a presence in 42 states.

As of Jan. 18, the company's system total comprised 2,170 Jack in the Box restaurants, including 844 franchised locations, and 470 Qdoba restaurants, including 335 franchised locations.

Several new items debuted on the Jack in the Box menu in the first quarter, including a new product platform, Teriyaki Bowls. Available in two varieties, each bowl includes steamed rice, broccoli and carrots with a choice of all-white-meat chicken or 100% sirloin steak strips topped with teriyaki sauce. Launched at most of the chain's restaurants in the western U.S. in the first quarter, the Teriyaki Bowls rolled out to the rest of the U.S. on Jan. 29.

Also added to the chain's central and southeastern U.S. markets were two new products that feature a buttery, crispy chicken breast fillet, the Breakfast Homestyle Chicken Biscuit and Homestyle Ranch Chicken Club. The Breakfast Homestyle Chicken Biscuit is made with a warm buttermilk biscuit, and the Homestyle Ranch Chicken Club includes bacon, cheese, green leaf lettuce and sliced tomato topped with ranch sauce and served on a toasted bakery-style bun.

Jack in the Box expanded its line of Real Fruit Smoothies during the quarter by adding a Pomegranate Berry flavor, which is made from a blend of pomegranate, blueberry, red raspberry and cranberry Minute Maid fruit juices and purees blended with nonfat frozen yogurt.

This article was written by a staff member of TheStreet.com.