Improving sales sends Jack in the Box stock soaring

Thanks to value bundles, the burger chain’s same-store sales rose to their best level since 2016.
Photograph: Shutterstock

Value bundles helped Jack in the Box generate its strongest same-store sales in more than two years, sending shares of the company’s stock skyrocketing Thursday.

Same-store sales rose 2.7% systemwide in the company’s fiscal third quarter ended July 7, the company reported Wednesday. That ended a period in which the key metric never increased by more than 0.5% and more often declined.

Traffic, which had been down for some time, was roughly flat, executives said Thursday. And company executives said the chain’s sales have improved in the weeks since the end of the quarter. Sales are up in “all dayparts.”

Jack in the Box stock, which had hit a new 52-week low late last month, soared more than 15% through early afternoon trading Thursday.

“We essentially found a way to compete in the QSR space effectively on value,” CEO Lenny Comma said on the company’s third quarter earnings call Thursday. “We were missing that.”

Not even $1 tacos from Burger King could hurt sales, either. Comma said that “our taco sales are up” in recent weeks despite the competitive offering, which had led to some speculation that the chain’s sales would suffer.

Comma said that value bundles featuring limited-time product offerings helped drive both traffic and average check. He said average check on orders with one of the bundles, such as a $4.99 Triple Bonus Jack Combo, was “significantly” larger than normal, in part because customers added items.

The company is working on a number of initiatives to improve speed, increase sales in the drive-thru and drive more delivery.

Jack in the Box has delivery in more than 90% of its more than 2,200 locations. The vast majority of those locations are franchised, with 137 company-owned restaurants.

The chain is also simplifying operations in a bid to improve customer experience. Comma said these initiatives could help improve speed of service by a minute on average.

The company is working, for instance, to reduce customer complaints that lead to them getting frustrated and leaving. Such “disappointments” are “strongly correlated to sales and transaction growth or decline,” Comma said.

But it’s the bundled value means that have helped the chain win back some value customers it has lost in recent years. Comma said that the company is working to add a permanent new value menu item to “restore the everyday value we lost when we increased our taco pricing.”

Jack in the Box had long resisted discounting but found that the bundled value deals worked without sacrificing profitability.  

“We refrained from deep discounting, believing it was not in the best interest of the health of the brand,” Comma said. But many of the value-oriented promotions are either new items or limited-time offers that offer value but don’t diminish the perception or profitability.

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