Jack in the Box on Wednesday ended its strategic review process without a sale, saying that it instead intends to refinance its debt and buy back shares.
The company also gave a vote of confidence to CEO Lenny Comma amid calls from franchisees to change leadership and find a buyer.
“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,” said David Goebel, lead director for the Jack in the Box board of directors, in a statement.
The move follows a monthslong strategic review, including a possible sale. The company started the review in December. But reports shortly thereafter cast doubt on a possible sale, noting that buyers were concerned about the chain’s growth and its valuation.
One issue: Franchisees are in open revolt. Operators called on the company to replace Comma, sued the chain and then publicly called for new ownership. Franchisees operate 2,100 of the chain’s more than 2,200 locations.
On Jack in the Box’s earnings call Thursday, Comma said the company ran “a pretty rigorous process,” though he would not provide details.
But he did say that the company learned about the business from the strategic review. “Our team is pretty energized to take what we learned from the process and use it to implement the changes that we think will grow the business going forward,” Comma said.
Jack in the Box’s same-store sales have been slow for some time. Same-store sales rose 0.2% systemwide in the quarter ended April 14 and were flat for the past seven months, according to the company’s earnings report for the fiscal second quarter.
Comma in the second quarter earnings release did say that same-store sales are up by more than 2% so far in the third quarter. He said the company did see improved traffic in the second quarter thanks to the chain’s bundled value deals.
Jack in the Box stock rose more than 3% on Thursday.
On the company’s earnings call Thursday, Comma said delivery mix increased by 60 basis points in the quarter and that nearly 90% of the chain’s locations had the service.
“We really see this as a reflection of what we are specifically doing in the marketplace,” Comma said. He said that when the company markets with “compelling” products that are “appropriately priced … that tells the consumer how much value they’re getting for the money, we have performed well.”
“When we put these bundles into the marketplace, it’s driving a lot of incremental sales and also traffic.”
UPDATE: This story has been updated to include information from Jack in the Box’s second-quarter earnings call.