Change has become so common at Jack in the Box over the past few years that it’s almost expected that something big will come up every time the fast-food chain reports earnings. But this is getting ridiculous.
On Wednesday, the company named Mark King interim CEO. King, the former CEO of Taco Bell, was only recently named chairman.
This is the second straight year that Jack in the Box is naming a new CEO. Lance Tucker was named CFO in January of last year, and in February of that year was named interim CEO, and in March was given the permanent job.
For those of you keeping score, this is what has gone on at Jack in the Box over the past 15 months:
- The company replaced its CEO;
- A CFO in the job just a few weeks was given the permanent CEO job;
- The company sold Del Taco three years after buying the chain;
- It successfully fought an effort by activist investor Sardar Biglari to oust the company’s chairman;
- That chairman, David Goebel, left anyway;
- Same-store sales declined at some of the worst levels in the brand’s history;
- It’s changing CEOs again.
Oh, and amid that the company continued a legal battle with a Washington state franchisee and was sued by another franchisee over a litany of issues.
In reality, we’re not sure quite what to make of it at this point. But we will note that the company’s sales challenges, not to mention its presence in high-cost states like California, have created profit issues for the chain’s franchisees. “The system is challenged from a profitability standpoint,” King told analysts on Wednesday during the company’s earnings call.
(A call, by the way, that came 72 hours after he took the interim CEO job.)
Another point, when asked what’s ailing Jack in the Box, King noted, “Where has Jack struggled? I think it’s across the board. I don’t think there’s any one area.”
He did mention one thing that wasn’t a problem. “We do not have a food problem.”
All this change, however, does not help matters. Excessive change in management is dangerous, leading to constant shifts in strategy and organization. New executives routinely prefer to put their own stamps on a company. And new CEOs often lead to other changes in the C-suite, which only furthers the chaos that results from so much change.
Indeed, the CEO change is coming less than a year after the company brought in a new chief operating officer, and just two months after it hired a new chief marketing officer. Both were crucial hires that King referenced on the call. Marketing, in particular, has been an area of needed improvement.
King on the call and in the announcement repeatedly backed the “Jack on Track” plan begun by Tucker, so at least he isn’t coming in and making a lot of changes before somebody else comes in.
But Jack in the Box franchisees have spent the past several years warring with one CEO, then watching the other CEO buy another chain before leaving, then watching that CEO’s replacement not even last 18 months. No matter the reason, that is a lot. Sure, the company's stock has lost half its value over the past year, and has been on a steady decline for the past five years, but more change at the top is difficult.
Jack in the Box will need to get this next hire right, and then give that hire a long, long leash, and probably create a decent succession plan in the process. Because this is too much change for one company.