Jack in the Box posted mixed financial results earlier this week for its fiscal fourth quarter — with good news from improved same-store sales offset by overall revenue and profits that fell short of Wall Street’s expectations.

The San Diego fast food chain said same store sales — a key metric in the industry — rose 3 percent in the quarter, compared with 0.5 percent for the same quarter last year.

That’s the strongest performance in four years for the company’s 2,100 franchise restaurants and 137 company-owned outlets. It was driven by so-called “valued priced” bundle meals such as the Really Big Chicken Sandwich combo and add-ons such as Sauced and Loaded fries.

“We are still seeing that having the value bundles and the add-ons out there is driving the type of behavior from the consumer that we like,” said Chief Executive Leonard Comma. “We oftentimes see that our snacks and sides that we promote are sold more as an add-on than they are as an a la carte item. But they do allow the consumer that’s looking for value to get a decent quantity of food at a reasonable price.”


But some aspects of Jack in the Box’s fiscal fourth-quarter earnings were messy, said David Tarantino of Baird Equity Research. The company’s adjusted operating earnings of 95 cents per share came in just short of Wall Street analysts’ estimates of 96 cents per share.

Revenue of $221.2 million for the quarter also was under analysts’ expectations of $222.7 million.

In addition, the company declined to provide a forecast for the current quarter in the hotly competitive quick-service restaurant space, instead opting to give only full-year guidance.

The combination seemed to create some concern among investors. The company’s shares ended trading Friday at $77.81, down 9 percent for the week.


But Tarantino believes Jack in the Box is taking steps that could pay off moving forward, including an initiative to reduce drive-thru wait times by one minute and sprucing up its menu with new offerings such as the White Cheddar Cheeseburger and Chicken Breakfast Jack.

The company also plans to roll out a new low-priced meal to lure customers looking for good deals. It will replace the discontinued 2-for-$1 taco deal.

“Although we acknowledge the tone of (Thursday’s conference call) was not as positive as in prior quarters, we remain cautiously optimistic that Jack in the Box has a good game plan to drive positive comps momentum in upcoming quarters,” said Tarantino in a research note.

Looking ahead, Jack in the Box forecast same-store sales growth of 1.5 percent to 3 percent for the current fiscal year, which ends Sept. 30, 2020.


It plans to open 25 to 35 new franchise restaurants during the year. That compares with 19 new outlets that opened in 2019, which was partially offset by 13 closures.

The company forecast adjusted earnings before taxes, depreciation and other items of $265 million to $275 million for fiscal 2020, compared with $269 million for fiscal 2019.

“Most of the financial engineering stuff is done at this point, so we’re going to be focusing operationally -- driving the (restaurant) economics and sales,” said Chief Financial Officer Lance Tucker.

