Late-night snacking pays for Jack

Fast-food chain's strategy paying off as profits climb

By

Published:

 

Jack, the round-headed fictional chief executive in Jack in the Box commercials, is not only a hit on television. He’s also popular on Wall Street.

In the past year, investors have driven the company’s stock price up more than 80 percent — and industry analysts are bullish about the company’s future.

Jack in the Box Inc.’s profit was up sharply in its recently completed fiscal first quarter, as sales increased at its flagship restaurants and at the company’s other brand, Qdoba Mexican Grill.

Jack in the Box sells cheap, quick and tasty food, much of it fried and heavy on fat and calories. And it’s not shy about it.

In September, the company launched a new line of TV ads, unveiling its late-night “Munchie Meal.” The campaign promotes Jack in the Box as the place to go when it’s late and you’re hungry.

For six bucks, customers choose one of four Munchie Meal entrees, including the “Exploding Cheesy Chicken” sandwich, accompanied by two tacos, French fries and a 20-ounce soda.

In an era when many restaurants are promoting healthful options, Jack in the Box says its new chicken sandwich is “exploding with mozzarella cheese sticks and gooey white cheese sauce. Oh my cheesy goodness.”

In addition to the late-night meals, the company is jacking up the music and adding mood lighting for the after-party audience.

“The late-night crowd has been beloved by Jack in the Box. … We have decided to double down on this and really go right after this late-night segment by attracting them with what we think they want, which is four new decadent late-night products,” the company’s chief executive, Leonard A. Comma, told trade publication Food Business News in January.

Jack in the Box also has a variety of low-calorie options such as a grilled chicken salad (250 calories without dressing) and apple bites with caramel (70 calories).

The company is best-known for its clever and award-winning advertising campaign, featuring the dry-witted Jack. One recent ad for the chain’s new Bacon Insider Burger has more than 900,000 views on YouTube.

Founded in 1951, Jack in the Box owns and franchises more than 2,200 restaurants in 21 states, the majority of them in California, Texas and Arizona. It also operates more than 600 Qdoba restaurants in 46 states, the District of Columbia and Canada.

Its Qdoba unit offers made-to-order burritos, tacos, tostadas and nachos and ranked fourth in sales among Mexican fast-food restaurants behind Taco Bell, Chipotle and Del Taco in 2012, according to QSR magazine, a trade publication that covers the food and restaurant industry.

The big news at Jack in the Box is the new big cheese.

Comma, 45, who prefers to be called “Lenny,” was appointed chief executive and chairman in January. He succeeded Linda Lang, who retired after serving nine years as CEO and chairman. She had been with the company for 30 years.

Comma joined the company in 2001 as director of convenience store and fuel operations for its Quick Stuff convenience store chain, which it sold in 2009. He also served as regional vice president, vice president of operations, chief operating officer and president.

In more than five decades, Jack in the Box has evolved from a single San Diego drive-through into one of the most recognizable fast-food brands in the West — and now one of the most profitable.

Jack in the Box is coming off of a strong first quarter, with earnings of $33 million. Profits were up 27 percent in the three months ended Jan. 19, compared with a year earlier.

Sales at company-owned restaurants open at least one year were up 2.1 percent, while franchised restaurants saw gains of 1.8 percent.

Comma credited the same-store sales increase in part on the success of the late-night Munchie Meal ad campaign.

“This … has a lot of upside potential for us,” Comma said in a February conference call with analysts.

Fast food is one of the most competitive businesses in the United States. Comma said the company has been winning customers from competitors, but needs to improve the speed at which it delivers food to customers and continue developing new and appealing menu items.

“Improving speed of service remains a key priority,” he said in the analyst call. “Since March 2011, we’ve improved our speed of service by nearly a minute, which is building trust with our guests, driving additional visits and contributing to higher guest satisfaction scores.”