Jack in the Box sales slump as diners choose to eat at home
It was Jack in the Box鈥檚 turn to explain the slumping quick-service restaurant business and Chairman-CEO Lenny Comma pointed to 鈥渄eal fatigue鈥� and a rising gap between food-at-home and food-away-from home prices, a gap causing 鈥渢ransaction erosion鈥� to supermarkets.
For its fiscal Q3 ended July 3, 2016, Jack in the Box reported a 1.1% increase systemwide in same-store sales for Jack in the Box (including +1.5% by franchisees) and a 0.6% increase for its Qdoba chain. The company said Jack鈥檚 1.1% was just behind the QSR sandwich segment鈥檚 1.2% gain according to The NPD Group鈥檚 SalesTrack Weekly for the 12 weeks ended July聽3, 2016.
But Jack鈥檚 Q3 gain was the result of a 3.3% increasing in pricing and an increase in premium-product sales that offset a transactions decline of 3.7%.
What we鈥檙e seeing, Comma said, is 鈥渄eal fatigue in the marketplace now. Deals that are out there are not penetrating鈥� as they did earlier this year. The other important factor is that the聽听蹿辞谤听food-away-from-home聽is down 1.3% over the past 12 months, while聽food-at-home聽is up 2.6%.
鈥淭here鈥檚 transaction erosion to the food-at-home players, the supermarkets,鈥� Comma said. Supermarkets can reflect reduction in food costs much more quickly than can restaurants he said. 鈥淚 would be very concerned if those transactions were going to our competitors. That鈥檚 not what we鈥檙e seeing.鈥�
Comma said Jack 鈥渋s where we ought to be鈥� with its balance of value and premium-price products. On the low end, the chain has launched Garlic Herb Fries and a $2.99 Jumbo Breakfast Platter deal. At the premium end is the recently released聽, however that also is being promoted via a $4.99 small combo bundle deal.
Comma said Jack will be more aggressive on both the value and premium fronts in the current quarter than it has been earlier in its fiscal year. Qdoba next week will add聽smoked brisket聽to its menu systemwide.
During its聽聽yesterday, The Habit Burger鈥檚 President-CEO Russ Bendel said marketplace softness has spurred heavy discounting that he vowed not to join. 鈥淲ithout question it seems to us that we are in a time of unprecedented discounting, not only below us in the QSR category which鈥as seemed to accelerate discounting again as we finished Q2. But now [there鈥檚] also a tremendous amount of discounting in casual dining sector, which has been challenged in this environment as well鈥� We鈥檙e going to avoid getting into discounting That鈥檚 not who we are.鈥�
In a down, near-recessionary restaurants look to improve results through increased sales of higher-profit sides and beverages. Jack in the Box鈥檚 Garlic Herb Fries, mentioned above, are an example. And Wendy鈥檚 next week (Aug. 9) will launch advertising and marketing for its聽Baconator聽burger and companion聽Baconator Fries, which are offered for a limited time at just $1.99.
This article first appeared at .
