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Jack in the Box Inc. Message Board

  • GoalY2K GoalY2K Feb 26, 1999 6:51 PM Flag

    Rational?

    I don't get it. FM reports record earnings for
    successive quarters and a big institutional investor bails
    on Thursday. I understand the rationale of getting
    an immediate return on your investment. Hell, I sold
    20% of my FM investment when it hit $22 (bought at
    $10.25). I just don't understand why a large investor
    would liquidate their position in a stock that is a
    great buy at it's current level. With such a low P/E
    and great earnings, I wish I had kept my money in FM
    instead of re-investing elsewhere. My next sell order is
    going to be at least $30.
    Anybody see any possible
    reason why FM can't continue these SSS increases? FM
    seems to have experienced people handling their
    expansion, any views on how that will translate to their
    East coast expansion?

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    • As a regular visitor to the post-production
      facility that handles duplication for JITB's training
      videos, I can say that they are very well done, and
      interesting to watch. I can't speak for the training efforts
      of other fast food restaurants, but clearly FM
      management goes to great lengths to ensure that their people
      are well-trained and consistent in their approach to
      customers.

      Glad somebody else has noted the superior service and
      attitudes at JITB.

    • I had observed the same "hustle attitude" at
      CKE's Carl's Jr. chain from 1997 to early/mid 1998,
      then saw a drop off in motivation in my limited visits
      the last quarter of 1998. They were tripping over
      themselves to serve the customer faster with hot food. Then
      something happened.

      JIB has had a renewed
      friendliness and hustle this past year, attributes that
      usually accompany positive changes within an
      organization. It apparently is following their expensive
      training and refocusing on the customer program of last
      year. If they [FM] can keep the ball rolling, the
      productivity changes sure will bring in the sales. It is
      pretty exciting.

      In general JIB, CKR, MCD, WEN
      and others draw from the same labor pool. So it is
      particularly facinating to see one company (or a location)
      out-servicing other chains and nearby locations. I feel it is a
      sign of the top-management setting the tone, and then
      that tone trickling down to the important company
      employees--the managers at the execution level--where it then
      becomes contageous affecting the crew that deals directly
      with the customer. It appears to be affecting
      franchised stores also.

      JIB crew and managers, from
      my few experiences, have had that extra jump in
      their step and glow in their attitude. I think they are
      still excited with "their" new
      make-it-when-you-order-it system and really are trying to do it right.


      Foodmaker's strategic initiatives appear to have set the
      HIGHER standard and it is good to see initially the
      store-level efforts to make it work.

    • I had observed the same "hustle attitude" at
      CKE's Carl's Jr. chain from 1997 to early/mid 1998,
      then saw a drop off in motivation in my limited visits
      the last quarter of 1998. They were tripping over
      themselves to serve the customer faster with hot food. Then
      something happened.

      JIB has had a renewed
      friendliness and hustle this past year, attributes that
      usually accompany positive changes within an
      organization. It apparently is following their expensive
      training and refocusing on the customer program of last
      year. If they [FM] can keep the ball rolling, the
      productivity changes sure will bring in the sales. It is
      pretty exciting.

      In general JIB, CKR, MCD, WEN
      and others draw from the same labor pool. So it is
      particularly facinating to see one company (or a location)
      out-servicing other chains and nearby locations. I feel it is a
      sign of the top-management setting the tone, and then
      that tone trickling down to the important company
      employees--the managers at the execution level--where it then
      becomes contageous affecting the crew that deals directly
      with the customer. It appears to be affecting
      franchised stores also.

      JIB crew and managers, from
      my few experiences, have had that extra jump in
      their step and glow in their attitude. I think they are
      still excited with "their" new
      make-it-when-you-order-it system and really are trying to do it right.


      Foodmaker's strategic initiatives appear to have set the
      HIGHER standard and it is good to see initially the
      store-level efforts to make it work.

    • There does seem to be a different attitude in JITB places. I'll have to pay more attention now when I visit them. Thanks for the insight.

    • If you've done as well as I have over the years
      with FM, you also get the urge to thank those hard
      working JITB employees for ensuring your success, as they
      hustle to get your order to you. I have never once had a
      bad experience at a JITB, and I've visited quite a
      few in Southern California. The servers always have a
      smile and friendly attitude. No other fast food
      restaurant I've visited comes close, in my book. Also, the
      employees seem to be more mature and truly dedicated to
      performance. At other places, often you'll get a high school
      kid with no personality or worse, attitude
      city.

      David

    • Never thought about it putting money in our pockets. I go often! Later, Dave Scatt

    • There are some interesting bits in the 10Q,
      available at
      http://sec.yahoo.com/e/990303/fm.html

      "PSA sales for comparable Company-operated
      restaurants, those open more than one year, grew 6.8% in 1999
      compared with the same period in 1998. Sales growth was
      distributed fairly evenly between average number of
      transactions and average transaction amounts, increasing 3.7%
      and 3.1%, respectively, compared with a year
      ago."

      Good to see more customers coming in, as well as
      spending more money.

      "Distribution and other sales
      increased $3.5 million to $10.3 million in 1999 from $6.8
      million in 1998, primarily due to an increase in the
      number of franchise restaurants serviced by the
      Company's distribution division and sales growth at
      franchise restaurants."

      For years, distribution
      sales have been going down dramatically, since that
      lawsuit where the franchisees won the right to get food
      from other suppliers--are some of them coming back to
      FM? Regardless, I suppose it doesn't really matter to
      the bottom line because the distribution end of their
      business is very low margin.

      "Franchise restaurant
      sales increased to $112.6 million in 1999 from $106.1
      million in 1998. Sales at domestic franchise restaurants
      were also strengthened by the strategic initiatives
      implemented at Company-operated restaurants."

      That's
      a 6.1% increase vs. the 6.8% increase for
      company-operated stores. It's not a huge difference, but it does
      add up when you're talking about 1,100 stores, and it
      makes me glad they're not franchising any
      more.

      "The Company requires capital principally to grow the
      business through new restaurant construction, as well as
      to maintain, improve and refurbish existing
      restaurants, and for general operating purposes. The Company's
      primary sources of liquidity are expected to be cash
      flows from operations, the revolving bank credit
      facility, and the sale and leaseback of restaurant
      properties. Additional potential sources of liquidity include
      financing opportunities and the conversion of
      Company-operated restaurants to franchised restaurants. Based upon
      current levels of operations and anticipated growth, the
      Company expects that cash flows from operations, combined
      with other financing alternatives available, will be
      sufficient to meet debt service, capital expenditure and
      working capital requirements."

      Although Nugent
      publicly declared at the annual meeting that they had no
      plans to franchise new stores, I'm not sure he was
      clear that they would not franchise EXISTING stores.
      Interesting that this option is mentioned
      here.

      There's lots more in the 10Q to review, and a worthwhile
      read for FM investors.

      David

    • At the annual meeting, Ken Williams said the new
      menu board displays have been installed in 90% of all
      JITB stores. Although I don't have the exact quote in
      my notes, I think I recall him saying that the rest
      would be equipped in a matter of months (?). So you'll
      get your LCD menu board display at your favorite JITB
      soon. Why not ask the JITB manager on duty? I'll bet he
      knows or can easily find out for
      you.

      David

      And remember, every visit to JITB puts money in our
      pockets. But stay away from too many of those Oreo Cookie
      Shakes. ;-)

    • ...to buy a snack or burger. I wish that they
      would
      install the little video display showing what
      you
      ordered, and what was owed, into
      EVERY-Jack-In-The-Box.
      The last time I went through, I couldn't
      understand
      the box and wasn't sure of the cost or if I
      would get
      what I ordered until I got to the window.

      I've been to JIB's that had them and it was a much

      better experience.
      It may cost us, but I think more
      of them would
      pay off for FM.
      I'm like a
      previous poster who's only black Nos. were my FM Quotes.
      Love the product, love the stock. RL

    • Well, the recent two days have been encouraging,
      particularly since every other stock I own was RED!!! It makes
      me more determined than ever to hold until $30 for
      the next sale. I posted last year that I thought FM
      would hit $25 in the first quarter and I foolishly sold
      at $22. FM still has a very low P/E, even after the
      previous discussions about the Vons settlement. As long as
      they don't have some kind of major melt-down (another
      ecoli) IMO we will see $30 by July. I don't see a major
      problem, they have the best food safety program in the
      business, they have to. This is part of the reason I like
      their company owned strategy. I believe it was a
      franchisee who was undercooking the burgers in WA? Of course
      inattentive management does not necessarily have to be
      outside a company!
      Well, have enjoyed the discussions,
      will be traveling for a few weeks and checking email
      sporadically. I have faith in my FM investment while I'm gone!

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