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Jack in the Box Inc. Message Board

  • perryao perryao Nov 8, 1999 4:52 PM Flag

    .47 earnings, rueters. eom

    <EOM>

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    • Yes, I was disappointed in today's action. Order
      imbalance at the open caused a delay, then it was almost
      straight downhill from $24 after a couple of failed
      attempts to stay above $23. I expected a lot of selling
      into strength, but I didn't think it would close at
      the low of the day. Still, it was a tough day in the
      market, and an even worse one for restaurant stocks,
      which got hammered.

      David

    • JITB jumped fries and drink prices to extreme
      levels, as well as super-sizing as a means to maintain
      margins. Since fries/drinks prices have no more upward
      room to go, any increased labor costs must come out of
      the bottom line unless 99 cent products become a
      thing of the past. That can only happen if the
      competition takes the lead. That means
      MCD.

      Arnie

      P.S. Were you as surprised as I was that JBX closed at
      the low of the day? Volume dried up after lunch and
      the price faded. Looks like somebody is still
      unloading. It's beyond me why.

    • "As long as it continues to cost 45 to 55 cents
      to make a Jumbo Jack"

      It's been about 18
      months ago but at that time the Jumbo Jack cost 28
      cents.

      "25-cent sodas"

      I'll bet the container costs more
      than the contents. 25 cents is WAY too high. 3-4 cents
      is more like it.


      Arnie

    • For the past couple of years, I have repeatedly
      asked whether there were any future plans to increase
      prices, especially on the Jumbo Jack, and have always
      gotten the same response. NO.

      I know JBX has done
      pricing tests in the past to see what would happen if
      they raised prices, and they probably still run them
      from time to time. I take it that these tests continue
      to prove it isn't a good idea. The 99 cent Jumbo
      Jack is here to stay for a while. JBX must consider it
      is a vital part of their game plan.

      David

    • I goofed and meant to say "As for WEN, they have
      about $250M in cash and equivalents, which is about the
      same amount as they hold in long term
      debt."

      NOT $2.5B!

      As always, do your own research
      (especially if you're numerator-challenged from time to
      time)

      David

    • (( Since X percentage of the industry is probably
      already paying, or is on
      track to exceed, the current
      min wage, it appears to give the
      politicians an
      open door to do something to make them look good to
      their
      potential voters. ))

      This, I think, is
      the most telling statement in your strong post about
      min. wage. In fact, I was just reading that the US
      Senate passed the GOP min. wage bill but Clinton has
      already said he'll veto it if it gets to his desk (which
      won't happen until next year, if at all).

      What I
      was attempting to do with my earlier post was just
      try to explain the unexplainable: Why institutional
      investors would be dumping JBX last week despite its strong
      growth over the last 5-plus years and in advance of a
      year-end result everyone expected would be strong. The
      ghost of minimum wage hikes was my theory; hopefully,
      with today's Senate action, that ghost is
      dead.

      As for the rest of your post, as a customer I
      wouldn't mind if JBX inched up its 99 cent menu to $1.29
      or $1.59 because I go to JBX for the quality of food
      (which is a bit pricier). As a stockholder, I like the
      idea of a slight increase, but I worry that the JBX
      99-cent menu draws people who might have otherwise gone
      to another QSR for its cheap menu. As long as it
      continues to cost 45 to 55 cents to make a Jumbo Jack, I
      say keep the price of it down and make up for it on
      the 15-cent fries or the 25-cent sodas that cost
      $1.09-plus.

      - Parker

    • We had a couple of messages about the Min Wage on
      CKR board but never tore the subject apart, and
      several months ago there was some discusion about
      increased labor requirements at MCD with their Made For You
      assembly procedures. But Min Wage wasn't really visited
      except in passing. It has to be a big part of increased
      food quality and service.

      More labor needs +
      higher min wage = higher labor budgets. Since MCD still
      makes half it's earnings from the US, why didn't it hit
      the market leader too? Why would it affect one
      player, but not all? I don't know the answer.

      One
      CKR post says the labor budget is usually NOT
      increased after an increase in the min wage. I wonder what
      affect that has on an organization. That link to the one
      I'm referring to is:
      http://messages.yahoo.com/bbs?action=m&board=7081366&tid=ckr&mid=4817&sid=708136
      6


      I get the impression that a great part of the
      country that entry level labor is already a little higher
      than their states current minimum wage.

      Since X
      percentage of the industry is probably already paying, or is
      on track to exceed, the current min wage, it appears
      to give the politicians an open door to do something
      to make them look good to their potential voters.
      They are probably just coming up behind the wage
      number that the market has already determined staffs the
      stores.

      The real problem I see is the affect on
      those employees that are currently higher than the
      current wage, but par with the proposed minimum wage.
      Wouldn't you feel good making $1 more than the current
      minimum (with your experience) only to find out some off
      the street now earns the same. So on one hand I see
      the pressures.

      The ability to absorb or pass
      on the increases in the form of price increases or
      the market power to pass on the increases seems key
      to this industry.

      Does this mean a bigger
      organization is better, where the larger the player, the lower
      the costs, and the better to deal with labor cost
      pressures. What if the larger player want greater market
      share? No price increases?

      JBX, if I recall, was
      able to institute a 2% average price increase at the
      last min wage increase in CA initially. However, if
      you watched their pricing, you might get the
      impression they back tracked a little. If I recall
      correctly, one or two low-cost items were pulled back to
      their previous price levels after they upped the price.
      The 99c value chicken sandwich comes to mind as one
      example.

      JBX success to absorb labor pressures
      appear to be in their menu board presentation and
      ability to upgrade or add on to an existing orders. The
      new boards appeared to increase the average
      transaction by encouraging more transactions to be meals than
      previously. Their order screen may have told the customer
      that they can spend a little more. If they had $5 in
      their pocket, and they spent 3.87 (confirmed by the
      screen), maybe they would add another dollar item to their
      order. These increases may have allowed to JBX to
      absorbed some of the increases by making each transaction,
      on average, more productive.

      I expect
      something has to give. The 99c menu has to be in target. I
      would hope the entry-level menu would fall closer to
      $1.59, or if desperate, $1.29. Not 99c.

      Any
      further thoughts on if the min wage discusion in DC
      contributed to JBX's decline?

    • in North America. From their 11/9 press
      release:

      "In Quick Service Restaurants, comparable restaurant
      sales for the period are down by 3% in North America.
      This was expected as comparable restaurant sales
      growth in the prior period was 6%. Comparable restaurant
      sales are up 2% in the Rest of the World with continued
      strong performance in Europe and Latin America. 160 new
      restaurants have been opened in the first quarter and system
      sales have increased by 4%."

      McDonalds' U.S.
      sales are also flat. KFC and Taco Bell's YTD sales are
      flat. Carl's Jr. is in the toilet.

      Any questions
      where JBX is getting its PSA increases from?

      As
      always, do your own research,

      David

    • Thomson's I watch at this moment is showing
      several "super sell messages" between 22 1/8 and 23 1/4.
      It would seem that some institutional player is
      looking to put their money to work elsewhere. Hard to
      believe, based on results, that there is any hidden issue
      within the business. I can relate however to what might
      be sector rotation, since technology looks like the
      hot sector for the likely short and medium term
      (1.infrastructure 2. business to business 3. consumer...in that
      order). Nice to take a breather, though, and put the
      money into a friendly under 12 PE stock for a while.
      Burgers aren't "breakthrough," but they're
      tasty!

      With heavy volume, half of it today being
      institutional, this market action has to be showing some
      "choreography." Trying to read how these big guys play poker, how
      they mask or telegraph their intentions. Don't have
      Level II so also trying to learn how to use the tools
      publicly available.

      If I was Jim Cramer for
      instance, or had several million in my trading account, my
      access to the brokers could provide "a little" more
      insight into what's being played out. Cramer (who
      generally trades on business fundamentals, rather than
      "technicals" and just like everyone sometimes gets blindsided,
      hence the title of his column at thestreet.com: "Wrong!
      Rear Echelon Revelations") trys to infer what kind of
      weight is behind selling or buying by watching "the
      tape," seeing how the bid and ask adjust to price and
      volume. Aw, that's too cute for me, I just need to pick a
      good company and try to ignore the daily ebb and
      flow.

      Question to observers of market makers: what does it mean
      when there are 5000 shares on the bid, and only 100
      shares on the ask? Does that imply the MM is defending
      the price (ie. accumulating by not dropping the price
      to pick up the bid)?

      This MM is moving some
      volume today...watching the orders at Quote.com live
      charts, I'm seeing the majority of trades being 1000 or
      more shares. I'm thinking this isn't hundreds of
      retail buyers opening or closing their entire positions,
      but rather large pieces being added to, or whittled
      down, in many slices.

      Oh well...what's for
      lunch? *smile* ~Geo.

    • Yes, it's a comforting sight to drive by almost
      any JITB from San Diego to Palm Springs and see cars
      in the drive-thru lanes at any time of day or night.
      But it's obvious they're doing well, since PSAs
      continue to move UP, this quarter up 9.3%--pretty
      incredible when you consider how long most of the JITB
      restaurants have been open in their mature, highly
      competitive markets.

      As for WEN, they have about $2.5B
      in cash and equivalents, which is about the same
      amount as they hold in long term debt. Book value is
      around $9/share. These fundamentals are much higher than
      JBX, so that could account for the difference in how
      they're valued. WEN's chart shows a similar drop, from a
      high of $31 11/16 to today's price of around
      $23.

      Checking my Yahoo! quote list of restaurant stocks shows
      that with the sole exception of JBX, it's a bloodbath.
      Most are down 3-5% right now. I think we are looking
      at a sector that is continuing to fall out of favor,
      folks.

      You can bookmark my Yahoo! quote list of restaurant
      stocks if you like:
      http://quote.yahoo.com/q?s=CKR%2CDEO%2CJBX%2CMCD%2COSSI%2CPZZA%2CRUBO%2CTACO%2CV
      RES%2CWEN%2CYUM&d=v2


      As always, do your own research,

      David

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