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Jack in the Box Inc. Message Board

  • jakfan jakfan May 13, 2000 8:12 PM Flag

    So I hear

    I was done in the Southeast a week ago and the
    stores are booming! They are SOOOOO busy that some
    people are actually complaining that they are so busy.
    Plus, they haven't even seen the commercials yet. Just
    wait until those start! I don't know why they're
    waiting on releasing the commercials, maybe because they
    wouldn't be able to handle the business?? And those stores
    are the bomb!! They are going to be opening one here
    in Sd soon, I think in El Cajon but I'm not sure on
    the location.
    As far as G&A goes, I also heard
    that they were cutting alot of it back mid FY00 to
    make some of it up. Not sure how.

    It took some
    time, but hopefully those stock prices will keep going
    up & up & up!

    cya- JF

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    • Just wanted to let you know that I'm still around. Keep up the informative posts, all of you guys and thanks.

    • CKE's Carl's Jr. concept has had debit cards
      (with a usage charge to the user I beleive) to pay for
      and food at their stores here in SoCal. Maybe even
      cash back like an ATM. They have had it installed at
      or near each register, but never really promoted it,
      for many years now. As I recall they have added
      credit processing recently.

      At one of the
      previous two JBX annual meetings I recall a question being
      answered, or a summary of future plans to include all
      company Jack in the Boxes to be equiped with the debit
      and/or credit processing terminals. They didn't make it
      sound like it was an urgent item--but I wouldn't expect
      them to tip their hat. I suspect it is a bigger part
      of makeing eating at Jack in the Box more
      convenient. If done correctly, I would wager, could give the
      company the infrastructure to potentially eJack
      themselves into the wireless world. Just a
      thought.

      With an electronic wallet (or better yet, a eJackhead
      keychain wand) tied in with a major processor like Visa or
      Mobil Speedpass, patrons could pay for their food
      faster and easier than cash or even than a
      card--automatically. Transactions would soar. No cash. No problem.
      Let's go to Jack in the Box. Annother reason for you to
      chose JiTB over the competitor.

      Recently you may
      have read a Canadian company, a local toll-road
      company, along with some SoCal McDonald's offering to
      customers that have a FastTrack toll road transponder in
      their vehicle to optionally pay for their drive-thru
      food by having it charged to their toll
      account--automatically. No cash needed. Can you imagine if McDonald's
      claims (aka owns) that portion of the windshield real
      estate, and Mobil speedpass window transponder owns the
      back windshild corner, Jack, along with a
      multi-location VISA-type transponder payment system may needed
      soon before all the corners get used up. Or they need
      to tie themselves in with a company that specializes
      in it already.

      I could envision a little
      plastic snap-around Jack head that fits around the Mobil
      Speedpass transponder wand that could make money for both
      concepts, encourage loyalty, create value and boost
      transactions. If not too expensive to transact, it would
      immediately buy into a huge base of Mobil users. Jack in the
      Box purchases could be paid for on the affiliated
      Speedpass charge card. Mobil users would get an additonal
      benifit from it too. Like Arco, maybe a 25c or so usage
      charge can be added for convenience and investment
      returns?

      The only problem may be usage is drive-thru (if
      secured to a users keyring). You'd have to remove the
      wand (and your keys) to get it close enough for
      triggering the receiver. Maybe that would encourage inside
      eating. I'm sure their are other usage challenges like if
      the payment between the companies is batch processed
      versus real time transacted and the liability for stolen
      and not reported transponders etc....

    • There are only a few of those Eatzi's as you say
      bgh92109. We hope to try it in the next month during a trip
      to Houston. My mother-in-law who lives in Houston is
      very laudatory about the one near her, though it is
      not cheap by any means. Next time I plan on buying a
      stock for a 50% up move in 6 months, I will surely let
      you know after I've purchased the full position. :)
      Right now, my feeling about EAT is that if it drops
      below 30, it is a buy and below 27, a screaming buy.
      Along with JBX, it is a long-term core holding.

    • Nice job on EAT. Congratulations. One of
      Brinker's newest concepts is Eatzi's, which, I think are
      only in Dallas, Houston, Atlanta? Have you been able
      to try them? I guess it takes a critical mass of
      affluent consumers to justify one. From what I've read,
      Eatzi's sounds like a place I'd like to go
      eatzi.

      Say, next time you've got a 50% move up in six months,
      let me know. Just kidding. Niiice.

    • 8.00/hr.

    • Outstanding job with the transcription!

      BTW, did you get to hear the call live? The quality was exceptional.

      Regards,

      CN

    • (continued from pt. 3)

      Closing
      Comments:

      Bob Nugent: We will continue to grow at a measured,
      sustained pace, adding about 10% company units per year.
      But our existing markets are also growing. In 1980,
      the distribution of food expenditures was 61%
      consumed in home, 39% away from home. Between 1980 and
      1999, that's changed. Now it's in home 53% and away
      from home 46%. Over the last 3 years, consumers
      continue to increase their spending at restaurants. In
      1997, increase was 6.6%, in 1998, it was up 7.4%, and
      up 6.2% in 1999. American's use of restaurants
      continues to rise, the annual meals that are purchased at a
      restaurant on a per person basis went from 139 in 1990 to
      158 in 1999, or a 14% increase. So existing markets
      continue to grow. The QSR segment also continues to grow
      at the expense of other segments, specifically for
      mid-scale restaurants. Since 1991, the fast food segment
      has grown 60% overall, or almost 5% a year. So we are
      not only growing geographically, but our market is
      growing also.

      (EOM)

    • (continued from pt. 2)

      Do you know of any
      competitor that you're hurting in your new
      markets?

      We sent in reconnaisance teams in, and one of the
      things we noticed was the lack of discounting. So we
      actually structured our menu to acommodate that, we did
      not go in with a 99 cent Jumbo Jack. We went in with
      a fully priced Jumbo Jack and reduced the price of
      other items. Since we entered the market, the
      competition has responded with some agressive price
      discounting, but we still have not reduced the Jumbo
      Jack.

      Any plans to add franchised stores?

      We have
      some franchisees who have the desire and ability to
      develop new restaurants and expect over the coming years,
      we will see some new restaurant development in our
      franchises, but we don't expect it to be
      significant.

      How much have the volumes from the Southeast markets
      fallen from the peaks? What is the average check in the
      new markets vs. core markets?

      Volumes have not
      fallen from their peaks. When we opened in Charlotte, we
      opened at a given level, and we began advertising 3 or 4
      months after we opened, and the volumes have not stopped
      growing since then. Nashville did not open at a high
      volume and fall. They opened at a given volume 15% ahead
      of system, maintained it, and we just started
      advertising last week so it's too early to tell. I expect to
      see a repeat from what what happened in Charlotte. We
      have not started to advertise in Baton Rouge yet.
      Average check for the system was just over $4.60 for the
      quarter. It is slightly higher than chain average in the
      new markets.

      Tell us more about your customer
      research and food quality improvements under
      ATO.

      We do a great deal of research, and we have been
      monitoring very attribute ratings of our business for years.
      The most significant movement we have ever seen in
      that regard has been over the past 6 months: hot and
      fresh food, good tasting food. We have made
      statistically significant improvements relative to all of our
      competition. We're not going to sit back and rest on that,
      we've got other initiatives underway that I believe
      will have as much impact on those kind of scores as
      ATO did. Some of those are in the development stage,
      some are in the rollout stage. So I expect to see
      continuous improvement.

      So your improvement is not
      just a function of maybe one or two competitors
      eroding, but pretty much across the board?

      Yes. I
      think it's a game of rising tide, I think everybody in
      this business is recognizing the importance of the
      quality of your food, and it's just a matter of who's
      able to execute at the highest levels to meet those
      consumer needs.

      Is that dropoff in service times
      also showing up in that kind of feedback, or is your
      consumer showing a little more resiliance on the longer
      waits?

      No, that's amazing that it doesn't. In-N-Out Burger
      chain gets the highest scores in the industry for
      service, but their speed of service is by 2 times the
      slowest in the industry. The most important experience is
      the quality of the food, and if you deliver high
      quality food, it puts a halo around everything else.
      (continued)

    • (continued from pt. 1)

      Q&A:

      "Capex
      and store openings for this year, and an estimate for
      next year?"

      We expect to open 120 new company
      restaurants this year, we've already opened 63, so we expect
      to open approximately 30 new restaurants in each of
      the next 2 quarters. Capex for this year is expected
      to be about $145-$150M range. Next year, capex will
      go up somewhat from this year's level.

      "At
      that spending level, would there be an increase in
      debt?"

      We expect this year to be debt-neutral, or very
      close to what we started the year at.

      The
      primary reason we expect to turn profitable sooner in the
      new markets is due to the higher sales volumes. We'll
      end the year with about 25 new restaurants in the new
      markets. We're spending less on advertising than we
      thought, also due to the acceptance of our concept. G&A is
      about what we anticipated for this year. Given where we
      are, we are right on where we thought we'd be. I think
      the G&A will come down somewhat next year as a
      percentage of sales. Problem with changing expansion plan is
      identifying new sites, and it takes about a year to get a new
      site open. Also, training and hiring people takes
      time, and speeding up the expansion would put pressure
      on our operations.

      Has G&A peaked relative to
      the 3 new markets?

      These levels will probably
      stay about the same for the rest of the
      year.

      Comps (current 3rd) quarter to date? Address the
      bottlenecks in ATO.

      Comparisons year to year become
      tougher as we move into the year, due to the strength
      last year, but we expect to maintain our sales
      momentum in the 3% range. We have experienced about a
      30-second slowdown in our service, and we believe that we
      can eliminate that slowdown and actually improve
      service. These inititatives is not fully rolled out into
      the system, but we'll update you in the
      3Q.

      Commodity and labor trends?

      Restaurant Operating
      Margin went up by about .4%, in spite of increases in
      labor, and this was due to lower food costs. In the
      second quarter, we had increased pressure on beef and
      pork, but this was offset by decreases in items like
      chicken, dairy, produce. Looking ahead over the next 6 to
      9 months, we see no material impact on our food
      costs. Labor markets are tight throughout our entire
      system, and it's creating some pressue on the cost. Our
      average wage is up between 3 and 4%, on top of it being
      up about 5 or 6% last year. So it's a difficult
      situation, but we are managing it quite satisfactorily.

    • I finally got around to listening to the
      conference call. Here are my notes, which are by no means
      complete. DISCLAIMER: you should listen to the conference
      call yourself and make no investment decision based on
      anything I've written here. There may be typos and
      mistakes. corrections welcomed.

      2Q00 Conference Call
      Notes

      Bob Nugent: Record sales and operating earnings,
      excluding an unusual item from last year's 2Q. Comparisons
      today are without that unusual item. YTD, earnings are
      up 24% compared with last year, company restaurant
      sales grew more than 14% compared to last year's 2Q.
      YTD company sales are up more than 15% over last
      year. Systemwide, sales improved nearly 12% and are up
      nearly 14% YTD. Total revenues have improved 15%, and
      16% YTD. Total revenues also include not only sales
      from our convenience store and gas station test
      program, but also the JITB distribution company. Unlike
      some competitors, we are not at the mercy of another
      business to deliver goods to our
      restaurants.

      Pleased with the 3% increase in same store sales,
      especially since it was on top of the 9.1% improvment
      experienced this time last year. 1.4% increase in
      transactions, 1.6% improvement in average check amounts.
      Restaurant Operating Margins are up from 19.5% to 19.9%.
      Labor was up due to wage pressures and new store
      openings, but this was offset by lower food costs.
      Advertising costs and promotions were 5.1% of sales,
      essentially the same as one year ago.

      We have been
      putting in an infrastructure to support the new expansion
      to become a nationwide chain. Reflecting that, G&A
      was 6.7% of revenues, compared to 6% a year ago.
      EBITDA was $44.8M, up 17% quarter to quarter. Capex was
      $24M/quarter, $48M YTD. We opened 29 new JITB restaurants, and
      63 YTD, for a total of 1,255 company restaurants at
      end of 2Q.

      Since the inception of our Assemble
      To Order program, food quality scores have indeed
      risen. We have delivered on the promise of a great
      restaurant experience. In our new Southeastern markets,
      customers in focus groups made overwhelmingly positive
      comments on our food, service and new building. Only
      negative comment was that service was slow because of the
      crowds. ATO has slowed our service on it somewhat and
      expect improvements in the future. But we get credit for
      assembling to order and the food is worth the wait. Sales
      volumes there are 15-20% ahead of our sales system wide.
      We thought our new markets would be profitable in
      about 2 years, and have since cut that time in half; we
      expect next year to be profitable in these markets.
      That's not to suggest that the competition uis not
      responding--they are, with discounts and refurbished restaurants,
      especially with freshly painted exteriors. So pleased are we
      about our new market performance, we approved an
      additional new market for next year, the
      Greenville/Spartanburg, S.C., area.

      Next quarter, there will be a
      few additions to our core product lineup. Refreshing
      the menu offers value-added opportunities. You will
      see a new and improved Chicken Supreme Sandwich,
      biscuit sandwiches, the return of the root beer float and
      the raspberry ice cream shake. (continued)

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