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Jack in the Box Ramps Up in 2Q15; Chipotle Slows Down

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Jack in the Box ramps up

On May 13, Jack in the Box (JACK) reported yet another quarter of impressive same-store sales growth for two of its concept restaurants. Jack in the Box’s 2Q15 same-store sales grew 8.9% compared to 0.7% in 2Q14. This is the highest over the past 12 quarters.

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 Jack in the Box’s same-store sales

Jack in the Box’s same-store sales were impressive compared to restaurant chains operating under the same format. McDonald’s (MCD) had a negative same-store sales growth of -2.6%, and Wendy’s (WEN) had a same-store sales growth of 3.1% over the same period. This indicates a strong differentiation for Jack in the Box, which is driving sales at this popular chain.

Qdoba grows 8.3%

Qdoba Mexican Grill had a strong 2Q15 same-store sales growth of 8.3% compared to 7% in the same quarter a year ago. According to the company, unfavorable weather conditions affected Qdoba’s sales during the quarter. Qdoba, a fast casual restaurant, benefits from shifting customer trends. Chipotle has been the most beneficial in this trend. As you can see in the above chart, Chipotle’s same-store sales reached a high of 19% in 4Q14. This also benefited the consumer discretionary sector ETF (XLY), which holds 1% of CMG.

Investors must watch this metric closely since it will help identify where restaurant sales are heading and whether management is taking initiatives to sustain growth.

Unit growth is equally important in order for a restaurant’s stock to increase by adding more units in underpenetrated markets. We’ll look at this in more detail in the next part.

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