uploads///EPS Estimates Based on Full Year Guidance

Will Success Continue for Jack in the Box?

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Dec. 4 2020, Updated 10:52 a.m. ET

Management initiatives

In the previous part of this series, we saw that Jack in the Box (JACK) didn’t add many units during 2Q15. This indicates management’s focus on growing same-store sales. Restaurants use several strategies such as adding new products, aggressive promotion, marketing, and advertising.

According to Jack in the Box, transactions drove same-store sales for the second quarter. Transaction is the average check a customer pays at a restaurant per order. Jack in the Box introduced Buttery Jack Burgers in the second quarter. According to the company, it was the company’s most successful launch. Sales were also lifted by its Loaded Breakfast Sandwich and Breakfast Burrito.

Other changes include the presentation of burgers, which the company changed by serving burgers and sandwiches in baskets. The company will also roll out its Coke Freestyle machines by the end of 2015. This will offer more beverage choices to Jack in the Box customers.

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Qdoba benefited from the restaurant’s pricing structure as well as catering sales, which grew by double digits. Qdoba added Savory Queso sauce, Bacon-Jalapeno Queso, and Quesomole to its menu. Chipotle Mexican Grill (CMG) also offers catering services. The consumer discretionary sector ETF (XLY) holds 1% of CMG stock. XLY also holds 3% of Starbucks (SBUX) and 4% of McDonald’s (MCD).

What’s the outlook for Jack in the Box?

Same-store sales at Jack in the Box’s company-operated restaurants are expected to grow in the range of 4%–6% in 3Q15 and 4.5%–5.5% for the full year. For Qdoba, same-store sales are expected to increase in the range of 6%–8%.

The consolidated operating margin guidance is expected to increase to 20% from 19.1% for the full year.

Given this outlook, we’ll now look at how investors reacted to the company’s 2Q15 earnings.

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