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What Drove Jack in the Box’s Revenue in Fiscal 4Q16?

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Revenue sources

Jack in the Box (JACK) earns its revenue from company-operated restaurant sales, franchise fees, and royalties collected from franchisees for the Jack in the Box and Qdoba Mexican Eats brands.

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4Q16 performance

In fiscal 4Q16, JACK posted revenues of $398.4 million, a rise of 12.5% from $354.1 million in fiscal 4Q15. In 4Q16, the Jack in the Box brand posted a rise in revenue of 9.9%, while Qdoba Mexican Eats posted a rise of 19.9%.

In the last 12 months, the Jack in the Box brand has increased the unit count of its company-owned restaurants by four and its franchised restaurants by 12. This, along with a systemwide same-store sales growth of 2.0%, drove Jack in the Box’s revenue.

Qdoba’s revenue growth was driven by a rise in the unit count of company-owned restaurants by 45 and a systemwide same-store sales growth of 0.80%. However, the unit count of franchised restaurants fell by seven, which offset some of the gains in revenue.

Peer comparisons

In fiscal 4Q16, Restaurant Brands International (QSR) posted revenue growth of 5.5%, while McDonald’s (MCD) and Wendy’s (WEN) revenues fell 2.9% and 21.7%, respectively.

Outlook

Analysts expect the company to post revenue of $1.6 billion in fiscal 2017. That figure represents a fall in revenue of 1.4% from 2016. Due to its optimization strategy, the company has been refranchising its restaurants to decrease the unit count of company-owned restaurants 10.0%. Fewer company-owned restaurants are expected to lower the company’s revenue in fiscal 2017. However, positive same-store sales growth is expected to offset the lower count.

Next, we’ll look at same-store sales growth for the Jack in the Box brand in fiscal 4Q16.

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