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What Drove Jack in the Box’s Revenue in Q2?

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Second-quarter expectations

In the second quarter, analysts expect Jack in the Box (JACK) to post revenue of $217.7 million, which represents a rise of 3.8% from $209.8 million in the corresponding quarter of fiscal 2018. Its adoption of a new revenue recognition standard and its net addition of new franchised restaurants in the last four quarters are expected to drive its revenue.

However, the company’s refranchising and its closure of underperforming company-operated restaurants are expected to offset some of its revenue increase.

By the end of the first quarter of fiscal 2019, JACK operated 2,104 franchised restaurants, a rise of 47 from 2,057 at the end of the first quarter of fiscal 2018. However, during the same period, the unit count of its company-owned restaurants fell by 51 units to 137 restaurants.

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JACK is focusing on the implementation of digital advancements, the expansion of its delivery service to a higher number of restaurants, menu innovations, and value offerings to drive its SSSG (same-store sales growth). In February, the company introduced the $4.99 Sourdough Patty Melt Combo and the $4 Fish Sandwich Combo.

By the end of the first quarter, JACK had expanded its delivery service to 85% of its restaurants after adding Uber Eats as a delivery partner in December 2018. In the previous quarter, the company had introduced a new feature on its app by which customers could place orders for pickup. The company has also been remodeling its old restaurants to enhance the customer experience. All these initiatives are expected to drive the company’s sales during the second quarter.

Peer comparison and outlook

During the comparable quarter, Wendy’s (WEN) and Restaurant Brands International (QSR) posted revenue rises of 7.4% and 1.0%, respectively, while McDonald’s (MCD) saw its revenue fall 3.6%.

For fiscal 2019, analysts expect JACK to post revenue of $946.9 million, a rise of 8.9% from its revenue of $869.7 million in fiscal 2018. The company’s management plans to open 25–35 new restaurants in 2019, while its SSSG is expected to be in the range of 0%–2.0%.

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