JACK - Earnings call transcript Q4 2017

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Operator

Good day, everyone and welcome to the Jack in the Box Incorporated Fourth Quarter Fiscal 2017 Earnings Conference Call. Today’s call is being broadcast live over the Internet. A replay of the call will be available on the Jack in the Box corporate website starting today. [Operator Instructions] At this time for opening remarks and introductions, I would like to turn the call over to Carol DiRaimo, Chief Investor Relations and Corporate Communications Officer for Jack in the Box. Please go ahead.

Carol DiRaimo

good and Natalie, you, morning, everyone. Thank

charges amounts on Lenny on GAAP Comma; me Rebel. operating our per earnings restructuring the share is basis earnings and EPS call CEO, and In from share or morning, losses this as Chairman per are comments to and and a gains from and Jerry diluted per today refranchising. CFO, Joining refer defined Executive diluted share President Vice operations continuing excluding

EPS, operating Please including operating measures margin included margin. non-GAAP include comments franchise restaurant refer in and Our our reconciliations to earnings release.

Wednesday, January attend and February management on information market to first website Box information. our at management’s and will materially Company questions the Actual www.jackinthebox.com. today, in based yesterday’s the for conference advised are conference to session of our A and on our relating well this are to the note. are calendar detailed to these documents statement cautionary call. which we operations are presentation, The today’s current most and the the the Please course and in plan These Material a SEC. community. risk on as after presentation part public announce the we documents be factors Investors Form the the we may Following most in news future, Company’s Xst during of of section statement expectations the on take risks reflect as expectations in XX-Q results XX-K, based with Safe plans our from make close. recent the in recent ICR Harbor to question-and-answer Jack differ quarter other filed business. available items financial on forward-looking our release considered that few XXst from ends may tentatively that results Orlando January XX-K in statements

a.m. Lenny. scheduled that, Pacific at tentatively turn to XXnd. to Time on be will is February X:XX And with held Thursday, over I call conference Our call the

Lenny Comma

good Thank Carol, and you, morning.

in the or as Stanley, we to will shareholder course of made be its action. specific release, process as with news value. Qdoba to Board other transaction our Morgan in of other any substantial of evaluation ways no Directors progress that with As enhance respect have well noted potential There the result yesterday’s of assurance can in alternatives assistance evaluation

appreciate I’d We initiatives or talk to back about be use and morning to any the highly plan reported underway your Jerry while regain questions this color fiscal results that matter quarter time not a will now environment, will the patience. like competitive fourth on little we for drop, in taking With this today yesterday. add around to continued my a momentum XXXX

the with start Jack in Let’s Box.

with an $X October, launch primary XXX% the will our positioning, entire competitors bundled that multiple focus burger product expect points ranging products We To promotion points, our price that message single was to ribeye LTO, that will January, deliver end, menu aware which quality like on from on value be our stray on focused featuring completely we in our introduced acutely everyday us are day. higher our won’t comes of in will value value to and from $X. with $X. capability below price but the We media. a the promotions, extremely message unique remain on consistent When offering throughout leverages our to it

launched enhance in our fiscal imperatives We key of there we plan our the to performance improvement, franchise and areas to are service work innovation holistic importance influenced with by community critical our on our highest strategic the image to addressing plenty to closely external differentiate Jack resources a the can and and business coming additional identify improving of leverage to elevate will plan results. factors, prioritize experience. brand XXXX, focus further accelerate the those Box, for impact. year At contribute our transform control of within to things the our with that be our we Although by beginning

mix continue letters will progress and sold We our XXXX. have initiatives. to expected XX% with XX% now the to high-end Jack of the Box to at of year make restaurants in on to sell bringing anticipate during XX Box previous range approach of XXX a the We Jack franchisees to intent of refranchising XX% the restaurants in fiscal the franchised steady non-binding fiscal our currently year, system by franchisees end franchise the We end. the

front, digital order the has payment. ahead Jack functionality application the a supports and Box mobile in On that

testing anticipate currently mobile this XXXX. markets and and system across in are a ordering web few out rolling app our in We

system. X,XXX are XX% to also the sales our Including in the an we offered. now about that where it’s expect XXX We’re for delivery further more restaurants system continuing By in our expand markets has we restaurants. January, more in Box of that’s of food which came than Jack online of generated to approximately delivery, delivering to incremental expand lift additional QX, end than XX%

Moving to Qdoba. on

ingredients. transactions Our sales, the we need high-quality and food awareness QX increase what of sales trends across we help flavorful were with fast we casual segment. consistent drive to dining and of To use saw our know

Flavor we promotes called United an over unique. flavors the that integrated make celebrates recently brand by So, campaign division the launched that unity and

merchandising. see on media, email, digital as tag as media, in-store social will well this line You

The new on basis. is messaging years first several product It’s promoted quesadillas. system-wide quesadillas flavors the incorporate we been promotion our to a since

celebrating our for the queso adding including and way express to campaign ingredients they love we extra great no With guac guests a lives, charge. were themselves mission thought people’s quesadillas by to at flavor to bring new

year-end. of to expect more system will delivery third-party catering total future. bring for XX% near delivery our company Qdoba. DoorDash and expanded Grubhub We restaurants to incremental nearly delivery continue third-party XX number in sales locations, was locations And QX, under franchise increased to and to at we UberEATS, with even In invest in Including XXX. company we the drive additional restaurants than more of contract to online fiscal the or offering

military and We will has be Development fiscal campuses, medical awareness in to now also detailed active plan classes. intend in that has XX of particularly update for Jerry? markets. around and we than great targets questions XXXX process and X closing, airports, the that you opened continue generate XX XXXX to malls, travel over our this for nontraditional In loyalty Jerry of Qdoba, members. I’ll Qdoba way million nontraditional process. know facilities, CapEx once brand now leverage in With underpenetrated program a restaurants for to more the that, restaurants operating which fourth has at quarter. over shopping We specific will completion provide a fiscal to look installations concluded. evaluation following the have sites Qdoba more call college guidance the turn new leverage we G&A, to

Jerry Rebel

Thank versus QX were sales year XXXX. G&A and Lenny, $X.XX more you, negatively Box lower estimated share company the $X.XX $X.XX the by an Qdoba. than from estimate you or lower, quarter that days per about results and by were per good The system by Qdoba $X.XX the with of last $X.XX morning. and penny XX impact negatively Jack hurt lost XXrd year sales exclude to Hurricane than for the EPS last restaurant points, quarter benefits about and XX tax $X.XX was impacted particularly initiatives impairment by if lower-than-expected was lower at in week refranchising points. in margins sales and margins, from about by We our share. rate approximately related the higher offset a with Operating benefit costs impacting Harvey basis a same-store basis

nearly QX, year-ago to our growth the same-store sales for the the of quarter, sales and of of the Company approximately in in by year. X% higher refranchising the Through X.X%, we eight franchise of over inflation Box of the X.X%, commodity maintenance system year. Wage of system same-store deleverage X.X% mix the ongoing comparable of Jack Franchise flat quarter; restaurants during sales the quarter our decrease partially Jack margins quarter. these just the which of related basis sales I same-store and X% on X%, the first running factors cost were in decreased the guidance. compared the Box of X%, points a transactions costs extreme were in For Hurricane mentioned, to sales was comprised sales of basis impacted related Jack approximately XXX eight Box, Jack Box pricing in competitors’ in restaurant basis-point in slightly was the and last Margins at by impact, Harvey. XX.X% positive, in focus value. the XX of by are midpoint same-store in XXX to X.X% repairs declined the inflation weeks points over and despite to lapping including declined year, weeks took X.X%. decline in same-store benefits for offset first the approximately negatively benefit earlier that our

the Qdoba, we in year. increase X% with franchise sales in decreased average pricing and X.X% decrease a the same-store versus took the to of in during fourth reflected same-store no The X.X% X.X% Company flat catering quarter on in check; transactions. last Moving restaurants system decrease sales quarter, growth a X.X%

same-store weeks XXX XX.X% of catering and of full to first first declined margin year the quarter catering For Qdoba of basis sales. the for in sales. similar restaurant system mix XX.X% the QX the sales points are sales to results. running X.X% the quarter, grew eight increased quarter, our same-store Through Qdoba to

the and the prices G&A contributed X% decline system-wide the lower years quarter. to margins. basis in Food to fiscal the XXX restaurants to impacted declined roughly basis points, avocado inflation. approximately of factors resulting leverage the in year over in spike wage X.X% quarter X.X% cost both XX% the addition to last was opened in included sales in from impact XXX the points and X.X% the also quarter approximately over year. from And last compared in including the and In costs XXX sales new decrease, negatively up the periods Labor increased as points of basis three following were the same-store margins.

lower compensation activities, pension restructuring decrease. costs Our the and to incentive contributed

shares did average Although, not repurchase during year’s versus fourth any by quarter. last we XX% quarter, weighted outstanding shares the decreased

the call times ratio Natalie? questions. remarks, Our end of like year. over of operator it to to to now X.X as turn the our for That up concludes the prepared the open I’d was leverage

Operator

from UBS. [Operator our first you. of you Instructions] Geiger question Thank Thank is Dennis

Dennis Geiger

of kind like Thanks. it quarter, for of some you did with of point at The $X improvement made under you all under side single that comment the we the during that performance some the far sounds price throughout it you point looking commentary Can you on price adjustments that of say the see quarter? more the low balance point? Definitely look as an interesting during the And it price the the Anything transactions just Thanks year Great. value question. mix already things. products. kind can on ahead, about be value? then, bundled the of will thinking like and as go as a on

Lenny Comma

Yes.

we share, first and to And face then look promotions particular and that see like of breakfast those impact back we the larger when sort negative look that the a of have me forward quarter major around were in day, let promotions, in behind lion thereafter. they’ve back. that to major space our marketing go then against some you shortly our or when competitors So, strength run bounce competitors promotions that our equities or directly see all back within putting if those run value tend the

look As we to want the don’t be where position after January fact. we at going are reacting forward, we in

be lion January to the anticipation us see in time. the as have messaging in which advertising of the share major price of during in some and points what’s our come the primary it will similar will will means put you competitors, messaging, of the So, we from that value-oriented marketplace getting

Big gotten as Munchie far Breakfast As well well $X the Really and the Sandwich. that back, we’ve have Mash-Ups, as the done point, on items looking have also priced Platter contraction price Chicken some particularly we as the the below

contraction coming January. into gives more confidence So, here which be aggressive we us have seen to the

So, the we environment. coming I like think well we will fare feel pretty in

Dennis Geiger

focus the to I Lenny, could but than the premium anything been you just that the price say in $X if point. Great. done just sneak considering environment quick greater performance, on on challenging, run? that’s could of wanted I one Thanks the the you’ve some transition kind environment innovation one, and know of this upgrades you in you what on that as the factoring environment, you Again, of upgrades seen QSR with a you’ve innovation premium are response been plus. pleased to to with to lot. has some the those on what

Lenny Comma

the ribeye first a this remarks, we’ll is and which we’ve -- out got supported in the quarter, of exceptionally we XXX% value shared performing are long. right Absolutely. Jerry which we’re in are prepared continued now, year really it. winning part and the how burger well. there doing doing of the said value We have ribeye as biggest through burger that rollovers the And with beneath all messages with of some I face

really now. we The in feel the well. we’re on strategy value right good with we working getting So, innovation have is front attraction place and the as

Operator

Oppenheimer. Our question next of from comes Brian Bittner

is line open. Your

Brian Bittner

you said want the you in on that move release year to the now with the XX% you to Jack the and XX% deliberately business in call Lenny, Box closer exited range. and that this franchise

or storage And Jerry, in give unit as an us economics plan follow-up thinking? change that update you just batch on just X% so of stores, you stores Thanks. can the this of looks what what I like? So, well. First. those a the have drove keeping, on then,

Lenny Comma

Yes.

continue can we to So, moving closer range by high see side to the of where communicated. create previously value the we

what said. -- felt continued refranchising would where the strategy always said, would always started what’s the From end refranchising been we’ve time to So, the we game, add if in keeping asked really consider we we’ve refranchising value, it’s we you And do it. more. that we’ve with

really place and So, today we’re the in decision. that that drives

Brian Bittner

And the… on Jerry just

Jerry Rebel

Yes.

we the you the me would as Let level. for restaurants way, XX% the question opposed answer at have this that to

in And just that restaurants we we restaurants take from a quarter these the were were that refranchising, all by restaurants If impacted under fourth not was had not at long, the look year these you that are franchisee. back It the the did commodity highest XXX X.X% of of the the had think inflation that then, year, there. margins inflation in were mind in also greater keep their And than fourth locations. in those XX% we commodity quarter I quarter.

X%, and XX driven in bucks upto of inflation increase wage Xst. almost hour X% minimum quarter, by had in $XX.XX from the wage went hour which also We another that an was LA, July on an

So, even down XX%. were above that and all deleverage comp, sales of X% we still the from with

closer also a to to up I would go think would we rates franchise from the then as pick also. XX XX% see level, margin you

Brian Bittner

lapping at and X you comp to are saying slightly you Okay. so just Jack the that things on things very forward? And ease two-year Does again far for you can that Do you a obviously, this quarter in point that’s here, flat improvement? And Do lot comparisons driving have Box, the specific to finally. you are are positive. matters from moving that all? matter think

Lenny Comma

would one the got we’ve supported breakfast we’ll which launch positioned this one value had it’s of the then products of the I now, time it item, arguably these we during is the say, with we and pocket. ribeye reasons better the year right of $X year, knew And the Well, because rollovers. burger, we’ve this

needed quarter. the gates remainder And out will I pretty came we is our I additional The say, of and to the this strong, we to marketing approach the of in going knowing best some well. have products that year, think quite innovation would be as place exciting. I have edgy think little So, maybe be refreshing, of that we

in see product. some the is for a other going we would has would emphasis that and true that So, that burgers we into news we burger going year, strong burgers well. Jack like in the sure the lined the have sort do continuing will food products -- you up came bring Box past. we we on out knowing tend that I rings consumer, to burgers make new also the traction say have as did forward. anticipate But, around to what we Jack the with We with just offered that marketplace, sandwiches I not to just Throughout will of gates of we year get but Buttery and will wanted to new the this innovation that

Operator

of from next comes Our Morgan question Stanley. Glass John

Your line open. is now

John Glass

Thanks.

well maybe industry the fourth up improving improving? want quarter gap and or and specific speak of quarter-to-date, just narrowing now during First, this to the you the saw that is getting quarter how I the industry as both on just just numbers, industry the know as following industry you improvement or may to exceeding your is is the that but you’re benefit? much

Carol DiRaimo

Yes. the John, industry approval. share can’t unfortunately, data prior we without

So, we can’t comment on that.

John Glass

wider? can’t Even just directionally, you or narrower it’s whether about gotten talk

Carol DiRaimo

since where are people tracking some versus -- will tracking flat because slightly No, to we know positive. where we’re

John Glass

development as get that a will that’s And for can see the What some ‘XX Is and franchisees as there XXXX for something again. put you in hooks are something there development refranchise? ‘XX? talk You the about in to going business future? the pipeline have commitments Jack you more do development know period and in we is units you digesting acquiring or these now like you

Jerry Rebel

With there of in the so XXXX and the would think restaurants and sold go restaurants. were were see be see some time begin that development would so you’ll commitments for those because and new restaurants don’t forth But lead I process permitting XXXX which to XXXX XXXX, timeframe on. anything and online. XX of you in

John Glass

my one to on Okay. weren’t And Jerry, you answer. able since first

are the to going dilutive experience dilution renewed earnings. restaurants lower give of a view lower, Can XX? talked about specific you EVs being number give XX you’d You the you Obviously Can X% about to today. on last a margins versus that?

Jerry Rebel

Yes.

were in year. be been quarter down lower above from were other at restaurants you a described But it and they margin able dilution And they XX% than half I the that for I have where fourth quarter. reasons. you were last than is XXX to in same that won’t ago would the a is, can year rates tell I tell a roughly too today that So, what of just it of number

And that make so, it that the have I that does at wage the some particularly dilution pressure, -- noticeable. think less as markets get you we of little

The XX% higher when going provide should And it’s us than on would I like. mention the guidance, flow forward is going do can with we other to consideration, even a we consideration, closer asset XX% can that John, helps otherwise that free have help it think updates I to some XX% while cash what not only level thing we would the then, also. and more at light is look also to EBITDA getting yield become

Operator

comes of Stifel. Chris O’Cull question next from Our

is line open. Your now

Chris O’Cull

we guys. margin and the Good morning, Thanks. menu? I then, the check Jerry, how should value new the about a think impact impact average follow-up. And of had

Jerry Rebel

in Well, are specifically about why That’s products talked discounting; innovative all these be were margin. core that reasonable I were a all what think the that -- things to with reasonable happened you’re we not margin not the engineered Lenny mind. a new designed were to value generate that products products

sales So, look rate. I would to not being at margin these that dilutive

to to on too. too if cost those negative, dilution thing items deleverage as fixed are on some other -- sales with is here The you respect get start

think to them people to don’t be also help the coming expect to margin cost, dilutive will continue So, these as you I keep while I sales, fixed to offset restaurants.

Lenny Comma

I’d add that. to Chris, just And

and time experienced do to we mentioned ways drive loss Our our margins. goal to would transaction same is transactions, Jerry mitigate, that to that in some we’ve it at out bounces the like

a in be margin prepared can both offerings, the January I as doing single bundled we appropriate $X will will that the $X and combination price that what in from remarks, we achieve so balance. so of and be mentioned products through points at And

Chris O’Cull

Jack could the kind has clutter there January messages. out? this value you Are past, roll to And Okay. again happen of concern you’ve had indicated you in in this Lenny, regards out the through when advertising breaking with difficulty then,

Lenny Comma

going different break on will ways and wave. what No, marketplace past the table from that goes message I what through to also the think think that so and we we’re we’ve I I the on think in many is along right ride done in in would like with putting that what’s the we

Chris O’Cull

fair. That’s much the weight And heavier? will be

Lenny Comma

secondary the this as will message. our they’re And weight heavier. weighting time. value will items typically much primary don’t for put primary be be advertising; The These typically we the

Operator

next Our Gregory question of of Bank from Francfort America. comes

is line Your open. now

Gregory Francfort

I questions. just had quick two

some I to is, a is, compete I had first on calculated focusing guess, the of can shift you’ve brands bigger maybe able think that of The you I most franchisee or notice on with franchisees the time any kind on sales; put time of happened do recent ago, couple you you out? them where have value? are of chicken flows to kind are guess, able were update your benefit to second you’ve cash that Jack And months of the them to us impact? industry as question the

Lenny Comma

chicken us. I business new will to the more seeing are new sandwiches we’re don’t product focused see I becoming that very would all chicken because The there chicken. me on the some see is with new the on we that think popping chicken are -- do products of focus more associated that up focus tides concepts on bring say focus we can into that line are know several exclusively and current our comment. marketplace our a something benefit Let chicken. the getting address popular improve chicken we’re that we the that and and are chicken our on I shifting tell and in will focused what that teams marketing

franchisees grows buy flow, the Greg, a the want that did year. franchisee are restaurants second is sure cash things, And I the couple during could part sorry. anyway, I name -- least [Multiple to So, taking comment also that your XXX Speakers] one it. call. correct sorry, at far So, during the so that something of as I’ll each -- point opportunity franchise don’t the Chris. One as just to seeing as I we’re we we advantage of on. But question of make that today

the And the our cash best so, I probably of flow. of that’s sign think health

year is our similarly levels the brand that in down similar company cash from were is versus it and for last this and margin the to levels that margin Jack are franchisee what is Box their Secondarily, we they flow the our also. intelligence have -- from

So, would they appear us healthy trending appear cash brand to But the flow. is. to similarly to it very very, be what overall be

Gregory Francfort

helpful. Thank you. That’s

Jerry Rebel

would is how just Frances the President wage that minimum that increases impact franchisees further will say, time are and some with I the as Allen, to we future what their franchisees business. spent our the about brand on I comment concerned see

I think influences we make cooperation do are on and anxiety. I that we they bring with as impacts And we work hope in that. them. forward mitigate seeing some will our margin I that to of franchisees today their And But time concern going level find how efficiencies a a can certainly biggest forward. is business sure believe team we to in that together to those the that with that our look spending mitigate negative

we thing. on right So, the are focused

Operator

David of Baird. question comes from Our W. Tarantino Robert next

Your line is now open.

David Tarantino

of couple quick questions. Just

why higher franchise Can margins. given the case, explain down maybe of was a were as know then, quarter. XX% us lot trend that how that there on noise towards maybe that I was the First the you in help franchise? think franchising could about year-over-year? is mix and should you going they this line move And on of line you Jerry,

Jerry Rebel

about here. Let first first question me speak the

rent about was due year’s to margins quarterly there, things then, increase had is the million support the a of one on costs signs consider franchise franchisee couple I in is numbers cost. support to that increase in everybody’s support of that as $X the would based you there. can, support was of increased in two franchise higher. costs franchise around I adjusted the items were line, One down, week XXrd of that out data. there. and Most the remodel support. to the Qdoba assume on cost point the last for And the as And So, best which franchise

the to year on that, in sales than would the performance lines. I would for in last this versus Beyond cost of difference I those franchisees rent the year the the really point increase

that last year, sold. the not X.X%. to not So, sales with year with really they to commensurate you the related restaurant and down would XXX expect The be up that we rental franchisee did This so were cost increase, is X.X%. revenue were it that’s -- grow that

and the year. for you’d about normalize you rent, when last close X.X in be get If rate that, then, it calculate margin you what And adjust on in that. margin would revenue very and rental have that rental you on to also the been million

appears to look because the same-store a be decline being it issue, last at revenue as what of a cost really I sales So, versus issue year.

David Tarantino

part trend how you the just range, could the but towards if And store about XX% how that... as [ph] get might it elaborate same that on depends you know sales I

Lenny Comma

on provide more we think I that we can guidance color that when are updating XXXX. for

David Tarantino

then, I a have And question. Lenny,

you’re that programs I in QSR you you your remarks, terms Jack mentioned elaborate in three all the could that I and meant prepared by or think premium position the in on plays four transforming one value the was Box, factors on of on? going focusing how and of have into which brand wondering And you that, you if was just what and image.

Lenny Comma

Yes.

at every probably remodel our than is of to and they’re we of tired thing brands recognize they’re first more a the buildings, day. against compete look the that they’re think old, I need in if many you

four-year not rooflines are roof these So, old that -- are these lines. are

that So, it’s like can have are not them maybe or and right place we even we architecturally in in the on. move buildings right paint generation, the

need where current to rooflines, and them change of more a we significant to the We’re bring look dollars a really in locations change to invest state. place the sites in and feel these

update of to essentially, made on when model program. remodel levels the our are for remodel Company all we to we’ve order chain signed And about have our commitment talk going our investment Obviously, and the for we’re franchisees our how a the compete. our in locations. this same so, And specifics will guidance. impacts But we

to what than so. commitment do done we’ve And a in which coming see round, going last more be And years will us so, be you’re more was this in to from this will cosmetic structural. the nature,

ops with probably contributing that’s gave I that our dollars. high direction both the Company own level to you. And the broadest the investment in So, and or we’re that franchise

Operator

Cowen comes Our next Company. of from question Charles Andrew &

line now open. Your is

Andrew Charles

Lenny, behind you you you Great, around are But, of like. was obviously efforts behind you results test and what the the plans, the the can tested it test the confidence thank recognize behind results saw look more markets how sensitivity about talk from value in have sharing markets? you. what going widely

Lenny Comma

the Yes. the comment is come have look putting time. the if would And fact it are points makes much we past. in say being I offers points, promoted this. at in the each same in to done that. we’re we’ve What we on the to is that that what’s of do at January. different can’t individual that you what the face price I price those What think will we multiple marketplace, things But, at too in need

So, whole the thing messaging we’re pulling and together different it’s it. that’s way the

in to in of value together menu done it where bundles single options, now are might items we’ve little than close But, different the past. the past. have in past. done our Even done in marketing all the to little than Some the in done they’re We’ve the be what different what what a past. we’ve all of just in unlike put department emphasize would the we’ve

so. probably necessarily but some to So, hopefully little a that It’s makes you. sense cryptic

Andrew Charles

stage still the done feel is or curious Got CFO helpful. for And I new with if to in shortlist obviously, point? And I the it then, big looking was That’s on with of this meeting you’re update was an just qualitatively, shoes at candidates you. search. in.

Lenny Comma

with So, we several candidates. met have

the optimistic about we’ll shortlist. We But, of fluid. corner the to that turn I’m are them. are these situations several excited here

that up want we’ll time. So, wrapped make to very any period a I of predictions. But, in optimistic reasonable don’t I’m this get

Operator

of Bernstein question Jeffrey comes next from Barclays. Our

now is open. Your line

Jeffrey Bernstein

One following future so the like unit going high units XXX some the It and on business. would the obviously refranchising kind and growth questions. to Two or Jack question this have earlier about seem of capital year is is work. with franchisees put interest to well of up you

you might obviously the another gating about the from moving have over from wondering Coast or think I should So, and the the more I’m to keep few a then, step, encouraging the follow-up. that attempts keep you beyond already from uptick this franchisees time? seeing in push would had And years, Jack over what just maybe but refranchising backdrop, national taking factor units with an you maybe your learnings brand from we that as next West one beyond past maybe just above pipeline the brand

Lenny Comma

Yes.

lens. have So, if a bandwidth to you short-term, amount if at And is to way I significant practical capital money remodels their have go just to remodels. are engaging they a think time, of franchisees look through time and spend we just don’t beyond they it the go going to to our In ask of that. bandwidth, sort beyond at this in at probably the even the the look

we new the I don’t into to I think couple potentially them the When decrease well. will current but not we only in rates necessarily growing look then, I necessarily the recent remodel over yes, growing get don’t of rates. or the will years growth our seen beyond of we as remodels. as think forward see see franchise growth So, increasing next franchisees I an markets engage new increasing uptick don’t we’ve unit with a would passed effort, in they see in years what but

Jeffrey Bernstein

Is seen there of might any color cost older done from or you these of some on for especially lift some stores? those have you’ve the really the remodel

Jerry Rebel

may sales talking a such on around or that reasonable invested lift, capital as approached lift return report won’t we restaurants sales that industry remodel. talking sales seen of one we Let in you on this any the have what of one have lift about describe me a return capital. upon that going not the imagination say for is so invested intend and based XX% upon is right But it’s each way It’s based to which about we’ve I we’re others now. targeted

each So, a the because each going get of lower approach, are volume a based restaurants. upon is remodel store is one than we flow like these these of to be based to upon say a think remodels what tiered return store be for cash and volume a low heavier a

franchise are the allowance. is it’s very a control be landlord around them to to And And we really also be them, agreement So, are to what tenant leases. I since providing or offer think the to appears what the the we we’re contribution models. in them, will extending able franchisee to responsible restaurants that there. a improvement are the term contributions that really way And the for that capital for for approach we and we lease

the are that. we to So, on agreeing getting take then committed the upon by them term restaurant and franchisees extra remodel the Company from contribution the

Jeffrey Bernstein

I system on you guidance. you longer have and you for gave the the specific or system, other was mentioned, just to brand given than when term know Can didn’t I of update per and rather X% at which specific the directional Interesting, the gave you color dollars to either of X.X% system? But the my of on targets you was Jack where your kind give settle store, look think new terms And question guidance that. any if think realize Jack I which the just Lenny store. of should we in sales that you a assume could color or system where -- on Jack per system brand, percentage XX,XXX you sales in, G&A,

Lenny Comma

the It’s color areas investment do to to What blanks those just deliberate new of model see Company community capabilities I but that work We evolve will the get fill ask the we And are guidance, shakes the we for of the retain this, to make a updated how we two current brining move you about and compete. all to I our the through do of do to us the around resistant that. intent continue focus which to you’ve aren’t point to brands forward sure do you. seen situations need give some can would certainly change to think business folks I would the within time for out. go up way each obvious say pretty plans in also the is and and to we areas careful to we forward over and to where us, allow all we has, that patients

things. hash what taking folks this to perceived little and need to a communication right make to just that more time delay we resistance we the be the approach a to might the to sure interpret that it’s So, And a give of as way. timing us be just at that relook do want out. I that just all don’t

Operator

Slagle Alex Our next of question from Jefferies. comes

Your line now is open.

Alex Slagle

any has way is that reflect around the three back Regarding us guidance And accomplished an how question, the that far? been much give last reductions? thus to previous there as idea phases of G&A

Jerry Rebel

Phase two process I’d level certainly, in XX%, really around to we’re is primarily And say, was in almost accomplished. us XX% phase phase at through virtually getting is one there. everything refranchising. two the

most going well. around three that that’s and of have most -- it versus to longer, by little did also, points those IT So, I Phase that process. think in were of And is because and process. take then, systems as that was of the system-wide IT -- normalizing in a we year. XX last about been But indicated was is achieved And G&A some it we reduce is. where basis our

Alex Slagle

was much the the And competitive review And or how more if traffic? on have then discounting? intrusion, drove the Qdoba, that on what you in reduced of from commentary any distractions just deceleration the wondering

Lenny Comma

same segment we with at what’s the the couple of that the industry, segment. within time consistent things. So, performance of Qdoba was that happening the I think of recognized One, very

we but just a the riding industry breaking have as segment actually of wave or company, trend. sort ourselves not always the think I on prided

certainly what’s focused distractions but from end as of at our the what’s And innovation day Qdoba So, use as the marketing the distracting, well happening any menu it into as their insert everyday our never on, efforts to perform. And long that at as far on. the an expectation to as the over we is that going end are expect and product term. an the play of emphasis excuse, is well they are to the focus value day, is putting we that folks

Operator

next Our Wells Jeff Fargo. comes question of Farmer from

Your line is open. now

Jeff Farmer

What relationship just business. to a of and Box been and sales and media value in the historical get between has can these your I’m decreases Jack understanding these in thanks. numbers? messaging the weights same-store shifts rate, impactful Great, be increases your traffic how on your trying better and

Lenny Comma

we actually And on internally haven’t is to to the you -- without guess that further because that focus And way most I But, the that I would a thing during -- that the I to we facts specific think share recognize ask are to done around it our past. major I hesitate in discussion you it emphasize say in to get shared the that something way. expect going I value. anywhere. time is that. the Yes. do in important emphasize is this, of thing sort that going would period similar we very value we’ve would not to going to don’t past, what weights of is where a I media competitor weight specific describe media is I the that’ on now sharing know information since would that we’re And we

of the And the And back. we’re fit. seen on doesn’t that on aggressive What going time our fray months the not will some do typically into when think we jump play bounce out. and the XX permeated value-oriented So, ride in And competitors I there that discount again. said that discounting; it been we biggest the it But, go we’ll slowdown going well. drug to is away. you’ve that’s to this think emphasis, to value industry that has to time want has to last of seem sort we’re

play we’re something And ahead So, will going we to think try and go new. it well.

sure how we’ll flexible. this We’re remain not with we’ll path, continue long but

Jeff Farmer

And of one quick then, just bigger sort follow-up picture.

brand? of price a as see So, hamburger set than point what do concept or to given a Meaning… consumer percentage more the you loyal

Lenny Comma

or that. $X not maybe and to customers major value trade on competitors the to promotions. points. the of chase below the we a based it third all value so get are our all loyal And We you point, within They price look see brand. our They’re consumers loyal price outside of When is. at at a wherever segment with

here. essentially differently are So, the our competitors to share there and can the we’re fries how box. doing our products things other get offer some Box burgers Jack don’t from a from items and But, just into on to little want to only across sells. of have fair we’re I focus much in within a to our want value of But, some is that see offerings you going that what different looking we’re one it that jam out I also the industry. I

Jeff Farmer

media just thing, last see can this move? alignment, can you product and how standpoint. how franchise If a and then, same both And on you standpoint it bit quickly forward you go on the the opportunity, quickly touched page but from everyone little an you get

Lenny Comma

means all up varying discounting going on that’s line that XXX% looking them, we But they franchisees, let the So, where community, and our different I want compete, they they over opinions we although able a when which they are would they those have or on how when we because they discounting, geographical not balance little XXX single just run saying, little are have having premium, are XXX% or premium have align. think go to innovation franchise When opinions we issues lower me set by we And same impacts opinions. in typically the may particularly are competitive. on a start XXX at just to we is with to competitive are the bundled space.

spot to we are us a little is for the of So, both. doing make sweet sure

on I about that do played can the be faster flexible investment they there. think out the system think that than of any they just offerings the are other media well as return form weights I going and in to sales. in can on believe us as we for move a But transactions are I that’s the seeing And past. long

of look planned in the just up recent something speed it we months. at the is put reflection not are until moving what a doing I had if think to in you marketplace been that hyper at January, us

Carol DiRaimo

additional any prompt could for questions? Operator, you

Operator

of Matthew [Operator And DiFrisco Guggenheim Securities. comes Instructions] next from our question

line now open. Your is

Matthew DiFrisco

brand. questions of Box I and Just guess respect the follow-up sort the to there, of the in remodel couple Jack with

since the a coming brand, a CapEx curtailed the at outlook looked potentially a bit? down. that XX should I of think Analyst come had remodel running and million sort you that? does adjusts does I books thinking at of you ‘XX, little been sort while and a the know we’re a Day, about How Jack XX progressively for for beyond think on ago CapEx million CapEx that I and that that basis. to year just escalate of sort it’s now off half number

Jerry Rebel

is But, improvement tenant when that Matt, allowance will the capital. will flow guidance. that What that way we is be the is not there get you technically there impact provide capital. works, the can a cash it’s see not Well, but we into

Matthew DiFrisco

been consistent quarter, trend benefit market are eight there you was was to Okay. potentially in there was hurt have might I throughout sort you trends, what considering early commentary or Texas some about influence outlier guess, rebuild an activity the any there that the was And then, a there down of the start in just Texas Texas quarter-to-date seeing a from far? reported the weeks or the an so

Lenny Comma

strength seeing really are brand. the We across

Matthew DiFrisco

or I an just noticed And respect a for was… what cost, very question. what in I’m give support relative was -- sorry on the fourth high the us in for the you reported. Qdoba that then, cost color franchises some the seemed With to the on that segmentation last support reporting in my third basis effect Could quarter Okay. quarter there, fiscal

Jerry Rebel

permanent Yes, costs wouldn’t new That’s as support to with cost increase franchisees help Matt. as at well a forward. to related I being remodels. their going as view logo, that levels signage, those

Operator

Robinson SunTrust Humphrey. question comes Bartlett Our of next from Jake

Your line is now open.

Jake Bartlett

Maybe about of be pay. question your and with order going that. give tech that enabled mentioned initiatives you us I you are and could to just had mobile a the you timeframe

of the thoughts rolls some year? that it year are the And I of any how then, competitors the think out end know through I kiosks? but on doing. maybe by before you said your

have you think in do little tested bit you a of kind experience making Where the that past. on different? the I stand

Lenny Comma

Yes.

on there that about way basic out most we stable we start consumer to failing. pertains tech offering is the build growing really from will concerned it most that platforms then the as needs. where by the we provides guest will we’ll So, for in tech most And with general, the it of really the basic are approach don’t disappoint

the need able programs. they things to look if what consumer you to mobile now, and be delivery so, and pay need in they And loyalty at needs and the future like integrate order

believe looking firsts place of And base kiosks were redefine consumer in we as that of can we additional kiosks will then, be We so, we our is our expect use the restaurant you conjunction before to what going layering for the features kiosks, that experience, entire as there would could franchise forward. in at our that environment. a far And one future, but how support in are with the ways, is we as and mobile use on sort how an of you go just the of mobile a apps, an of to of kiosks, should phone use There technology. be of payment going should with will how far with many versus start see you as between extension far system. as the kiosks really a land mobile interplay source. you the phones interesting and particularly POS to In piece

want so, much in technology invest experience question a room. And the how the will to standpoint, within consumer be we from do dining

out. need thing we figure we experience The good is in have that area. So, that

business in the We our have impact the seen past. to

check. And certainly mobile things similar the higher some with We to see average of a the lead can through kiosks apps. impact

can share place to the level. of to they But put in at really these with service for a be to going important model work is they So, our play think high who us. can franchisees potentially lion execute what’s run a our things operations that well will

community, more issues. come work So, have that a once with to through those on time more our we little franchise

Jake Bartlett

understand is maybe more helpful. we the you competitors? to guidance by year not or seem is an just labor as wondering be mean, earlier? on that for trying it I’m are you’re you giving helpful something story mean, this things an see And doesn’t you because it on figure know for I specific commodities just the with outlook But it of coming to quarter to how XXXX, And be the should I would of time out? end then, just anything fourth year would pay to or have order I impact of of your and is it more going mobile the kind exactly roll a should out. for

Jerry Rebel

you We’ll that. on halfway meet

give you commodity. me Let

we’re we’re over first looking Qdoba commodity brand, plan, in of Jack quarter, the under the commodity last So, higher in we’re deflation quarter the Box than X%, the expecting roughly around year. just inflation X%. of X% because inflation And on was at that first rolling the

Lenny Comma

on be, the rollout speed stability going but timing, any of move far the as we’ll of platform. timing share to As with approach the at up we’re not the tech, a the marries will that the

important we’ll that impact here So, be. is slow you very then we’re it of the we’re of can going timing results, if the bit. intend testing a see if our most not outcome compromise like first set a tech, of internally, around potentially you rollout. what some timeline, you impression is strict with consumer strong about the to of The speed. the consumers, goes down exceptionally well and to But things little seeing we really the move one it’s sort we’ll at different unbreakable, If be careful light then

Jake Bartlett

much. very Great. you Thank

Carol DiRaimo

that think time and us us for Thank joining with out I of we for today. speaking to soon. you puts look forward you

Operator

you. participation. Thank your conference. Thank today’s that And all for concludes you

You may now disconnect.

Jack in the Box (JACK) 30 Nov 172017 Q4 Earnings call transcript