JACK - Earnings call transcript Q3 2019

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Operator

Good day, everyone, and welcome to the Jack in the Box Incorporated Third Quarter Fiscal 2019 Earnings Conference Call. Today’s call is being broadcast live over the Internet. A replay of the call will be available on Jack in the Box corporate website starting following 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. ahead. go Please

Carol DiRaimo

and Anne, everyone. Thank good you, morning,

Rachel and CEO, me CFO, Tucker. the Vice on Chairman are Lance today call Lenny and Joining President and Comma; Executive and

diluted morning, share losses per defined on gains company-operated on as share of amounts In a operating per is per restaurants, earnings the continuing comments share and sale this refer our restructuring or to from earnings diluted GAAP per earnings excluding the tax termination impact company’s which share lease loss charges, operations share-based a of income expense as on as swaps and component compensation reported tax interest the tax of on versus deferred well rate reform as benefits arrangements, assets, previously. tax equity now of the are basis, excess from

net and basis, income GAAP amortization represents and EBITDA of excluding or from a depreciation on interest of taxes, tenant restaurants, allowances. the earnings charges, amortization, operations, company-operated other losses sale gains expense, improvement the franchise and discontinued impairment Adjusted

other standard. earnings Our the and for of the revenue in comments included results may also prior as non-GAAP reconciliations year accounting refer the non-GAAP measures margin. the adoption Please franchise-level recognition recast as as to well EBITDA release, the restaurant-level such new include

Following financial we’ll questions community. today’s presentation, from the take

for business. Please differ expectations risks on may today, the during and these results future, we on the be presentation are information. that the from session Actual management’s advised which that our expectations may statements to question-and-answer course our of reflect make current materially forward-looking based based

the XX-K, other in section with call. recent operations, news Investors part our considered documents Form information relating as on in statement cautionary of company’s Harbor of documents These most detailed filed to Material are most statement website well our www.jackinthebox.com. XX-Q factors, available a yesterday’s in as the are at are and risk Safe The and this recent the conference release XX-K SEC. public company the

to note this morning. calendar few items A

market on ends announce XXXX and close. November tentatively quarter Sunday, Our after fourth we plan to Wednesday, September on XX, results and fiscal XX, the

tentatively Time on Thursday, be call at conference to X.XX is held Our scheduled November XX. the AM Pacific

XX Box earnings a restaurant eleven the month. be note, in years my this in wonderful more On before including will with years after I retire Jack last personal industry, call this than the

You're and Rachel, great in hands Lance Lenny. with

And with that, the to over I'll turn Lenny. call

Lenny Comma

Thank you, Carol.

on professionals Let ever me talented There really with. work you just to had deserving no of honor most congratulate you, a one one is your take continue I've to and the to moment than be more retirement. the pleasure

for none. people has and to code second commitment ethics, care been Your to business of

You truly are a role model.

So we please thank Gap] and [Audio that you accept heartfelt my know all

Moving for since the future. transactions level to the start sales I we've on year-over-year by little same-store fueled all bit with and XXXX, growth to quarter contributing day seen about third the sharing System QX, quarter about with results business. their nearly want so strongest four increased what am positively in bullish years. to sales products highest and to a I why our the

of fiscal quarters momentum compelling a driving targeted now direct nor QX spend and little our execution mix we're offered track achieve point. deals product three our growth, XXXX innovation, bundled operational of on that for price was sales three store of same to year something sales in into QX. value we towards consecutive has at growth marketing Jack's the More With on the system accelerated sales than books, ninth everyone

is chicken primary strips and was which Our featured X.XX on Jack's example most innovation. culinary at X.XX markets featuring QX new of also promotion our of average guest our is on a breakfast adversely and brought not croissants. our a back spicy great including for trend value two for Most combo combo, we Emphasis Jack bonus product triple affecting curly $X favorite with check. a signature

fact, the than that approach on. combos check important due orders upsell for to restaurant add our level was to higher In It's prime in QX negatively other average to note value significantly value profitability. not impacting is

our offers of in discounting minimizes products, the which remain tactics, brand. products best core are are like of new Generally loyal our industry. of Many highest which our risk margins the menu would limited in from the core interests the on or deep promotion equity eluding long the strips customers especially great. either refrain oriented we value check; chicken be not among term that of items health Our the time believe

while We also check can a that strategically build generate higher upsell promotion the margins. with preserving opportunities in

we it's meet important growth. the consumers areas ever and needs, changing to in of sustainable all evolving continue that ahead, Looking our business drive

that underway Let are initiatives do some me of that. to the share

in it First, when experience really operation, Box the scratching average. rolled making guest meaningful of restaurant the and Jack minute simplify July. the so increased this improvements just we will more is service be consistent system But comes the faster about this one in surface benefits throughput. across will initiative the Phase that of to and a out on

the in need targeting what do the the phase next in To half and operate be we change way we'll the of to we exactly back that, program. that’s

and implemented, deliver and profits changes operators. are our provide As consistent more faster service to more expect for guest for and ultimately we our sales

products live our strength social dominated rebellious deal personality fanbase and our in capitalize from competitive brand. other to that our gaming in the on relationships to prices. Instagram and differentiates our media to by brand This the influence. We Box a Jack means plan a Second, online of and with who loyal at build has favorable us promote world fans

Social are. consumers and where meet us space they to allows digital

to app expanded our base continue further fuel build user and our sales. other up we'll digital So to avenues

delivery who guest party with team. more of further seamless making percent for we'll also cover the more Next, system while restaurant our our providers work XX coverage, expand third than now and to our purchase

Another area of drive will through the focus be enhancing experience.

We parking boards, menu that, digital plan upgraded experience designated finalize new out XXXX. this We’re to and to to in of program including branding the currently elements delivery. canopies do intended elements, and amenities begin rolling and testing pickup different just for

components the we our expect this our to and in to Including structural Now and completed, in to more to repurchases we form some year, quarter. shareholders $XXX last repurchases address With return planning million of I'd than shareholders like return to share XXXX resume through we're continue billion switch business. of dividend. QX gears securitization share of $X to

off transition transition In asset addition Qdoba. of soon entity our single light the an will complete roll service last we agreements when we with brand the to

to place franchise to and well participation conclude, It's of and flow. patience. as contribution team thank free for increasing I'd into With initiative we're our their revenues their and seeing certainly and get my franchising this our and key like stakeholders, more a cash lot of effort predictable levels higher as loyalty taken

With some bullish to that Jack's am early I'm and future that extremely us, I experience on pleased wins. to behind already starting we're see

more Lance? call Lance for a third look and fiscal over the for turn the I'll to quarter Now, expectations detailed our full at year. the

Lance Tucker

I best we've retirement. here Lenny been and of to worked you, I've you we an have Box the in much and at and It's at Thank industry's how time the investment time in you at energy appreciate want reiterate large. devoted the in all Carol. community experts the short relatively together. enjoyed the honor the I wish one too Jack Jack to the Box to

on and fourth and review results far third quarter was last so rates, on the Operating provide quarter in tax of and tracking year. fewer was by third all the restaurant from where compared properties, EPS update dilution onto quarter. outstanding, refranchising. for $X.XX, to driven performance, favorable higher more we're year's gain an primarily The $X.XX G&A sales sale our Now of as last increase $X operating which good offset the comparable shares than

the by gain I and included the sale compared note included approximately rather G&A the EBITDA nearly includes that I in unfavorable which $XX in million is the the $XX negative loss. million line gain and verdict Adjusted quarter last million the want of generated Adjusted with restaurant properties is impact is EBITDA not just jury the other the adjusted EBITDA, of as for with that mentioned $X.X impairment an in to year.

comparable X.X% years. our the performance improved in transaction which comp sales X.X% best as quarter. increased transactions in System-wide Company-owned several to increased to flat sales is

strategically positively Franchise a way to average. third bundles that comprised quarter capitalize mentioned, check transactions approximately in makes from pricing. increased these comparable the also allows of up-sales impacting us on X.X% value of incremental basis X.X% Lenny enables As points. This compelling the XX Check in designing quarter. increase X.X% increasing sales

points the this labor quarter; strong restaurant-level basis due XX year than and is increases margins in primarily Company the lower packaging costs. to and prior XX% food at for remained

approximately we increased X%. for anticipated to labor Most wage in hourly third due quarter the by increases quarter of inflation the the inflation commodity as which approximated X.X% were

Given our the commodity guidance on we for full year in our year, more remain first favorable the approximately of of inflation inflation track X%. half

we for full margin at are our XX% As XX%. year noted keeping in the guidance company release, to restaurant-level

margins compared million the strong by sales performance and primarily recast or last quarter about increased when to refranchising. X% with Franchise-level in $X.X figures due year's

incremental million the did in provide prior which Advertising The SG&A year million quarter. decreased to incremental and company versus year. any refranchising last contributions costs are spending in not included $X.X due this an $X.X

increased full got sales. While sales in X% to G&A system-wide in to to to we we’ve come of year X.X% G&A do still X.X% for quarter that third system of the expect at approximate the

in listed is press components in discussed versus but and increase significant increase yesterday's increase notable an from the prior in compensation comp worker's insurance was earlier release, unfavorable adjustment offset year by coming favorable reserves. Major the or the liability general most jury verdict of the incentive

new XX the total XXXX. guidance remain opened to We are of year-to-date restaurants. in bringing restaurants XX of XX, our new which in year track to achieve full Five franchised all quarter, our on restaurants to

Now, about line approximately our leverage in stated completed EBITDA our on bringing we let’s JulyX, securitization bit X refinancing speak little ratio target. our our with times a to

As we with details and securitization can to flexible covenants leverage good rate and of the above in we the bank benefits The filings. numerous can including a debts. the amortization, discussed, securitization to borrow what our structure are ability our increase found interest fixed be there

details won't more you this to we're can business here, but we us on into driving the have day imagine so day. as behind go focus So excited to re-franchising can I fully

expense secured model as With fees, on just fees also forward. the over additional X.X%. questions as interest moving $X.X amortization $X for expense numerous for Interest how of about received fees in million to XXXX agency interest will million an miscellaneous senior well of is an We other letter billion $XX rating to items. include of credit notes transaction rate and

resume authorized bringing of Lenny share stock common repurchases related board in We our $XXX to additional total a in did as but $XXX our repurchase any third roughly has the authorization share million shares we an forth. million. note, to share repurchase On repurchases, do not mentioned intend quarter,

securitization In first impacting interest closing, termination career quarter of interest resulted of our of anticipation reflected the swaps these the charge also a a swaps the of existing anyway. XX.X our third million. quarter, which This of in from in benefit for XX.X% rate in we terminated was my which pre-tax rate, tax was expense,

our approximately impact, tax quarter. the this was Excluding rate in XX% third

the excluding impact the swaps our XX% to we rate rate the of tax XX% swaps. For interest now -- the approximate the the year, XX% swaps expect for of including termination to

same-store and on so first system QX positive fourth quarter in of results the from have system, four have quarter, growth. our to accelerated currently sales the Moving the performance in traffic far fourth we weeks

same-store increased is our guidance million XXXX. QX improvement $XX million have performance our least comps, for guidance of full mainly to far to the the also tenant to timing projects. sales strong and change up updated for This We've in so our the good Given system at allowances due $XX we year X%. to QX

remarks, our is operating fundamentals third was wrap-up sales and strong by driven out in our even To performance business quarter starting good the QX better.

leverage our and milestone, times coming. ratio achieved completed now securitization X approximately also EBITDA, long been it’s have a significant target time our We of

ninth look We momentum growth XXXX and our forward XXXX. system sales to to year into straight being the same-store continuing

questions, to the please. we open-up I'd operator call turn over Operator, now ready for call to questions. for to are like the With that, the and

Operator

[Operator Instructions] you. Thank you. Thank

is Brian from Our first Bittner. question

Your line open. is now

Brian Bittner

on retirement. Thank morning. congratulations Carol, you. your Wow, Good

professional true a just accomplishments are think that well known. You're all full of I very

be really this traffic in drove industry. inflection or Just incredible in drove your clear quarter you business shifted from human sure But you'll at you've you set. that running I'm clear obviously being, your a environment for friend, a to just quarters missed. you a now? now, an peer dive personally, several continue this Lenny, little the in our paths inflection this Why into deeper in the this this going future. what saw relative will true improved I'm cross been now? happen Can What's traffic really what performance? But in to to miss

Lenny Comma

Yeah.

it, tomorrow. share today it little bit of a about I I'll and So how into that fueling what's progressing see sort

it's bundles and in of have a look been introductions today, is product So that placed that attractive snacks the in things, if market proteins you the $X add-ons of price either at these the really and into couple very one to a way very or allows That additional strategically worked has placed mark, ability form point add-on very but for operation. our for add up-sells. below at exciting the is well the new

So And time. our on I missing quite that in think the found way QSR some we essentially effectively value. I have for compete think to we're that phase

fueling been sales complaints essentially, We've away also in you will the have been Jack able But of types do from the making and have reduce people anticipate service. walk the in our what's number But ongoing of to – into that the to continue that is customer complaints operations do business. improvements Box the that to the future.

transaction have growth we disappointments of and very decline. past, or in sales to and looked on As at strongly are those sort correlated our a the

we’re these that to we're phases early making of that sort improvements are happy there the just and So now see experiencing.

So at driving things it. really those two this it's basic point, they're

be continue is restore and menu look of do increased some up-sells bundled at we'll tomorrow, competitive with permanent we pretty that thing that be we for add we'll strategy allows we'll intended everyday with prices the that new what the limited offer and we item time As continue deals live value on. to our we'll second the a But lost when the have taco we'll that pricing. we'll at

coming be the as in some additions So well. there'll future permanent

already sized And of operation, who on has decent and other have a our President does for that to service, our operation be and to for and been player. drive We all. And do We'll an more then major a a in brands us Vice for pretty believe consistent. very he's what and the we way in we big Operations we'll opportunities be consistent believe focusing that's identified simplifying area has successful. it have faster worked new simplify more really crew this Services do sales

Brian Bittner

Thanks for that.

Just a follow-up.

time is that. months? that not the confirm, And dollar also tacos. easier I the about for a negative talked quarter. in trends Can You accelerating a very fourth large player can It's just you're seeing next at happening comparisons from confirm you doing two same for you get impact guess that the quarter the

Linda Wallace

Yes, so the our we Brian year quarter, of about talked last softest. the period last was

remember, a ago kind to of we a let the in X% X.X%. up quarter X% you started year we out and range If at

actually in comparison the easier it's the the month last So of quarter.

Lenny Comma

our taco really sales they competitor, it up. as currently And as the are how from far doing, speaks are but our to sales taco

to increasing. see that correlation happy we're performing. currently they're certainly, there's how taco know our what So I don't any we're doing But and between sales

Brian Bittner

it guys. pass Thanks I'll on. Okay.

Operator

you. question Gregory next is The Thank Francfort. from

now is line open. Your

Gregory Francfort

the for question. thanks Hey

maybe from how two thought the I and proceeds you to guess uses the cash. the about of back going that questions. refinancing Just

which think The timing cash deploy first to the that shareholders? about is how you going maybe we should of to

of in you how evaluating that. through and And a you maybe process investment possible consider then for evaluating go of of went today rather that bigger do maybe you're share through of sort than best the returns? process that making making business as then uses did cash, the of it you kind the And uses

Lance Tucker

Greg is I'll Lance, that. Hey, this take

to get exact without timing, do. there, are all getting information we is into once and market the yesterday's out all first quickly can the all designed release into of which pretty obviously the So

in proceeds, back be use than market of growth to our fund cash the So in quickly. the funds what we'll free business. we Relative reinvest need more to able the order flow be the in and to

returning from we've cash plenty pretty need to much standpoint make. expect make investments because intend we use used that So to to shareholders, the we a the all funds, of be how for of securitization we will that do to got

Gregory Francfort

it. Appreciate you. thank Great,

Operator

Thank from is Glass. you. John The next question

Your line now open. is

John Glass

the miss bundled pleasure. on to stimulate in done days some you at is from to It's you've value a of the things question Carol, to Applebee's the comps early first you President's. about real Wow. growth. we're My been Thanks. going talked

so a specifically at and environment more changed a been recently I You've role do guess that think for what's while, in the competitive really that. played maybe you has

I prevalent, hurt think more had been when by deep that. discounting was you

not you're is signal what's changed a of sort or really this that that and of has been what is So less been you've changed doing? seeing

Lenny Comma

value the a seeing in still We're amount marketplace. of significant

one do products, see dollars that of some We is our So their see the in other of and with focusing waning. deals and advertising prevalent. we but don't pretty of still that necessarily as aggressive marketplace it positioning are competitors are some the

feel bundle a it's going the environment would and did that forward. unfortunately, trade in and would and take remains them. the discount But we we and So Whereas, competitive still core that we would them is not a likely competitive in that what fuel environment items sale. what down to past, typically QSR the we lead space

on are In through nor a with line coupled also size buy this more addition, were add-ons type create allowed primarily compelling a we products putting extensions new protein complimentary LTOs bundles we up-sell. or day and/or or that are and that a didn't snacks some of we're innovate LTOs, the add snacks that that did the out typically add-ons there item

particularly we've done the up-sell think crews to also the say of and the space. of operation And much So a front, advertising, digital the in house. the through It's social better I past. and advertising on easy think through of -- is directing it side what's on execution back that the it. as I is from doing the job well the I'd as the very we're both our that, different what for positioning driving combination execute

parts spread offerings and more also well. making that's that a that think like breakfast And that across day being I is our as we sure that and versus approach can or multiple we're things dinner out balanced offering, lunch advertising balance

lots tweaks of since So, that started happened we have this.

effective I have think much at. than today we been more

John Glass

my then unit is on And helpful. development. just That's -- follow-up

look that know had I also How is and think back market declines some recent flat modest are -- in quarters. months prior the they getting seen in of next in up as notice when unit are do shaping frictions the today? do you development, labor year-on-year notable growth pipeline quarter you toll XX plans it to XX development we see is you XXXX, about combination the This to had the a and long-term -- Or that think franchise taken how over has you the unit development the past pipeline? on you

Lance Tucker

John, lot XX be want in result a I year a Muskie's openings. on getting don't should as get with be unit net And ahead numbers. pipeline to in the look like is expect this time, We'll one. going better But our we unit at XXXX as far next XXXX November, without some I'll in it’s a of not far of go so our start out now number you year. Lance, right frankly to too in strong will XXXX given seen tell we've can I just what as down least to into detail. XX and be too that I'm new guidance restaurants is of to would I

thing we growth pipeline now standpoint, this well. sudden forward think on unit I We're is particularly get tend So with to be and from last to us you'd then good likely things off going have add focused such a some we these I like anything a that to Lenny, next other to a the think start if results the fuel can and of that the really growth. looking good It's I'll as that say to behind year.

we columns lead business, more sustainable And have that aside, the so naturally a in interest some grow for to of as opening unit. should the other plan and frictions continue to

John Glass

you. Great. Thank

Operator

from question next Dennis is Thank Geiger. you. The

line Your open. is now

Dennis Geiger

and Lenny, And about for just at the going congratulations, the of on to that Couple value wanted guess, about your kind thanks luck you've to to for how just and be you're forward. it in how to best another thinking the past? success help fair as sure assistance Thank parts just the ask with and future. versus it, given that value two had you. it the Great. of Carol in all assume, go I doing simultaneously, going generally you're three forward is times messages is that thinking always

just of that that given on promos, visibility is points, the other but and the could point to value, on touched or strategy. to that's to on maybe you seen And Thanks. on is that then parts, be to the you've you you've If high now? good adoption fair? Is piece there speak that just far, have And based the how menu value the high the results seen. you it just generally learnings two, it's price just going items, so remain now, going day last variety the continue that franchisee

Lenny Comma

I'll there. far as of messages. lot a as versus any So that, two three the to but not miss try

I going how really big any on down to think thing. comes that particular we're

media is more launch items can weight of messages we likely more So three think do -- that have or only time, create marketed. windows, two focus. if we we we're of to marketing area that But that significantly the have we have pretty major, of we’ll something may windows that at the outside

weren't able that I that their that and conditioned a reducing profitability, if participation do anticipate we're stuff right? would do And is day, franchisees to of at certainly but so. on the then We respect franchisees, grow end if think stay rate putting from right will pretty performance, marketplace have I allows into high to the that it high. participation rate So we our the would the sales

and believe seeing from that part that forward. today think think live our a us on we marketing I will can strategy what do do I of be that promotion. So don't important we just LTOs you're it's going that

of some everyday also equity we restore in to lost have the value. we think I that

sales and to the of or us that see sales allows that of a sort latter creates I everything else that. layer up on bring that of lost a think sales that permanent you'll of us or of back so base altogether. more then layer restoration And top will do And bring

Dennis Geiger

Great. Thank you.

Operator

Chris The you. O'Cull. question next Thank is from

line now Your is open.

Chris O'Cull

XX learned have past from lot the years. I a you over

to talk Lenny, just you're unit little development? how about could follow-up want on so, And you testing a development. prototype. I use So to If be bit it franchisees it whether when new is performed? for might able a

Lenny Comma

and Not at Development our to too to to is the that our very cost designed Chief growing. the look throughout developers pick investment ideas this delivery that order up, in of consumer prototypes. through also, convenience good would is on drive Officer is to toward much say contributed what build. more going to like focus industry And signed next working time, strong be around it and what both is I a some the ahead is a currently have – growing and prototype generation will actually who consistency if the And what shaped throughout on been forget the years It's speed. say the franchisees also efficient huge on to the most, prototypes through

that But just do a the our that. and prototype focus anticipate try beyond along the franchisees. with would an contributions it's to can We're basic comment of you that needs. really So far one not to that do know that area whatever enough appreciate we address

Chris O'Cull

we've more different digital a with what they kind Obviously, Jack's could help Can those? talk from us boards accomplish some menu lot heard to then you plan that of technology boards. provide you the And digital hope detail use through about the what you of of expecting on through. menu drive understand levels in to Okay. competitors

Lenny Comma

Yeah.

menu about static a great is that So of than today. a platform dynamic things. couple boards what say it's would I menu boards One, digital more is our

pretty last day to all board available menu the We them day parts that the each have menu and the means XX/X. throughout orders are is that consumer. complex advertise of to the to pretty a essentially presents XX It cluttered in consumer,

digital If to we we than consumer. what go it's can what do, to can menu boards presented potentially is flex the

consumer. they're consumers be what simplifying a And be also but eases or it to contributor it That that's our space. not our takes the throughput ordering and for buy more potentially So the more during it on thing those boards. huge up for to would that reading likely day would they're menu only what ourselves, a as

The that board products you're trying can you that sell, sell. to advertise with to promotional is consumer. directly thing you're that that do menu a to trying other the The item

So that. to do there's an opportunity

are with And with future, have then also, with place a as that you of evolve a purchases start their the consumers platform can on where you into on to relationship brands. one-to-one those based history to you communicating consumers a basis the

along we is the XXX% to see with a in testing and boards return that the components other not But the worth we do mentioned. We're investment then for the menu in we'll the it's pay it. investment if digital sure that going believe on off all a of areas I go that

we use highest to have industry digital also But see in they today. industry note that there boards. we other And are that in growing NAVs the brands decided the to would are the that not menu

we on think our individual So off. really just capitalize brand. We're matter going so, it it's I attempt to how can doesn’t if going a but from with to this to it, we're work do pay not

Chris O’Cull

Thanks. Great.

Operator

Thank is David you. The from Tarantino. question next

now is open. Your line

David Tarantino

doing a rolled just X to you're in you've you could I Lenny improvement the just elaborate there, -- if Phase there on this morning. operations referenced related what addition Good question, on think was to and simplification? out you I wondering Hi. you

some there's thoughts And I a on of been led whether has level been company that secondly, case change then the uncertainty. guess, of your and And wondering exited you've the if as of lot to you I'm couple look period the at last inside that likely that of back distraction. has years,

a some would more of the drive is little sales recent had? maybe operational think momentum helping you what's bit you Do focus Thanks.

Lenny Comma

Yes.

operations the on So, side couple are things happening.

some the year. in QX, and and skew was essentially that completed simplification an rolled end procedures test of first removes phases out of at the And successfully the First, some back-of-the-house. earlier we simplify off it

we The in the waste be a it made also to marginal service. received it of crews the reduced it feedback the had And for and improvement operation, trained. that that the food it easier from some

all So good guests. of the things things and negatively those none impacted

with like thing of get early the to we was So wins. it those felt moving some right

to now our of causing from our that, of we are identified for Our and biggest the proteins are we Operations start what consistency have seeing VP speed essentially products study is out that and service? Services bottleneck. times detractors are new when whole our of What we a figure handful

And make if change our be some in we we we procedures the lot have. speed do a it we'll think specific of that for meet can to items, easier to these that to able crews objectives the back-of-the-house

in size some going today. we've is what And what encouraged discovered. that testing we're we encouraged pretty by think by of opportunity area the And There pretty on the is.

but come to going I VP that, allow our a job new plan his to solidify it. more on about to to and do we're So too before much say

That's yeah, period And difficult we all during to certainly been experienced, changes far drive above although a of significant that, distracting. the as company, change. like we've to can As they results as we'd a that do. imagine average

changes, I'm have say growth. So that look, our of same store I tracking to we're those sales straight happy ninth can despite year that,

taken haven't distractions the certainly So down. company the

upside at been same that more wanting. think, focus the will additional give there's way But the additional And us we've what is maybe that time, I upside.

David Tarantino

your career. terrific certainly and you. Well, Carol, we'll Thanks. congratulations Great, my thank miss to you,

Carol DiRaimo

Thanks David.

Operator

Thank Jeff Farmer. from next question is you. The

is line open. now Your

Jeff Farmer

Great, thanks.

the comments. some echo, earlier to of Just

miss you, Carol. We will

almost think We that XX I've are out. I with best. you for definitely years. the And just worked you figured

my franchise begin that can it. to the to to timeline? remodels? more And to you what expect questions, get when pursue touched the thru you And on started? So remodel But is updated drive provide initiative an moving you on appetite guys or aggressively

Lenny Comma

Yeah, answer part your I'll of second the first. question,

have various this We X testing test, of just Phase which essentially finished really which stability the is components. was of -- the

branding out So we've elements put there. new some

those are of Some internally things lit.

there. components have out some also We digital

worked things, just actually you the know, sure and canopies. some elements. the As needed to those of And and that hardware make software all properly held up we to

be would a extreme and the components rain ones in up significantly adjusted. and be will or which some to most have it So, And about it we're what high need whether testing temperatures. of we're lot weather, not hold discovering

Phase So, to that intent X. was really the

them the believe What will in those now platforms marketers the And way, opportunity essentially and present individuals it is, to sales. hands do and the will to compelling of in take drive a that we an we guest those put operators. has

are at phases that. the We only of beginning

think had team its the this I past fact, week. first meeting, In

test. everything we've a to to that to of up. kick So, little lined part sort off of officially of them give time, X phase got the get And bit

can I'm lastly, we we to on read timing. once grow, a and very help and as for If there Then the investment then reasonable And probably participation, all you And in. that, a if that, size. at me can a in you then hone in. on on it's investment start return do simple. my far is I'm sales profitability get can franchise And not franchisees can't as all

very And investment, the we the will also we keep of will target from So return. sides our operators. reasonable standpoint, franchise reasonable a for our

So work a really can do this We do that about before really But encouraged. say really experience. little the specific. I can more it, time. think can bit enhance I it all will a share franchisees we to start to overall at be That's need guest

Jeff Farmer

a meals, the might meal that's pushing out you terms move been right, XXX you helpful. but average All add-ons those go? up, And for have of where seeing in are thought the potentially the by combo higher than average you orders? And the response surprised it as combo mentioned to shack follow customer -- you with

Lenny Comma

Yeah.

So we're wouldn't that surprised. say I

actually marketers promotions this result. the generate to designed Our

were I we that that results actually would we to. say able we're So the generated pleased

if many credible our we've consistently, to me do brand One erode to heard compete for is And say is this you've so think I that want can of good job by options We credible food. quarter. preserving a at presents value do in not point, our to some with we the that times. equity consumer, And things of said looking price all in the they we've mind, drive what around done trying of try come a they're in or reasonable then that value. to to the brand quarter process

going that's typically deal. are within of to And loyal sort But than they're one looking and bundled customers true what tried seeing. bundle if our credible of for exactly they items, what those to that that's them, presented we're more we

So, out high that also $X. really It's we Donut quality convenient very Holes. It's a a for It's item. easy an add-on have currently credible the for reasonable a marketplace They're example, Donut Holes the the in It's the consumer. for up-sell price. for crew.

it day, sell -- the throughout just breakfast. and at not we So

cart can item. because, that that So, by it of that who again, of design this in I is know can't we competitors and -- marketplace and space. into beat low at compete take in all the all is single the Price think sort go some national we

you've value, us, value same maybe something that got we're sweet with those while for to for a combos at find presenting attract the isn't looking and time, guest that for credible spot items price that at who So are. just

Jeff Farmer

you. Thank All right.

Operator

is from Jon Thank Tower. you. question The next

Your line is now open.

Jon Tower

great learned sentiment you, luck Great. been Carol on endeavours. of call. from the Thanks. working you And a echo lot future earlier with best on and it's

Carol DiRaimo

Yes.

Jon Tower

turning Now just questions. to

First on you mobile numbers digital maybe mix some you of as adoption of perhaps today? provide ordering the users a the equation, into around or delivery side of the where and and some sit can customer registered app either percentage insights

some just give just And item Jack's consumers? Can us value to the something perhaps differently is earlier. of innovation to respect you you then be permanent kind the next question to for consistent there bit Jack's menu would of Would new current or menu that kind it you're side of on as thinking be there? a little everyday the on presented something what money to with or Jack, kind value color mentioned within

last trends, some different on markets about And you. one casual the footing? the then discrepancies sorry off -- quarter weaker in curious heard competitors any present starting California quarter dining the thank to-date piece, We in. on So talk of your you're that

Lenny Comma

I'll first. your last take Yes. Maybe question

weakness performance, see quarter look not the note. across market do really improvement individual at our we're any we to-date seeing when anomalies, So specific all always but markets. to we operator are There

across So that pretty I you we're tell would our right looking now. just business good

permanent going working to any that to All really I'm that details that. value, roll them tested I say year. excited is next we've really not can as well. are far some share We're out As around things

mix to in our the per QX percentage And space, continues sales more really then The percentage about and side, haven't digital. on digital the versus of store grow last a but our relatively on delivery business, we than shared app small doubled is year. still adoption

look grow is just or don't would to that Jack we digital delivery I it will and is in the believe Box main the way for the significantly. we're consumers go remaining the today, the drive area sure at to an that So through presenting connection to are inside, make this of but of point point as through, or XX% that, guests those that consumer Still Do we delivery opportunity the going consumer? we our out. want the half this take of and

business time. relatively in. for over standpoint small our to play a us digital delivery time, think part our we going from again, mostly at are of sense So But purchase, because point and we're in make to this convenience-oriented

Jon Tower

the uptake any get just on so only exclusive done offers through from point some last the And you far consumers? that to Have digital digital on piece.

Lenny Comma

things, drive done of those sort We've number have. to good of opt especially the people we adoption Yes, app. have a into and up

Jon Tower

you. Thank

Operator

Thank you. next is Robert question The Derrington. from

line Your is now open.

Robert Derrington

to you're have. just heck want XX time, and know to sure I Yeah. going party long years, Thank to been a of a I you. it's Carol that be the that invited I'm

Carol DiRaimo

Thanks Bob.

Robert Derrington

you. Miss

to that Specifically, product. guess of quarter future. might I a a quarter, remember us past during -- little around quote was a in Can the and you market whether Jack beyond give you whether the that, again Jack celebrity Lenny, this using that you I first guys this color use something ever bit spokesman that's

Lenny Comma

Yeah.

he’s create Larry who Pond, with social we would it got following, of connectivity to do thought that because the Internet We a of we is it And chose media sort So, a play, -- sort following. social that that huge a it's that. that Typically, and first the we'll time extend reversed way sort mass media. into we approach that media of of the will consumers. then start we with set

up that then media actually mass and mind, We with media in built a started into social play.

her passion but so that's to us also extremely what wonderful in the seemed it She have not talented does to with, And makes she professional, very for for why individual, the campaign. who was to only sense for use work a brand.

bay. people connect continue to like love in work future we'd with the that so, to consumer And our to to

Robert Derrington

if last follow-up -- I could. one helpful. That's One

to protein needs based Jack, all the what believe Jack On plant a outlook future about. in for its that or kind you counter is Jack's of Lenny, do

Lenny Comma

bringing what in or and copy that be I of interesting substitute. to some curly doing protein. into like have is Jack's all French we the on simply it I we don't fries, Jack sort an to to protein marketplace be think of But it other the of would the counter plant-based world to a sort say pride ones. in ourselves be we'll things about counter plant-based think way would else everybody way either to protein as a

them. with some used So, seen I being forward of I've play of would marketing some sort look to team my ideas. to

I make of think to way time, to in things. the going sure they're Box need But is exciting. pretty to same they're it authentic the the Jack at that doing

Robert Derrington

Carol. and congrats, We’ll you. great quarter Terrific. Again miss

Operator

Charles. The Thank is Andrew question from you. next

Your now open. line is

Andrew Charles

Great, all you said your value especially were Rachel volume higher thank for can't presume be points Can stores X% for perhaps congratulations inflation different almost it I as gross franchise best company wishes commodity have gross guys basis and having Carol help, higher XQ role. bundles, inflation. we order you. and is partnership. franchisee your course up? going counts margin strategy? the But be are talk you, bundle experience gross fair to and base, stepped to XX about to And operated margins support, down that because might value franchisees any and to of enough, margins these We're ticket new think sizes thank realized the amid amid you in you higher that the miss only

Lance Tucker

Andrew, take this I’ll is one. that Lance.

-- really the franchisees right are gone dollar You're think from that the [ph] the able back a sales With higher from that a standpoint, way margin we we were AUBs and introducing have to do we've into and said, benefit base about, . value market. higher

is us be working right guys those we the this grow But to of way from on of value that percentage higher for really as are way margins a a are kind like going we're a the than to So granted, to to feel dollar And benefit lot a a this going in standpoint. margin is well. approach franchisees. franchisees

Andrew Charles

Had and quarter gauge clarification. in service helped around helpful. tacos? increase taco news mix the bad sales one That's more trends in by category And of just quick an been the hamburger

Lance Tucker

that looked at that way. can't I say it I've

see I we're happy anything So to doing is contribute question, up that. else there's but that say would to I anyone and sales taco to answer won't that

Andrew Charles

guys. Thanks good. Very

Operator

next Thank is you. The question from Matthew DiFrisco.

open. now is line Your

Matthew DiFrisco

Thank you.

know remains on you clarify Just they on the both for XXXX. broad mention think X to XXX the it as then I remarks have. in restated difference your Lance again Does into wonder I pretty and sounds if and bases. about that earlier far big are XXXX as anything also you intact? I million markets infer I to want just something they're clarify, I prepared call that wanted it's billion a free as or cash or reaffirmed that those based. consumer to relatively wanted the the there's just by the to that, there in make for Two a then you've you. by said different return flow target If term point. are to just in recommitted pretty I in well. Texas you sure that try about saying you XXXX. flow comp, longer Thank you know cash like and guys had California want free accelerating factors

Lenny Comma

you your and we dollars as We be go changes all billion and long ago, Absolutely, reaffirmed there the to a about Matt. return any more. quarter a of let guidance. guys Well on track question going to I'll guidance. recently or second term to know we're our on certainly as So term would long take

quarter. I in most So talked XXX million the to to about. to to money the you update from on or and said the not can what TI’s, reaffirmed say we're year expect it's reduction now, I'll updates of related spoken you the What We number this that No on to last expect we for it this changes that. TI’s up see would to right I remodels. We'll call reiterate as a committed opportunity go contributing we've in little long-term that. in we to the to as And cash -- the the there's see TI And get last do we strategic our we've and then timing down that as plan. have that return any we franchise relates the to bring as already more it if process, have really we'll through putting guidance bit.

Lance Tucker

as just Texas And are and California our markets. confirm both up to most trending our of

Texas So softness brands some sales XX%-plus has that with markets seeing either just there some restraints And of our business. are markets, those growth. both but know to those are of sort total those and other of reiterate for I California in we news been -- account I of know

Matthew DiFrisco

Thank Excellent. you.

Operator

you. from next question The Thank Setyan. Nick is

now open. is line Your

Nick Setyan

years. Thank throughout you you. all of help congratulations. Thank for Carol the the

to obviously, X.X% long-term three are sales. X% that you the G&A, terms sort In we're of framework the years the in next about that within next in of terms of just already reiterated, range within thinking year, How over you years, two now guys framework that system

Lance Tucker

around targeting X.X%. Nick, plan long-term its Lance. be What we is we've guided to in the ultimately

of restructuring that's pretty end agreement an and most of work pieces has given So, it's to still to -- you transition mentioned, range left. expected the do to is we're done still do close just a few what would coming there. you a to noted and expect now as we services getting as the little Lenny that Qdoba But bit been

So, thinking we're kind of of system X.X% sales. that

Nick Setyan

Got it.

of side the In on in you're terms and any share lifts the would remodels that enhancements, anything on sales tests, that the in update the seeing terms drive-thru from of seeing then you're lifts what sales drive-thru and the remodels? you the of terms in

Lance Tucker

one as that I'll is well. This Lance. take

making those hold drafters things. works, testing, been mentioned to as around are now and So equipment really phrase about right that with the Lenny has all up the the sure equipment elements the

the We would expect but have major sales driving not them be we really components. introduced,

come digital to sales. some once other Relative got of menu would boards of just – our up-selling good need the of units kind place we progress remodels, doing that reiterate some some the expect forward XXX more the on really on to that So and the we that system call on in well. oldest things we we're to we've so, in once as what that with said more remodels, making some some plan the work to the last or is of move structural the and

of do of digits I'm on now have XX% to mid-to-high lifts there. what seen over that and single well trying we going those We're sales those to good lift is

Nick Setyan

very you Thank much.

Carol DiRaimo

Anne, I for one think we more time have question.

Operator

is from Lauren question you. Thank next Silberman. The

is line Your open. now

Lauren Silberman

Thank integration making store I you Carol go and restaurant, mix? meaningfully And just it in contribute delivery both to quarter did part be of are becomes to delivery, the the in of the then in to want you. comps the and what back POS? Just the congratulations. kind modifications a whether that packaging, layout, Rachel, bigger

Lenny Comma

specifics growing still the small overall I growing our relatively don't I delivery contribution a and business. comps. on is fast. shared although think we've It's to part mean, of deliveries,

is I've the guest really that, what to So product the mentioned improvements say new or I the service biggest introductions would about and operations driver.

as say, doing far we're to what would I as integrate. then, And

or separate party system bring our major not partners tablets currently those their of delivery is Our in. some delivery having IT group to integrate POS so the use to into working sales network we're to with

As have for down and our fees going forward, providers profitability. make the also negotiate our being marketing the is a work to just to done guests the third-party both crews, lot working and it with department as palatable well of the more

be all work time us well with with the service delivery us to meet So third-party of as major more open taken work the to continue done with And they business. but to to as face the to to the working face we very companies. have grow towards there, leaders seem to

to see what line. on largely bottom We'll where from contribution our it's And dependent goes making that it here. be will

sort will it believe consumers that. makes be we get going optimistic do sense seem strategically of space. The done to play here. But in to remain way. come about right how we this more So on it to the to But cautiously

Lauren Silberman

you. Thank

Carol DiRaimo

the the outside joining day. next years. call. to It's And rest us your many the been with enjoy listening today. of in pleasure you I all for on over work look a forward to everyone on from the of the Thanks call SO,

Jack in the Box (JACK) 8 Aug 192019 Q3 Earnings call transcript