JACK - Earnings call transcript Q2 2020

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Operator

Good day, everyone and welcome to the Jack in the Box, Inc.

Second Quarter Fiscal 2020 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 Rachel Webb, Vice President of Investor Relations and Strategic Analysis for Jack in the Box. ahead. go Please

Rachel Webb

and Cheryl everyone. Thank good you, morning

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

our refer share share. In morning, earnings diluted per amounts this comments to per

will non-GAAP earnings share, margin reconciliations yesterday’s operating and provided We call, margin. Please as release. as per to in throughout adjusted non-GAAP today’s refer refer including well franchise-level EBITDA restaurant-level items to earnings the

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

from statement differ a call. cautionary to The company section of most our factors well yesterday’s the information public available the and Investors are the question-and-answer which are and these pandemic today, the statements the of of most management’s uncertainty. of and with course on considered as on Form conference on news part potential on this current of level risk make XX-K, release XX-K, given statement business. SEC. the this detailed should risks this provide call Please statements we changing Safe recent current thinking elevated may are will Harbor website in with as to www.jackinthebox.com. results our COVID-XX be advised forward-looking presentation may that the our around during expectations XX-Q our filed Material operations in environment, any the materially be relating and company’s for are rapidly of information in session considered based recent on documents forward-looking the impacts other that and reflect this management These the while expectations future, Actual business, unprecedented nature documents based at

the will to of Jack morning, attending Consumer Box June calendar Oppenheimer’s couple this note virtually on Conference A management XX. be items in

July after Sunday, we results Wednesday, announce on close. ends plan and market August third quarter X tentatively to on X Our

Thursday, Time Our at held X:XX conference Pacific X. scheduled tentatively is August a.m. call on to be

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

Lenny Comma

on franchisees Thank partnership, take our I express would ingenuity first like provide priority unprecedented been for everyone’s you, for remarkable to consumers. to also meet thanks responders. and the of It morning. to flexibility share team by see and careful on the suppliers the and first weeks X% in to, me but momentarily, XX. will week that Jack improving sales of this three flow for Based May despite the that as great outlook our cautiously more will we Rachel and rallied the to restaurant Box challenges gives coronavirus. for top like we the needs guests to conservative. our week to keeping moment approach continue going and rebounded as optimistic and these forward would heartfelt with employees, I has Sales as during times. brand their quarter the a the an describe to corporate our will for a to X these members and I each most the of plus know needs our results, positive on way changing I thank chapter peace robust have would be has the ending brought good truly recently, first positive for contemplate Lance remain cash next my it safety

Tiny in over averaging was since in our Tacos. the our strongest on track at weeks as impact quarter newest trajectory to of April, our the be XXXX This menu the coronavirus. driven the look quarter second X% release for by outlined of of three the strong quarter was preceding performance we item business two sales on a and prior year versus positive a Taking in quarter our

price of we back. As to is restore to value equity raised X of $X.XX years some iconic related lost intended Tacos Tiny our the the calls, for few shared I have $X.XX when on Tacos previous a we

in Taco new in Tacos not bring still lapsed had our on our is orders. sales, are to but power bringing is Tiny of on Tiny transactions, only helping bolstered quarter offering, Lance Taco also the back users, our a our staying and great significant check second added that to up to early in it also they the Taco are guest of determine Although recap too impact results some sizes seeing as will attention operating the we drove to COVID-XX not but showing response frequently entire a this is moment. Tiny only consumer category. a

the I will to get in seeing of today. business consumer Before behavior briefly some in mention that, changes we our we are

are consumers more app than of than more and doubled usage are sales ever. with app users of and mobile have delivery the experiencing pandemic. quarter the First, record Delivery utilizing doubling our in high our since we start mobile the active

As providers, with a the by the at of major three reminder, over XX% major one four delivery of utilizing XX% are our at of restaurants least covered providers. least

anything a the the consumer are from have want occasions consumers away breakfast typically selling later items changing And since to no significant menu, trends. for with of work, we seeing Second, longer in is orders sizes the plenty we breakfast now shifts for this agility at have day the but this Jack any people. in and thank in are led traditional positive Box on day. response offer as to time. increase team to of larger time part commuting placing factors consumers our shifted these their in one the check sales believe our rapid to multiple contributing to day behavior of These I the we

provide moved our first receiving Within to sanitizers, and drive-thru consumer also value. shifted to needs food also in only. current masks, corporate want to well a to address for for The I and all that swiftly supply restaurants and great menu to team chain while the overall two offering marketing new reduce facilitate thank team take-out appropriate indulgent travels to from gloves adjustments to March, restaurants making operating working risks. home and weeks meals our ensured pivoting the were model our supply

placed mark way delivery, the that and Popcorn ensuring in Our Chicken take-out to portability, a value, by great hit drive-thru. itself lends in $X.XX has temperature Spicy

Our portable with for take-out a craveability. high in money on box and popular are value Tiny the equally marks Tacos

it success easy patties. us We profitability with pointed successful our continue price to supports a operate not of crews such is $X.XX only up-sell for these bundles, to option generate as promotions the four option which franchisees. and the Jack, Bonus to as Triple our our for execute also up-sell This

launched messaging. placement to believe than our concerts delivery, help #StayInTheBox streaming community these less, place and have With The we commuting shifted mobile sheltering and as where dedication major canceled I drive-thru advertising and such and quickly from team changes ads campaigns to events We and media meet consumers open communicate digital developed app. initially consumers in the us team content events entertainment our shifted billboards through to to safely and much are. both and sporting in promote they also all in serve the expected. to allowed staying of better fare to to

quarter especially current about lapping are in strongest our We of bullish last from light trajectory, year. our feeling

our at trends. the turn closer to Lance? I Lance quarter look call will second and results over a for now current

Lance Tucker

everyone. morning good and Lenny you, Thank

by the for upfront. performance you Rather are the just item quarter this detail prior I weeks Before driven impacted COVID-XX to, second I getting than the the by operating state undoubtedly negative the year was mention speak wanted aware, into this pandemic. as versus to every for largely

quarter. by sales Operating The of year. EPS lower $X.XX for primarily G&A was $X.XX the decline the versus to as driven year quarter higher prior compared was second and $X.XX during last costs the

comparable decreased decreased X.X% of X.X% comp quarter system-wide transaction sales for we Company comprised decreased pre-announced. of and XX.X%. declines as check the increases quarter. sales X.X% the sales Our comp second in Franchise of X.X%

great Our the of system a X the increased quarter first start sales was weeks off to X.X%. as for

entire system. time, transactions During for were positive also this the

pandemic the that we the XX%. quarter, impacts later for COVID-XX As of declined sales by in the period X-week felt

far the Now, third to have an allow we on update me thus in seen quarter. give what

ending weeks XX, X May have up positive, same-store the sales around For X.X%. been

XX, and the the nimbleness this the This over start our a week sales ending last of Lenny May time. it’s the As with accelerating brand’s versus sales of have during quarter strongest X%. been year in testament up mentioned, is

decreased restaurant-level from this During in inflation Most hour the as quarter by XX.X%, moved to labor. decline per the in and quarter, down of was Wage XX.X% second California last $XX year. driven margin to was X% company between January. X%

and We to for during impacted also restaurants the employment positive our maintained in staffing for experience consistency the weeks higher our pandemic in guests ensure the of a sales employees.

by food in X.X% packaging and the inflation approximately commodity costs Additionally, quarter increased X.X%. driven of

decreased $X.X by XX prior Also, from Franchise-level unfavorable the when the restaurants on with impact the compared company impacts margin decrease margin. primarily same-store prior January to X in driven acquired This year an had pandemic. sales. restaurant-level franchise quarter approximately in basis points company of the million any

total margin percent have franchise-level the As for franchise-level franchise XX.X%. quarter prior lease a been revenues, margin of the the the very XX.X% from in year. standard, XX.X%, Without to changes would accounting new the comparable percent was

pandemic, this the rent average liquidity, of million. base ensure to give a of unit franchisee averaging strong owns we help capital their volumes our time, marketing postponed with operates help restaurants first our some To franchisees we franchise their financial on $X.X the stability XX approximately preserve and to approximately To XX portion unprecedented payments. our rent, and during requirement prior color franchisees To provided relief.

sheet of for rental have As our cash disclosed, collectively. million postponed collected of does a totals that our May we statement, and previously pass-through over some franchisees’ be does $XX will XXXX. July in the and balance April This franchisees impact relief roughly impact This in our flows. we to our of have we payments. the savings million $X June but in landlords XX% approximately from rent our income months of of collection April, not on revenues Similarly, beginning received

marketing provided we payment fee reductions Second, deferrals. and marketing relief through

range will reduction from X%, our for we collected have as addition of postponed fee the yesterday These to based in to X% releases. X% to we on the X% sales collection so March month volumes. also a percentage In fee fees we reducing subsequent be described remaining to the April’s fees marketing in typically of are announced press

through Third, and QX. push the capital requirements. to second will much franchisees XX In investment we XXXX. other least months half us new suspended the at delayed bringing opens units, of second X in previously the development unit opened anticipate into of new expected We X any all XXXX by quarter, XXXX development agreements

pandemic performance since the sales and the of liquidity generally our the have strong. the remains of Given our franchisees relief start the franchisees received,

a closed the to testament on health closures throughout less than had temporary have our with we of our again any of reminder, X% minimal a quarter day, the As or restaurants temporary given restaurants.

efforts relief impact do relief, nature margin. have franchise the our As extension a on of as payment material not these franchise-level of primary the the to terms, rather

This the April million reduction month compared Moving on within the our for million $X.X rest second in SG&A, of with of to million were advertising quarter. which P&L, in and of due prior $X.X year. to March decrease in costs, the are quarter fees included $X.X the was marketing in the the

with any million. to company-owned or in life the and given quarter. In company COLI declines. did during also stock driven amounts are addition, the by the swings $X.X are policies. associated $X.X the market Both These non-cash to increased COLI during million in refer mark-to-market reserve million to these the in were quarter the and make insurance roughly incremental sensitive policies legal stock were G&A higher the we quarter marketing related items. primarily by as $X policies, reserves them, losses contributions the COLI policies Legal quarter not second market adjustments

was reasons rate that the and income for elevated in remain being of are tax second quarter rate We losses reduced tax not the the year. biggest the the elevated tax with deductible. remainder at the Our anticipate COLI to XX.X%

on details Our additional XX-Q rate. contains the tax

withdrawn to turn to outlook do term change and guidance. Because relatively liquidity has liquidity continue the our up long these will both our many have business well, our the duration long prudent and this maintain significantly it given increase we our seen we the know XXXX healthy uncertainty, financial around sustain. our we current comments Further, impacts is industry, not business and and we in that our on magnitude to by held will of caused take and and debt, to Now, volatility of bolster have trends position. how the while performance performance and like actions believe our uncertainty pandemic, sales

To cash, company quarter balance provide was ended second the of cash of a which $XXX the with quick update unrestricted. on million $XXX on million sheet, our

which repurchase that in program remaining. dividend, our temporarily paused paused number our We week typically share Monday paid $XXX have this June. share we authorization of and quarterly is repurchase of temporarily As of is unchanged. Similarly, have million

returning cash flexibility in remain we we prioritizing are committed shareholders, the While financial to maintaining to near-term.

funding that $XXX monitor is allocation our risk with caution, we the but our down goal our associated And the variable returning with of higher the scope share any will to put debt-to-EBITDA and clarity around each notes, by policy does repurchases We ratio EBITDA our of credit. million of than declines which abundance we covenants drew line This, to capital to to debt us increases as with the reinstating effectively business soon targeted, continue as have not Xx the caused structure. at combined leverage our slightly and more also as disruption the quarter dividend of duration with we COVID-XX. of have

coverage debt at must or X.XXx. a reminder, primary our debt is and DSCR our the that As service ratio covenant remain

not disclose actual was the Xx we DSCR amount, do of our a cushion. ratio, second at the had amount quarter, typically we of the While where our covenant roughly end significant

Lastly, driving now at projects like we are our the this capital to for concludes time. line the spending Cheryl? up and prepared questions. open year back I for call have and turn remarks. only essential to the spending to would operator on over sales That the scaled

Operator

you. Thank Instructions] [Operator

from Bittner Oppenheimer. ahead. Our Brian first is Please question go of

line Your open. is

Brian Bittner

and question. it I the same-store with and impressive I you good you is To think. X% sales said quarter outperforming positive be Hi, morning. to-date, up it for very industry think Thank trending currently is the your

from about So impact to normalize, also environment will you new a doing states from In in to other you of think do that you begs in? there are question living words, do how is right, and business all think tailwind seem something your things here? it but as a now be now your business start reopened this how we

Lenny Comma

Yes, Lenny. is Brian, this

we we of that feedback I our And guest-related seeing about I when our dining have improving. capacity think value. of even a exceptionally things are couple open things. you look around It the that sentiment And of able all momentum is optimistic. my opportunity can’t and service, One, the to at lose would some actually food add-ons, are rooms that for at we we snacks think that also I craveable that so we’re driving that LTOs well to family and working the on the able and maintain I as this levels, like seems are just seems all sides like and combined we that great time. be been then and what executing would those with the are said working that we’ve achieve to bundles, their expect be we in an cautiously the service more plain imagine remarks

of for optimistic executing is were a said hands and great right so Moving setting the sales going to up employee. job we’ll this I stronger which remain I yet maybe to importantly an only the growing I that to the of time transaction now for but consumer forward it then it on the continue forward. and a marketplace which delivery to we done down little and I well really take really trend transaction us good like and think trends a out to safe and think travels those yes in it seem I would we Yet sort think things team’s exceptional not of comes so of to playing putting and would of get time lot sort this convenience think most the efficient the out teams and would oriented that be food right the expect travel earlier and they well in cautiously the is into well really and I that be drive-thru expect a feel portion now our wind well bit about having at come

Brian Bittner

Lenny. you, Thank

Operator

Your next of Francfort go ahead. question comes from of Please America. Gregory Bank

open. is line Your

Gregory Francfort

maybe sales curious because Thanks. could that business I’m you past shoulder the and open the guess in can labor question break operationally XX% a is the just in bit sales doing be dine to that in? are little timing is to talk manage for more it’s in when of change now where period in little going you more the were have about just does that think of up drive-thru efficiently checks that the is right that more going able would even seeing the a drive-thru I of I to you thanks guess than don’t are you Yes because you about you you bit and dine the been to how XX%

Lenny Comma

question. good Yes

we council, we and the the of the larger seeing public efficiency drive-thru of sales as conversations actually one first reasons check. much advisory for two our is through rooms franchise lot a are we for as open being fold with kind really of are safely think we sure that is also dining meet the multiple I orders is it for second Making about. do in driven exact the we’re average that then what a our having right employees. And those lot the higher now is there’s and by conversations

able on and the these are for mentioned remarks through adjusting flows As high actually I efficiency lot flow to my rather these puts demand typically the of requirements applaud I our so that the would type with great bottom labor but it through because to of that of be job we toll associated line. type expect families going the doing is you just and this franchisees transaction transactions so the cash team a entire as would and a a more that food said that when a in purchasing to transaction meet people each have you for are drive-thru speed on much earlier with employees the

would to and XX% dine that the re As less going my you likely We when up I gained. lose pandemic a remaining lower maintain Yes look as think at even about a we won’t the Jack current too trend Box than efficient drive-thru historic only to reopen we XX% dining dining the prior dine being within XX% dining transaction much open if another that levels our essentially and in will is in that XX% for but rooms rooms we efficiency our takeout with expect that would in. of we rooms lot be it’s efficiency of anticipation opening. start the to much

Gregory Francfort

Thanks, Lenny.

Operator

Your next comes ahead. John go Stanley. from Morgan question Glass of Please

Your open. line is

John Glass

much. Thank you very

was it very fact XX, going adjustments to a an First, and need or And just just you position quarter would trends you I that back to the recent you than that nearly despite make to end the between by traffic achieving day now actually did quarter? mentioned actually and the employment in just in drag? or a just breakfast to-date from your did forward the breakfast further traffic negative follow-up, XX be company can part have you then you this broadly people pivoted away do and when unpack different is value still cognizant also is the unemployment suffer this know but probably think by spiked so more you are check most of and Lenny XX%

Lenny Comma

Yes.

but are that. in so part actually seeing check, haven’t, So, stay are the question and significant based Jack once forward. most first this that – massive pretty transactions, year-over-year actually of the about of same-store in in first that last offering chick able business despite the lower to last as although during And of shift week-over-week things through our unemployment but sales the and X than amount X we the time is in traffic, things. in is weeks talked see showing most we historic over of period about away address a the improvements got you have just that think are Box actually this going drive And that experienced. typically years the are sales unemployment couple of what right of improvement traffic seeing have your trend, recent good I now. the may some I we trend to been And business think obviously have the great we from we coming erosion disclosed sequential we higher average we the transaction quarter position to we a of The have growth a I’ll feeling on have sales from trends transaction and

in what to well-suited the a So, believe traffic. have pivot some of we safety drive-through a broader we in maintains the a is where amount of through value get food the looking the the sacrificed there the at that price. sense When information be we equated you component are look institutional they way you what beyond I because value. you way, has and if the also component, we feel the seeing a providing the to will today snacks, like we But value. and sacrifice the to and component to traffic are both quantity at are as at in of deals offering price the delivery consumer starting looking that, profit, of consumer there transaction component, if is just the in that a much actually also of of at sales even that digital and are value see value is that’s sides component lack looking that flows of the don’t for the the from But bundled value and and look is tremendous the are

what in be mix using it in value overall does are on the people look now the or deals out from also all proving are at our on through that price, in delivery can safe seeing A take-out based way a be evaluation. and be to table family bundle brand delivered now. seems – sales, an seems in promotions the manner we in the right that drive-through overall So, to a reasonable consumers’ you right our when

at product we the drivers way think historic evolved consumer going going think and but that of needs, brand the current set present we to to about the we to only are to look be we it’s business, of rapidly. I our the important meet not quite has to their have pivot which some of way So, just the

John Glass

Thank it. Got you.

Operator

is Alex Your from Jefferies. go next Slagle Please of question ahead.

Your line open. is

Alex Slagle

to was everyone. you about XXXX, I how franchisees the could initiatives is faster target how talk this by and much belt a Good wondering from impacted you. be other on tighter if process spending the speed of can changes capital and just getting and hear Thank given minute accomplished just through changes?

Lenny Comma

Absolutely.

are do throughout done on couple all sourced the received starting a that good the very would minor just the that XXX but happen get line much and execute their transaction. procedures at team project and main significantly and could did of some obviously for work the field, make in rollout The changes, takeaway ready social a to pandemic. reaching adjustments the move operations we broader next us the that have allow So, relatively short-term into allow plus to to optionality many already to that low of have pandemic. taking much has And has But drive-through folks identified, minute the in only for at forward to we from those those restrictions the those is on great complexity process long-term own some to installation made the could prior based identifying tested are improve lifted the and the basis, adjustments pandemic adjustments locations not restaurants step created the and sort to their during job is ever that drive-through the already of some continue the not first seconds sort equipment. the but the of folks were distancing pace really things. to of operationally to then with we identify and come and franchisees out safely operation can of What changes go to together cost some that we and things of our team throughput reducing with that of also for be equipment standing have to started suppliers actually directly equipment to to

generate some main thing that the I with the saying of we identified of that what the is actually couple system pieces long-term to test come ability restaurants operating. in going good pandemic short some we that and we adjustments to of and at all of that first I’m lifted. we’ve feeling be all quickly the but with would to term on out some continue cost new go just want and the test of the we the once we our adjustments at as things to look so of and into that when that equipment shareholders path that can know the have low longer impact short-term are forward So, term this of forward time Procedural both identified is identified the minute some term adjustments and of able basis, been and the part restrictions has biggest is and disrupted actually more start we would training but those accountability whole that longer the restrictions is will things

Lenny Comma

Great. Thank you.

Lenny Comma

Got it.

Operator

next question UBS. Your from ahead. of Please is Dennis Geiger go

Your line is open.

Dennis Geiger

Great, course. thanks Best thanks of and Lenny. luck of

just then guys of on forward be Just impactful you sales split if trends one related and if any another on of wanted new thinking either how just the curious learning mix so specifically that more mix about been kind segmentation thinking provide any kind bundle kind and those there of customer of on value kind two most into product and you. the about you’re new Thank comments going on what’s looking you’re the the commentary? might how seeing the to that geographic of shape the could anything ask customers recent

Lenny Comma

in the our things lot we operation I far sweep distancing the of for a nation agility delivery that bundles entered clearly. Even would as operations at look team really when to to as of look impact team example prior couple strength the social the trend I of position a think at and started the consumer the the also team, say there. chain providers when things working in very general and with those I to as some to of delivery. quickly. into so Yes, started us family create the supply a were the Put pandemic we week the be marketing they

dinner Third not pandemic the party going consumers the breakfast for purchase they are allow are or opportunity during out at you night mark even when for delivery the when there what but lunch of also through drive-thru in we folks we’re and right early driving order same that. so I you promotions are at so that’s new the shifting late looking that those is us the not to folks look until seeing where but evening and attract think and bundles family to particularly occasions to take hit an look would dramatically for some work

commuting great brought be product us like one this think and During a those when to they’re this they goanna off what sort packaging the because the Tacos be are really the of put day to of I delivery actually can is not afternoon, think lot products sort entire morning have important even the they of at look menu of type are lined of the in of Tiny later the types know the minutes when are big changed cooked so at it’s got of more they’re to for the and products that tried didn’t or look at going definition folks together the breakfast, the not is promote what repeat all I the morning present later to deal XX/X, then don’t those along portability the saying are of is is a home also them that they goes doing expanded on into in before these water think Jack things that make right, craveable convenience our of the the X:XX selecting ever you think when through price way have and times how consumer what’s whatever those is promotions the want because those and don’t in were really be they of part today you after the are all are I popcorn is doing and that drive featured in things need items and XX patterns and indulges value their definition you’ve together early your goanna service when think they of food products taken goanna taste it XX that around things. back or items to focus product fresh it and outcome still than a because food in was well and abundance of customers. times to for provider home buying o’clock the immediately out be it team the minutes position hold are folks well the consumer perspective but be that to expanded going being being soggy many all the work, looking around bring and and early hot they they and products example some a and goanna I to bread kind the the to they offering the sort a but pandemic is the consumer using else although the chicken need that your in oversight to crunchy that morning, breakfast up have still to down is afternoon on an morning I likeXX they or is want going they’re in and to Box with when the trust into it and experience think you go produce or for about from at insight of o’clock bring would that whether they eaten burger consumer traveled be paying make more grab that that it sort And question the I it

hours, o’clock with at is many post are when financially sort we menu the helping look be flows Jack X:XX now at timeframe, cutting cash are struggling that restaurant just p.m. seeing that you right XX/X are the and of companies so really So till they or available. their the open night oftentimes down offering so are particularly we Box businesses, would XX and typically shutting that drive-thru early even in that

tit-bits hands a on sort let So, regional perspective, will lot of that. now, From Lance I a few into share are right of things our helping. maybe that playing

Lance Tucker

week, performance have a you, you similar of very regional haven’t at on mid was We every single-digits. the But can at I served Thank up seen tell looking regional and week back this last this past what we least region traditionally types really side. Lenny. and lot

and performance So regions we thankfully it’s we like as region those necessarily drive looks left behind no to being pretty good consistent are continue across results.

Dennis Geiger

Thank you.

Operator

Jeff ahead. go question Bernstein next of is Barclays. Your from Please

Your line open. is

Jeff Bernstein

Great. you Thank much. very

offer will support franchisees on the am feedback franchise to this Lenny, Any the just the deferrals whether well. operations changes or the think related quite on this on question great? think you down one, opportunity, opportunity catalyst. a interest of sales up wondering think a you then post-pandemic current whether be in has cost recognized system, thoughts this were think perhaps that’s thoughts cost I any restaurants about management wondering said am watch, their would how of despite franchisees abatements I will there to from if equipment or or the Just franchisees as under significant the but maybe position? any only do for potential you. wouldn’t growth terms And you probably I geographic offered side I if evolution opens I to financial in Thank Lenny, mentioned be is and just bring sentiment holding leverage and your other just you to-go the increasing able lower and on you anything

Lance Tucker

have to of like one Relative feel it I I good felt like continue like shape average system you the to franchisee health, of to some the am generally, this done. were Lance. It going prepared we than we start units. they strong in way. pandemic on more first struggled but kind over and of $X.X when turn Lenny will it’s do feel Jeff and with we my I was with into brands all, that all in million as AUVs others, remark, said and I

We have not closed to any pandemic. due units the permanently

them remains performance, have to anything As sales. the pandemic that have had PPP those have look low their the strong. you just and reduced support provided other that support we them we provided received time were at either fact cash when the at X% that loans, then sales And and for closed we many have franchisees less on not temporarily like awaiting than related position than we feel due landlords or said, quite our and wasn’t to of believe received the we even

So, overall, from time, disclosed the think very of health say are fair the in that of I it’s notes the standpoint, but seen something this franchisee we feel the shape. not have good our franchisees going are so I at a good we we haven’t and questions I franchisees. to to that’s do liquidity know, around and levels about of some some are debt

a development a shape, little from PPP we feel probably Some going a question, your have leads to ultimately in on emerge in due are this standpoint. be of more to that’s we not to debt of and the development which loans to going like lot forgiven, them but taken good pretty

I a unit would a we with make seating be and situation. and get sure of and look in iterations providing this opportunities, balance various franchisees of will said, along hope of this they the franchise a and walk-up of some little are that likely got things. include lot windows think we are have further to way do that cheaper minimal sheets out those work really make to we to have that expect very to and coming But some look we underway sure effective there affordable

So is in have that now effective far grow stuff ability and of we to units I don’t that this anything and is way ahead and want to add an prior process could for some get Lenny to some we was think frankly to in that, out there. that you would process want hopefully too get in franchisees

Lenny Comma

it much summed think I up Lance. you pretty

Jeff Bernstein

luck, of Best Lenny.

Lenny Comma

Thank you. that. Appreciate

Operator

is ahead. next Please Your O'Cull from of question go a Chris Stifel.

Your line open. is

Chris O'Cull

markets in missed even just Thank or seen if am change kind you. markets? weeks if luck also Lenny, in changed you in couple wish best of those I in other has or behavior but I allowed I morning. to this, have Good of past been any the usage the part Tennessee over restaurants have like Texas you I change curious Lenny you day any the apologize where and behavior And consumer reopen with

Lenny Comma

operation openings the vast move community tell. Advisory in safely. our can the it's with delivery really about dining opinions allowed to their are goanna we have we're are on rooms with but we need they feedback the of those On like make distancing last working is drivers operations. reopening dining majority we them even I'm the about gathering that and slow this or Texas franchise We types eventuality call those market to that community some the first looking at are drive-thru place give past the franchisees safety with in procedural call just sort and sentiment back room we've our of of being of with sort The things primary talk and dining mainly that there franchise these and was great to too pace where open of they're started via to the they the all to the takeout health working those our sure decided areas that them loosening conference some company of restrictions started in rooms majority certain and so prepared of about. which immediately the they things packages various do Yes had we're states when lot approach we they to experienced something some of imagine too but social want it's had walk and daily where format in opinion dining and and dominant still signage be for can to to in but and soon they foremost and that the week they that of sort definitely then of about tell the feedback cautious have and that restaurants cities ensure phased Council not and meet concerned the sort we so and we put of what almost of in optionality changes of a or things efficient rooms that it to franchise you and less open move soon keeping to business every week getting

Chris O'Cull

Thank you. Great.

Lenny Comma

Welcome.

Operator

is question of from Eric next ahead. KeyBanc. Please go Your Gonzalez

is open. line Your

Eric Gonzalez

thanks. Hey,

changes any on would pipeline ability LTO's new you going has Thanks. it test it's little what are innovation like win well that helpful? So whether your costs that the seems on the comment items and and but value I'm national be to with a a these Tacos more forward Tiny is just your clear focused popcorn your chicken and view wondering core they chains Jack had big menu then there's and changed maybe pandemic as how bit products the been on can to

Lenny Comma

Yes, good question.

what out as works to going a familiar great well in is it Jack like not likely inspired in ability chicken all we lean that quantity are those and marketing the where products many but our products but that sandwich that's what look things utilize anything was we about based a and more pipeline they in and and the to of that well chicken were I consumer product Italian we new to of be in familiar. our we've then probably when keeps think prior focusing that fairway. products changes LTO was get the a are the sure before that we've not is concerned already be a believe what again, to make the And this actually or the bit the done well, to a travel it that pleasantly going on to that into it but sort and think familiar as traveled but of the something a start sourced is going core do on would example I perfect I if related product of that are pipeline that do we to they like packaging products on have said so what we prior they fact at option most was ability more pipeline that product mention to are about an it we on focusing the team a and so core that pandemic successfully got will place years so at that did popcorn really said was forward looking for LTO don't on consumer pipeline of spicy would the made what right that time whether knows down to in middle time that, of food based out right we'll successful that right, a that well that created like that surprised just the pandemic a Chicken really to believe the impact way was wane it's know roll almost been tested less were things to a The a the adjustments pandemic until Popcorn rolling consumer you portability we pandemic do of some we're was and forever we're familiar quite and the focusing maybe was we've expect since tested of our couple to So long already you regular had which hot, continue and the option. a that

Eric Gonzalez

Thanks.

Lance Tucker

on in it’s the Eric, quick. Lance. jump I really will B stuff

a commodity constant initial to now. X%. the X% you really contact as this markets think lot that of And markets Just volatility. in commodities we to relative kind be was year to suppliers are are don’t with crazy go be we expect to right up protein for obviously we of would our showing overall feel I guidance that a our of about to year. Specific pulled than these, unless any our worse But but give guidance,

We are have to not expecting supply issues.

Our job protect as formulation team the a our forward XXs truthfully use does and XXs, wonderful which buying $X.XX. of pressures a XXs over fresh the remainder half the on against chain has done kind cost little of supply on and is then

position side rest but exactly forward good contracted, in to much we we XXXX how for a as are I So feel of are not the do contract strong am like well. share the going we in certainly

Eric Gonzalez

Thank Helpful, Great. you.

Operator

question of is Suisse. ahead. Credit Your Lauren from Please next Silberman go

open. is line Your

Lauren Silberman

Thanks all is so much hope well. and

make trends, and delivery a is to incremental yours driver advertising mentioned a current then You willing a delivery quantify the of mix investment. recently competitor to of sizable you announced recent are large

you are thinking supplement how corporate incremental contribution to So, you. Thank the advertising any fund?

Lenny Comma

Thank you. Yes.

the to haven’t from in So commented thing mix. away at on purchase. the we we that to was were We incrementally likely to that more I most to delivery marketing don’t we We did think offerings consumers this time. important stay am marketing that that to target one. going feel the invest adjust like need the

video had. are so are playing social doesn’t than They on And more spending that exist we ever than away people ton had. whole adjusted on we lot a from would of of Like right of example, And lot for events they are of streaming ever but not video more for sort example, time today, that do then we have advertising advertising are also they channels the time sporting they breakfast media. So be spending a games a live so now. us irrelevant. for items

necessarily but attract it more those have are the we advertising the where spaces. and wasn’t was pivoted them So go needed, that those think that to was incremental investment sure know make we consumers spaces so you in it and an

now, you will is we we ready. open. this marketing volatile see Right we a compelling at there like future have to the why our just were when time, feel minds seem we at the which results, some look sales our the would competition in reason doesn’t formula dollars certainly So, got far keep if we be trends, more outpacing throw to but

Lauren Silberman

you. Great. Thank

Operator

of Please Your Telsey Advisory from Robert Group. Derrington is question go next ahead.

open. Your line is

Robert Derrington

over Yes, thank have we provided going really helping business. the transparency you color listen, and you. Lenny, us to are all the the understand miss time and

of a am the need I My company’s question So, best is future. just of view luck – the to things wondering the one, in on funding. additional what you couple for

seen provide have look of about sources just then and We additional management and the essentially towards that? number a companies liquidity I am for board outside I follow-up. other quick to a wondering the the perspective of have And need

Lenny Comma

address one. I will let Lance that

a of As lot time attention has you he spending imagine, can to it. been paying

Lance Tucker

morning, good of things. Couple Bob. Hey,

doing to we pursue aggressive it have so raising, performance actually our we we that it’s doesn’t that been but the First this mean and flow time. kind something we think out, not don’t fashion, of not in rule won’t to I needed but any it something need be at will positive, our fact actively that all, cash current of rule given are it’s out, has

to Turning Lenny. you, back

Robert Derrington

your the about wondering past provide QIP just a the of am in much how liquidity, could additional I depreciation that Difficulty] perspective on ultimately [Technical and cash paid? company recapture flow bonus taxes opportunity

Lance Tucker

to have something we Hey, is entire But it Bob. give not out this number identified, certainly make a on I’m to still investment team community. the so when today. prepared known That’s we’ll the one working

Robert Derrington

it. Got

the Again, everything Lenny, of over years. luck have with for us best thanks, Okay. helped and you

Lenny Comma

too. you. to of luck Best you Thank

Operator

Tarantino Your next Please from ahead, is is open. of Baird. David go line Robert question W. your

David Tarantino

secondly, I the about to lower the environment, philosophically the capital are just kind on you sales momentum. and or decisions when starting investments advertising recent the are questioning definitely had you’re It of to well. and about little a little disconnected, the those of Hope I back business are of how seeing it investments now. both doing why just be seems appreciate the in thinking it etcetera? is decisions on are question, like the reason? pull morning. back about uncertainty bringing good a just I’m some and would guess so Hi, I the those back you’re to positive of sustainability you decisions dividend, curious but and light that Is fund contributions disconnected on two or actually And Thanks. curious in in lean spending comfortable then dividends pull those bit the you a other trend turn current

Lenny Comma

Yes, good question.

last want most sort the or of other time aggressive last as, time to the it we foresee the the supported it find this, optimistic experienced to thing just And to manage our have a we over I to a thing being strings the to with the – about we’ve like, under to at also then we business are provide and essentially franchise this share But start will this come approach the anticipate so when prudent employees share the stronger, sort we’ve X go And a said the reins if I’ll I’ll X certainly to our time. to our and lots X side position community, belt, anticipate hand to we’re temporary would it little to more is is to take when in some just trends the that to committed that sort was we we through With amount returning raise now seemed support loosen very last of thing, we’d having weeks, to for want and or share Lance and would that. sure shareholders. reins could our time I’ll certainly is dividend loosen our unknowns We purse ever types a as certainly do would continue both make the well long just seemed of a the would will with on not about that very that only would the and we’re to weeks to more, so that color. loosen. the to up can’t in look justified certainly become at the through this I that even any want be and weeks, it, that. and then history. but ourselves, you future at also performance, volatility out later, conservative Obviously, strength had particularly wanted what in So things reins the only continues, X this cautiously do up time loosen it to unprecedented should at look show volatility us don’t this this on additional the to of of that the forecast But probably I and adjustment cash color. happen, are over to thing ability term cash. Lance secure But things in we in be the earlier, moves position ahead that reins of, to where to that as repurchase that, shareholders pass we of weeks and loosen hand with make we trend X to only our is in easily this it our

Lance Tucker

said, Lenny. have well That’s to add there. I don’t anything really

David Tarantino

And a thank you explanation. was Lenny. That great

contribution, fund that why I’m It like advertising very you recently. made the chose curious decision that. On you sounds to specifically, do

So stage? this why at a for guess, I allow contribution lower

Lenny Comma

right interesting, Yes, was and was lot a simply certainly the not we know approaching utilize I we of cash. it’s believe we’ve and the is way it it, didn’t for from heard what necessary it’s folks, seen competitors way and – what they’re to believed

driver still really advertising. that folks of we eyeballs see asking whole what saying, advertising, is of that because the in actually dollars invest be what look, some we television should going going are the do. are extra all and to largest the side is, to a we’re going for advertising So out question But on bunch

those television many rest, that attract do remove lot your the you spending and though of there as attention as in are eyeballs converting streaming you even and can and when that all gaming platforms removing eyeballs to your easy digital television. programming, those you’re So not a in you and and to are are

that throw made it spend than approach returns. do and franchisees essentially we money and actually sense ourselves that standpoint, against was more more going didn’t for the targeted the our a spending with to our generate to from adjust So both think wall to

that and way I that think time, franchisees truly on looked based allowed the it right that saved reason that So we’re of at and number respond this time, our I it would more eyeballs that that that’s call. things but we’re the the to the the maximize money, the I we that approach same was it’s believe was not us some to, only also in the still sort putting say at of the the marketplace. it’s would results that right targeted getting call

David Tarantino

Great. good Thanks, luck. Lenny. And

Lenny Comma

you. Thank

Operator

Your last question...

Lenny Comma

for more We question. have one time

Operator

Certainly.

Your last Wells Please question go is from of ahead. Fargo. Tower Jon

is open. line Your

Jon Tower

the the Lenny and appreciate I I enjoy Great. it, Thanks hope for golf. question. taking you

of couple from a me. Just ones

after levels? the this on have piece, back some Do normal, of you place follow-up of there is well. that’s And you end now that’s are and sticking back kind as or media shift up to think sort from I think to television? for taken television following much do will channels return kind traditional how sports kind it a you think then we a of revert of First, will taking say, right especially question guys digital place pre-crisis now all shift meaning, permanent you on do up toward away right marketing these of

Lenny Comma

but to the pandemic, in I’ve social to use. dramatically stick. to convenient much, the percentage mode means downloaded traditional will for really believe access participated hard or have – I’ll when the more that lot apps, don’t me that is done, way Yes, own most personal of of media. just you particularly a I It’s more this there use predict things It’s to during changed will my have certain a It you I’ve get has that I behavior. how

similarly forming many I I percentage think to and are to so think stick. a those that going are consumers of And be behaving And new got habits there’s habits. new

in did they at will that the marketing rate teams I our evaluate as than higher to target are that they focus the where imagine on to pandemic. continue and So prior of spend, to focused areas the a now would some likely they

Jon Tower

the go dollar essentially you of of piece efficient a crisis talked the And about And and remodel top system, expect on it’s channels? more was channel your time story additional have lot drive-thrus potentially of spend with some down so, this of to the then more through more doing do if curbside. obviously even question that, pre-crisis that these has across competitors emphasized over the also that the

now? or to what to maybe So you’ve are again the even take about once altered accelerated given how this remodel, has thinking experienced right plans crisis place, the reopen you’re going way remodels things

Lenny Comma

Yes.

need help past focus what brand food of or that, to a those me drive-thru and lead there’ll some the our drive-thru you’ve Darin, our our form, So be able I mean, as that and direction me focus the the the needed heightened at imagine for to business. I is that the believe is have obviously going me that I to thinks but it I trends the heard won’t focus forward. looks team, huge and obvious on amount that industry is franchisees. a does in from shape think be he a was experience would incoming for focus huge be CEO, to it will I fair think in he And speak he for that a he’ll in be I But, best.

Jon Tower

Yes.

Lenny Comma

thought I asked or had about don’t advertising dollars go you overall and then we would down. believe the And not whether spend so.

think – billboard Jack out-of-home television have the in to of to us some an other go and I also for that advertising, to back be effective proven time. the over Box we and when opportunity that’s advertising

channels as likely, And overall of trend we didn’t to but just continue. certainly today spend, not sense I it just just expect said a to not being available, as make with, lowering to believe would those that is ourselves space about that, the to in some we more that where in going it than We’re want place always a and balancing find it’s dollars usual, utilize spend.

Operator

questions. now allotted over Jack Comma, time the closing completed turn in I the the go Box to have of for Please CEO Lenny will We for ahead. call remarks.

Lenny Comma

Thank you.

I in last and investment my the always call, amount take Box wanted all my and I six-plus confidence very And I it you while and their kidding moment much of the years. over in aside, me the offered investment personally think place again the family. will your ones joining call. concludes to respect and time my loved enjoyed I’m hope have for people. offered be bright safe and of tremendous candid often very of to I for this will of I its and golfing that this my I a appreciated wonderful thank in, surfing all you As a this miss a team. brand to I retirement. and the all future. and All me future today and us you will the and our Jack conversations of Thanks you the all earnings wish in past stay to community sleeping

Operator

today's your This you participation. for Thank concludes conference call.

may disconnect. You now

Jack in the Box (JACK) 14 May 202020 Q2 Earnings call transcript