Jack in the Box 2Q16 Earnings Call Notes

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Jack in the Box (JACK) Leonard A. Comma on Q2 2016 Results

Not seeing economic weakness in Texas, seeing weather weakness though

“I think the rains are probably the biggest current driver. We’ve been paying close attention to this and we do see that California is outperforming Texas, but what we’re not seeing yet is any confirmation that Texas has a major economic slowdown. So, we’re looking really at the most recent weather impact as the bigger contributor.”

We’re going to be involved in digital and it we may do it ourselves

“when you look at the list of potentially all things digital in delivery, we understand that in order for us to be competitive going forward, we will have to play in that space. What we’ve been able to evaluate and get some information on is really this understanding of how much of that business is being led by the aggregators that are out there or the third-party folks that do digital for major organizations and how much of that is being done internally. And what we see is, there is going to be a pretty decent contest with the aggregators versus the internal investment. Either way what you’re going to see is every major brand including us will play in that space, whether we do it all ourselves or partially ourselves, we’ll be involved in everything from delivery to apps and digital applications that allow us to manage everything from CRM programs to mobile payment.”

Going to stay outside of TV advertising for Qdoba

“Yeah. So, we tested TV alongside several other things and what we actually found is that some of the other things we were doing outside of television actually drove better results. So although TV was a great way for us to bring attention to the brand and some of the innovation that was happening. We didn’t feel like after the test it was the best go-forward strategy. So, we’re going to use other media type platforms, online and also promotional activities intended to put offers in front of the consumers’ face very directly and we’ll use those types of things to bring that messaging alive and essentially get food in people’s mouth, that strategy seems to be playing well for us. So, we’re going to stay more on that side of the things versus television.”

Not clear we’re seeing a softening outside of regional weather impacts, but it is clear that we’re seeing aggressive competition in a deflationary competitive environment

” I don’t know that it’s completely clear that there is a softening that’s happening outside of a regional impact, we’re going to keep a close eye on it. But at the end of the day, the pieces that are very clear is that the industry continues in a deflationary commodities environment to be aggressive.”

Impact of McDonalds all day breakfast has begun to wane

” it has begun to moderate, we can see that quarter-to-quarter. Additionally, we had mentioned back when we reported first quarter results that the breakfast items that were being sold outside of that 10:30 to noon timeframe had taken a hit, which we thought was largely due to the rollover from prior year’s promotions for Jack in the Box. And it was certainly compounded though by the aggressive marketing of the breakfast all day promotion from one of our major competitors. But as we move here into Q2 and Q3, we do see that the 10:30 to noon timeframe, which is the timeframe we set was most impacted has waned. And we also see that the impact outside of that timeframe has been negated.”