Jack in the Box FY 4Q15 Earnings Call Notes

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Jack in the Box’s (JACK) CEO Lenny Comma on Q4 2015 Results
Lenny Comma – Chairman and Chief Executive Officer

Minimum wage costs will affect margins by 50-75 bps

“We are currently estimating the impact of higher minimum wages including the increase in California’s minimum wage to $10 and our beginning January first to be about 75 basis point on the Jack in the Box brand for the full year or roughly 50 basis points on a consolidated basis”

A lot of discounting in the industry and all day breakfast at MCD is impacting

“let me first make a broad statement, I think, what we see in the industry is a significant amount discounting going on and we think that as having the largest overall impact on the industry. Then when we narrow it down to one of our major competitors doing the breakfast all day, certainly it’s going to impact everybody in the industry.”

” as we talk to our franchisees about the impact, essentially there is not a big level of concern out there about McDonald’s competing with us in this way.”

You don’t want consumers to remember a punch line but not a product

“the tone of the Jack in the Box advertising is changing and it’s the way to think about it is we spend a lot of time in our ads kind of having this punch line and the big joke and that brought a lot of attention to the brand, but if sometimes outweighed the focus on the product and it didn’t necessarily get the consumer – focused on and what it was we’re offering. Certainly, we don’t want to be in a position where at the end of an ad, they can remember the joke, but they can’t remember the product.”

Let customer reaction tell us where to go

“we’re going to see the consumers’ reaction of what we’re doing and that will tell us what the next steps are.”