Jack In the Box Market Performance Jack in the Box is one of the nation’s fast food hamburger chains, operating and franchising more than 2,600 quick-service and fast-casual restaurants in the brand name. According to Business and Company Resources Center database “The Company has around 2,212 Jack in the Box restaurants in 18 states, of which 1,190 were company-operated and 1,022 were franchise-operated. ” In fiscal 2009, Jack in the Box sold 109 company- operated restaurants to franchisees, with gains on sale totaling $66. 3 million.
In spite of the tightening of the credit markets, the number of restaurants sold and the gains on sale exceeded the company’s guidance for fiscal year 2008. Over the last three years, Jack in the box has refranchised 267 restaurants and increased franchised ownership from 25% to 38% of the system. Financial Performance Ratios | 2009| 2008| 2007| 2006| 2005 | Current| . 89| 1. 11| . 70| 1. 19| 1. 03| Quick| . 30| . 37| . 17| . 78| . 45| R. O. A (%)| . 08| . 08| . 09| . 07| . 07| R. O. E (%)| . 23| . 26| . 30| . 15| . 16| Total Debt to Equity | 1. 78| 2. 28| 2. 33| 1. 14| 1. 37|
Liquidity Ratios provide information about a firm’s ability to meet is short-term financial obligations. The current ratio is a measure of current assets to current liabilities. The current ratio fluctuates throughout the five year span; having the highest ratio at 1. 19 in 2006 and 11. 1 in 2008. An alternative measure of liquidity is the quick ratio, it removes inventory from current assets. Profitability Ratios offer several different measures of success of the firm at generating profits. R. O. A measures how effectively the firm’s assets are being used to generate profits. In 2007 the rate went up to . 9 but then dropped back down in 2008 and 2009 with a rate of . 08. R. O. E is the bottom line measure for the stockholders, measuring the profits for each dollar invested in the firm’s stock. 2007 turned out to have the highest total net income of 126. 3 million and also the highest R. O. E percentage of . 30. According to Jack in the box 2008 annual report “Our primary sources of short-term and long-term liquidity are expected to be cash flows from operations, the revolving bank credit facility, the sale of company-operated restaurants to franchisees and the sale and leaseback of certain restaurant properties. Competitive Advantage Jack in the Box has one of the most innovative menu implementation strategies in the industry. With a flexible menu developmental process and three different price tiers Jack in the Box is able to target multiple customer segments throughout the day. This approach to menu innovation gives Jack in the Box “variety, flexibility and adaptability in the marketplaces,” Stated in the Business and Companies Research Center says Suzanne Schlundt, DVP of Brand Strategy. Jack in the box has also come up with a way to offer value-priced product alternatives known as Jack’s Value Menu.
They use this menu as a way to compete against price-oriented competitors. The company believes that “its distinctive menu has been instrumental in developing brand loyalty and its appealing to customers with broader range of food preferences,” according to The Street Rating. Competitive Position Jack in the Box is re-inventing and growing through a set of environmental initiatives included renovation of its restaurants comprehensive re-image of the facilities, starting with a redesign of the dining room and common areas, as well as other exterior enhancements such as new paint schemes, ighting and landscaping. They have re-imaged 270 company restaurants during the year while franchisees re-imaged another 85 locations. The 2008 annual report claims that “with more than 40% of the Jack in the Box system now reflecting our updated look, we believe there is an immediate opportunity to achieve a more cohesive brand image in all of our markets. ” The brand reinvention program will generate interest among consumers and will increase Jack in the Box’s visibility.