Both chains generate intense interest from consumers and executives alike, but which one is the best option for business?
Jack in the Box reported a double-digit increase in revenues and customers of all ages, including children. Same-store sales were up 8.4 percent. The company still reports losses, but losses are a lot smaller than they used to be. Operating income increased 31 percent, and diluted EPS climbed 45 percent. Like many other fast-food chains, Jack in the Box is venturing into the lucrative breakfast market, selling its Egg McMuffins for $1.49. In terms of mobile, Jack in the Box is far ahead of McDonald’s. The company credits marketing and the commitment of its franchise owners. Total customer minutes on its mobile app during the quarter were up 31 percent from the same period a year ago. The company has in place a new app that it says is more interactive than previous efforts.
For its part, Wendy’s reported a loss of $0.05 per share, but increased revenue by $14 million to $390 million in its first quarter. Earnings were up 21 percent from last year and revenue was $9.1 million higher than last year’s first quarter. In terms of customer traffic, it was a record-breaking month. Wendy’s same-store sales were up 4.2 percent. Total customers increased by 3.6 percent to almost 1.5 million. Just as Jack in the Box did, Wendy’s credited its continued progress on menu innovation, management of labor, operational and marketing efficiencies, and its efforts to “deliver the widest variety of affordable food options in our industry.” Wendy’s has also expanded a mobile order and pay system to approximately 2,200 restaurants. In its latest quarter, Wendy’s also announced it will be able to open 700 more QSRs.
In terms of innovation, Wendy’s is moving beyond its current offerings. In October, the company announced it will be testing out a lunch menu, which will include a new taco with cheese and salsas, and chicken quesadillas, along with new sauce options. And while the Wendy’s menu may expand, the company also reiterated that it won’t be expanding alcohol into a majority of its domestic locations. That’s right, just 10 percent of its domestic locations have beer and wine. It’s easy to see why Wendy’s investors would be disappointed. It’s clear that like Jack in the Box, Wendy’s is trying to create more differentiated choices from its competitors.
Wendy’s mobile app has had 1.7 million downloads, and the percentage of mobile transactions is up 44 percent from the same period a year ago. As for the new lunch menu, Wendy’s CEO noted that there was some resistance at first, and he expects to provide more details on the lunch menu at a later date.
But none of that helps Jack in the Box; without same-store sales growth, it has lost market share to Burger King. Since 2012, Burger King is enjoying double-digit growth and is now bigger than Wendy’s. Despite an improvement in same-store sales during the first quarter, it remains the third-largest burger chain. With this in mind, Jack in the Box’s chief executive said at a recent investor conference, “we do not believe a more ‘classic’ QSR concept can defeat the continued fast-food genre expansion that Burger King and McDonald’s are pursuing right now.” Indeed, Jack in the Box sold the rights to its Jared brand to Hefner Enterprises for $20 million in the first quarter.
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