Jack in the Box I

Jack in the Box

I chose to write this document on Jack in the Box because ever since we were children, we can remember the Jack in the Box clown and the story our parents used to tell us just as we can remember having a Jack in the Box restaurant around when we wanted to eat something.

Secondly, we believe it is an important company which tries to satisfy all its customers' needs and do to the fact that we can compose our own sandwiches and menus it manages to achieve this goal at a higher rate than any other local competitor.

Thirdly, we like the way their management team deals with conflicts, lawsuits and manages to keep the good rename of the company. Moreover, I like their funny commercials and the fact that they are not afraid of the competition.

Furthermore, we like the fact that they support foreigners in learning English and they do not discriminate when it comes to hiring people. But what I like most is the fact that they are not a company, but a family, which enriches itself with each employee and each customer.

II. Company Profile

The first Jack in the Box® restaurant was opened in 1951, in San Diego, on the most important east-west access road into the city, by an entrepreneur named Robert O. Peterson. The restaurant was rather modern as it was "equipped with an intercom system and drive-thru window." While the large jack-in-the-box clown kept watch from the roof, the small restaurant sold 18 cents hamburgers to motorists who were passing by.

Together with his Jack in the Box fast-foods, Mr. Peterson managed other restaurant concepts. Moreover, he ran a food-manufacturing facility as part of a bigger business entitled San Diego Commissary Co. Then, in the 1960s, San Diego Commissary modified its company name to Foodmaker Co., and Jack in the Box stretched out of California with the opening of its primary fast foods in Phoenix, Arizona. Later on, Jack in the Box reached Texas, where it opened restaurants in many areas such as Houston and Dallas-Ft. Worth.

In 1968, Ralston Purina Co. bought controlling interest in Foodmaker and managed the company as a wholly-owned subsidiary. Thus, the business expanded to more than 1,000 restaurants by 1979, although the company sold or closed more than 200 Jack in the Box fast foods in the eastern and midwestern markets due to the fact that it decided to focus its attention on the western and southwestern ones.

In 1985, members of Foodmaker management and other investors finished a leveraged takeover of the company from Ralston Purina. Foodmaker's management enriched when the company went public two years later and it became a privately owned corporation in 1988. "In 1992, Foodmaker again went public, with an offering of 17.2 million shares priced at $15 per share."

With the passing of time and while continuing with its expansion, Foodmaker divested itself of all restaurant concepts. In 1999 the company changed its name to Jack in the Box Inc. Moreover, it converted its New York Stock Exchange ticker symbol to JBX. It is a public company.

To sum up, Jack in the Box, Inc. operates 2,132 quick-service restaurants, from which 1,436 restaurants are company-operated and 696 franchise-operated under the brand name "Jack in the Box." Moreover, since 2003, the company operates 395 fast-casual restaurants under the Qdoba Mexican Grill brand name, from which only 90 restaurants are company-operated while 305 restaurants are franchise-operated. Furthermore, starting with 2002, "it operates 60 convenience stores under the name Quick Stuff®, including a fuel station adjacent to a Jack in the Box restaurant."

United States Locations:

Arizona

173 Locations

North Carolina

28 Locations

California

907 Locations

Oklahoma

Locations

Hawaii

27 Locations

Oregon

45 Locations

Idaho

25 Locations

South Carolina

21 Locations

Illinois

13 Locations

Tennessee

25 Locations

Louisiana

20 Locations

Texas

569 Locations

Missouri

59 Locations

Utah

Locations

Nevada

76 Locations

Washington

136 Locations

New Mexico

Locations

Colorado

Locations

Total Number of Locations: 2132

Due to the fact that Jack in the Box, Inc. is not an international company, that is, it only has restaurants in the United States of America, it only has domestic competitors and not international ones. However, if we were to make a comparison between the company's main competitors, the industry in itself and the company, this is how it would look like:

JBX

Jack in the Box Inc.

BKC

Burger King Corporation

MCD McDonald's Corp.

YUM Yum! Brands Inc.

Industry

Market Cap:

1.65B

3.21B

60.02B

18.22B

Employees:

4.10K

Qtrly Rev Growth (yoy):

Revenue (ttm):

2.88B

2.29B

23.17B

10.17B

Gross Margin (ttm):

EBITDA (ttm):

6.55B

1.84B

44.09M

Oper Margins (ttm):

Net Income (ttm):

1.82B

11.84M

EPS (ttm):

P/E (ttm):

PEG (5 yr expected):

P/S (ttm):

If we were to make a Top 10 Restaurant Companies by the market cap, this is how it would look like: McDonald's Corp. (MCD) - 60.4B, Yum! Brands Inc. (YUM) - 18.1B, Chipotle Mexican Grill, Inc. (CMG) - 4.1B, Darden Restaurants Inc. (DRI) - 3.9B, Burger King Corporation (BKC) - 3.2B, Wendy's International Inc. (WEN) - 2.1B, Brinker International Inc. (EAT) - 1.9B, Jack in the Box Inc. (JBX) - 1.6B, the Cheesecake Factory Inc. (CAKE) - 1.5B and Sonic Corp. (SONC) - 1.3B.

The Jack in the Box's Historical Stock Chart of the last five years (Jan 2003 - Jan 2008) looks like this:

When it comes to its employees but also to its customers, Jack in the Box puts and accent on diversity at all levels and is dedicated into offering fair chances for everyone and to an "inclusive, culturally sensitive and respectful environment strengthened through leadership, equitable policies and best practices." The company has more than 40,000 employees and provides food and services for more than a half-billion people per year. At Jack in the Box both the staff and visitors, together with the "board of directors, franchise operators and other business partners comprise men and women from different nations, cultures, ethnic groups, generations, backgrounds, skills and abilities."

Due to the fact that it is a large company, it does not have a very detailed organizational chart. However, from the company's website we can find out information about the Jack in the Box's management team: There are the Executive Officers: Linda a. Lang, (chief executive officer and chairman of the board since October 2005), Paul L. Schultz, (president and chief operating officer since October 2005), Jerry P. Rebel, (executive vice president and chief financial officer since October 2005), Carlo E. Cetti, (senior vice president, human resources and strategic planning since July 2002), Terri F. Graham, (senior vice president and chief marketing officer since September 2007), Phillip H. Rudolph, (senior vice president, general counsel and corporate secretary since November 2007), David M. Theno Ph.D.,(senior vice president, quality and logistics since May 2001) and Gary J. Beisler,(chief executive officer of Qdoba Restaurant Corporation since November 2000 and president since January 1999)

The Board of Directors together with the membership of each of the five standing board committees is presented in the above figure.

When speaking of the international market, there is very few information available. In fact, except for two news-paper articles from 1991 and 1996, there is no additional information on the international side of the business. These two newspaper articles talk about the opening of Jack in the Box restaurants in Tijuana, Mexico and in Bangkok, Shanghai and Singapore.

There is no International Sales department as the company did not focus on the international market, but rather preferred to penetrate the local one (USA). Therefore, there are no international markets being served do to the fact that "Jack in the Box Inc. is not currently pursuing franchise opportunities outside the United States." Percentage of revenues generated from international sales is also inexistent, according to the annual report 2006

However, although they are not considering international markets as the next step to their development, they are offering franchise opportunities in the U.S.A. stating that their main advantage, unlike their major QSR competitors, is the fact that most Jack in the Box restaurants are company-operated. The company's long-term goals are "to grow the percentage of franchise ownership in the Jack in the Box brand by approximately 5% annually and to move toward a range of franchise ownership more closely aligned with that of QSR industry."

In terms of management and marketing problems, Jack in the Box always had a team who managed to face all problems and come up with a strategy that managed to make the company even stronger and more profitable.

The most impressive problem their management faced throughout the existence of the company was the 1993: "Three Washington children died and 600 others were sickened due to poisoning from E. coli O157:H7 served in undercooked Jack in the Box hamburgers." Even worse was the fact that "The Jack in the Box fast-food chain knew about but disregarded Washington state laws that would have prevented the deadly 1993 outbreak of E. coli food poisoning, according to court documents."

Health experts declared that if Jack in the Box Inc. restaurants had obeyed Washington State's set of laws, the outbreak of an epidemic would have been prevented. Jack in the Box, on January 22, 1993, guaranteed "to do everything that is morally right for those individuals who had experienced illness after eating at Jack in the Box restaurants as well as their families." Due to the negative publicity the company was facing, Robert Nugent substituted his public relations firm. Moreover, they instantaneously stopped their hamburger production, "recalled meat from distributors, increased cooking times and temperatures, and pledged to pay all medical costs related to the disaster." Jack in the Box used the services of Dr. David Theno, in order to come up with a brand new food-handling method.

In 1994, they instituted the fast-food industry's first comprehensive food-safety program, the Hazard Analysis & Critical Control Points system. Today, they are considered the leader in food safety in the fast-food industry and they are the country's fifth-largest burger chain

Foodmaker has settled more than 90 lawsuits related to the January 1993 outbreak" the most expensive one being with Angela Noble, who went through a kidney transplant in order to save her life, settlement which had cost the company $7.5 million.

Another process which brought change in the company's way of doing business was the one of Alfonso Cruz. Jack in the Box decided to pay $25,000 and modify its hiring policy in order to end a court case claiming that the company discriminated against a deaf candidate.

The U.S. Equal Employment Opportunity alleged that a Jack in the Box restaurant in Texas violated the Americans with Disabilities Act by rejecting Alfonso Cruz for a position as cook because he was deaf and unable to speak. The lawsuit accused the company of rejecting Cruz without making an individual assessment of his ability to perform the job."

Moreover, the National Association of Jack in the Box franchisees filed suit against Jack in the Box parent Foodmaker Inc., "alleging that the company possibly withheld promotional money, paid by suppliers that should have gone to franchisees"

In what marketing is concerned, the most important problems were the ones concerning their advertising campaigns.

One very controversial commercial is debating the idea of corporate responsibility for the social environment. Their commercial presents a young man driving while being under the influence of drugs and reaching one of the "Jack in the Box" restaurants. The commercial out broke in a wave of complains from people everywhere. Victoria Carlborg from Health Advocates Rejecting Marijuana states that: "We would like to partner with Jack in the Box to develop, adopt, and make public a more socially responsible policy guiding future nationwide advertising decisions that will not target our youth with messages that trivialize drug use, nor glamorize drug use as humorous and entertaining."

Other harmful commercials were the ones which brought Jack in the Box a lawsuit issued by CKE. "CKE sued Jack in the Box in May 2007 over two TV ads, including one in which executives laugh hysterically at the word 'Angus' and another where the chain's mascot, Jack -- a man with the round clown head and pointy nose -- is asked to point to a diagram of a cow and show where Angus meat comes from." The reason for this commercial, as Jack in the Box management team said is the fact that "the humorous ads were meant to differentiate own new sirloin burger from the competition."

We present bellow a SWOT analysis for the Jack in the Box Inc. Company.

STRENGTHS of the COMPANY

WEAKNESSES of the COMPANY

It has been on the market since 1951.

It has became a brand

Jack is the symbol and the mascot of the company and it is wide known.

It has a very good (general) reputation

It is present in about 20 states in the U.S.A. with more than 2000 restaurants

It offers franchising.

It has always had quality products.

People appreciate the variety of the menu and the fact that they can make their own menus.

It always managed to come out of lawsuits face-cleaned.

Strong food-safety control

Good management team. Very profitable

Not just a restaurant. Usually it also includes a store and/or a gas station

Good social responsibility (the Jack in the Box Foundation)

It is not present on the International Market.

Resistant to change. People are used to the way the restaurants look like, to the food they serve so if the they want to bring a change in their locations/products, they might have to face a wave of unwillingness or dissatisfaction coming from their customers minor scandal might cause enormous loss for the company

Being as developed as it is, and moreover, because of franchising, it is hard to maintain control over each restaurant and make sure that all conditions and requirements are met and all products are completely safe.

THREATS in the ENVIRONMENT

Competitors will stop at nothing in order to reduce the company's income and ruin its reputation.

Any other scandals (if people's health is endangered) will decrease people's confidence, commitment in the company and the profits as such.

People's preoccupation for healthy food might endanger the future of the fast food industry

OPPORTUNITIES in the ENVIRONMENT

Expansion on the international market

Association with other famous brands

Involvement at a higher rate in the society (more corporate responsibility)

Research and develop the "healthy" aspect of their products (Bio-products)

III. Conclusions

After this rather detailed analysis of Jack in the Box, we have reached the conclusion that this important company has its pluses and minuses as it has its strengths and its weaknesses. It produces quality food and satisfies customers' needs but also deals with lawsuits and discontented people. It involves itself in the community, thus giving the allure of social responsibility but at the same time gets involved in trials due to the fact that their advertising campaign promote the use of drugs.