SAN DIEGO -- Jack in the Box Inc. has reported that net earnings totaled $21.5 million in the fourth quarter ended Oct. 2, 2005, including a $2 million aftertax charge, related to the cancellation of the company's test of a fast-casual concept called JBX Grill.
Same-store sales at Jack in the Box company restaurants increased 1.5% during the fourth quarter on top of a 4.1% increase in 2004. Restaurant sales were consistent with guidance despite the impact of Hurricane Rita, which caused the temporary closure of approximately 200 Texas locations. Most [image-nocss] restaurants re-opened within a week of closing; the five locations that remain closed today are expected to re-open in December.
For the full year, Jack in the Box same-store sales increased 2.4% on top of a 4.6% increase in fiscal 2004. The temporary closing of restaurants due to Hurricane Rita negatively impacted fourth-quarter and fiscal-year same-store sales by approximately 0.5% and 0.1%, respectively.
For the quarter, company same-store sales at Qdoba increased 11.4% on top of a 7.9% increase in 2004. For the year, Qdoba same-store sales increased 11.8% on top of a 9.3% increase in 2004. As expected, Qdoba was accretive to earnings for the fourth quarter and fiscal year 2005.
Restaurant operating margin was 17.3% of sales in the fourth quarter compared with 17.6% a year ago, with the decrease due in large part to higher restaurant operating costs, primarily utilities and costs associated with Hurricane Rita, along with higher food costs, partially offset by improved labor management. For the full year, restaurant operating margin was 16.9% of sales, down slightly from 17% a year ago with the decrease due in large part to significantly higher food costs, primarily beef and produce, partially offset by improved labor management and Profit Improvement Program initiatives.
SG&A expense rate was 11.3% of revenues in the fourth quarter, including the charge of $3 million, or $2 million after tax, to cancel the JBX Grill test, compared with 11.6% in 2004. For the year, SG&A expense rate was 10.9% of revenues compared with 11.4% a year ago. The reduction in the SG&A rate compared with prior year is due primarily to sales leverage on higher Quick Stuff, distribution and restaurant sales.
Sixteen company and franchised Jack in the Box restaurants opened in the fourth quarter, including five with new Quick Stuff convenience stores, compared with 20 restaurants, including four new Quick Stuff sites, opened in the same quarter a year ago. For the year, 49 company and franchised Jack in the Box restaurants opened, including 15 with new Quick Stuff stores, bringing to 2,049 the number of Jack in the Box locations at fiscal year end; Quick Stuff comprised 44 locations at year end. Qdoba Restaurant Corp., a wholly owned subsidiary of Jack in the Box Inc., opened 22 company and franchised Qdoba Mexican Grill restaurants during the fourth quarter compared with 28 locations opened in the same quarter a year ago. For the year, Qdoba opened 77 company and franchised restaurants compared with 67 restaurants opened in fiscal 2004. At Oct. 2, the Qdoba system totaled 250 company and franchised restaurants. Quick Stuff and Qdoba operations are not material components of the company's consolidated financial results or projections.
Other revenues totaled $8.4 million in the fourth quarter, primarily from the sale of 12 Jack in the Box company restaurants to franchisees. This compared with other revenues of $5.5 million in the fourth quarter of fiscal 2004, primarily from the sale of 11 such restaurants to franchisees, with the variance in gains versus 2005 due to differences in the sales and cash flows of the restaurants sold. For fiscal 2005, other revenues totaled $33 million, primarily from the sale of 58 Jack in the Box company restaurants to franchisees, compared with $24 million in fiscal 2004, primarily from the sale of 49 such restaurants to franchisees.
Fiscal 2006 earnings guidance represents an 8% to 9% improvement over comparable 2005 results. The primary assumptions on which earnings guidance is based are as follows, in approximate amounts:
The opening of 45 to 55 company and franchised Jack in the Box restaurants, including 13 to 15 with new Quick Stuff c-stores, and 85 to 95 new company and franchised Qdoba restaurants. A 2% to 2.5% increase in same-store sales at Jack in the Box company restaurants, and a 4 to 6% same-store sales increase at Qdoba company restaurants. Restaurant operating margin at 17.4% of sales versus 16.9% in 2005, due primarily to lower food costs, principally beef and produce, as well as fixed-cost leverage on same-store sales growth and Profit Improvement Program initiatives. Other revenues of $34 million to $36 million, primarily related to the sale of 60 to 65 Jack in the Box restaurants to franchisees. The effective tax rate is forecast at approximately 37% to 37.5%. Capital expenditures are estimated at $140 million to $150 million compared with $124 million in 2005, with the increase due in part to investments associated with the planned re-imaging of 100 to 150 Jack in the Box restaurants in 2006.The company also today affirmed earnings guidance for the first quarter ending Jan. 22, 2006. First-quarter fiscal 2006 earnings guidance represents a 6% to 9% improvement over the prior year after adjusting for the effect of expensing stock options in 2005. The primary assumptions on which first-quarter earnings guidance is based are as follows, in approximate amounts:
The opening of eight to 10 new company and franchised Jack in the Box restaurants, including two to four with new Quick Stuff convenience stores, compared with 11 restaurants, including three Quick Stuff sites, in 2005; approximately 20 to 25 new company and franchised Qdoba restaurants compared with 22 in 2005. A 1.5% to 2% increase in same-store sales at Jack in the Box company restaurants on top of a 2.2% increase in 2005. Restaurant operating margin at 16.9% of sales versus 16.3% in 2005, due primarily to lower food costs, principally beef and produce, and Profit Improvement Program initiatives. Other revenues of $8 million to $10 million, primarily related to the sale of 14 to 16 Jack in the Box restaurants to franchisees, compared with $9 million in 2005, primarily related to the sale of 13 company restaurants to franchisees.Jack in the Box Inc., San Diego, is a restaurant company that operates and franchises more than 2,000restaurants in 17 states. The company also operates a proprietary chain of c-stores called Quick Stuff, with more than 40 locations, each built adjacent to a full-size Jack in the Box restaurant and including a major-brand fuel station. Additionally, through a wholly owned subsidiary, the company operates and franchises Qdoba Mexican Grill fast-casual dining, with more than 250 restaurants in 37 states.
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