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Tom York on Business: Jack in the Box Sees Automation Improving Profitability

BusinessTom York on Business: Jack in the Box Sees Automation Improving Profitability

San Diego-based Jack in the Box Inc. is famed for 24-hour service at many outlets. But with the pandemic, the fast-food chain's store at Lake Murray Boulevard and Dallas Drive in La Mesa isn't taking chances, reminding drivers that the drive-through window is open.A Jack in the Box store opening in San Diego. Photo by Ken Stone

San Diego’s favorite burger business, Jack in the Box, recently announced financial results for the second quarter, which, in reality, weren’t all that good, but the company was upbeat for the future, despite soaring operating costs due to current turbulent economic conditions.

The results included both Jack in the Box units, as well as the recently acquired Del Taco Mexican fast-food chain. That acquisition was completed in March.

According to a earnings release, Jack’s system-wide sales for the quarter increased a tiny 0.1%, in large part driven by growth in average restaurant volumes, but offset by a slight decline in the number of restaurants.

“While challenged by continued inflationary pressure facing our industry, we are pleased to have delivered strong same-store sales on a two-year basis. This performance has allowed our franchisees, operators and corporate team members to provide our guests with innovative and craveable food they have come to expect from Jack,” said Darin Harris, the company’s chief executive officer.

Like other competitors in the fast-food sector, Jack faces rising labor costs in its efforts to offset labor shortages as the economy emerges from the COVID-19 pandemic.

Industry publication Restaurant Business said that Harris has found at least a partial solution in terms of combating inflation.

The solution, wrote the magazine, is “self-cleaning shake machines.”

“Specifically, … automated shake machine cleaning, along with simplifying burger builds and new cheese pumps, are among a handful of efforts that over time could improve profitability by 200 basis points,” the magazine wrote.

In its earnings announcement, Jack in the Box said its overall restaurant level margin is now expected to be less than 17%, down from the previous 20% to 21%, which includes high single-digit price increases, compared to previous estimates in the mid-to-high single digit range.

It reported $1.16 earnings per share for the quarter, missing analysts’ estimates of $1.36, according to online financial news site MarketWatch. The firm posted $322.29 million in sales for the quarter, compared to a consensus estimate of $341 million. 

The company declared a quarterly dividend on May 27, according to the Wall Street Journal. Stockholders of record June 7 will receive a dividend of 44 cents per share on June 22. 

* * *

Speaking of burgers, Irvine’s The Habit Burger Grill, is opening another San Diego location here in Pacific Beach. 

“The San Diego area is home to over 15 Habit Burger Grill restaurants, and we are so excited to be opening a drive-thru in Pacific Beach! Guests can look forward to great handcrafted food and our signature ‘Habit Hospitality’,” said Iwona Alter, an executive for the company in a news release.

* * *

San Diego private investment firm Copley Equity Partners, which focuses on making deals in the lower middle-market companies with strong growth opportunities, said that it has made an investment in industry-leading advisory firm FMG Leading. The amount of the investment was not disclosed, according to a news release.

FMG Capital is a national service provider that offers lending and financing solutions to small to medium sized businesses, according to its website. The firm provides working capital in amounts ranging from $5,000 to $5 million.

Established in 2012, Copley has offices in Denver and Boston. And according to its website, the firm partners with growing, lower-middle market private companies. 

* * *

MG Properties, a local real estate owner and operator, has acquired the 275-unit Verona Apartments in Henderson, Nevada. MG Properties said owns five other properties in the Las Vegas submarket, according to a release.

MG Properties says it has acquired 11 communities in 2022 so far, totaling more than 2,800 units exceeding $990 million in value. The company says it is looking for more acquisitions in the West.

* * *

At a recent annual awards dinner, the Carlsbad Chamber of Commerce recognized the 331-bed Tri-City Medical Center as Business of the Year in the large company category at recent awards festivities.

The chamber cited the Oceanside-based hospital for its innovations in robotic surgery, its response to the COVID-19 pandemic and its outreach initiatives as well as future projects, including a new emergency room, a new 3T magnetic resonance imaging system and construction of a 16-bed, adult inpatient psychiatric facility in partnership with San Diego county. 

Other finalists in the large company category included healthcare equipment maker Quidel and theme park Legoland California Resort.

* * *

Business travelers heading to San Diego International Airport’s Terminal 1 can expect to encounter major changes starting June 5 — and extending through all 12 months of 2024. The terminal is undergoing a massive five-year, $3.4 billion re-do, and numerous changes are underway to accommodate the rebuild.

Officials said that parking will be significantly reduced this summer, with the terminal lot closed on June 5. All cars parked at the lot need to exit by June 14. The terminal parking lot permanently closes the next day. 

One June 15, the pedestrian bridge to the parking lot and to the ground transportation island will be shuttered and replaced with a crosswalk. 

Officials said the construction is an important piece of the new project that will replace the current facility and make way for a new parking plaza to open at the end of 2024. 

* * *

Construction company Webcor has hired veteran construction executive Cecilia Kucharski to rejoin the prominent general contracting firm, as vice president and regional manager, to lead its San Diego office.

“Cecilia brings to Webcor an established presence, once again in San Diego, with a deep understanding of the markets we’re interested here, and complete knowledge of the community, its subcontractors, elected officials and the way things get done in the region,” said Matt Rossie, Webcor’s top executive.

“What I love about San Diego is that it’s more recession-proof than other markets,” Kucharski said. “Obviously, we have defense contractors, a very robust health care market, life science and higher education market. Those are stable markets, which positions San Diego as very attractive for long-term growth.”

* * *

The Board of the San Dieguito River Valley Conservancy said that long-time local environmental specialist Cheryl Goddard has been named as its new executive director.

According to a news release from the conservancy, Goddard brings more than 20 years of local government experience to the position, including more than 15 years of County of San Diego land-use and environmental-planning experience.

Goddard has a master’s in public administration from San Diego State University, and bachelor of arts degrees in ethnic studies as well as urban studies and planning from UC San Diego. 

* * *

And finally…Mira Costa College student John Siebelink, a military veteran who is a first-generation college attendee, was recently awarded the Jack Kent Cooke Undergraduate Transfer Scholarship that pays up to $55,000 for tuition, books, and housing for up to three years at a four-year school.

Mira Costa said Siebelink was selected as one of 1,200 applicants across 332 community colleges.Siebelink said he hopes to transfer to the University of California, Los Angeles. He is the president of the Creative Writing Club on campus. 

Tom York is a Carlsbad-based independent journalist who specializes in writing about business and the economy. If you have news tips you’d like to share, send them to [email protected].

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