Jack in the Box for sale could add to billions spent on restaurant acquisitions in past two years
Jack in the Box announced that it could be put up for sale, based on a current strategic review. The company is exploring “strategic and financing alternatives,” it announced December 17. The Board of Directors has been meeting on the matter, but has not set a timeline or made any decisions. Jack in the Box had showed marginal growth during its fiscal 2017.
For the fiscal quarter ended September 30, 2018, Jack in the Box posted system comparable sales growth of 0.1 percent after seeing sales tick up only 0.5 percent last year, on an adjusted basis for a one-week calendar shift.
Otherwise, during the first half of 2019, Jack in the Box will be pooling its debt to issue a bond sale. Management also said it is committed to a new capital structure. According to the San Diego Tribune, the company had been rumored to be exploring a sale, adding to a plethora of restaurant acquistiions this year. The Tribune based its reporting on a report from Reuters using unnamed sources.
As of its most recent financial reporting for Q4, Jack in the Box had 2,237 restaurants, of which 2,100 are franchised. It had also faced pressure from its national franchisee association to oust its CEO, and to reconsider a move to reassign some of its leases to a subsidiary.
A restaurant chain or investment firm looking to acquire Jack in the Box, since it is for sale, could consider a fresh management team. A new owner would presumably bring additional resources to revamp growth at the chain.
This could appease its national franchisee group. A Jack-in-the-Box private sale would take a potential financial comeback out of the limelight, putting it in the hands of investors with a more strategic and systematic approach.
2018 has seen some hefty restaurant acquistions, including Sonic’s acquisition by Inspire Brands, a wholly-owned subsidiary of Roark Capital and the acquisition of Jamba Juice, and buyers snatching up Barteca Restaurant Group, Zoe’s Kitchen, and Quizno’s, which are all deals finalized that were finalized this year.
Photo credit: Jack in the Box