Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

McDonald’s Corporation (MCD), Chipotle Mexican Grill, Inc. (CMG): There’s More Than Just Jack in the Box Inc. (JACK)

Jack in the Box Inc. (NASDAQ:JACK)What I like about Jack in the Box Inc. (NASDAQ:JACK) is that you get both a hamburger chain and a Mexican fast-food chain by owning the company. It’s like having both McDonald’s Corporation (NYSE:MCD) and Chipotle Mexican Grill, Inc. (NYSE:CMG) all in one. Or is it? The concept certainly is appealing. The only question is if the company can execute on this strategy and deliver.

Company overview

Jack in the Box Inc. (NASDAQ:JACK) operates the hamburger chain Jack in the Box Inc. (NASDAQ:JACK) and Qdoba Mexican Grill. The Jack in the Box hamburger chain has more than 2,200 locations in 21 states, while Qdoba Mexican Grill has more than 600 locations in 45 states, the District of Columbia and Canada.

The hamburger chain’s locations have drive-thru windows, indoor dining and are open 18 to 24 hours a day. Hamburgers are the core of the menu, but the restaurants also offer chicken sandwiches, breakfast, portable salads and have a value menu.

Qdoba Mexican Grill was acquired by Jack in the Box Inc. (NASDAQ:JACK) in January 2003. Its fast-casual dining locations offer a Mexican kitchen where each meal is prepared fresh right in front of the customer. Its menu items include burritos, nachos, quesadillas, tacos, taco salads and breakfast burritos.


For the Jack in the Box Inc. (NASDAQ:JACK) hamburger chain, the strategy is like many other fast-food chains. The plan is to get out of owning its restaurants and instead franchise. In the last quarter, the company completed the sale of 18 restaurants. The company also decided to refranchise more than 50 additional locations, hoping to complete the sale of about 40 of them by the end of the fiscal year. The typical refranchising scenario for a company has a positive effect on sales volumes, restaurant operating margins, earnings per share, cash flow and returns. According to CFO Jerry Rebel on the company’s last earnings call,

When we’ve completed our refranchising, we expect to operate roughly 400 company Jack in the Box restaurants, and for the brand to ultimately be between 80% and 85% franchised.

For Qdoba, the restaurant chain is in the middle of a restructuring. In March, the company brought in a new President with a renewed focus on market performance, overhead structure, brand development and growth strategies. A performance review has already been completed, and the company will close 67 (10%) of its Qdoba Mexican Grills by the end of September. By closing these underperforming restaurants, the company can redirect its resources elsewhere and will open 60 to 70 new stores next year.


With all the success that McDonald’s Corporation (NYSE:MCD) and Chipotle Mexican Grill, Inc. (NYSE:CMG) have had, it’s safe to say that every hamburger chain wants to be like McDonald’s Corporation (NYSE:MCD) and every Mexican grill wants to be like Chipotle Mexican Grill, Inc. (NYSE:CMG). This is especially true for investors where both companies have been great stock performers over the long-term.

In terms of McDonald’s Corporation (NYSE:MCD), the company has faced its stiffest competition in recent memory. Its competitors like Wendy’s, Burger King, and Jack in the Box Inc. (NASDAQ:JACK) have all taken a page out of its playbook by offering value menus and breakfast. To better compete, McDonald’s Corporation (NYSE:MCD) is continuing to update its menu and offer new items such as wraps, smoothies, and new burger variations and flavors.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.