Southeastern market foray debuts new house that Jack built

Nation's Restaurant News, Oct 25, 1999 by Amy Spector

SAN DIEGO -- Jack in the Box will attempt to grab consumers' attentions as it enters three new Southeastern markets this month with a start-up development plan for at least 34 company-owned sites, using a new futuristic prototype. The chain is the nation's sixth-largest hamburger chain, with 1,515 units in 11 states and Hong Kong.

The new model, an 82-seat, double-atrium-lit prototype, nicknamed internally "The Jetsons Building," bears a price tag between $1.2 million and $1.3 million, project coordinator Kathleen Finn reported.

Sporting round columns topped with glowing red rings, a bright red roof and two atriums that meet above the service counter, the prototype "has curb appeal," said vice president of public relations Karen Bachmann. "The atrium convergence also focuses customer attention on the menu," she added. According to company reports, traditional Jack-in-the-Box units currently vary in size from 44 seats to 90 seats.

Created in-house by designer Larry Webb, the prototype, officially called the Mark 7DF82, initially was intended to be an upgrade of current Jack-in-the-Box units, Finn said. But the goal to make an impact in the company's new markets propelled the project into a unit overhaul.

The first unit was slated for opening in Charlotte, N.C., by mid-October, with two of 17 other potential sites under construction, said Jack-in-the-Box president and chief executive Robert J. Nugent.

Three of six selected sites in Baton Rouge, La., are in development, the first of which is slated to open by early November. December is the target date for two units under construction in Nashville, Tenn., where the chain eventually plans to have 10 locations.

During fiscal 1999, ended Oct. 3, the company spent $130 million in capital expenditures, primarily for construction of 115 new units. Systemwide sales, according to Nugent, moved up 18 percent to $1.3 billion. And new stores coming on line, he said, have been generating annual unit volumes of $1.2 million.

The chain, which lists a broad menu encompassing tacos, pita sandwiches and teriyaki bowls, as well as hamburger and chicken sandwich variations, will add several menu items to appeal to Southern tastes, Finn said. Sweetened iced tea, a honey-mustard dipping sauce for the chicken-breast pieces and a breakfast biscuit line will complement the existing menu in the three Southern markets.

"We don't go out of our way to regionalize our menus, but biscuits are important" in the South, Bachmann said. For example, quick-serve competitor Hardee's has forged a strong breakfast daypart with its biscuit program. Bachman declined to state how many items would be included in the Jack-in-the-Box biscuit line or what the price points would be.

The 50-year-old chain, which projects $1.7 billion in sales systemwide for its October-ending fiscal year, operated a smattering of units along the East Coast that had been opened by previous owners Ralston-Purina, Bachmann said. Jack in the Box pulled out of those Eastern markets in 1993 to pool resources when its Western-unit sales slid, following a well-documented E. coli bacterial outbreak traced to the company's stores.

But CEO Nugent recently stated that with five years of consecutive, same-store sales gains and three years of growth in profitability, the chain has been plotting its return to the national playing field. Same-store sales jumped 8.4 percent over the previous year for the 40 weeks ending July 4, 1999, and diluted net earnings per share rose to $1.48, compared with $1.35 one year earlier.

Bachmann reported that the company planned to grow 10 percent per year systemwide, but declined to name markets the chain is considering for future development.

The chain's convertible-driving, suit-and-tie-toting fictional leader, "Jack," a "regular guy" with a pingpong-ball-shaped clown head, will front the advertising campaign to present Jack in the Box to its new trading regions, Bachmann said. "Jack never gets the fact that he looks weird," she added, explaining the ads will play off of the strange reactions the character receives as he meets his new neighbors. Television and radio advertising will introduce the brand, with all television ads shot locally in the three Southern cities, she said.

Referred to in the advertising trade press as the "anti-Ronald McDonald," Jack has been crafted as an everyday man by creator Dick Sittig and Santa Monica, Calif.-based advertising firm Kowloon Wholesale Seafood Co. He even appeared recently at the New York Stock Exchange to ring the closing bell on the day Foodmaker changed its name and ticker symbol to Jack in the Box and JBX, respectively.

The character's portrayal as a regular person, who has a family, attends little-league football games and works late nights in the office, has bolstered the chain's awareness, Bachmann said. "The ads bring people in. The restaurant experience brings them back."

Jack in the Box recently responded systemwide to focus-group requests to abandon its creamy "secret sauce," the contents of which Bachmann does not even know. Hamburgers, cheeseburgers and double cheeseburgers now are topped simply with mustard and ketchup, Bachmann said, although the proprietary topping would still be available on request. She did not expect the request to complicate service since the company adheres to its advertised "Assemble To Order" program, where sandwiches are made as they are ordered, rather than assembled and held in holding bins, she explained.