![](https://investorshub.advfn.com/uicon/386739.png?cb=1666470865)
Monday, May 29, 2017 2:50:46 AM
Motley Fool Staff (the_motley_fool) May 26, 2017 at 8:55AM
Click For Article
In this segment from the Motley Fool Money radio show, host Chris Hill, Million Dollar Portfolio's Matt Argersinger, and Motley Fool Total Income's Ron Gross talk about Jack in the Box (NASDAQ:JACK). The company's quarterly earnings beat was overshadowed by word that it had hired Morgan Stanley (NYSE:MS) to facilitate a sale of its Mexican food chain. The CEO alleges that the two chains have "different business models" -- but the Fools can only think of one way that statement applies.
Chris Hill: Second-quarter profits for Jack in the Box came in higher than expected, but that is not what pushed the stock up this week. Jack in the Box is the parent company of Qdoba, and it is looking to sell its Mexican chain because, in the words of CEO Lenny Comma, "Our valuation is being impacted by having two different business models." What is he talking about, Ron?
Ron Gross: I sense some sarcasm in your tone.
Hill: They're both restaurants! I don't get this.
Gross: I tried to do some digging to figure out what he could potentially mean. First, I looked, maybe the Jack in the Box stores and the Qdoba stores have different business models in the sense that one is franchised and one is not. That is not the case.
They're both somewhat equally franchised. Then I went to the conference call, to see if perhaps one of the analysts asked the question to say, "Could you please clarify what that means?" And no one asked that, either. So, I kept digging, and I couldn't find anything, and I'm just left to believe that what he meant was, one is a burger joint, and when is a Mexican place. That's what he meant, I think.
Hill: That's two different cuisines. That's not two different business models.
Gross: Yeah. And for some reason, he believes that's dragging valuation down. What truly dragging valuation down is that Qdoba is just not putting up numbers that are similar to Jack's. The same-stores sales have been declining, and there's weakness, so he wants to spin those off, and hopefully create shareholder value as a result. He actually might be right about that.
Matt Argersinger: I was just thinking, Chris, about what we talked about before the show -- I think he's a little too late on the whole spin-off idea. I think you're right, when Chipotle was at the trough of struggles with E. coli, and Qdoba sales were still somewhat decent, that would be the time to really raise value. I'm not sure now is the right time.
Hill: Jack in the Box bought Qdoba for $45 million in cash in 2003. They're going to make some money off of whatever they do with this, but, yeah, it really does seem like a year ago was the time to pull the trigger on this.
Gross: For sure. But, it's still a small franchise. There's only 699 Qdobas at the end of the fiscal year. There's plenty of runway out there, as long as they can get their act together, and people continue to want to consume Mexican cuisine.
Blessings to All
TRUTH
I've never claimed to have all the answers but feel i'm beginning to corner the market in questions worthy of them.
Recent JACK News
- Trejo's Tacos® and Del Taco Bring the Flavor this Summer with NEW Roasted Pork Al Pastor • GlobeNewswire Inc. • 08/22/2024 01:05:00 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/06/2024 08:28:03 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/06/2024 08:09:31 PM
- Jack in the Box Inc. Reports Third Quarter 2024 Earnings • Business Wire • 08/06/2024 08:00:00 PM
- Del Taco Continues its Southeast Surge, With Record-Breaking First-Week Sales for New Market Openings • Business Wire • 07/25/2024 05:18:00 PM
- Del Taco Debuts New Del’s Real Deal$™ Menu With 15 Items All $2 and Under* • GlobeNewswire Inc. • 07/11/2024 01:15:00 PM
- Jack in the Box Announces Third Quarter 2024 Earnings Webcast • Business Wire • 07/09/2024 05:35:00 PM
- Del Taco Opens First Location in Virginia • GlobeNewswire Inc. • 07/03/2024 01:05:00 PM
- Jack in the Box Makes Triumphant Return to Chicago with Eight Planned Openings and Aggressive Expansion Plans • Business Wire • 07/02/2024 06:32:00 PM
- Jack in the Box Celebrates the Release of Marvel Studios’ “Deadpool & Wolverine” with New Deadpool-Inspired Chimichangas • Business Wire • 06/27/2024 04:00:00 PM
- Del Taco Continues Its Florida Expansion With New Location in Orlando-Metro Area • GlobeNewswire Inc. • 06/19/2024 01:15:00 PM
- Jack in the Box Announces First-Ever Entry into Georgia, Continuing New Market Momentum with Landmark Development Deal, Bringing 15 Restaurants to the Peach State • Business Wire • 06/11/2024 04:10:00 PM
- A Legendary Pairing: Jack in the Box and Ice Cube Put a New Spin on Jack’s Munchie Meal • Business Wire • 06/03/2024 05:16:00 PM
- Jack in the Box Announces Continued Florida Expansion with New Franchise Commitments • Business Wire • 06/03/2024 10:06:00 AM
- Florida Welcomes Another Del Taco Location With New Restaurant in Tallahassee • GlobeNewswire Inc. • 05/30/2024 01:00:00 PM
- Jack in the Box Gives Big Value Energy with New Jack’s Munchies Under $4 Menu • Business Wire • 05/29/2024 04:30:00 PM
- Del Taco Brings More Flavor to Florida With New Port Orange Location • GlobeNewswire Inc. • 05/20/2024 01:15:00 PM
- Celebrate Summer With the Return of Shredded Beef Birria, Nacho Cheese and Funnel Cake Fries • GlobeNewswire Inc. • 05/16/2024 01:10:00 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 05/14/2024 01:30:48 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 05/14/2024 01:25:36 PM
- Jack in the Box Inc. Reports Second Quarter 2024 Earnings • Business Wire • 05/14/2024 01:01:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/13/2024 09:33:52 PM
- Jack in the Box Celebrates Jack Box’s Birthday With a Week of FREE Food • Business Wire • 05/13/2024 04:00:00 PM
- Del Taco Opens Eighth Location in the Sunshine State • GlobeNewswire Inc. • 05/02/2024 01:05:00 PM
- Jack in the Box Partners with Qu to Deliver the Store of the Future • GlobeNewswire Inc. • 04/11/2024 12:00:00 PM
PickleJar Unveils Latest Venue Managed Services Innovations in Upcoming Webinar • PKLE • Aug 23, 2024 1:11 PM
Element79 Gold Corp Provides Update on Nevada Portfolio • ELMGF • Aug 23, 2024 8:00 AM
Maybacks Adds Award Winning Show to Its Lineup Discusses Maybacks Opportunity • AHRO • Aug 22, 2024 11:30 AM
North Bay Resources Announces First Gold Concentrate at Mt. Vernon Gold Mine, Assays 12 oz/ton Gold, 17.5 oz/ton Platinum, and 8 oz./ton Silver, Sierra County, California • NBRI • Aug 22, 2024 10:28 AM
All Things Mobile Analytic, Inc. Reports Major Growth with Over $11 Million in Revenue • ATMH • Aug 22, 2024 7:19 AM
Unitronix Announces Strategic Entry into Cryptocurrency Space • UTRX • Aug 21, 2024 10:00 AM