SAN DIEGO _ Jack in the Box franchisees, growing increasingly troubled about the financial health of the San Diego-based fast-food chain, demanded this week that they participate in corporate decisions they say affect their bottom lines.
Leaders of the National Jack in the Box Franchisee Association, which represents 95 owners of about 2,000 of the chain's 2,240 stores, asked for a seat on the board of directors, a meeting with the board to "arrest the decline of transactions" and an audit of the company's marketing fund.
"What we really want is input into the larger strategic initiatives taken by Jack in the Box that affect our ability to perform as franchise operators," association Chairman Michael Norwich said. "For one thing, they don't have a chief marketing officer, and they've eliminated key positions in the marketing department, which is where many of the sales are driven."
This past summer, Chief Marketing Officer Iwona Alter left the fast-food chain after 13 years with the company, and key positions in the marketing department have been eliminated, franchisees say. (Habit Restaurants Inc. this week named Alter as its chief brand officer.)
Same-store sales for those open at least a year _ rose just 0.5 percent in the quarter that ended July 8, according to Jack in the Box's most recent earnings report. The company lagged behind the quick-service sandwich segment by 2.1 percentage points for the comparable period, according to market research firm NPD Group. For the 40-week period that ended July 8, Jack in the Box's profit of $105.1 million was down slightly from the same period a year earlier.
Franchisee David Beshay, who operates 34 Jack in the Box restaurants in San Diego County, said he has been disappointed in their performance in relation to the competition.
"Having been in San Diego for over 26 years, we should dominate the market and we're not," he said. "Under current leadership we've continued to lose sales and transactions year after year. It's because we don't have an effective strategy, and the further you go from San Diego, the brand doesn't resonate with the consumer as it does in the West."
Jack in the Box said in a statement that although it remains open to working with the franchisee association, it does not believe the leadership of the group necessarily reflects the sentiments of all franchisees.
Last month, the franchise group published a letter calling for the ouster of Jack in the Box CEO Leonard Comma, saying that it no longer had confidence in his ability to lead. In its announcement this week, the association said it wants to have a "seat at the table" where crucial decisions are made regarding future cuts in resources.
The association demands came after Jack in the Box made public an agreement with New York-based activist investor Jana Partners to name two new independent directors of its choosing to the board. Those board members have not yet been selected.
Jana, which owns 6.7 percent of the company's stock, had told Bloomberg News that it shares the franchisees' concerns about Jack in the Box's performance and the lack of urgency in addressing it.
"We don't know if this is a positive or not, Norwich said. "Jana has advocated for some of the same concerns we have, so we remain hopeful the second board seat could be someone from" the franchisee group.
