VIChallenge Jack in the Box: Valuation AnalysisVW Staff
Jack in the Box Inc. (NASDAQ:JACK) operates and franchises Jack in the Box quick-service restaurants (“QSR”) and Qdoba Mexican Grill fast-casual restaurants. JACK also operates an attractive real estate business, whereby it collects rent from franchises on its portfolio of wholly owned properties or below-market leasehold assets.
Jack in the Box Inc. (NASDAQ:JACK), ~48% of 2012E EBITDA) As JACK’s original line of business, Jack In The Box has a 60 year operating history and is currently the 5th largest QSR hamburger chain in the US, with a number two or three position in most of its major markets. JIB touts excellent brand loyalty and recognition amongst consumers, and while ~70% of locations are located in California and Texas, this affords significant potential to expand geographic reach (stores are currently located in only 19 states).
The company currently has 2236 total units: 634 company-operated and 1602 franchised (72% franchised). Jack in the Box Inc. (NASDAQ:JACK)s SSS were up 1.8% across the system in FY ’11, and were up 3.6% in Q1 ’12. AUV’s are currently ~$1.3mm. Qdoba (~12% of 2012E EBITDA) Acquired by JACK in 2003 for ~$43mm when it was comprised of just 85 restaurants, Qdoba is currently the second largest fast-casual Mexican food chain in the US behind Chipotle Mexican Grill, Inc. (NYSE:CMG) and is the largest franchisee system in the segment.
Qdoba features an extremely popular concept with a very long growth runway given ~15-20% annual unit expansion potential for the foreseeable future. The concept has a diversified geographical footprint with a store base spread out over 43 states with minimal single state concentration.
The company currently has 597 total units: 262 company-operated and 335 franchised. (56% franchised). Qdoba SSS were up 5.3% across the system in FY ’11, and were up 3.8% in Q1 ’12. AUV’s are currently ~$961k. Real Estate (~40% of 2012E EBITDA)
Jack in the Box Inc. (NASDAQ:JACK) also has a substantial portfolio of wholly-owned real estate assets as well as long-term, below-market leasehold assets from which it derives a healthy rent roll from its underlying franchisees (on the JIB side of the business).
H/T Curry Goat