Skift Take
Brands are being pulled in all directions but there are consistent messages coming out of earnings season, both in terms of shortcomings and triumphs.
One by one, restaurant chains have served up quarterly earnings to investors over the past month.
The conclusion: companies are betting big on delivery, simpler menus, and store redesigns to boost sales. Meanwhile, some just continue to fight with franchisees and nag about higher labor costs. These are the key takeaways from a busy restaurants earnings season.
Franchisees Rebel Against Brands
Emphasized by: Jack in the Box, Papa John’s, and McDonald’s
Skift Take: It’s a mess. But McDonald’s arguably has the easiest path to rectifying its relationship with storeowners.
Fresh off company earnings Monday, Jack in the Box was hit with a complaint submitted by its franchisee association to the California Department of Business Oversight. In it, owners cited an Oct. 8 letter from the brand asking independent landlords to transfer their lease agreements from Jack in the Box Inc. into a newly formed subsidiary, Jack in the Box Properties LLC, Nation’s Restaurant News reported.
Property owners who decline to do so will be subject to not receiving assets or payments for rent, franchisees said, citing the letter. Jack in the Box currently handles 1,800 master-lease agreements, which it sublets to franchisees.
The latest news comes after franchisees called for CEO Leonard Comma’s head last month. Storeowners are also keen on the board of directors replacing a number of other individuals who have contributed to the restaurant's lackluster performance in recent quarters.
Same-store sales only just returned to plus territory in the summer, at 0.5 percent. The company reported the same figure for the period ending Sept. 30, while also missing on revenue.
“We appreciate the unwavering passion [franchisees] have for the Jack in the Box brand,” said Comma, on the company’s earnings call with investors Monday. “While we're currently managing through some issues with the association regarding most of our franchisees, we believe our mutual interests are very much aligned. We understand their concerns about issues our industry is facing such as rising labor costs, traffic, and market share in a hypercomp
