SAN DIEGO – Jack in the Box reported mixed results for the fourth quarter of fiscal 2018.

Same-store sales at company owned stores in the fourth quarter increased 0.8 percent compared with a decline of 2.0 percent in the year-ago period. The company attributed the result to average check growth of 2.8 percent which was partially offset by a 2.0 percent decrease in transactions.

Franchise same-store sales increased 0.4 percent compared with a decline of 0.7 percent in the fourth quarter of 2017.

System same-store sales increased 0.5 percent compared with a decline of 1.0 percent reported in the year-ago quarter.

“Same-store sales were positive in the fourth quarter, although we experienced a slowdown in September along with the rest of the category,” said Lenny Comma, chairman and CEO. “The competitive environment remains extremely aggressive, but we continue to avoid deep discounting which we believe is not in the best interests of the long-term health of the brand.

“We completed our refranchising initiative during the quarter with the sale of eight Jack in the Box restaurants, and our franchise mix now stands at approximately 94 percent.”

For the most recent quarter, earnings from continuing operations at Jack in the Box were $18.3 million, or $0.68 per diluted share, compared with $31.3 million, or $1.05 per diluted share, reported for the fourth quarter of 2017.

Revenues for the fourth quarter totaled $177,472,000, down from $232,125,000 reported in the fourth quarter a year ago.

For the full year, earnings from continuing operations totaled $104.3 million, or $3.62 per diluted share, compared with $128.6 million, or $4.16 per diluted share in fiscal 2017.

Operating earnings per share for fiscal year 2018 were $3.79 compared with $3.46 reported in 2017.

The company completed the sale of its Qdoba business March and included operating result for Qdoba in discontinued operations. “However, the company did not allocate any general and administrative shared services expenses to discontinued operations prior to the sale,” the company noted.

On the same day the company released its earnings report, the National Jack in the Box Franchisee Association (NFA) revealed the organization had filed a complaint with the California Dept. of Business Oversight related to what the group called “a new financial restructuring strategy” they believe jeopardizes their rights to occupy and operate at a given location.

In October, Jack in the Box sent a letter to the landlords of approximately 1,800 different properties, NFA said, to inform the landlords of the company’s strategy to realign assets and revenues among newly created subsidiaries. The letter requested landlords to transfer their lease agreements from Jack in the Box Inc. into its subsidiary Jack in the Box Properties LLC. The company’s goal is to increase credit worthiness and secure new financing.

The NFA said “…landlords who opt not to have their lease re-assigned to the new subsidiary and wish to have their lease agreement remain with Jack in the Box Inc. have been warned by JIB in a letter to them that there may be no assets or revenues to pay their rents.”

Franchisees are concerned because the 1,800 properties are sub-leased to franchisees who pay all rents, taxes and insurance to Jack in the box. Those payments are then sent to each respective landlord. NFA said franchisees are not in direct contact with landlords and have no information related to how rent payments are divided between Jack in the Box and the landlords.

In response, Jack in the Box said the franchisees’ concerns about real estate were fair but unfounded.

The complaint is the most recent maneuver in conflict between Jack in the Box and its franchisees. In July, a majority of the association’s members cast a “No Confidence” vote in the system’s leadership during the group’s annual meeting. NFA’s membership includes 85 percent of franchisees representing the ownership of approximately 2,000 restaurants out of a system-wide total of approximately 2,240 restaurants.

The group wants to replace Comma as CEO and the appointment of a dedicated Chief Marketing Officer, among other changes to Jack in the Box management.

Long-term goals for the company include improving operations consistency and targeted investments aimed at maximizing returns.

“We remain focused on balancing the interests of all our stakeholders, including our franchisees, customers, employees and shareholders,” Comma said.

The company’s guidance for fiscal 2019 included system same-store sales of approximately flat to up 2.0 percent. Restaurant-Level EBITDA was forecast at approximately 26.0 to 27.0 percent of company restaurant sales. The company expects capital expenditures of approximately $30 million to $35 million, and approximately 25 to 35 new restaurants opening system-wide, the majority of which will be franchise locations.