The West Coast fast-food chain, which has seen a remarkable turnaround due in part to an irreverent ad campaign featuring the CEO character called Jack, plans to start with 30 or 40 restaurants in Charlotte, N.C., and a similar number in another market near Atlanta.
Robert Nugent, president-CEO of Foodmaker, operator of the 1,450-unit chain, said he envisions building up to 500 units in the Southeast if the initial foray proves successful.
"If we are accepted in those markets, then it's no holds barred," Mr. Nugent said.
One industry analyst said the move could position the chain to become a serious national competitor to industry leaders McDonald's Corp. and Burger King Corp., which already feel heat from Jack in the Box in the West.
POTENTIAL TO BE NATIONAL
David Rose, a restaurant analyst with Jefferies & Co., called the plan a good move, and said the 48-year-old concept, now the fifth-largest burger chain in the country, has the potential to be national.
"There's a tremendous opportunity for a player in the Southeast market that offers as broad a menu as Jack in the Box," Mr. Rose said. "You have a company with a management team determined to grow and a concept that appeals to an adult taste."
Jack in the Box does strong business in burgers and fries, but also sells tacos to cater to late-night cravings. While it does supply toys, they're typically kitschy plays on the irreverent Jack character targeted to adults rather than kids, such as clown-head balls for car antennae.
JACK MOVING EAST
The move east will be backed by TV commercials from Jack in the Box agency Kowloon Wholesale Seafood Co., Santa Monica, Calif. They will introduce the concept to consumers, and use the same theme as the long-running campaign featuring the Jack character, Mr. Nugent said.
This isn't the company's first foray East, but consumers there "don't know who Jack is," Mr. Nugent said. "We've got to come up with a clever way to introduce us and him."
Under prior ownership of Ralston Purina Co., Jack in the Box expanded to the East and Midwest before pulling back in 1979.
Jack will provide new competition for Rocky Mount, N.C.-based Hardee's Food Systems, the No. 4 U.S. burger chain that's struggling to regain its footing.
That Jack is growing at all would have seemed unlikely just a few years ago.
In 1993, business was brought to a screeching halt when four people died in a food-poisoning outbreak linked to undercooked hamburgers tainted with E. Coli that were served at Jack in the Box restaurants.
Now, the chain is one of the best-performing restaurant concepts in the country. The company posted its 16th consecutive quarter of same-store sales gains for the quarter ended Jan. 17, Mr. Nugent said.
The expansion is one of several new moves. Just as McDonald's Corp. is adding a new cooking system to provide better quality food, so is Jack in the Box. Jack in the Box has invested $20,000 per store in new equipment in 73% of its units to date, and has ordered up new advertising to back it.