Jack's fighting at fifty

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Jack in the Box has spent the last five years mocking its fast-food competitors in its advertising. With every new TV spot, the chain's clown-faced icon seems to send a raspberry to the Golden Arches and the Home of the Whopper with a resounding "Pppppptttthhhhhhttt!"

But the San Diego-based chain-known as much for its September 1993 E. coli contamination as it is for its irreverent ad campaigns-is understandably more charitable to McDonald's Corp. and Burger King Corp. as they struggle with the mad-cow-disease panic overseas.

This week at its annual shareholders meeting the company will celebrate its 50th anniversary-a milestone some doubted would happen after four people died and 700 fell ill in Washington after eating tainted menu items.

As CEO Bob Nugent adds the chairman title Feb. 23, it's likely he will face shareholder questions about the mad-cow issue. While he and other company insiders acknowledge the issue is "scary," they are quick to laud the sweeping food-safety program established following the 1993 contamination which since become a gold standard in the food-service industry.

That no-bull approach has helped recapture customers and has become a hallmark of the brand, said observers. Clearly, Jack is no sacred cow. In a 1980 TV spot that might have been blasphemous to some, the company blew up the ping-pong-ball headed clown-CEO character, Jack, to symbolize its shift to adult consumers.

It seemed even more symbolic that the company revived Jack in 1995 for a branding campaign following a study that proved the bulbous icon was the strongest identifier of the brand outside of the tainted burgers. The "Jack Is Back" campaign was aimed at helping close an ugly chapter in the company's history.

"While Burger King was known for the Whopper, McDonald's was known for the Big Mac, Jack in the Box was known for E. coli," said restaurant analyst Mark Sheridan, partner with institutional equity firm partner, Johnson Rice & Co.

The new Jack would serve as a change agent who would "deliver great food with great value and great service," said Greg Joumas, VP-advertising and marketing communications for Jack in the Box. "He was going to challenge the industry" using irreverence consistent with the attitude among men ages 18 to 34 that "everything is open to make fun of."

One 1997 spot called "The Visit" followed Jack as he confronted a slacker kid who badmouthed the food. To prove the food was improved, CEO Jack forced a sample at the kid. Another spot called "Drive Through" was set at the speaker box, where a sassy customer demands to speak with Jack. The joke inevitably was on the smart aleck as Jack was patched in to the speaker from his Learjet.

The marketer will unveil a campaign to shareholders true to form next week. In it, Jack is standing in a long line for the men's restroom. Despite trying to hide his identity, a man behind him recognizes him. The row of men chime in asking Jack what's new. So Jack tells the crowd about his new Chicken Breast Pieces with Red Hot Sauce. When the line reacts enthusiastically to the Buffalo wings-style treat, Jack says, "Now you don't have to go to strip clubs." The men groan.

"Because Jack is a fictional CEO, he's much more dimensional than a real CEO, even than [Wendy's International's] Dave Thomas because we can take more liberty with him," said Mr. Joumas. "Jack really resonates with people. He does and says a lot of things they would say and do."

"People can recite these ads verbatim, even today," said Cathy Leaf, account director at current agency Kowloon Wholesale Seafood Co., Santa Monica, Calif. Despite being viewed as edgy, the advertising isn't necessarily risky because the company is so in tune with its target, she said, adding, "The bottom line is [the ads] really help sales."


That's more than can be said for much of the competition, which is facing declining customer counts despite deep discounting and a din of product introductions. Jack's influence in the cutthroat Western market clearly has competitors hustling to keep up.

The chain last week announced an 11% increase in fiscal first-quarter sales over the same period last year. In the quarter ended Jan. 21, total revenue grew to a record $631 million. Same-store sales grew 4.3% for the period, making it the 24th consecutive positive-growth period.

"One characteristic they've enjoyed over the last two to three years ... [is] some very steady and consistent advances in awareness and usage levels, unlike many chains that are volatile period to period," said Bob Sandelman, president of Sandelman & Associates, a Villa Park, Calif., a restaurant-industry research company.

Jack's awareness is surprising considering the company in 2000 spent a mere $61.6 million in measured media, according to Competitive Media Reporting. Because the company's 1,634 units in 15 states are concentrated mainly in the South and Southwest, it purchases media on a spot basis. With an average growth rate of 10%, it will be several years before the chain builds the critical mass of its national competitors.

In 1999, the chain opened stores in Charlotte, N.C., its first move East since the aggressive but short-lived expansion effort in the early 1970s under then-owner Ralston Purina. Early successes in the Southeast spurred growth into Nashville, Tenn., and Baton Rouge, La. Now the chain is on the verge of opening stores in Greenville/Spartanburg, S.C.

Inbound Chairman Mr. Nugent admits the persistent specter of the E. coli disaster bothered him at first, but he realized it would always be a part of the company's history. "While it was a tragic thing, a lot of good things came out of it," Mr. Nugent said. "Also what came out was the [corporate culture] that exists today that otherwise wouldn't have existed."

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