Propelled by a new image and popular ad campaign, Foodmaker and its Western U.S. Jack in the Box hamburger chain are back.
Last month, the parent company posted its first full-year profit since Jack in the Box took a nosedive following a January 1993 incident in which four children died and several hundred patrons of a Pacific Northwest outlet became ill after eating hamburgers tainted with E. coli bacteria.
PR*NIGHTMARE
The crisis sent customers fleeing and submerged Foodmaker in a public relations nightmare, during which the company took several steps to mend its image: It publicly apologized and offered to pay for victims' medical expenses; adopted a state-of-the-industry food safety program; and drastically cut prices.
From the close of fiscal 1992, ended in September, to 1995, Jack in the Box sales fell 24%, and earnings from $21.9 million to a $69 million loss.
Despite its PR and promotional efforts, something was still missing. Help arrived in January 1994, in the form of Jack, centerpiece of the ad campaign TBWA Chiat/Day, Venice, Calif., used to beat out incumbent Cohen/Johnson, Los Angeles, in a review the summer after the incident.
"Our previous [ad] campaign was more narrowly focused on specific products and promotions, but didn't have much of a brand image," said Brad Haley, VP-marketing communications for Foodmaker. "After something like that, brand image was critical."
SEARCHING FOR PRODUCT I.D.
"The chain lacked product identity," said John Truscott, account director at the agency. "They had spent a lot of energy promoting a wide variety of products that were becoming less and less relevant in the marketplace."
Jack, the chain's fictional founder/spokesman, is a suited, slightly irreverent executive with a giant, white clown head. During the 1970s, the chain's symbol was a similar giant clown head that housed the drive-through intercom.
THE CLOWN RETURNS
In 1980, when Jack in the Box wanted to position itself more toward adults, it blew up the clown in TV spots. The new agency's twist was to bring back the clown, who this time blew up the executives who got rid of him earlier.
Mr. Haley said market research at the time revealed the clown character as an underutilized asset.
"The marketing campaign was pretty key," said David Rose, securities analyst for Jefferies & Co. "It was a real catalyst for getting people back in the restaurants. The `Jack' character has brought a lot of life back to a fantastic concept that couldn't find its target audience."
In the wake of the E. coli incident, "The campaign got across the idea of new leadership," said Mr. Truscott.
Foodmaker spent $38.3 million in 1995 on advertising in its 12-state marketing area to support Jack in the Box, according to Competitive Media Reporting.
Mr. Rose said the campaign's appeal to the young, male, core audience has helped Jack in the Box regain nearly all the brand equity it lost in the E. coli crisis. "Foodmaker is beyond being a turnaround; they're back to being a growth story."
For fiscal 1996, ended Sept. 29, net earnings were $20 million vs. a $69 million loss in the previous year, and sales grew 11% to $892 million. Per-store sales rose 7.2%, double the previous year, and customer visits increased 7.7%.
