Qdoba failed to take advantage of Chipotle's missteps over the last 18 months, a huge lost opportunity that's just passed it by.
— Jason Clampet
Qdoba’s same-store sales fell 2.1 percent last quarter, Jack in the Box said on Wednesday. Analysts had projected a roughly flat quarter for the brand, according to Consensus Metrix. Total earnings also fell short of estimates, weighing on the stock.
The disappointing Qdoba results raise questions about what it might fetch in a potential sale. Jack in the Box began weighing its options for the brand in May, saying that having two different business models — a Mexican chain and its burger-focused flagship business — could be hurting its overall valuation.
“If they’re looking to sell it and things are getting worse, they could get less for it in the market,” said Michael Halen, an analyst at Bloomberg Intelligence.
The shares fell as much as 9.4 percent to $92.56 in late trading on Wednesday. They had been down 8.4 percent this year through the close.
Jack in the Box’s board has been working with Morgan Stanley on the Qdoba review. The company said on Wednesday that it wouldn’t provide guidance for the next fiscal year until it figures out its plans. Jack in the Box also wrote down the value of the business, including $3.6 million tied to the evaluation of Qdoba’s prospects.
“There can be no assurance that the evaluation process will result in any transaction or other specific course of action,” Jack in the Box said.
Same-store sales at Jack in the Box’s namesake brand also fell last quarter, though not as much as analysts expected. Overall earnings amounted to 73 cents a share, excluding some items, well below the 89-cent estimate.
©2017 Bloomberg L.P.