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Jack in the Box blames tax refund delays for soft sales

A selection of food that is on the menu at the Jack in the Box on Campus Drive in Irvine, Calif.
Glenn Koenig | Los Angeles | Getty Images
A selection of food that is on the menu at the Jack in the Box on Campus Drive in Irvine, Calif.

It seems a planned delay of two tax refunds and inclement weather took a serious bite out of Jack in the Box sales during the first quarter and could carry over into the second.

CEO Lenny Comma blamed the delay for softer sales, noting that lower income markets were hit the hardest.

"In those marketplaces, the sales and transactions were more negatively impacted than affluent areas," Comma said Thursday at the UBS Global Consumer and Retail Conference in Boston.

Congress passed a measure in 2015 to delay the Earned Income Tax Credit and the Additional Child Tax Credit refunds, which benefit low-to-middle-income households with children, to give the IRS more time to track down fraudulent claims.

Jack in the Box, which also owns Mexican chain Qdoba, reported first quarter earnings and same-store sales growth in February that were weaker than analyst expectations.

Overall same-store sales for Jack in the Box, which were up 3.1 percent, fell short of estimates of 3.5 percent. At Qdoba, system-wide same-store sales dropped 1 percent, while expectations called for growth of 0.5 percent.

The company also cited flooding and inclement weather in California.

To gain back momentum, Comma said that the company will shift its advertising focus from its premium items to its value promotions. Traditionally, the majority of marketing funds have gone toward promoting premium products, but a shift in consumer demand for value bundles redirected the efforts.

"The pie isn't getting any bigger," Comma said of the restaurant industry, noting that Jack in the Box is going to have to work harder to steal share from other chains.