Dive Brief:
- Jack in the Box's board of directors announced Wednesday that Chairman and CEO Lenny Comma is stepping down, according to a company release. Comma has not yet chosen a specific exit date.
- The company does not yet have a successor for Comma in place and will consider both internal and external candidates. Comma has been with the restaurant for 18 years, leading it for the last six.
- “I’m committed to working with the Board to identify a successor who will continue to grow this exceptional brand, and to working closely with that successor to assure a smooth and successful leadership transition for the company and its stakeholders, including our incredible guests, employees, franchisees, suppliers and, of course, shareholders," Comma said in a statement.
Dive Insight:
Comma's impending exit follows a tumultuous few years for Jack in the Box, marked by franchisee unrest, activist investor pressure and the exploration of a sale.
Operator frustrations came to a head in late 2018 when the National Jack in the Box Franchisee Association called on Comma to step down and replace "several members" of the company's management team. The association, which represents close to 84% of the fast food chain's footprint, was frustrated with Jack in the Box for allowing activist investor Jana Partners to name two additional seats to its board of directors. Jana holds 6.7% of the restaurant's stock, and activist investor Blue Harbour Group took a 6.8% stake in the company less than a month later.
The association claimed that its attempts to contact the company's leadership team were ignored, and said that they were concerned "that the health of the brand as a whole may be in jeopardy."
Comma attributed these tensions to rising labor costs and weak sales, but operators said the root of the problem was insufficient resources, an empty chief marketer position and lease restructuring. The chain has struggled with sluggish sales even after selling off Qdoba last year. During the 28 weeks ended April 14, revenue rose only 0.5% over the year-ago period, and sales were flat during the same period.
Jack in the Box explored a sale earlier this year to right the ship, but ended its search in spring of this year. Instead, the company began implementing a securitization, which it believes will generate shareholder value.
The reason for Comma's exit is unclear, but it's certain that his successor will face an uphill battle. Though aggrieved franchisees may be pleased by Comma's departure, another empty seat alongside the abandoned CMO post — which appears to have remained vacant since Iwona Alter's exit in August of last year — could also fuel discontent. Fresh talent could be what the chain needs to heal from its wounds, but rectifying flat sales and sour franchisee relationships is far from a quick fix.
