Source:  Jack in the Box

It seems like every direct competitor is taking a bite out of McDonald's (NYSE:MCD) when it comes to growth percentages, including Burger King Worldwide (NYSE:BKW.DL) and Wendy's (NASDAQ:WEN). And now, Jack in the Box (NASDAQ:JACK) is the latest to eat Mickey D's lunch. While McDonald's domestic growth seems to have caught some frost bite, Jack in the Box is cutting through the cold like a hot knife through butter.

Jack's box of goodies
Jack in the Box has been refranchising a number of its restaurants, which results in lower gross sales but higher profits. It gives the company more resources to focus on improving its brand and menu. It's paying off.

On Feb. 20, Jack in the Box reported fiscal first-quarter results for the period ending Jan. 19. System same-store sales jumped around 2%, while adjusted earnings per share soared 27% to $0.75. This was in reverse of the previous quarter's negative same-store sales for Jack in the Box restaurants.

Same-store sales gains were in-line with the guidance and on the way to the goal of achieving same-store sales growth of 2% to 2.5% for 2014.

Source: Jack in the Box

Jack Frost has nothing on this Jack
CEO Lenny Comma pointed out that the gains were coming mostly from the company's new late-night munchies menu and breakfast offerings.

During the conference call, Comma pointed out that the positive reversal of sales growth came despite 40% of units being affected by winter weather.

During the question and answer session, Comma stated, "We are a little less affected by weather than some of the other brands...We're certainly not gloating about our performance versus the other competitors, because we do realize that some of that is, for some of them, a more significant weather impact."

It still begs the question: If 40% of the company's units were directly affected, how much better might Jack in the Box have performed overall if not for that impact? Perhaps the numbers are even better than they seem at first glance.

CFO Jerry Rebel offered more color on this. He stated, "Here were a few markets that were significantly affected by the weather...We had many markets that were well above that company-operated comp number of 2%." The phrase "well above" might be more telling of what the future holds for Jack in the Box.

Okay, so the winter did affect the chain, but overall Jack in the Box was able to successfully shake off the snow and report a solid quarter...unlike some others, such as McDonald's.

The golden snow-covered arches
For McDonald's, domestic same-store sales have been in a tailspin. For the third quarter, they were up 0.7%. October, they were only up 0.2%. November they fell 0.8%, and the fourth quarter saw a 1.4% drop. For January, they plunged 3.3%. The reason cited by McDonald's? You guessed it: "severe winter weather."

Certainly the winter weather isn't helping McDonald's or many others, but it seems like it's giving others the opportunity to take market share. At Burger King, domestic same-store sales grew by 0.3% versus a 0.3% decline in the quarter prior. 


Meanwhile, Wendy's saw a staggering 3.1% same-store sales jump compared to a 0.2% decline last year. Its reimaging efforts were part of the reason for the improvement. Wendy's estimates that on average for each store it reimages, it sees a 20% to 25% boost in sales. Maybe those new images come with better heaters than those at McDonald's. In any event it seems to be a free for all lately for others to take market share from McDonald's. Jack in the Box included, of course.Part of the reason for the reversal was its new menu items that are aimed directly at McDonald's.

Foolish final thoughts
Jack in the Box trades with a P/E of 22 based on next year's expected earnings, with 14% projected growth over the current year. Unless earnings beat by a wide margin (which they often do), it seems a bit on the pricey side. Jack in the Box is a fantastic company with what appears to be a solid growth future, but with the stock at all-time highs, cautious Fools may want to see if it gets a decent pullback first before considering an entry.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.