Good day, everyone, and welcome to the Jack in the Box Incorporated Fourth Quarter Fiscal 2015 Earnings Conference Call. Today’s call is being broadcast live over the Internet. A replay of the call will be available on the Jack in the Box corporate website, starting today. During the question-and-answer period, please use your handset when asking a question. Please do not ask over a speakerphone. At this time, for opening remarks and introductions, I would like to turn the call over to Carol DiRaimo, Vice President of Investor Relations and Corporate Communications for Jack in the Box. Please go ahead ma’am.

Thank you, Carol, and good morning everyone. Joining me on the call today are Chairman and CEO, Lenny Comma, and Executive Vice President and CFO, Jerry Rebel. During this morning’s session, we’ll review the company’s operating results for the fourth quarter of fiscal 2015 as well as some of the guidance we issued yesterday for the first quarter and fiscal 2016. In our comments this morning, per share amounts refer to diluted earnings per share and operating earnings per share is defined as diluted EPS from continuing operations on a GAAP basis, excluding restructuring charges and gains or losses from refranchising. Following today’s presentation, we’ll take questions from the financial community. Please be advised that during the course of our presentation and our question-and-answer session today, we may make forward-looking statements that reflect management’s expectations for the future, which are based on current information. Actual results may differ materially from these expectations based on risks to the business. The Safe Harbor statement in yesterday’s news release and the cautionary statement in the company’s most recent Form 10-K are considered a part of this conference call. Material risk factors as well as information relating to company operations are detailed in our most recent 10-K, 10-Q and other public documents filed with the SEC. These documents are available on the Investors section of our website at www.jackinthebox.com. A few calendar items to note. Jack in the Box management will be attending Barclays Gaming, Lodging, Leisure and Restaurant Conference in New York on December 8, and the KeyBanc Capital Markets Consumer Conference also in New York on December 9. Our first quarter ends on January 17, and we tentatively plan to announce results on Wednesday, February 17, after market close. Our conference call is tentatively scheduled to be held at 8:30 a.m. Pacific Time on Thursday, February 18. We’ll be hosting an investor and analyst meeting on May 24 and 25 in Kansas City, where we recently opened our first Qdoba restaurant and have several Jack in the Box restaurants. During his remarks, Lenny will provide a little more color on what you can expect us to discuss at that event. We’ll provide more information as the date nears, but please mark your calendars. And with that I’ll turn the call over to Lenny.

Thank you, Carol, and good morning everyone. We wrapped up the fourth quarter with solid results, which caps yet another year of terrific performance for the company. We’re proud to report that both our Qdoba and Jack in the Box brands exceeded just about every target we set at the beginning of the year. In addition, our level of confidence and our ability to compete over the long-term was bolstered by the fact that both brands drove these results by successfully introducing more craveable food and without relying on aggressive discounting. Our franchisees also experienced the benefits of higher sales and margins on their profitability, which is the critical factor in driving their desire to grow and make investments in each brands. This morning, we would like to review some of the strategic initiatives that drove these results and take a look ahead at what you can expect from us in 2016. First, let’s take a look at our Jack in the Box brands. As I shared just about a year ago, we conducted a round of consumer research in 2014 that gave us confidence, but our consumers would reward us for quality improvements across our line of burgers, fries, and drinks. I further shared that we would foreshadow these product improvements throughout 2015 with the introduction of several LTOs and permanent new items. As promised, we introduced a number of higher quality burgers in 2015, including our popular Buttery Jack platform, which was one of the most successful product launches ever when it debuted in February. In addition to these new products, we are improving the quality of our entire core burger menu, and we’ll introduce those across our system at the beginning of quarter two. On the beverage front, our guests clearly told us that they wanted more…

Thank you, Lenny, and good morning everyone. Before taking a closer look at some of our fourth quarter results, I wanted to take a few minutes to review some highlights for fiscal 2015. Our operating EPS for the year reached $3, an increase of 22% on top of three consecutive years of growth in excess 30%. System wide same-store sales grew 9.3% at Qdoba and Jack in the Box exceeded the NPD sandwich category by 490 basis points with same-store sales growth of 6.5%. Consolidated restaurant operating margins rose a 190 basis points to 20.4% of sales with margins increasing nicely at both brands. Franchise margins improved 190 basis points to 51.5% and EBITDA from our revenue stream of approximately $90 million represented over 30% of our consolidated EBITDA. Given the annuity like cash flows our business model generates we return more than $350 million in cash to shareholders during the year including $317 million in share buybacks while increasing the dividend by 50% in May. The share buybacks resulted in a 9% reduction in weighted average shares outstanding for year which will continue to contribute to our future EPS growth. We currently have $200 million available and chose November of 2017 for stock repurchases. Let’s take a closer look at the fourth quarter. Operating EPS grew 15% in Q4, driven by solid same-store sales growth and margin expansion at both brands. The system same-store sales growth of 6.2% in Q4, Jack in the Box outperformed the QSR segment by 350 basis points. These results also exceeded those of each of our major competitors. Sales were positive across all-day parts, with breakfast, dinner, and late night generating the strongest growth. For Jack in the Box the 4.1% increase in company same-store sales was comprised of mixed benefits of 2.6% and…

Thank you, sir. [Operator Instructions] Due to time considerations, we ask you to please limit yourself to one question and one follow-up per turn. If you do have additional questions, you may re-queue at that time. Thank you. And our first question will be coming from the line of Brian Bittner, sir your line is now open.

Thank you.

Brain?

I think most investors are probably wondering how comps at Jack in the Box are going to get better after the first quarter as comparisons get tougher. And maybe you can really dive into why that is and get people comfortable with it. I think clearly it has to do with the menu upgrades that you have starting in the second quarter, but is there anything you can say around that, what you saw in the tests from those that are driving the confidence that you can really accelerate comps in the tougher compares?

Brian we are, this is Lenny, Brian. I think the balance here is how much detail we want to put out in the marketplace at this point in time. Here is what I can tell you, when you look at the cumulative effect of all of the LTOs and new products that we introduced in 2015. What we’ll do starting Q1 will be significantly more than that all in one [indiscernible] because of the impact to our core burger menu. So a lot’s going on there that we think will be accepted very favorably by the guests, and we anticipate that it’s going to generate the sales. And if you look at, so the cadence of activity last year, it was just the beginning of quarter two where we really got aggressive with the Super Bowl promotion and starting to see the sales lift, so we see very similar activity this year, but significantly more of it and that is what gives us the confidence that we can not only roll over the sales well, but we can see a high level of guest loyalty based on the research that we did on what these products would do.

Okay and the second question, Jerry on the Jack in the Box commodities, I think last call you said that they would be a little less than 1% and that's was back in August. Now you're saying about 1%, but you have some real major commodities down over 20% since that August call like you beef trimmings and eggs. So why is the commodity outlook relatively same? Is there some conservatism baked in there or were you already locking back then before a lot of these fell?

Yes, Brian great question, most of our major commodities are locked in for a good portion of the fiscal year, particularly on the Qdoba side, but also on many items on the Jack in the Box side. We are currently tracking a little higher than our initial outlook on items such as produce and pork, but we are trending lower on beef. What I will say is if the beef prices continue this low, then we would expect our commodity forecast for Jack would be conservative. But we will revisit that on the February call.

Okay, great thank you.

Thank you, our next question will be coming from the line of Mr Alex Slagle from Jeffries. Sir, your line is now open.

Thanks, question on the Jack in the Box traffic in the fourth quarter, being impacted by less discounting. Could you remind us the nature of the discounting that took place last year, was it basically the $4.99 spicy chicken club combo or was there something else.

Alex just to clarify, you are looking to get fourth quarter comparisons not information on first quarter of this year.

Yeah, just on the discounting difference.

So for Jack in the Box, it is really a $1 drink impact, it is the major deal and then promotionally it was our $4.99 Chipotle chicken combo that we are doing, Chipotle chicken club. So that was the real impact of the quarter, at least promotionally.

Got it and then a clarification on the guidance and what share repurchase is assumed in the earnings guidance for 2016, is it only what’s already being completed or does that also include some level of additional repurchase?

No Alex, it does assume some level of share repurchases in 2016.

Okay, thank you.

Thank you. Our next question will be coming from the line of Mr. David Tarantino. Sir your line is now open.

Hi, good morning. Lenny, just a clarification on what you’re seeing so far in the first quarter for Jack in the Box, I think, you mention that comps are positive. Are they running inside the range you’ve given? And I think last year you mentioned that comps accelerated pretty meaningfully as the quarter went on. So I guess how should we frame-up Q1 in the context of the guidance you have given?

The way to look at Q1, first off, our guidance is within the range. So answering that part of the question first. Secondly, the way to look at the quarter, in simple terms, is that last year at the beginning of the quarter we had some aggressive promotions going on, we had a two for $3.50 breakfast croissant promotion which is probably one of our most successful value oriented things that we do. We did not do anything this year, so not only we do not have something out there that wasn’t as aggressive, we weren’t out there with anything. And then this year in the second half of the quarter is when we will be out there, and we’ll be out there with breakfast, as well as burger promotions that we think we’ll roll over the last year’s momentum. So it’s really just a flip-flop of the timing of the promotional activity from one year to the next and that’s how we arrive at the guidance.

Got it, that’s very helpful. And then just a question there’s been a lot of buzz in the industry of McDonald’s launching all day breakfast and you’ve had all day breakfast for a long time and I guess, could you offer some perspective on whether that initiative by the competitors are impacting your business in a positive or negative way?

Yes, so let me first make a broad statement, I think, what we see in the industry is a significant amount discounting going on and we think that as having the largest overall impact on the industry. Then when we narrow it down to one of our major competitors doing the breakfast all day, certainly it’s going to impact everybody in the industry. But what we’ve been able to do is focus on hamburgers and drive sales by really speaking to our own game. And at the same time that we’re doing that we are not seeing that, the breakfast all day launch for McDonald’s is overall killing our business. We know that there’s going to be some impact there, but the biggest that we see in the first half of the quarter is really related to the fact that we’re rolling over two for $3.50 croissants. So I think when we focus on breakfast discounting, we’re going to get all the traffic we need. When we lay-off of it and go to burgers we’re going to get the traffic in that area. So as we talk to our franchisees about the impact, essentially there is not a big level of concern out there about McDonald’s competing with us in this way.

Great, thank you very much.

Thank you. Your next question will be coming from the line of Mr. Joe Buckley. Sir, your line is now open.

Thank you. I wanted to ask a couple of questions on sales as well. Can you talk about the level of pricing, you gave us the fourth quarter pricing level, does that carry through the first quarter when you start lapping price. And talk a little bit about your decisions on the timing of discounting, because you mentioned a lack of discounting in the fourth quarter or a lack of discounting early even in the first quarter but then plans to sort of pick it up. So may be just talk about the cadence for that and the plans - what sort of drove that decision?

Joe this is Lenny. I want to talk about timing of the discounting first and I’ll let Carol and Jerry handle the pricing question. So when we look at the timing of discounting and promotional activities in general, it really is just part of the overall activity that we are planning for either the quarter or the year. We are able to successfully go through last year without having to do a significant amount of discounting. And keep in mind, in fourth quarter although company out traffic was slightly negative, system traffic was positive. So an 82% of our system is franchise. So from the standpoint of brand health and what we’ve been able to do without the discounting we’re not having a major transaction erosion for this 2015. So I think that sort of handles the 2015 question. When we get to 2016, we’ve had a significant amount of energy going into our quarter two launch. And a lot of our focus has been there. So we’ve wanted to remain quite in the first part of this quarter to give our teams an opportunity to prepare for all that we’re going to do in quarter two. So we didn’t want to sort of lob a bunch of things on their plate. While at the same time we’re asking to do pretty big job in prepping. So now that we’ve got a vast majority that work done, we’re able to start doubling down on some of the promotional activity knowing that it’s not going to have a negative impact on our restaurants.

Joe, on the pricing we had 2.4% in Q4, the question is how much of that will carryover. We’re estimating we’ll have something a little lower in the 2.4% pricing in the quarter.

Okay and they…

Also some pricing from last year.

And then just a broader question, what are seeing in the overall QSR sandwich category with McDonald’s up, is there a little bit more growth in the category because McDonald’s is back or is it just market share shifting around?

Yes Joe, so unfortunately we can’t disclose the QSR sandwich numbers beyond what our quarter was with our agreement with NPD. I think you’ve heard McDonald’s say that they are outpacing the category but I can’t tell you what the category looks like right now. And the numbers we see always include McDonald’s.

Okay, okay. Thank you.

Thank you. Our next question will be coming from the line of Chris OCull, sir your line is now open.

This is Dave Carlson and I’m for Chris this morning. Jerry quick question for you on the G&A. Came in at 14.4% of revenue during fiscal 2015, I think, that was about 40 basis points above the guidance you guys provided in the fiscal third quarter report. Can you talk about what expenses surprised you during the fourth quarter? And I have a follow-up question.

Okay. So I’d say there’s only three components to the fourth quarter G&A percent of sales miss. So one, we did have higher cost related to mark-to-market they’re always a surprise whether they are positive, whether they are negative. That was $1.1 million negative impact to us within the quarter, that would represent about $0.02 a share. We also had higher pre-opening costs for Qdoba new locations not just those that were opened in the fourth quarter, but also those are opening up during Q1. So those were a little higher than what we had anticipated. The other thing that I’ll mention is the revenue, total revenue numbers that we had and our models were a little lower due to a couple of things, one, was you noticed that Jack in the Box company same-store sales were very strong and well ahead of were the industry was with below the midpoint of the range that we had guided. Then also some of the Qdoba new locations opened up later in the quarter as opposed to around the midpoint of the quarter. All of that came to reduce the denominator portion of that calculations, higher expenses, slightly lower revenues, which is what created that. I think going forward though, with the lower pension expense and with that being a structural and ongoing change to our pension expense where we’re seeing a much lower outlook on our overall G&A cost for 2016.

Great, and then you guys talked about the $100 million to $120 million in CapEx plan for fiscal 2016, a little bit higher than we had expected. And I know you talked about IT Qdoba openings for models, et cetera. Can you give a little bit more detail, can you kind a put some buckets for us, how much are we talking about new store, remodel, investments in support services, et cetera.

Yes, and so we generally don’t give that information. Let me give you some - I’ll give you order of magnitude. And I’ll give you some numbers around number of new stores and every model that we are assuming. So order of magnitude the number of new restaurants and I'm going to take you through the midpoint of the range guidance. So the Qdoba new stores at the midpoint we are anticipating about ten or so more new company restaurants in 2016 versus 2015, if you look at our guidance of 50 new stores to 60 new stores after them being company. And then we have 25 Qdoba remodels to 30 Qdoba remodels, in the numbers. And then we have - and then right along with that we have IT, and this is we’ve been talking for a while about normalizing our IT systems between both brands. What you’ll see us spend money on for IT next year is the common POS platform primarily with the Qdoba brand as they are going to go to the same system at the Jack in the Box brand has. We’ll begin the normalizing with the back office systems in the restaurants with the new back office system across both brands. And then Lenny mentioned the digital strategy for Qdoba launching in 2016. So that is in there too. So a little higher IT spend than what you would normally expect us to have for those reasons.

That’s great. And just to clarify on the 25 Qdoba remodels to 30 Qdoba remodels and also the new units as well, I would assume that those would all come fiscal third quarter and later after you guys have completed the analysis, I think, you said it in fiscal second quarter you guys would have figured out exactly which design you want to go with and then ramp development.

No, I would say the new stores and the remodels are ongoing now.

Okay.

We did have some remodels in 2015 that we are analyzing what those elements are which ones work, which ones don’t work. And then we are working on the value engineering part of that. And also the restaurant that we opened late in 2015 has that same kind of features associated with the new prototype so…

Perfect, thank you.

Yes, you will see that throughout the year not just third and fourth quarter.

Thank you, guys.

Thank you. Our next question will be coming from the line of Mr. Jeffrey Bernstein. Sir, your line is now open.

Great, thank you very much. Two questions, just one on the Qdoba side for looking at fiscal 2016, you are talking about I guess a 2% to 4% comp I know your prior long-term guidance was more on mid single-digits. I’m just wondering if you could talk about, why Qdoba might be running below and I’m guessing that’s going to tie in, if you can give some color in terms of how you think about the lapping of that simplified menu pricing structure, how we should think about the cadence of the components of the comp as we look through 2016 being that was such a big initiative, you guys implemented in 2015. And I had one follow-up?

Yes, so I think the simple answer is, we’re guiding 2% to 4% this year as compared to guidance of 6% to 8% last year. But we actually, we’re 8.3% last year. So some of the guidance is really just reflective of the roll over and I think that’s probably the meat of it there. You would ask sort of a sub part to that question how we should think about something, I didn’t catch it. So I just want to make sure I answered everything you wanted in that first part.

Yes, just because fiscal 2015 was such a big year for the Qdoba brand in terms of the simplified menu pricing structure no nickeling-and-diming kind of thing, I’m just wondering how we should think about the components of the comp in 2016 as you know lap what was obviously very high average check component in 2015, how we should, how we should think about that for full year fiscal 2016.

Got it. So at the end of the day we’re looking to generate traffic this year. And it’s going to be through new products, that we’ve actually just started launching and we’ll launch throughout the rest of the year also catering it’s a big component for us. So and then enhanced communication so lot of things that we’re testing now and then also the digital strategy that will be able to utilize later. But those are the major drivers, but it really is focused primarily on traffic building.

Got it, and then just on the restaurant margin in 2016, Jerry I think you said, 20% to 20.5% which you kind of sell right in the middle of that for fiscal 2015. So I’m just wondering if you could talk about the puts and takes, I think your prior long-term guidance was for 20% flat so you’re already kind of running a little bit ahead of that maybe that’s something we’ll hear more about the Analyst Day but whether or not you could talk specifically about the puts and takes in fiscal 2016 or how the fiscal 2016 guidance related to the long-term and I think you kind of give some color on pricing and sounds like commodities going to be benign but labors up I'm just - how we should think about fiscal 2016 relative to the long-term guidance?

Yes, so I think what we had on the long-term guidance previously with 19 to 20. So we've blown pass that. You can definitely expect us to update that with the long-term guidance in the May meeting. The 2016, those specifically to 2016 we have - in the total between minimum wage and the Affordable Care Act we have at least 75 basis points of impact to margins for the year and that on a consolidated basis. And that is mitigating the benign commodity outlook as well as any sales leverage that we would get from the 2% to 4% sales guidance. As I mentioned on one of the questions earlier, if there’s any conservatism in the number it would be related to what beef cost turn out to be versus what we currently have them expected at. So if beef cost continue to be where they are now we would expect lower food and packaging cost. But will again we’ll update that at the - on the February call.

Great, thank you.

Thank you. Our next question will be coming from the line of Mr. Bittner. Sir, your line is now open.

Thank you. let me - you mentioned that 2016 digital launch for Qdoba, could you talk a little bit more about what that means, what you’re envisioning? What kind of features you think will be part of that? And similarly as we think about Jack in the Box, kind of similar update the strategy there because we've seen some big announcements and updates from much of the rest of the quick service industry. So just a little more detail on digital strategies for both brands. Thanks.

Yes, so I think both brands have been using the strategic plan and the research that we conducted to figure out the go-forward. So the strategy and cadence and I would say that the Qdoba brand is more ready to launch a digital platform than the Jack in the Box brand at this point. So if you think about the comparison between the two brands the Jack in the Box brand is focusing on getting its core menu items right. So the last thing we’d want to do is to launch a digital platform that’s inviting guests to come in and eat food that the consumers told us we needed to improve. So we need to get the timing of this right. So which you are going to see Frances and teams do is make the improvements to the food first which will be the focus this year. And then they will be able to come on the heels of Qdoba’s work and really get into the digital platform area. And for us more broadly and this kind a get to the Qdoba question but it also answers and sort of foreshadows what you can expect from Jack in the Box on digital front too. We don’t want the digital program to simply be a way to communicate discount to consumers because they purchase food. We want to be able to segment the consumers based on their specific behavior and then give them the types of offerings that they would actually want. So you’ve seen things like this in the industry but for example there are folks out there who would be more turned on by an opportunity to gift something to a friend then they would receive the benefits themselves through a loyalty program that they have, which they consider just be a way of managing the relationship that they have with the company. So we want to make sure that those folks that are the biggest advocates are rewarded in ways that they are actually going to find valuable. We don’t want to give too much away but those price have distinctions will be made in the program, so that as we segment those guests, we’re treating them appropriately. Today our program is really one side fits all. It’s a buy a bunch of stuff and get something free program. And so those aren’t going to be the most beneficial programs going forward, we’re going to need a lot more data and to be smarter about the way we do that. That’s what this platform enables us to do.

Just as a follow-up to that then. Thinking about Qdoba aside from loyalty mobile order and pay is an option here is the POS and other back in the house system in place. Could this be part of this program? It seems like that brand is very nicely positioned to hit that right now and that the customers respond very favorably and maybe even you can get there ahead of some competition how does mobile order and pay fit in keeping loyalty maybe out of the equation for a second?

I think one way to look at this from an IT perspective all of these things do actually need to tie together, so the way you can think about this is that as we’re designing, testing and then rolling out this platform, it will actually be inclusive of all the things that you mentioned. What we can’t tell you is the sequence in which we will activate each of those things because a lot of that’s going to be depend on what we’ve learned in the testing base.

Okay, thank you.

You got it.

Thank you. Our next question will be coming from the line of Mr. Jeff Farmer. Sir, you line is now open.

Thank you, so just following up on an earlier menu pricing question, some of your peers have been taking at least a modestly more conservative view on their pricing opportunities heading out to calendar 2016. With that said what is your view on menu pricing power for both of these concepts both at Jack and Qdoba as we get into 2016 especially in sort of this increasingly dynamic environment out there on the competitive front?

So this is Lenny, Jeff. Let me first say, one of the things that we pay attention to even before looking at the industry is the comparison of food at home and food away from home. So we want to make sure that we don’t move faster than the pace that potentially supermarkets are moving. Because that is the thing that really negatively impacts us immediately. So that is one of the things that we sort of start with the foundation of pricing decisions. Then we go into the marketplace to see based on competitive activity how much can the market bear and we are going to be very cautious going into 2016 with the level of discounting that’s hitting the entire industry. There isn’t one segment of the restaurant industry that isn’t heavily discounting at this time. So we’ll be cautious but at the same time, one of the things that we bank on is that the improvements in our food will give us some pricing power. So I think which you can see is, what you can expect is that we’ll strategically take price where we know the consumer appreciates the quality of the food and will allow us to take that price.

That’s helpful. And just one more again a lot of question today about Jack same-store sales in FY16 some of the components but I’ll just look at what happened in 2015 mix was a nice contribution, I think it was close to 2% some obvious reasons for that but as you look forward to 2016, I mean, is there circumstance in terms of new product which you’ve talked about a little bit earlier on the call. Is there a new product or collection of new products that you think will allow you to hold on to something close to 2% mix at Jack in 2016?

Well, we don’t really forecast that. But here is what I can say, last year if you look at what drove the mix it was consumers attraction to the quality of the items that we put out there. But also happen to be premium items and we did have much higher price on those items. So if I look at our intentions this year and where we put in a lot of time so the arsenal is really very much the same. Its improvements across high quality - improvements across the menu that should give us an opportunity to look at generating mix the same way but not something we necessarily can forecast for you at this time.

All right. Thank you.

Thank you. Our next question will be coming from the line of Mr. Bob Derrington. Sir, your line is now open.

Yes, thank you. Lenny, 12 months ago you provided us with a little bit of color on the long-term expectations for development particularly for Qdoba. And in that long-term growth this year’s development certainly appears to be at a lower level for new stores. I'm just wondering given the dramatic, what seems like a dramatic remodel of the Qdoba business? Is that one of things that came into play and slowing down the development? And then I've got a follow-up on that.

So, let me just kind of broadly answer your question and see if I given you enough detail and if not, just checking with me. But the thing that’s really happening, first off, from a capital perspective, we have enough capital to build more restaurants than we’re currently scheduled to build and to do the remodel tests and to do new image related testing. So any impact to the guidance on the spend there is really just associated with what we think is the right thing to do right now. And we think the right thing to do is to move at a pace that allows our franchisees to participate in the testing. We need them to have hammer and nails in hand and test out how these things come to fruition because if they’re going to believe in this going forward and if they’re going to feel confident in the returns that would be generated, what we found is that their participation is crucial. So, the pace of change is really just being managed to bring everybody along. And then when you look at, it will be Q2 before we have done enough of these to really start to read some results and then go back in and make tweaks. So we just don’t want to get too far ahead of it. But as I mentioned in my prepared comments, we do - we would expect in 2017 that since those decisions would be finalized that we would be able to ramp up the growth at that time.

Okay. And then follow-up just curious on Jack in the Box, will Jack ever speak again?

It’s a really good question. So he may. And so let me say that - and I mentioned this either in a prior call or conference that we - where we spoke publicly, the tone of the Jack in the Box advertising is changing and it’s the way to think about it is we spend a lot of time in our ads kind of having this punch line and the big joke and that brought a lot of attention to the brand, but if sometimes outweighed the focus on the product and it didn’t necessarily get the consumer - focused on and what it was we’re offering. Certainly, we don’t want to be in a position where at the end of an ad, they can remember the joke, but they can’t remember the product. So we’ve changed the tone of the Jack advertising to be more focused on the quality of the product, still to be fun loving and interesting, but not necessarily as sarcastic and so one of the ways that we’re making that transition is just toning down the use of Jack’s voice right now. And then over time, we’ll continue to evolve the campaign. And if we need to bring back the voice, we can bring it back, but we’re going to see the consumers’ reaction of what we’re doing and that will tell us what the next steps are.

Got you, terrific. Thank you.

Got it.

Thank you. Our next question will be coming from the line of Mr. Matthew DiFrisco. Sir, your line is now open.

Thank you. I've got just two questions. One question with respect to the guidance. I'm just trying to look at the cadence of 2016 taking into account the accelerating same-store sales in the back half implied. The mentioning of testing advertising for Qdoba and as well as returning to a little bit more promotional activity for Jack. I'm wondering I guess we should conclude them at a side from the extra operating week in the fourth quarter but just the operating earnings on a comparable basis also seem to be more back-end weighted in the first half of the year would imply a deceleration of the EPS growth on what we just saw on the fourth quarter.

I think I’ll answer that one Matt. So I think Jerry gave the factors that we believe would impact our Q1 guidance. But in terms of EPS by quarter we are not going to give that level of detail at this point.

Okay, and I guess what would be unknown part is the G&A savings in the cadence of that. How fast is that flow through, is that balanced or is that somewhat more skewed in the first half that could offset some of the other headwinds that obviously are going to weigh on the first half of the year.

Okay, I understand the - so the G&A savings are going to be throughout the year.

Okay, so balanced. Okay, and then…

It’s spreads pretty evenly.

Okay. And then just I guess on previous calls, there’s been a lot of mention about the two brands and one is a growth brand - one seems to be migrating more towards franchising in a cash flow brand and your response has been sort of they co-exist well together and you felt like the market was giving you the evaluation for both of the brands. At the current levels are you trading at a discount to your fast-food peers as well as your quick casual peers? I was curious has that stance changed is that something that possibly we could see an update on as well as far as perhaps entertaining some greater value creation from the separation of the brands?

Yes, I think the way to think about that is, that we’ll have an opportunity at our Investor Day in May. To spend a lot of time addressing all the types of interest that our shareholders have and that’s probably the best time to have that conversation.

Okay.

Thank you. Our next question will be coming from the line of Mr. Nick Setyan. Sir your line is now open.

Hi, so just a question on Knockout Tacos, and looking forward to the other stuff you guys said are coming up, if it is bigger than Knockout Tacos. Are you guys seeing an acceleration in transactions in the quarter as you guys have I guess rolled out those tacos?

So keep in mind, we've only been at for two weeks but yes we do see an acceleration and that I think about the tacos is, it is completely different than the items we currently sell on the menu. The goal is that those give our loyal burrito customers one more reason to come back and that customers that aren’t currently with us that we’re looking for something different now have a differentiated offering. And I can tell you that the tacos, if you read anything that’s in social media on Knockout Tacos, people absolutely love the flavors that are being presented in these tacos it is a pretty insane product. And it’s got I mentioned some of the flavors. But this isn’t a typical taco and we’ve got bacon in some of the tacos and obviously various cheeses and what have you. So people are people really enjoying that. And we would, we would really think look forward to any kind of product development, creating this type of buzz. We don’t for this brand that’s going to focus on flavor want to put out things that don’t really have sort of this ingredient lineup and flavor profile that people would want to rave about.

Got it, so we are seeing an acceleration in transactions and it’s also got a 999 price point. I guess, in the markets that I’ve looked at. So it sounds like it could also potentially be an average check driver, comping over some of those big mix numbers that we saw in the first half of last year. So are we going to be able to keep the mix flattish or should we still think about maybe positive transactions and negative mix.

So first just a clarification the retail that you see out there is a three for $9 price point and then if there are ala carte they are little bit over $3 each right about $3.50. So that’s, that’s how you should look at the retail. As far as an opportunity to increase average check that really does come down to whether or not this is incremental, right. If we’re drawing in additional visits new consumers and we’re not getting traded away from to burritos then this could be nice trade up and could possibly impact the average check. But I think with a couple weeks under our belt it’s too soon to tell but that’s obviously the goal.

Okay. And I just got one on just on Qdoba, on the you newer stores, are we entering any new markets this year? How many remodels are we thinking about doing this year? How are AUVs on new stores trending? Any color on the new units and the strategy there?

So keep in mind we’re going to host the May meeting in Kansas City because that is a new market that we’ve entered into which means this is going to have the new design elements and that’s what we’d like you to see because it will be reflective of also what you’d see in remodel. So, yes we’re entering into some new markets, there are 25 to 30 remodels you can expect this year, so we’ll get a good read on impact and then also be able to start predicting the phase of that change going forward.

Thank you.

Operator, I think we have time for one more question.

Certainly, ma'am. Our last question will be coming from line of Joe Buckley. Sir, your line is open.

Thank you, I just wanted to go back to the pension expense and what that is likely to look like after fiscal 2016, does that ratchet down again in 2017, and what would be your expectations beyond this year?

Yes. So, Joe, let me just tell you that this year we’re seeing - in 2016, we’ll have three months worth of service cost in our pension, and then after January of 2016, we’ll no longer be accruing any service related cost to that. So in 2017 and forward you wouldn’t have any service cost to the entire year, so everything else being equal, you would expect lower pension cost in 2017 and forward versus what you’re seeing in 2016. The other thing that I will mention is, with the sunset of the pension plan, the volatility should be lower in 2017 and forward than what we’ve currently seen as we would expect a significantly lower impact from a discount rate change than what we have in the past again related to the sunsetting of the plan and there not being any service related cost in there, so does that answer your question?

Can you quantify the service cost this year, Jerry?

Well, the $5.2 million number at lower pension expense is due entirely to the service cost, we actually had some increase in pension related to mortality tables and things such as that. So but if you just, if you looked at this and you say we’re generating about $5.2 million over nine months, you might expect a pro rata lower number for the three months in fiscal 2017, so in the $1.7 million range, but don’t hold me to that it’s just an estimate at this point, but you’ll see it lower.

It's very helpful. Thank you.

I think that's all the time we have for today, so we look forward to seeing you at a couple of upcoming conferences and our May Analyst Day, look for details to come out on that and we’ll see you in December.

Thank you. And that concludes today’s conference call. Thank you all for participating. You may now disconnect.