Jack in the Box Suspends Dividend to Preserve Cash Amid Outbreak

(Bloomberg) -- Jack in the Box Inc. is suspending its quarterly dividend to preserve cash as the coronavirus outbreak upends the restaurant industry.

The fast-food chain, which has also halted share repurchases, plans to revisit its capital allocation priorities in the third quarter with the goal of reinstating the dividend once it has “more clarity around the scope and duration of the disruption,” it said Wednesday in a statement. Jack in the Box ended the second quarter with $169 million in cash.

“In the context of an unprecedented global pandemic, the company believes it is prudent to maintain maximum financial flexibility,” it said in the statement. The company already made one 40-cent per share dividend payment earlier this year.

Jack in the Box joins a growing list of food-service companies looking to fortify their financial position as nationwide lockdowns batter the restaurant industry. Even as some states begin to reopen, it’s unclear whether and how quickly customers will begin to shop and eat out again. Fast-food operators, however, seem to be seeing improvement faster than other restaurants, initial data show.

The company listed close to $1.4 billion of debt on its balance sheet, excluding current maturities, as of April 12.

Cheesecake Factory Inc., Dine Brands Global Inc. and Dunkin’ Brands Group Inc. have also suspended dividend payments as restaurant operators take action to preserve liquidity.

Same-store sales, a closely watched retail metric, fell 4.2% in the quarter at Jack in the Box as demand fell sharply at the end of the period, the company said. Adjusted earnings fell to 50 cents a share from 99 cents a year ago.

The shares fell 3.8% to $61.17 in late trading at 5:08 p.m. in New York.

©2020 Bloomberg L.P.