Jack In The Box 2009 Annual Report Download - page 24

Table of Contents
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Restaurant sales decreased 6.0% in 2009 and 2.3% 2008, primarily reflecting the sale of Jack in the Box company-operated
restaurants to franchisees. To a lesser extent, decreases in same-store sales at Jack in the Box restaurants in 2009 and Qdoba restaurants
in both years also contributed to the sales decline. Additionally, in 2008, the loss of approximately 1,300 restaurant operating days due to
the impact of Hurricane Ike contributed to the decline in restaurant sales. These decreases were partially offset by an increase in the
number of Qdoba company-operated restaurants and, in 2008, modest increases in per store average (“PSA”) sales at Jack in the Box
company-operated restaurants. Same-store sales at Jack in the Box company-operated restaurants decreased 1.2% in 2009 compared with
a 0.2% increase in 2008 and include the impact of price increases of approximately 2.8% and 2.2%, respectively.
Distribution sales to Jack in the Box and Qdoba franchisees grew to $302.1 million in 2009 from $275.2 million in 2008 and
$222.6 million in 2007. The increase in distribution sales in 2009 and 2008 primarily relates to an increase in the number of Jack in the
Box and Qdoba franchised restaurants serviced by our distribution centers, partially offset by lower per store average volumes in 2009.
Higher food costs in 2008 also contributed to the sales increase per comparison with 2007.
The following table reflects the detail of our franchised restaurant revenues in each year (dollars in thousands):
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Royalties $ 79,690 $ 68,811 $ 58,070
Rents 103,784 86,310 72,830
Franchise fees and other(1) 9,645 7,639 8,986
Franchised restaurant revenues $193,119 $162,760 $139,886
% change 18.7% 16.4% 27.5%
Average number of franchised restaurants 1,215 1,068 918
Jack in the Box effective royalty rate 5.3% 5.1% 5.0%
Qdoba effective royalty rate 5.0% 5.0% 5.0%
(1) Includes re-image contributions to franchisees of $3.7 million, $2.1 million and $0.1 million in 2009, 2008 and 2007, respectively,
which were recorded as a reduction of franchised restaurant revenues.
The increase in franchised restaurant revenues is primarily attributable to an increase in the number of franchised restaurants
reflecting the franchising of Jack in the Box company-operated restaurants and new restaurant development by Qdoba and Jack in the
Box franchisees.
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Food and packaging costs decreased to 32.4% of restaurant sales in 2009 from 33.4% in 2008 and compared with 31.9% in 2007.
The decline in 2009 included the benefit of selling price increases, favorable product mix changes and margin improvement initiatives,
offset in part by commodity cost increases of approximately 2.0%. In 2008, higher commodity costs, primarily cheese, shortening, eggs,
and beef were partially offset by selling price increases.
Payroll and employee benefit costs improved to 29.7% of restaurant sales in 2009 and 2008 from 30.0% in 2007, due primarily to
labor productivity initiatives and lower workers’ compensation costs which more than offset minimum wage increases.
Occupancy and other costs were 21.7% of restaurant sales in 2009, 20.9% in 2008 and 20.3% in 2007. The percent of sales increase
in 2009 was due primarily to higher depreciation expense related to the ongoing re-image program at Jack in the Box restaurants and a
kitchen enhancement project completed in 2008, higher rent and depreciation related to new restaurant development at Qdoba and sales
deleverage at Jack in the Box and Qdoba restaurants, which were partially offset by lower utility costs. The percentage increase in 2008 is
primarily attributable to higher utility costs and an increase in depreciation expense related to our re-image and kitchen enhancement
programs.
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