Jack In The Box 2009 Annual Report Download - page 7
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Table of Contents
The following table summarizes the changes in the number of company-operated and franchised Qdoba restaurants since the
beginning of fiscal 2005:
Company-operated restaurants:
Beginning of period 111 90 70 57 47
New 24 21 10 13 12
Refranchised — — — — (4)
Closed — — — — (1)
Acquired from franchisees 22 — 10 — 3
End of period total 157 111 90 70 57
% of system 31% 24% 23% 22% 23%
Franchised restaurants:
Beginning of period 343 305 248 193 130
New 38 56 77 58 65
Refranchised — — — — 4
Closed (6) (18) (10) (3) (3)
Acquired from franchisees (22) — (10) — (3)
End of period total 353 343 305 248 193
% of system 69% 76% 77% 78% 77%
System end of period total 510 454 395 318 250
Restaurant Expansion. Our long-term growth strategy for our Jack in the Box brand consists of continued restaurant expansion,
including expansion into new contiguous markets through Company investment and franchise development. Qdoba’s growth is expected
to come primarily from increasing the number of franchise-developed locations. We remain committed to growing our fast-casual
subsidiary and believe that Qdoba has significant expansion potential.
Site Selection and Design. Site selections for all new company-operated restaurants are made after an economic analysis and a
review of demographic data and other information relating to population density, traffic, competition, restaurant visibility and access,
available parking, surrounding businesses and opportunities for market penetration. Restaurants developed by franchisees are built to our
specifications on sites we have reviewed.
We have a restaurant prototype with different seating capacities to help reduce costs and improve our flexibility in locating
restaurants. Management believes that the flexibility provided by the alternative configurations enables the Company to match the
restaurant configuration with the specific economic, demographic, geographic and physical characteristics of a particular site. The
majority of our Jack in the Box restaurants are constructed on leased land. Typical costs to develop a traditional Jack in the Box
restaurant, excluding the land value, range from $1.3 million to $1.8 million. Whenever possible, we use sale and leaseback financing
and other means to lower the initial cash investment in a typical Jack in the Box restaurant to the cost of equipment, which averages
approximately $0.4 million. Qdoba restaurant development costs typically range from $0.5 million to $1.2 million depending on
geographic region with most closer to the lower end of the range.
Jack in the Box. The Jack in the Box franchise agreement generally provides for an initial franchise fee of $50,000 per restaurant
for a 20-year term, and in most instances, marketing fees at 5% of gross sales. Royalty rates, typically 5% of gross sales, range from
2.5% to as high as 15% of gross sales, and some existing agreements provide for variable rates. We offer development agreements for
construction of one or more new restaurants over a defined period of
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