Jack In The Box 2009 Annual Report Download - page 8

Table of Contents
time and in a defined geographic area. Developers are required to pay a fee, a portion of which may be credited against franchise fees due
when restaurants open in the future. Developers may forfeit such fees and lose their rights to future development if they do not maintain
the required schedule of openings. In fiscal 2009, we began offering a new market development incentive to our franchisees whereby the
first 10% of restaurants opening on schedule in a new market may be eligible to receive a royalty rate reduction of 2.5% of gross sales for
the first two years after opening, subject to certain limitations.
In connection with the sale of a company-operated restaurant, the restaurant equipment and the right to do business at that location
are sold to the franchisee. The aggregate price is equal to the negotiated fair market value of the restaurant as a going concern, which
depends on various factors, including the history of the restaurant, its location and its sales and cash flow potential. In addition, the land
and building are leased or subleased to the franchisee at a negotiated rent, generally equal to the greater of a minimum base rent or a
percentage of gross sales. The franchisee is usually required to pay property taxes, insurance and maintenance costs.
We view our non-franchised Jack in the Box restaurants as a resource, which based on our strategic plan, can be sold to
franchisees, thereby providing increased cash flows and gains when sold while still generating future cash flows and earnings through
franchise rents and royalties.
Qdoba Mexican Grill. The current Qdoba franchise agreement provides for, in most instances, an initial franchise fee of $30,000
per restaurant, a 10-year term with a 10-year option to extend, royalties of 5% of gross sales and marketing fees of up to 2% of gross
sales. We typically offer area development agreements for the construction of 5 to 20 new restaurants over a defined period of time and in
a defined geographic area for a development fee, a portion of which may be credited against franchise fees due for restaurants to be opened
in the future. If the developer does not maintain the required schedule of openings, they may forfeit such fees and lose their rights to future
development.
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Restaurant Management. Restaurants are operated by a company-employed manager or a franchisee that is directly responsible for
the operations of the restaurant, including product quality, service, food safety, cleanliness, inventory, cash control and the conduct and
appearance of employees. Our restaurant managers are required to attend extensive management training classes involving a combination
of classroom instruction and on-the-job training in specially designated training restaurants. Restaurant managers and supervisory
personnel train other restaurant employees in accordance with detailed procedures and guidelines using training aids available at each
location. We also use an interactive system of computer-based training (“CBT”), with a touch-screen computer terminal at our Jack in the
Box restaurants. The CBT technology incorporates audio, video and text, all of which are updated on the computer via satellite
technology. CBT is also designed to reduce the administrative demands on restaurant managers.
For Company operations, regional group vice presidents supervise regional directors, who supervise area coaches, who in turn
supervise restaurant managers. Under our performance system, regional group vice presidents, regional directors, area coaches and
restaurant managers are eligible for periodic bonuses based on achievement of goals related to location sales, our “Voice of the Guest”
consumer feedback program, profitability and/or certain other operational performance standards.
Customer Satisfaction. We devote significant resources toward ensuring that all restaurants offer quality food and good service. We
place great emphasis on ensuring that ingredients are delivered timely to the restaurants. Restaurant food production systems are
continuously developed and improved, and we train our employees to be dedicated to delivering consistently good service. Through our
network of quality assurance, facilities services and restaurant management personnel, we standardize specifications for food preparation
and service, employee conduct and appearance, and the maintenance of our restaurant premises. Operating specifications and procedures
are documented in on-line reference manuals and CBT presentations. During fiscal 2009, most Jack in the Box restaurants received at
least two quality, food safety and cleanliness inspections. In addition, our “Voice of the Guest” program provides restaurant managers
with guest surveys each period regarding their Jack in the Box experience. In 2009, we received more than one million guest survey
responses. We also receive guest feedback through our 800 number.
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