Jack In The Box 2006 Annual Report Download - page 11

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ON FRANCHISING
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The third major initiative of our strategic plan is to increase franchising activities, including
new unit development for Jack in the Box and Qdoba as well as the continued sales of
company-operated Jack in the Box restaurants to franchise operators. Since announcing
this focus of our strategic plan, we’ve increased franchise ownership of the Jack in the Box
system to more than 29 percent. Our long-term goals are to grow the percentage of franchise
ownership by approximately 5 percent a year and to move toward a range of franchise
ownership more closely aligned with that of the QSR industry.
Last year, we refranchised 82 Jack in the Box restaurants, including all 25 company locations
in Hawaii. The sale of our Hawaii restaurants was significant for several reasons, not the
least of which is that it contributed 25 cents to EPS and will have a neutral effect on future
earnings. The operator acquiring the restaurants is new to the Jack in the Box system but
with years of experience in managing and growing other major QSR brands in Hawaii. We
will continue to explore opportunities to franchise whole markets – through sales of company
restaurants and through new development agreements.
Franchising is a proven economic model and a growth vehicle in an industry that is mostly
franchised. Qdoba, for example, is approximately 80 percent franchised, and we plan to
continue growing that brand predominantly through franchising. Franchising adds flexibility
to our growth strategy and provides an opportunity to penetrate new markets with local
operators while also mitigating increases in operating costs and investment risks. Our
franchising strategy is already contributing to higher margins, returns, profits and cash
flows, which we expect will continue to improve.
Congratulations to Gary Beisler, CEO and president of Qdoba Restaurant Corp., who received a prestigious Golden Chain award from Nation’s
Restaurant News at the 2006 MUFSO conference in Dallas. The award recognized Gary’s accomplishments as the senior executive at Qdoba.
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