Jack In The Box 2006 Annual Report Download - page 27

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the sections captioned “Business,” “Legal Proceedings,” the “Consolidated Financial Statements” and
“Management’ s Discussion and Analysis of Financial Condition and Results of Operations,” including statements
regarding our strategic plans and operating strategies. Although we believe that the expectations reflected in our
forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially
incorrect due to known and unknown risks and uncertainties.
In some cases, information regarding certain important factors that could cause actual results to differ materially
from any forward-looking statement appears together with such statement. In addition, the factors described under
Critical Accounting Policies and Risk Factors, as well as other possible factors not listed, could cause actual results
and/or goals to differ materially from those expressed in forward-looking statements.
ITEM 1A. RISK FACTORS
Risks Related to the Food Service Industry. Food service businesses may be materially and adversely affected by
changes in consumer tastes, national, regional and local economic and political conditions, demographic trends, and
the impact on consumer eating habits of new information regarding diet, nutrition and health. The performance of
individual restaurants may be adversely affected by factors such as traffic patterns, demographics and the type,
number and location of competing restaurants.
Multi-unit food service businesses such as ours can also be materially and adversely affected by widespread
negative publicity of any type, but particularly regarding food quality, fat content, illness (such as epidemics or the
prospect of a pandemic such as avian flu), obesity, injury or other health concerns with respect to certain foods. To
minimize the risk of food-borne illness, we have implemented a HACCP system for managing food safety and
quality. Nevertheless, the risk of food-borne illness cannot be completely eliminated. Any outbreak of such illness
attributed to our restaurants or within the food service industry or any widespread negative publicity regarding our
brands or the restaurant industry in general could have a material adverse effect on our financial condition and
results of operations.
Dependence on frequent deliveries of fresh produce and groceries subjects food service businesses, such as ours,
to the risk that shortages or interruptions in supply, caused by adverse weather or other conditions, could adversely
affect the availability, quality and cost of ingredients. In addition, unfavorable trends or developments concerning
factors such as inflation, increased cost of food, labor, fuel, utilities, technology, insurance and employee benefits
(including increases in hourly wage, and workers’ compensation and other insurance premiums), increases in the
number and locations of competing restaurants, regional weather conditions and the availability of experienced
management and hourly employees, may also adversely affect the food service industry in general. Because our
restaurants are predominantly company-operated, we may have greater exposure to operating cost issues than chains
that are primarily franchised. Changes in economic conditions affecting our customers could reduce traffic in some
or all of our restaurants or impose practical limits on pricing, either of which could have a material adverse effect on
our financial condition and results of operations. Our continued success will depend in part on our ability to
anticipate, identify and respond to changing conditions.
Risks Associated with Our Development. We intend to grow primarily by developing additional company-owned
restaurants and through new restaurants to be developed by franchisees. Development involves substantial risks,
including the risk of (i)the availability of financing for the Company and to franchisees at acceptable rates and
terms, (ii) development costs exceeding budgeted or contracted amounts, (iii) delays in completion of construction,
(iv) the inability to identify, or the unavailability of suitable sites, both traditional and nontraditional, on acceptable
leasing or purchase terms, (v) developed properties not achieving desired revenue or cash flow levels once opened,
(vi) competition for suitable development sites; (vii) incurring substantial unrecoverable costs in the event a
development project is abandoned prior to completion, (viii) the inability to obtain all required governmental
permits, including, in appropriate cases, liquor licenses; (ix) changes in governmental rules, regulations, and
interpretations (including interpretations of the requirements of the American with Disabilities Act, (ADA) and (x)
general economic and business conditions.
Although we intend to manage our development to reduce such risks, we cannot assure you that present or future
development will perform in accordance with our expectations. We cannot assure you that we will complete the
development and construction of the facilities, or that any such development will be completed in a timely manner