Jack In The Box 2007 Annual Report Download - page 15

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PART I
ITEM 1. BUSINESS
The Company
Overview. Jack in the Box Inc. (the “Company”), based in San Diego, is a restaurant company that operates
and franchises more than 2,500 quick-service and fast-casual restaurants under the brand names JACK IN THE BOX»
and Qdoba Mexican Grill». The Company also operates a proprietary chain of convenience stores called Quick
Stuff», with 60 locations, each built adjacent to a full-size JACK IN THE BOX restaurant and including a major-brand
fuel station. In fiscal 2007, we generated total revenues of $2.9 billion. References to the Company throughout this
Annual Report on Form 10-K are made using the first person notations of “we,” “us” and “our.”
JACK IN THE BOX — The first JACK IN THE BOX restaurant, which offered only drive-thru service, opened in 1951.
JACK IN THE BOX is one of the nation’s largest hamburger chains, and, based on the number of units, is the second or
third largest quick-service hamburger chain in most of our major markets. As of the end of our fiscal year on
September 30, 2007, the JACK IN THE BOX system included 2,132 restaurants in 17 states, of which 1,436 were
company-operated and 696 were franchise-operated.
Qdoba Mexican Grill — To supplement our core growth and balance the risk associated with growing solely in
the highly competitive hamburger segment of the quick service restaurant (“QSR”) industry, on January 21, 2003,
we acquired Qdoba Restaurant Corporation, operator and franchisor of Qdoba Mexican Grill, expanding our growth
opportunities into the fast-casual restaurant segment. As of September 30, 2007, the Qdoba system included 395
restaurants in 39 states, as well as the District of Columbia, of which 90 were company-operated and 305 were
franchise-operated.
Strategic Plan. Our Company vision of being a national restaurant company is supported by four key
strategic initiatives: (i) grow JACK IN THE BOX and Qdoba Mexican Grill, (ii) reinvent the JACK IN THE BOX brand,
(iii) expand franchising operations, and (iv) improve the business model.
Strategic Plan —Growth Strategy. Our growth strategy includes increasing same-store sales and new unit
growth at JACK IN THE BOX and Qdoba concepts.
•JACK IN THE BOX Growth. Sales at company-operated JACK IN THE BOX restaurants open more than one year
(“same-store sales”) increased 6.1% in fiscal 2007, primarily due to the progress we have made in
reinventing the JACK IN THE BOX brand. We believe continued success in executing that strategy will
continue to drive customer traffic and grow sales. In fiscal 2007, we opened 42 new company-operated
restaurants, including five with our proprietary QUICK STUFF convenience-store and fuel-station business, and
our franchisees opened 16 new restaurants. Restaurant growth in fiscal 2007 included expansion into a new
contiguous market, Corpus Christi, Texas. In 2008, we plan to open 35-45 new company and franchise-
operated restaurants and expand into new contiguous markets, in Colorado, New Mexico and Texas, through
both company investment and franchise development.
•Qdoba Growth. In 2007, we opened 87 new company and franchise-operated Qdoba restaurants, and plan
to add 75-90 new units in fiscal 2008. We will continue to actively expand our fast-casual subsidiary,
primarily through aggressive franchise growth. With a substantial number of new restaurants in the
development pipeline and a 4.6% increase in system same-store sales in fiscal 2007, Qdoba is a leader
in this segment of the restaurant industry.
Strategic Plan —Brand Reinvention. We believe that reinventing the JACK IN THE BOX brand will differentiate
us from our competition by offering our guests a better restaurant experience than typically found in the QSR
segment. We are pursuing a holistic approach in reinventing the brand by focusing on the following major initiatives
of menu innovation, service and environment:
•Menu Innovation. We believe that menu innovation and our use of high-quality ingredients will further
differentiate JACK IN THE BOX from competitors, strengthen our brand and appeal to a broader base of
consumers. In support of this initiative, we enhanced the JACK IN THE BOX menu in fiscal 2007 with several
distinctive products, including burgers and sandwiches made with sirloin steak, like the Sirloin Steak ’n’
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