Jack In The Box 2007 Annual Report Download - page 16

Cheddar Ciabatta, the Sirloin Steak ‘n’ Mushroom Ciabatta and the 100% Sirloin Burger. We were the first
major QSR chain to add sirloin steak to the menu and believe this high-quality ingredient can serve as a
broad platform from which we can launch additional innovative products, such as the Sirloin Steak ‘n’ Egg
Burrito that we added to our breakfast menu, which unlike many other chains is served all day, every day.
During the year we enhanced our line of entrée salads with a choice of warm grilled or crispy chicken strips
and a new lettuce blend that’s primarily romaine and spring mix. We also expanded our finger-foods menu to
include Mozzarella Cheese Sticks and Spicy Chicken Bites, which are two of the three sides featured in our
new Sampler Trio, along with stuffed jalapenos. We added a bundt-style Chocolate Overload Cake to our
dessert menu, and introduced several variations of our popular shakes, including Andes»Mint, Blackberry
and Chocolate Oreo». The real vanilla ice cream that we use in our shakes was also used to create a new line
of refreshing beverages, Real Ice Cream Floats, which our guests can customize with their choice of soda,
including Barq’s»Root Beer, Dr Pepper»and Fanta»orange. We also added a Grilled Cheese Sandwich as a
new option for Jack’s Kid’s Meal». Additional premium-quality products are in various stages of test and
development as we continue to innovate and enhance product quality as a means to differentiate our menu
from other QSR chains.
•Service. A second major aspect of brand reinvention is to improve the level and consistency of guest
service. In fiscal 2007, we continued to build upon recent internal service initiatives to help us attract higher-
quality applicants for team-member positions. These initiatives are designed to improve employee pro-
ductivity, maximize retention, and reduce employee training costs. They include access to affordable
healthcare for our employees meeting certain requirements, an ESL (English-as-a-second-language) pro-
gram for our Spanish-speaking team members, and computer-based training in all of our restaurants.
Additionally, we plan to leverage new technologies to improve speed of service and guest satisfaction. As an
example, in 2007 the company equipped all restaurants with “contactless” credit-card readers, enabling
guests to pay at the front counter or drive-thru simply by holding their cards in front of the device. We are
also testing self-serve kiosks, which offer guests an alternative method of ordering inside Jack in the Box
restaurants. And at certain high-volume locations, team members are positioned near the drive-thru menu
board to process orders utilizing a portable wireless communications device.
•Environment. The third element of brand reinvention is the major renovation of our restaurant facilities. In
fiscal 2007, approximately 200 restaurants were re-imaged with a comprehensive program that includes a
complete redesign of the dining room and common areas. Interior finishes include ceramic tile floors, a mix
of seating styles, decorative pendant lighting, and graphics and wall collages. Other elements of the program
may include flat-screen televisions, music, and new team member uniforms and product packaging, along
with new paint schemes, landscaping and other exterior enhancements. We are seeing positive sales trends in
markets that have been re-imaged, and in consumer surveys conducted in those markets, our guests rated re-
imaged restaurants higher on attributes ranging from being trendy and a good dining destination to providing
friendly, consistent customer service. We believe it is important to create a “destination dining” experience
for guests while remaining consistent with our goals of upgrading the quality of our food and guest service.
Strategic Plan —Franchising Strategy. Our third strategic initiative is to continue expanding our franchising
operations to generate higher margins and returns for the Company, while mitigating business-cost and investment
risks. In fiscal 2007, we sold 76 company-operated JACK IN THE BOX restaurants to franchisees. Additionally,
franchisees developed 16 new JACK IN THE BOX and 77 new Qdoba restaurants during the year and signed
development agreements to expand the JACK IN THE BOX brand into three new contiguous markets: Albuquerque,
New Mexico, Midland/Odessa, Texas, and Abilene/San Angelo, Texas. The first restaurants in these new markets
are scheduled to open in 2008.
Through continued refranchising and development of new franchised restaurants, our long-term goal is to grow
the percentage of franchise ownership of the JACK IN THE BOX system by approximately 5% annually and move
toward an ultimate goal of 70-80%, which is more closely aligned with that of the QSR industry. The JACK IN THE
BOX system is currently about 33% franchised.
Strategic Plan —Improve the Business Model. As JACK IN THE BOX transitions to a business model comprised
of predominantly franchised restaurant locations, this initiative is designed to improve the profitability and returns
3