Jack In The Box 2007 Annual Report Download - page 19

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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 restaurant businesses as a potential resource which, on a selected
basis, can be sold to a franchisee, thereby providing current increased cash flows and gains while still generating
future cash flows and earnings through franchise rents and royalties.
Qdoba Mexican Grill. We plan to continue to grow the Qdoba brand, primarily through increased franchising
activities. 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 fee and lose their rights to future development. Effective January 1,
2007, the Qdoba franchise agreement provides for an initial franchise fee of $30,000 (previously $25,000) per
restaurant, royalties of 5% of gross sales, marketing fees of up to 2% of gross sales and, in most instances, a 10-year
term with a 10-year option to extend.
Restaurant Operations
Restaurant Management. Restaurants are operated by a company-employed manager or a franchisee who is
directly responsible for the operations of the restaurant, including product quality, service, food handling 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.
Regional vice presidents or regional directors supervise area coaches who supervise restaurant managers.
Under our performance system, regional vice presidents, regional directors, area coaches and restaurant managers
are eligible for periodic bonuses based on achievement of location sales and profit improvement and/or certain other
operational performance standards.
Customer Satisfaction. We devote significant resources toward ensuring that all restaurants offer quality
food and good service. Emphasis is placed 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 distribution, quality assurance, facilities
services and restaurant management personnel, we standardize specifications for food preparation and service,
employee conduct and appearance, and the maintenance and repair of our premises. Operating specifications and
procedures are documented in on-line reference manuals and CBT presentations. During fiscal year 2007, most
JACK IN THE BOX restaurants received approximately four quality, food safety and cleanliness inspections. In
addition, our “Voice of the Guest” program provides restaurant managers with guest surveys each week regarding
their JACK IN THE BOX experience. In 2007, we received more than one million guest survey responses.
Quality Assurance
Our “farm-to-fork” food safety and quality assurance program is designed to maintain high standards for the
food products and food preparation procedures used by company-operated and franchised restaurants. We maintain
product specifications and approve product sources. We have a comprehensive, restaurant-based Hazard Analysis &
Critical Control Points (“HACCP”) system for managing food safety and quality. HACCP combines employee
training, testing by suppliers, and detailed attention to product quality at every stage of the food preparation cycle.
The USDA, FDA and the Center for Science in the Public Interest have recognized our HACCP program as a leader
in the industry. For example, in 2004, we won the Black Pearl Award, presented annually by the International
Association of Food Protection to the company that most successfully advances food safety and quality in the world.
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