Jack In The Box 2008 Annual Report Download - page 10

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PART I
ITEM 1. BUSINESS
The Company
Overview. Jack in the Box Inc. (the “Company”), based in San Diego, California, is a restaurant company
that operates and franchises more than 2,600 quick-service and fast-casual restaurants under the brand names JACK
IN THE BOX»and Qdoba Mexican Grill». In fiscal 2008, we generated total revenues from continuing operations of
$2.5 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 28, 2008, the JACK IN THE BOX system included 2,158 restaurants in 18 states, of which 1,346 were
company-operated and 812 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 28, 2008, the Qdoba system included 454
restaurants in 41 states, as well as the District of Columbia, of which 111 were company-operated and 343 were
franchise-operated.
Discontinued Operations — We also operate a proprietary chain of convenience stores called Quick Stuff»,
with 61 locations, each built adjacent to a full-size JACK IN THE BOX restaurant and including a major-brand fuel
station. In the fourth quarter of 2008, our Board of Directors approved a plan to sell Quick Stuff to maximize the
potential of the JACK IN THE BOX and Qdoba brands. Refer to Note 2, Discontinued Operations, in the notes to the
consolidated financial statements for more information.
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. In addition to driving increases in certain key financial metrics, such as
earnings per share and restaurant operating margin, 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 0.2% in fiscal 2008. On a two-year cumulative basis, same-store sales were
up 6.3%, primarily due to the progress we have made in reinventing the JACK IN THE BOX brand. We believe
our success in executing the brand re-invention strategy will continue to drive customer traffic and grow
sales. In fiscal 2008, we opened 23 company-operated restaurants and franchisees opened 15 locations.
Restaurant growth in fiscal 2008 included expansion into Denver, Colorado, and three other new contiguous
markets in Texas. In 2009, we plan to open 40-45 company and franchise-operated restaurants.
•Qdoba Growth. In fiscal 2008, 21 company-operated Qdoba restaurants opened, along with 56 franchised
locations. Our Qdoba system is primarily franchised, and although our strategy is to continue expanding this
fast-casual subsidiary primarily through franchised growth, we plan to increase the number of new
company-operated locations, primarily due to the attractive returns these restaurants have generated on
our investment. With a substantial number of new restaurants in the development pipeline and system same-
store sales growth of 1.6% in fiscal 2008 and 6.2% on a two-year cumulative basis. Qdoba has emerged as a
leader in this segment of the restaurant industry. In 2009, we plan to open 60-80 restaurants, including 30-50
franchised locations.
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