Jack In The Box 2008 Annual Report Download - page 18

Seasonality
Restaurant sales and profitability are subject to seasonal fluctuations, and are traditionally higher during the
spring and summer months because of factors such as increased travel and improved weather conditions, which
affect the public’s dining habits.
Competition and Markets
The restaurant business is highly competitive and is affected by the competitive changes in a geographic area,
changes in the public’s dining habits and preferences, new information regarding diet, nutrition and health, local and
national economic conditions affecting consumer spending habits, population trends and traffic patterns. Key
elements of competition in the industry are the type and quality of the food products offered, price, quality and
speed of service, personnel, advertising, name identification, restaurant location and attractiveness of the facilities.
Each JACK IN THE BOX and Qdoba restaurant competes directly and indirectly with a large number of national
and regional restaurant chains, as well as with locally owned quick-service restaurants and the fast-casual segment.
In selling franchises, we compete with many other restaurant franchisors, some of whom have substantially greater
financial resources and higher total sales volume.
Regulation
Each restaurant is subject to regulation by federal agencies, as well as licensing and regulation by state and
local health, sanitation, safety, fire, zoning, building and other departments. Difficulties or failures in obtaining and
maintaining any required permits, licensing or approval could result in closures of existing restaurants or delays or
cancellations in the opening of new restaurants.
We are also subject to federal and state laws regulating the offer and sale of franchises. Such laws impose
registration and disclosure requirements on franchisors in the offer and sale of franchises and may also apply
substantive standards to the relationship between franchisor and franchisee, including limitations on the ability of
franchisors to terminate franchises and alter franchise arrangements. We believe we are operating in compliance
with applicable laws and regulations governing our operations.
We are subject to the Fair Labor Standards Act and various state laws governing such matters as minimum
wages, exempt status classification, overtime and other working conditions. A significant number of our food
service personnel are paid at rates related to the federal and state minimum wage, and accordingly, increases in the
minimum wage increase our labor costs. Federal and state laws may also require us to provide paid and unpaid leave
to our employees, which could result in significant additional expense to us.
We are subject to certain guidelines under the Americans with Disabilities Act of 1990 and various state codes
and regulations, which require restaurants to provide full and equal access to persons with physical disabilities. To
comply with such laws and regulations, the cost of remodeling and developing restaurants has increased.
We are also subject to various federal, state and local laws regulating the discharge of materials into the
environment. The cost of complying with these laws increases the cost of operating existing restaurants and
developing new restaurants. Additional costs relate primarily to the necessity of obtaining more land, landscaping
and storm drainage control and the cost of more expensive equipment necessary to decrease the amount of effluent
emitted into the air, ground and surface waters.
Our Qdoba restaurants and Quick Stuff convenience stores sell alcoholic beverages, which require licensing.
The regulations governing licensing may impose requirements on licensees including minimum age of employees,
hours of operation, advertising and handling of alcoholic beverages. The failure of a Qdoba Mexican Grill
restaurant or Quick Stuff convenience store to obtain or retain a license could adversely affect the store’s results of
operations. We have processes in place to monitor compliance with applicable laws and regulations governing
alcoholic beverages.
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