Jack In The Box 2008 Annual Report Download - page 4

• Menu innovation. We will continue to differentiate our
Jack in the Box menu and broaden the brand’s consumer
appeal by developing new products and platforms that are
unique to the QSR segment. In fiscal 2008, we rolled out
several new product platforms, including Real Fruit Smoothies
and Breakfast Bowls, and we continued to enhance our menu
with products featuring premium ingredients like sirloin steak.
• Enhanced restaurant environment. In 2008, we continued
re-imaging restaurants with a comprehensive program that
includes a complete redesign of the dining room and common
areas. We re-imaged 270 company restaurants during the
year while franchisees re-imaged another 85 locations. With
more than 40% of the Jack in the Box system now reflecting
our updated look, we believe there is an immediate opportunity
to achieve a more cohesive brand image in all of our markets
by completing all exterior elements of our re-image program
by the end of fiscal 2009. These enhancements include new
paint schemes, lighting and landscaping. We remain on track
to complete the interior re-image of all restaurants, including
franchise locations, by the end of fiscal year 2011.
• Service improvements. To improve the level and consistency
of guest service, we will continue to focus on increasing
productivity, maximizing retention and leveraging new tech-
nologies to improve speed of service and guest satisfaction
at Jack in the Box. As an example, in 2008 we expanded our
test of self-serve kiosks, which offer guests an alternative
method of ordering inside our restaurants. We plan to install
these kiosks at more locations in 2009 where the frequency
of use is expected to be highest, based on restaurants that
experienced positive results in the test.
Moving on to our next strategic initiative, we plan to continue
expanding franchising to generate higher margins and returns
for the company while creating a business model that is less
capital intensive and not as susceptible to cost fluctuations.
Our long-term goal is to increase the percentage of franchise
ownership to the 70% to 80% range by the end of fiscal year
2013 through acceleration of refranchising and franchisee
development of new restaurants.
In fiscal 2009, we sold 109 company-operated restaurants to
franchisees, with gains on sale totaling $66.3 million. Despite
the tightening of the credit markets, the number of restaurants
sold and the gains on sale exceeded the company’s guidance for
fiscal year 2008. Over the last three years, we have refranchised
267 restaurants and increased franchise ownership from 25%
to 38% of the system.
Our third major strategic initiative is improving the business
model to improve restaurant profitability and returns as
Jack in the Box transitions to a new business model comprised
of predominantly franchised restaurant locations. Selling our
chain of 61 Quick Stuff convenience stores will further enable
us to maximize the potential of our Jack in the Box and Qdoba
brands. We’ll continue to focus on reducing food, packaging
and labor costs through product design, menu innovation and
operations simplification, as well as pricing optimization. As
the percentage of franchised locations increases, SG&A will
continue to decrease.
Growth is our final major strategic initiative, with our goal to
grow earnings, same-store sales, and other key operating and
financial metrics, as well as expand the Jack in the Box and
Qdoba brands. Both brands will continue to fill in existing
markets, as well as enter new markets. In fiscal 2008, 38
Jack in the Box restaurants opened, including 15 franchised
locations, and 77 new Qdoba restaurants opened, including
56 franchised locations.