Jack In The Box 2010 Annual Report Download - page 23

Table of Contents
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As we execute our refranchising strategy, which includes the sale of restaurants to franchisees, we expect the number of company-
operated restaurants and the related sales to continually decrease while revenues from franchise restaurants increase. Company restaurant
sales decreased $307.3 million in 2010 and $125.7 million in 2009 compared with the prior years. The decrease in restaurant sales in
both years is due primarily to decreases in the average number of Jack in the Box company-operated restaurants and declines in same-
store sales at Jack in the Box restaurants, partially offset by an increase in the number of Qdoba company-operated restaurants and, in
2010, additional sales of $28.9 million from a 53rd week. The following table presents the approximate impact of these increases and
decreases on restaurant sales ():

 
Reduction in the average number of company-operated restaurants $ (176.6) $ (85.5)
Jack in the Box same-store sales declines (156.1) (27.4)
53rd week 28.9 -
Other (3.5) (12.8)
Total change in restaurant sales $ (307.3) $ (125.7)
Same-store sales at Jack in the Box restaurants declined 8.6% in 2010 and 1.2% in 2009. The average check decreased 1.5% in 2010
and increased 1.8% in 2009, including the impact of price increases of approximately 1.7% and 2.8%, respectively. The 2010 decline
reflects unfavorable product mix changes, promotions and discounting. Sales continue to be impacted by high unemployment rates in our
major markets.
Distribution sales to Jack in the Box and Qdoba franchisees grew $95.8 million in 2010 and $26.9 million in 2009 compared with
the prior year. The increase in distribution sales in both years primarily relates to an increase in the number of Jack in the Box and Qdoba
franchise restaurants serviced by our distribution centers, which contributed additional sales of approximately $108.4 million and
$39.6 million in 2010 and 2009, respectively, and were partially offset by lower per store average (“PSA”) volumes in both years. The
increase in 2010 also includes sales of approximately $11.2 million from the 53rd week.
Franchise revenues increased $37.9 million and $30.4 million in 2010 and 2009, respectively, primarily reflecting an increase in the
average number of Jack in the Box franchise restaurants and, in 2010, additional revenues of $4.6 million from a 53rd week, offset in
part by a decline in same-store sales at Jack in the Box franchise restaurants. The increase in the average number of restaurants due to
refranchising activity contributed additional royalties, rents and fees of approximately $39.0 million and $31.2 million in 2010 and
2009, respectively. The following table reflects the detail of our franchise revenues in each year and other information we believe is useful
in analyzing the change in franchise revenues ():
  
Royalties $ 91,216 $ 79,690 $ 68,811
Rents 128,143 103,784 86,310
Re-image contributions to franchisees (1,455) (3,700) (2,100)
Franchise fees and other 13,123 13,345 9,739
Franchise revenues $ 231,027 $ 193,119 $ 162,760
% change 19.6% 18.7% 16.4%
Average number of franchised restaurants 1,424 1,215 1,068
% change 17.2% 13.8%
Change in Jack in the Box franchise-operated same-store sales (7.8)% (1.3)% 0.1%
Royalties as a percentage of estimated franchised restaurant sales:
Jack in the Box 5.3% 5.3% 5.1%
Qdoba 5.0% 5.0% 5.0%
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