Jack In The Box 2011 Annual Report Download - page 26

Table of Contents
Franchise revenues increased $51.0 million and $37.9 million in 2011 and 2010, respectively, and include the impact of additional revenues of $4.6
million from a 53rd week in 2010. The increase in franchise revenues in both years primarily reflects an increase in the average number of Jack in the Box
franchise restaurants, which contributed additional royalties and rents of approximately $53.5 million in 2011 and $36.6 million in 2010. Additionally, in
2011, increases in the number of restaurants sold to and developed by franchisees resulted in higher revenues from initial franchise fees of $5.7 million.
These increases were partially offset by an increase in re-image contributions to franchisees in 2011, which are recorded as a reduction of franchise revenues,
and, in 2010, a decline in same-store sales at Jack in the Box franchise restaurants. 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 ( dollars in thousands):
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Royalties $ 109,422 $ 91,216 $ 79,690
Rents 161,279 128,143 103,784
Re-image contributions to franchisees (8,208) (1,455) (3,700)
Franchise fees and other 19,573 13,123 13,345
Franchise revenues $ 282,066 $ 231,027 $ 193,119
% increase 22.1% 19.6%
Average number of franchise restaurants 1,707 1,424 1,215
% increase 19.9% 17.2%
Increase (decrease) in franchise-operated same-store sales:
Jack in the Box 1.3% (7.8)% (1.3)%
Qdoba 5.4% 3.6% (1.3)%
Royalties as a percentage of estimated franchise restaurant sales:
Jack in the Box 5.3% 5.3% 5.3%
Qdoba 5.0% 5.0% 5.0%
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Food and packaging costs were 33.4% of company restaurant sales in 2011, 31.8% in 2010 and 32.4% in 2009. The increase in 2011 primarily relates to
higher commodity costs and the unfavorable impact of product mix and promotions, partially offset by the benefit of selling price increases. Overall
commodity costs increased approximately 4.7% and 7.0% at our Jack in the Box and Qdoba company-operated restaurants, respectively, including higher
costs for beef, cheese, pork, dairy, eggs and shortening, partially offset by lower costs for poultry and bakery. The decline in 2010 reflects a decrease in
commodity costs at our Jack in the Box restaurants of 1.4% (including beef, shortening, poultry and bakery), margin improvement initiatives and selling
price increases, which more than offset the impact of unfavorable product mix and promotions.
Payroll and employee benefit costs were 30.0% of company restaurant sales in 2011, 30.3% in 2010 and 29.7% 2009. The decrease in 2011 reflects leverage
from same-store sales increases, lower insurance costs and the benefit of refranchising, which were partially offset by increases in unemployment taxes in
several states in which we operate and higher levels of staffing designed to improve the guest experience at our Jack in the Box restaurants. The increase in
2010 reflects the impact of same-store sales deleverage and higher workers’ compensation costs of approximately 50 basis points, which more than offset the
benefits derived from our labor productivity initiatives.
Occupancy and other costs were 23.9% of company restaurant sales in 2011 and 2010 and 21.7% in 2009. The percentage in 2011 reflects the leverage
from same-store sales increases, lower utilities expense and the benefit of refranchising. These benefits were offset by higher costs associated with the 2011
rollout of new uniforms and menu boards at our Jack in the Box restaurants, higher PSA depreciation expense related to the re-image program at Jack in the
Box and higher rent expense as a percentage of sales resulting from a greater proportion of company-operated Qdoba restaurants compared with fiscal 2010.
The higher percentage in 2010 compared with 2009 is due primarily to sales deleverage and higher depreciation from the Jack in the Box re-image program,
which were partially offset by lower utilities expense.
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