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Table of Contents
PART I
ITEM 1. BUSINESS
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Overview. Jack in the Box Inc. (the “Company”), based in San Diego, California, operates and franchises more than 2,800 Jack in the Box quick-
service restaurants (“QSR”) and Qdoba Mexican Grill fast-casual restaurants. 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 opened in 1951. Jack in the Box is one of the nation’s largest hamburger chains and, based on
number of restaurants, is the second or third largest QSR hamburger chain in each of our top 10 major markets, which comprises approximately 70% of the
total system. As of the end of our fiscal year on October 2, 2011, the Jack in the Box system included 2,221 restaurants in 19 states, of which 629 were
company-operated and 1,592 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 QSR industry, in 2003 we acquired Qdoba Restaurant Corporation, operator and franchisor of Qdoba Mexican Grill. As of October 2, 2011, the Qdoba
system included 583 restaurants in 42 states, as well as the District of Columbia, of which 245 were company-operated and 338 were franchise-operated.
Qdoba is the second largest fast-casual Mexican brand in the United States and has the largest franchise system in that segment of the industry.
Strategic Plan. Our long-term strategic plan focuses on continued growth of our two restaurant brands, increasing average unit volumes, and improving
restaurant profitability and returns on invested capital. A key element of our plan is to continue expanding our Jack in the Box franchising operations 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.
Through the sale of 332 company-operated Jack in the Box restaurants to franchisees and the development of 16 new franchise restaurants in fiscal 2011, we
increased franchise ownership of the Jack in the Box system to approximately 72% at fiscal year end from approximately 57% at the end of fiscal 2010. We
anticipate refranchising 150-200 Jack in the Box restaurants over the next couple of years which will bring our franchise ownership in the Jack in the Box
system to approximately 80%.
Through new unit growth and opportunistic acquisitions of franchised Qdoba restaurants in select markets, along with the success of our Jack in the Box
refranchising efforts, Qdoba has become a more prominent part of our company restaurant operations. As of the end of fiscal 2011, Qdoba comprised
approximately 28% of our total company-operated units as compared with approximately 5% five years ago. We plan to more aggressively build out the
number of Qdoba company locations over the next several years through new unit growth and opportunistic acquisitions of franchise locations. Accelerating
the growth of our Qdoba brand by increasing market penetration should generate heightened brand awareness.
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Jack in the Box. Jack in the Box restaurants offer a broad selection of distinctive, innovative products targeted primarily at the adult fast-food consumer.
Our menu features a variety of hamburgers, tacos, specialty sandwiches, drinks, smoothies, real ice cream shakes, salads and side items. Jack in the Box
restaurants also offer customers the ability to customize their meals and to order any product, including breakfast items, any time of the day.
The Jack in the Box restaurant chain was the first major hamburger chain to develop and expand the concept of drive-thru restaurants. In addition to drive-
thru windows, most of our restaurants have seating capacities ranging from 20 to 100 persons and are open 18-24 hours a day. Drive-thru sales currently
account for approximately 70% of sales at company-operated restaurants. The average check in fiscal year 2011 was $6.25 for company-operated restaurants.
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