Jack In The Box 2011 Annual Report Download - page 6

Table of Contents
In connection with the sale of a company-operated restaurant, the restaurant equipment and the right to do business at that location are sold to the
franchisee. The aggregate price is equal to the negotiated fair market value of the restaurant as a going concern, which depends on various factors, including
the sales and cash flows of the restaurant, as well as its location and history. In addition, the land and building are generally leased or subleased to the
franchisee at a negotiated rent, generally equal to the greater of a minimum base rent or a percentage of gross sales. The franchisee is usually required to pay
property taxes, insurance and ancillary costs, and is responsible for maintaining the image of the restaurant.
Qdoba Mexican Grill. The current Qdoba franchise agreement generally provides for an initial franchise fee of $30,000 per restaurant, a 10-year term
with a 10-year option to extend at a fee of $5,000, and marketing fees of up to 2% of gross sales. Franchisees are also required to spend a minimum of 2% of
gross sales on local marketing for their restaurants. Royalty rates are typically 5% of gross sales with certain agreements at 2.5%, as noted below. We offer
development agreements for the construction of one or more new restaurants over a defined period of time and in a defined geographic area for a development
fee, a portion of which may be credited against franchise fees due for restaurants when they are opened. If the developer does not maintain the required
schedule of openings, they may forfeit such fees and lose their rights to future development. During the last two fiscal years, as an incentive to develop target
markets, we entered into development agreements with an initial franchise fee of $15,000 and a royalty rate of 2.5% of gross sales for the first two years of
operation for each restaurant opened within the first two years of the development agreement, subject to certain limitations.
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Restaurant Management. Restaurants are operated by a company-employed manager or a franchisee who is directly responsible for the operations of the
restaurant, including product quality, service, food safety, cleanliness, inventory, cash control and the conduct and appearance of employees. Restaurant
managers are required to attend extensive management training classes involving a combination of classroom instruction and on-the-job training in specially
designated training restaurants. Restaurant managers and supervisory personnel train other restaurant employees in accordance with detailed procedures and
guidelines using training aids available at each location. We also use an interactive system of computer-based training (“CBT”), with a touch-screen computer
terminal at Jack in the Box restaurants. The CBT technology incorporates audio, video and text, all of which are updated via satellite. CBT is also designed to
reduce the administrative demands on restaurant managers. At Qdoba restaurants, our Career Map is the core development tool used to provide employees with
detailed education by position from entry level to restaurant General Manager.
For Company operations, division vice presidents supervise regional directors, who supervise area coaches, who in turn supervise restaurant managers.
Under our performance system, division vice presidents, regional directors, area coaches and restaurant managers are eligible for periodic bonuses based on
achievement of goals related to restaurant sales, profit and/or certain other operational performance standards.
Customer Satisfaction. We devote significant resources toward ensuring that all restaurants offer quality food and good service. We place great emphasis
on ensuring that ingredients are delivered timely to the restaurants. Restaurant food production systems are continuously developed and improved, and we
train our employees to deliver consistently good service. Through our network of quality assurance, facilities services and restaurant management personnel,
we standardize specifications for food preparation and service, employee conduct and appearance, and the maintenance of our restaurant premises. Operating
specifications and procedures are documented in on-line reference manuals and CBT modules. In addition, our “Voice of the Guest” program provides
restaurant managers with guest surveys each period regarding their restaurant experience. In 2011, the Jack in the Box and Qdoba systems received more than
1.1 million and 0.2 million guest survey responses, respectively, in addition to receiving guest feedback through our toll-free telephone number. Also,
beginning in fiscal 2010, we implemented a comprehensive, system-wide program at Jack in the Box restaurants to improve guest service by delivering a more
consistent dining experience. Additional resources are being committed to more closely measure how restaurants are executing the key drivers of guest
satisfaction,
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