Jack In The Box 2013 Annual Report Download - page 21

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For an understanding of the significant factors that influenced our performance during the past three fiscal years, we believe our Management’s Discussion
and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Consolidated Financial Statements and
related Notes included in this Annual Report as indexed on page F-1.
Comparisons under this heading refer to the 52-week periods ended September 29, 2013, September 30, 2012 and October 2, 2011 for 2013, 2012 and
2011 respectively, unless otherwise indicated.
Our MD&A consists of the following sections:
•Overview — a general description of our business and fiscal 2013 highlights.
•Financial reporting — a discussion of changes in presentation.
•Results of operations — an analysis of our consolidated statements of earnings for the three years presented in our consolidated financial
statements.
•Liquidity and capital resources — an analysis of cash flows including capital expenditures, aggregate contractual obligations, share repurchase
activity, known trends that may impact liquidity, and the impact of inflation.
•Discussion of critical accounting estimates — a discussion of accounting policies that require critical judgments and estimates.
•Future application of accounting principles — a discussion of new accounting pronouncements, dates of implementation and impact on our
consolidated financial position or results of operations, if any.

As of September 29, 2013, we operated and franchised 2,251 Jack in the Box restaurants, primarily in the western and southern United States, and 615
Qdoba restaurants throughout the United States and including two in Canada.
Our primary source of revenue is from retail sales at Jack in the Box and Qdoba company-operated restaurants. We also derive revenue from Jack in the
Box and Qdoba franchise restaurants, including royalties (based upon a percent of sales), franchise fees and rents from Jack in the Box franchisees.
Historically, we also generated revenue from distribution sales of food and packaging commodities to franchisees. We completed the outsourcing of this
function in the first quarter of fiscal 2013, and franchisees who previously utilized our distribution services now purchase product directly from our
distribution service providers or other approved suppliers. In addition, we recognize gains from the sale of company-operated restaurants to franchisees, which
are presented as a reduction of operating costs and expenses, net in the accompanying consolidated statements of earnings.
The following summarizes the most significant events occurring in fiscal 2013 and certain trends compared to prior years:
•Restaurant Sales — Sales at restaurants open more than one year (“same-store sales”) changed as follows:




Company
1.0%
4.6%
3.1%
Franchise
0.1%
3.0%
1.3%
System
0.3%
3.4%
1.8%

Company (1)
0.5%
3.2%
5.4%
Franchise
1.1%
1.9%
5.4%
System (1)
0.8%
2.5%
5.4%
____________________________ ____________________________
(1) Same-store sales for all periods presented have been restated to exclude sales for restaurants reported as discontinued operations during fiscal 2013.
•Commodity Costs — Commodity costs at Jack in the Box and Qdoba company restaurants increased approximately 2.2% and 1.5%,
respectively, as compared to last year. We expect overall commodity costs to be up approximately 1% in fiscal 2014 compared to fiscal 2013, with
higher inflation in the first quarter.
•New Unit Development — In 2013, we opened 17 Jack in the Box and 68 Qdoba locations system-wide.
19