Jack In The Box 2013 Annual Report Download - page 24

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
As we execute our Jack in the Box refranchising strategy, which includes the sale of restaurants to franchisees, we expect the number of company-operated
restaurants and the related sales to decrease while revenues from franchise restaurants increase. As such, company restaurant sales decreased $39.7 million in
2013 and $167.3 million in 2012 as compared with the respective prior year. 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, partially offset by an increase in the number of Qdoba company-operated restaurants and
increases in average unit volumes (“AUVs”) at our Jack in the Box and Qdoba restaurants. The following table presents the approximate impact of these
increases (decreases) on company restaurant sales ( in millions):


Decrease in the average number of Jack in the Box restaurants
$(123.0)
$(365.8)
Jack in the Box AUV increase
29.5
127.8
Increase in the average number of Qdoba restaurants
49.3
11.5
Qdoba AUV increase
4.5
59.2
Total decrease in company restaurant sales
$(39.7)
$(167.3)
Same-store sales at Jack in the Box company-operated restaurants increased 1.0% in 2013 and 4.6% in 2012, primarily driven by price increases in both
years in addition to transaction growth in 2012. Same-store sales at Qdoba company-operated restaurants increased 0.5% in 2013 and 3.2% in 2012 primarily
driven by price increases and in 2013 higher catering sales. The following table summarizes the change in company-operated same-store sales.



Jack in the Box transactions
(0.9)%
2.3%
Jack in the Box average check (1)
1.9 %
2.3%
Jack in the Box change in same-store sales
1.0 %
4.6%
Qdoba change in same-store sales (2)
0.5 %
3.2%
____________________________
(1) Includes price increases of approximately 2.5% and 3.2% in 2013 and 2012, respectively.
(2) Includes price increases of approximately 1.0% and 3.8% in 2013 and 2012, respectively.
Franchise revenues increased $20.3 million and $43.7 million in 2013 and 2012, respectively, as compared with the respective prior year. 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 $17.1 million in 2013 and $48.2 million in 2012. In 2013, a reduction in re-image contributions, partially offset by a
$1.5 million decrease in revenues from initial franchise fees, also contributed to the increase. In 2012, higher AUVs at Jack in the Box franchised restaurants
also contributed to the increase and were more than offset by lower revenues from initial franchise fees of $10.4 million related to a decrease in the number of
restaurants sold to and developed by franchisees. 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):



Royalties
$132,663
$127,887
$109,422
Rents
207,513
195,746
161,279
Re-image contributions to franchisees
(1,990)
(7,124)
(8,208)
Franchise fees and other
7,901
9,303
19,573
Franchise revenues
$346,087
$325,812
$282,066
% increase
6.2%
15.5%
Average number of franchise restaurants
2,032
1,952
1,707
% increase
4.1%
14.4%
Increase in franchise-operated same-store sales:
Jack in the Box
0.1%
3.0%
Qdoba
1.1%
1.9%
Royalties as a percentage of estimated franchise restaurant sales:
Jack in the Box
5.2%
5.3%
5.3%
Qdoba
4.9%
5.0%
5.0%
22