Jack In The Box 2014 Annual Report Download - page 28

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
The following table reflects the detail of our franchise revenues and costs in each year and other information we believe is useful in analyzing the changes
in franchise operations (dollars in thousands):



Royalties
$ 140,986
$ 132,663
$ 127,887
Rental income
217,182
207,513
195,746
Re-image contributions to franchisees
(22)
(1,990)
(7,124)
Franchise fees and other
5,073
7,901
9,303
Total franchise revenues
$ 363,219
$ 346,087
$ 325,812
Rental expense
$ 135,190
$ 128,173
$ 120,746
Depreciation and amortization
33,844
32,876
31,119
Other franchise support costs
13,852
12,518
14,213
Total franchise costs
$ 182,886
$ 173,567
$ 166,078
Average number of franchise restaurants
2,116
2,032
1,952
% increase
4.1%
4.1%
Franchise restaurant AUVs
Jack in the Box
$ 1,337
$ 1,312
$ 1,313
Qdoba
$ 1,028
$ 961
$ 958
Increase in franchise-operated same-store sales:
Jack in the Box
2.0%
0.1%
Qdoba
6.3%
1.1%
Royalties as a percentage of estimated franchise restaurant sales:
Jack in the Box
5.2%
5.2%
5.3%
Qdoba
5.0%
4.9%
5.0%
Franchise revenues increased $17.1 million or 4.9% in 2014 and $20.3 million or 6.2% in 2013 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 $11 million in 2014 and $17 million in 2013. In 2014, higher AUV’s at Qdoba and Jack in the Box franchised
restaurants and a decrease in re-image contributions recorded as a reduction of franchise revenue contributed to the increase and were partially offset by a
reduction in initial franchise fees of $2.1 million. In 2013, a reduction in re-image contributions, partially offset by a $1.5 million decrease in revenues from
initial franchise fees, contributed to the increase.
Franchise costs, principally rents and depreciation on properties leased to Jack in the Box franchisees, increased $9.3 million in 2014 and $7.5 million in
2013, due primarily to our refranchising strategy. As a percentage of the related revenues, franchise costs were 50.4%, 50.2%, and 51.0% in 2014, 2013 and
2012, respectively. The percent of revenues increase in 2014 versus 2013 was primarily driven by a decrease in franchise fee revenue and an increase in
franchise support costs at our Qdoba brand, partially offset by a decrease in re-image contributions to franchisees. The percent of revenues decrease in 2013 as
compared with 2012 was primarily due to a decrease in re-image contributions to franchisees.
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