Jack In The Box 2015 Annual Report Download - page 26

Company restaurant sales remained relatively flat in 2015 and decreased $68.1 million in 2014 as compared with the respective prior year. Higher AUV
growth in 2015 was offset by a decrease in sales attributable to a reduction in the average number of company-operated restaurants resulting from the
execution of our refranchising strategy which includes the sale of restaurants to franchisees. The decrease in restaurant sales in 2014 is due primarily to
decreases in the average number of company-operated restaurants related to the execution of our refranchise strategy, partially offset by an increase in AUVs
at our company-operated restaurants. The following table presents the approximate impact of these increases (decreases) on Jack in the Box company
restaurant sales (in millions):


Decrease in the average number of restaurants
$ (68.7)
$ (122.1)
AUV increase
68.8
54.0
Total increase (decrease) in company restaurant sales
$ 0.1
$ (68.1)
Same-store sales at Jack in the Box company-operated restaurants increased 5.1% in 2015 and 2.0% in 2014, primarily driven by price increases and
favorable product mix changes in both years, and in 2015 an increase in transactions. The following table summarizes the change in company-operated same-
store sales:



Average check (1)
4.2%
3.6 %
Transactions
0.9%
(1.6)%
Increase in same-store sales
5.1%
2.0 %
____________________________
(1) Includes price increases of approximately 2.2% and 2.7% in 2015 and 2014, respectively.
Food and packaging costs as a percentage of company restaurant sales decreased to 31.7% in 2015 from 32.6% in 2014, and 33.4% in 2013. In 2015 and
2014, the benefits of menu price increases and product mix changes more than offset higher commodity costs. In 2015, commodity costs increased 1.3% as
higher costs for beef, eggs and produce were partially offset by lower costs for pork and shortening. Eggs and beef increased most significantly by
approximately 53% and 10%, respectively, in 2015. In 2014, commodity costs increased 1.8% primarily due to higher costs for beef, pork, and potatoes. For
fiscal 2016, we currently expect commodity costs to increase approximately 1% at Jack in the Box restaurants.
Payroll and employee benefit costs as a percentage of company restaurant sales decreased to 27.6% in 2015 from 27.9% in 2014, and 28.4% in 2013. In
2015, sales leverage, the benefits of refranchising and lower costs for group insurance driven by favorable claim trends were partially offset by higher wages
from minimum wage increases, unfavorable development trends associated with workers’ compensation claims and an increase in incentive compensation
driven by strong operating performance. In 2014, the decrease in payroll and employee benefit costs as a percentage of company restaurant sales per
comparison with 2013 relates to leverage from AUV sales increases and the benefits of refranchising lower performing company-operated restaurants, which
were partially offset by higher levels of incentive compensation.
As a percentage of company restaurant sales, occupancy and other costs decreased to 20.1% in 2015 from 21.0% in 2014, and 21.5% in 2013. The
decrease in 2015 is related to sales leverage and the benefits of refranchising, partially offset by higher costs for credit card fees, maintenance and repair
expenses and equipment costs due to beverage and technology upgrades at our restaurants. In 2014, occupancy and other costs as a percentage of company
restaurant sales decreased due to sales leverage and the benefits of refranchising, partially offset by the impact of higher utility costs and higher depreciation
expense related to restaurant remodel programs.
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