What changed in this filing

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Item 1. Business

2020-11-18 compared with 2019-11-21 · 65 added, 144 removed, 91 unchanged (70% of the section changed)

Jack in the Box Inc., based in San Diego, California, operates and franchises Jack in the Box® quick-service restaurants (“QSRs”).

References to the Company throughout this Annual Report on Form 10-K are made using the first person notations of “we,” “us,” and “our.”

Jack in the Box opened its first restaurant in 1951 and has since become one of the nation’s largest hamburger chains.

We opened our first restaurant in 1951 and have since become one of the nation’s largest hamburger chains.

Based on number of restaurants, our top 10 major markets comprise approximately 70% of the total system, and Jack in the Box is at least the second largest QSR hamburger chain in eight of those major markets.

As of the end of our fiscal year on September 29, 2019 , the Jack in the Box system included 2,243 restaurants in 21 states and Guam, of which 137 were company-operated and 2,106 were franchise-operated.

Through the execution of our refranchising strategy over the last five years, we have increased franchise ownership of the Jack in the Box system from 81% at the end of fiscal 2014 to 94% at the end of fiscal 2019 as we completed our refranchising program.

In fiscal 2019 , our franchisees developed 19 new franchise restaurants, and we expect the majority of new unit growth will be through franchise restaurants.

Our long-term goals are focused on meeting evolving customer needs, with emphasis on improving operations consistency and targeted investments designed to maximize our returns.

As of September 27, 2020, we operated and franchised 2,241 Jack in the Box quick-service restaurants, primarily in the western and southern United States, including one in Guam.

Of the 2,241 restaurants at fiscal year-end, 2,097, or 94%, were franchised.

The Company operates as a single segment for reporting purposes.

Our revenue is derived from sales by company-operated restaurants and by charging royalties, rent, advertising fees, and franchise and other fees to our franchisees.

Our long-term goals are focused on meeting evolving customer needs, with an emphasis on improving operations consistency and targeted investments designed to maximize our returns.

The key initiatives of our long-term goals include:

Simplifying Restaurant Operations - We will continue focusing on redefining and elevating the guest experience to drive consistency through the following:

Back-of-the-house simplification, including kitchen equipment / technology that can drive higher throughput, improved quality, and labor cost benefits.

Reduction of redundant SKUs.

• Simplifying Restaurant Operations - We will continue focusing on redefining and elevating the guest experience to drive consistency through back-of-the-house simplification, including kitchen equipment / technology that can drive higher throughput, improved quality, and labor cost benefits.

• Differentiating Through Innovation - We will continue focusing on what makes us different by balancing premium and value innovation and leveraging our unique brand personality to differentiate creatively and focus on our core customer.

• Expanding our Brand Footprint - We are focused on growing units in existing, developing and new markets, primarily through franchise restaurants.

Enhancing the Guest Experience - We are focused on targeted investments designed to maximize our returns while meeting the evolving needs of our customers to drive a consistent experience and brand image in our restaurants and across digital platforms through the following:

Leveraging technology such as our mobile application to meet the evolving needs of our customers and improve in-store efficiencies.

Elevating the image of our restaurants, with a focus on the drive-thru, through which approximately 70% of our sales occur.

As of September 29, 2019 , the Company is comprised of a single operating segment.

Restaurant Concept

• Enhancing the Guest Experience - We are focused on targeted investments designed to maximize our returns while meeting the evolving needs of our customers to drive a consistent experience and brand image in our restaurants and across digital platforms through leveraging technology such as our mobile application to meet the evolving needs of our customers and improve in-store efficiencies.

Jack in the Box restaurants offer a broad selection of distinctive products including classic burgers like our Jumbo Jack ® and innovative product lines such as Buttery Jack ® burgers.

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In addition to drive-thru windows, most of our restaurants have seating capacities ranging from 20 to 100 people and are open 18-24 hours a day.

Drive-thru sales currently account for approximately 70% of sales at company-operated restaurants.

The average check in fiscal year 2019 was $8.34 for company-operated restaurants.

With a presence in only 21 states and one territory, we believe Jack in the Box is a brand with significant growth opportunities.

In fiscal 2019 , franchisees continued to expand in existing markets.

Through the execution of our refranchising strategy, we have increased franchise ownership of the Jack in the Box system to 94% at the end of fiscal 2020.

In fiscal 2020, our franchisees developed 27 new franchise restaurants, and we expect the majority of new unit growth will be through franchise restaurants.

The following table summarizes the changes in the number of company-operated and franchise restaurants over the past five years:

2020 2019 2018 2017 2016

Company-operated restaurants:

Beginning of period 137 137 276 417 413

New — — 1 2 4

Refranchised — — (135) (178) (1)

Closed (1) — (5) (15) —

Acquired from franchisees 8 — — 50 1

End of period total 144 137 137 276 417

% of system 6 % 6 % 6 % 12 % 18 %

Franchise restaurants:

Beginning of period 2,106 2,100 1,975 1,838 1,836

New 27 19 11 18 12

Refranchised — — 135 178 1

Closed (28) (13) (21) (9) (10)

Sold to company (8) — — (50) (1)

End of period total 2,097 2,106 2,100 1,975 1,838

% of system 94 % 94 % 94 % 88 % 82 %

System end of period total 2,241 2,243 2,237 2,251 2,255

Franchising Program

The franchise agreement generally provides for an initial franchise fee of $50,000 per restaurant for a 20-year term, and royalty and marketing payments generally set at 5.0% of gross sales.

Royalty rates are typically 5.0% of gross sales but may range as high as 10.0% of gross sales.

Some existing agreements provide for lower royalties for a limited time and may have variable rates.

We may offer development agreements to franchisees (referred to in this context as “Developers”) for construction of one or more new restaurants over a defined period of time and in a defined geographic area.

Developers may be required to pay fees for certain company-sourced new sites.

Developers may lose their rights to future development if they do not maintain the required opening schedule.

To stimulate growth, we have offered a waiver of development fees for new sites, in addition to lower royalty rates or a development loan, to franchisees who open restaurants within a specified timeframe.

Site Selection and Design

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Management believes that this flexibility enables the Company to match the restaurant configuration with the specific economic, demographic, geographic, or physical characteristics of a particular site.

Typical costs to develop a traditional restaurant, excluding the land value, range from approximately $1.4 million to $2.0 million .

Based on the geographical location and constraints of the potential restaurant property, as well as the prototype building selected for use, typical costs to develop a traditional restaurant, range from approximately $1.4 million to $2.0 million, excluding the land value.

The majority of our corporate restaurants are constructed on leased land or on land that we purchase and subsequently sell, along with the improvements, in sale and leaseback transactions.

Upon completion of a sale and leaseback transaction, the Company’s initial cash investment is reduced to the cost of equipment, which ranges from approximately $0.3 million to $0.4 million.

Franchising Program

The franchise agreement generally provides for an initial franchise fee of $50,000 per restaurant for a 20-year term, and royalty payments and marketing fees generally set at 5.0% of gross sales.

Royalty rates are typically 5.0% of gross sales but may range as high as 10.0% of gross sales.

Some existing agreements provide for lower royalties for a limited time and may have variable rates.

Developers may be required to pay fees for certain company-sourced new sites.

Developers may lose their rights to future development if they do not maintain the required opening schedule.

As a general matter, when we sell a company-operated restaurant to a franchisee, the sale has included the restaurant equipment and the right to do business at that location for a specified term.

The aggregate price has been based upon the value of the restaurant as a going concern, which depends on various factors, including the historical sales and cash flows of the restaurant, as well as its location.

In addition, the land and building are generally leased or subleased to the franchisee at a negotiated rent, typically 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 was responsible for maintaining the restaurant.

Restaurant Management and Operations

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In these surveys, guests rate their satisfaction with key elements of their restaurant experience, including friendliness, food quality, cleanliness, speed of service, and order accuracy.

In 2019 , the Jack in the Box system received approximately 1.2 million guest survey responses.

Our Guest Relations Department receives feedback that guests provide via phone and our website and communicates that feedback to restaurant managers and franchise operators.

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Information Systems

At our corporate support center, we have financial accounting systems, human resources and payroll systems, and a communications and network infrastructure that supports corporate functions.

Our restaurant software allows for daily polling of sales, inventory, and other data from the restaurants directly.

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Advertising and Promotion

We build brand awareness through our marketing and advertising programs and activities.

We build brand awareness and drive sales through our marketing and advertising programs.

These activities are supported primarily by financial contributions to a marketing fund from all company and franchise restaurants based on a percentage of gross sales.

Activities to advertise restaurant products, promote brand awareness, and attract customers include, but are not limited to, system and regional campaigns on television, radio, and print media, as well as digital and social media.

At September 29, 2019 , we had approximately 5,200 employees, of whom 4,820 were restaurant employees, 340 were corporate personnel, and 40 were field management.

Employees are paid on an hourly basis, except certain restaurant and operations management, and corporate personnel.

We employ both full- and part-time restaurant employees in order to provide the flexibility necessary during peak periods of restaurant operations.

We have not experienced any significant work stoppages, and we support our employees, including part-time workers, by offering industry competitive wages and benefits.

Executive Officers

The following table sets forth the name, age, position and years with the Company of each person who is an executive officer of Jack in the Box Inc.

as of September 29, 2019 :

Years with the

Chairman of the Board and Chief Executive Officer

Blankenship, Ph.D.

Executive Vice President, Chief of Staff and Strategy

Executive Vice President, Chief Legal and Risk Officer and Corporate Secretary

Executive Vice President and Chief Financial Officer

Senior Vice President of Finance, Controller and Treasurer

Melissa Corrigan, Ph.D.

Vice President and Chief Human Resources Officer

Vice President, Chief Development Officer

Vice President, Chief Supply Chain Officer

Vice President, Chief Information Officer

Vice President and Chief Operating Officer

The following sets forth the business experience of each executive officer for at least the last five years:

Comma has been Chairman of the Board and Chief Executive Officer since January 2014.

From May 2012 until October 2014, he served as President, and from November 2010 through January 2014, as Chief Operating Officer.

Comma served as Senior Vice President and Chief Operating Officer from February 2010 to November 2010, Vice President Operations Division II from February 2007 to February 2010, Regional Vice President of the Company’s Southern California region from May 2006 to February 2007, and Director of Convenience-Store & Fuel Operations for the Company’s proprietary chain of Quick Stuff convenience stores from August 2001 to May 2006.

Comma has more than 25 years of retail and franchise experience.

Blankenship has been Executive Vice President, Chief of Staff and Strategy since October 2018.

From November 2013 through October 2018 he served as Executive Vice President, Chief People, Culture and Corporate Strategy Officer.

He was previously Senior Vice President and Chief Administrative Officer from October 2010 to November 2013, Vice President, Human Resources and Operational Services from October 2005 to October 2010, and Division Vice President, Human Resources from October 2001 to September 2005.

Blankenship has 22 years of experience with the Company in various human resource and training positions.

As the Company announced in September 2019, Dr.

Blankenship is expected to leave the Company in January 2020.

Rudolph has been Chief Legal and Risk Officer since October 2014, Executive Vice President since February 2010, and Corporate Secretary since November 2007.

Before becoming Chief Legal and Risk Officer, he was General Counsel since November 2007.

Prior to joining the Company, Mr.

Rudolph was Vice President and General Counsel for Ethical Leadership Group.

He was previously a partner in the Washington, D.C.

office of Foley Hoag, LLP, and a Vice President at McDonald’s Corporation where, among other roles, he served as U.S.

and International General Counsel.

Before joining McDonald’s, Mr.

Rudolph spent 15 years with the law firm of Gibson, Dunn & Crutcher, LLP, the last six of which he spent as a litigation partner in the firm’s Washington, D.C.

Rudolph has more than 35 years of legal experience.

As the Company announced in September 2019, Mr.

Rudolph is expected to leave the Company in February 2020.

Tucker has been Executive Vice President and Chief Financial Officer since March 2018.

Prior to joining the Company in March, Mr.

Tucker held several senior leadership positions at Papa John’s International, Inc.

From February 2011 to February 2018, Mr.

Tucker served as Senior Vice President, Chief Financial Officer and Treasurer and added Chief Administrative Officer in February 2012.

From June 2010 to February 2011, he was Chief of Staff and Senior Vice President, Strategic Planning for Papa John’s International.

Prior to that, he served as its Chief of Staff and Vice President, Strategic Planning from June 2009 to June 2010.

Prior to joining Papa John’s, Mr.

Tucker served as the Chief Financial Officer of Evergreen Real Estate, from 2003 to 2009;

and held leadership positions with several finance companies from 1999 to 2003.

Previously, from 1994 to 1999, he served as the Director of Finance for Papa John’s International, Inc.

Tucker has more than 20 years of corporate finance experience.

Melancon has been Senior Vice President of Finance, Controller and Treasurer since November 2013.

He was previously Vice President of Finance, Controller and Treasurer from September 2008 to November 2013 and Vice President and Controller from July 2005 to September 2008.

Before joining the Company, Mr.

Melancon held senior financial positions at several major companies, including Guess?, Inc., Hyper Entertainment, Inc.

(a subsidiary of Sony Corporation of America) and Sears, Roebuck and Co.

Melancon has more than 35 years of experience in accounting and finance, including 11 years with Price Waterhouse.

As the Company announced in September 2019, Mr.

Melancon is expected to leave the Company in January 2020.

Corrigan has been Vice President and Chief Human Resources Officer since November 2018.

She previously served as its Vice President of Human Resources and Total Rewards from 2015 to 2018.

Corrigan was Vice President of Human Resources from 2013 to 2015, and she was Director of Human Resources from 2011 to 2013.

She previously held several positions of increasing responsibility in Learning and Development since joining the Company in 1997 as a Training and Development Program Manager and has more than 20 years of experience with the Company in human resources related roles.

Fox has been Vice President and Chief Development Officer since June 2016.

She has overseen development for the Jack in the Box brand since March 2014 (and supervised development at the Company’s two brands, Jack in the Box and Qdoba, from June 2016 until the sale of Qdoba in March 2018).

Previously, she held numerous positions for the Jack in the Box brand, including:

Division Vice President of Franchise Business Development since September 2013 and Division Vice President of Franchise Sales and Development since June 2011.

From February 2011 to June 2011, she was Director of Franchise Business Development, and she previously had the same title in Franchise Sales since October 2010.

Fox served in other capacities since joining the Company in 1997.

Before joining Jack in the Box Inc., she was a licensed real estate agent and worked for several companies in the residential real estate industry.

Fox has 27 years of real estate and development experience .

Gordon has been Vice President and Chief Supply Chain Officer since July 2017.

He was previously Vice President of Supply Chain Services since October 2012, and Division Vice President of Purchasing from February 2009 to October 2012.

Prior to joining the Company in February 2009, Mr.

Gordon was Vice President of Supply Chain Management for Potbelly Sandwich Works from December 2005 to February 2009, and he held various positions with Applebee’s International from August 2000 to December 2005, most recently as Executive Director of Procurement.

Gordon also held a number of positions at Prandium, Inc., an operator of multiple restaurant concepts, from October 1994 to August 2000.

Gordon has over 20 years of Supply Chain Management experience.

Martin has been Vice President and Chief Information Officer since November 2016.

He was previously Executive Vice President and Chief Information Officer for Lytx Inc.

(formerly DriveCam) from October 2011 to December 2014.

He previously held IT leadership positions with Sony Electronics and PepsiCo, and from January 2015 until November 2016, was owner and a principal in Silicon Beach Advisors, a technology strategy consulting firm.

Martin has over 25 years of experience in corporate IT and innovation.

Tom joined the company as Vice President and Chief Operating Officer in February 2018.

Prior to joining the Company in February, Mr.

Tom served as the Senior Vice President of Operations for JAB Beech Inc.’s Einstein Bros.

Bagels brand from July 2015 to December 2016, and its Caribou Coffee brand from January 2017 to December 2017.

From March 2006 to June 2015, Mr.

Tom held several positions at Starbucks Coffee Company.

From January 2014 to June 2015, he served as Director of Business Operations for all licensed stores in the U.S.

From May 2012 to December 2013, he served as the Director of Licensed Stores, and from 2006 to 2012 as the Director of Company Stores.

Prior to joining Starbucks, Mr.

Tom held several positions with YUM Brands International from 1991 to 2006.

Tom has more than 15 years of experience in operation leadership positions in the restaurant industry.

Trademarks and Service Marks

The JACK IN THE BOX ® name and logos are of material importance to us and are registered trademarks and service marks in the United States and elsewhere.

In addition, we have registered or applied to register numerous service marks and trade names for use in our businesses, including the Jack in the Box design marks and various product names and designs.

Restaurant sales and profitability are subject to seasonal fluctuations because of factors such as vacation and holiday travel, seasonal weather conditions, and weather crises, all of which affect the public’s dining habits.

Activities to build brand equity, advertise products, and attract customers include, but are not limited to, system-wide and regional campaigns on television, digital and social media, radio, and print media, as well as reaching consumers through our branded mobile app and delivery partnerships.

Competition and Markets

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In selling franchises, we compete with many other restaurant franchisors and franchisors generally, some of whom have substantially greater financial resources than we do.

Available Information

The Company’s primary website can be found at www.jackinthebox.com.

We make available free of charge at this website (under the caption “Investors — SEC Filings”) all of our reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, including our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and amendments to those reports.

These reports are made available on the website as soon as reasonably practicable after their filing with, or furnishing to, the Securities and Exchange Commission (“SEC”).

You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.

You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

The SEC also maintains an Internet site (www.sec.gov) that contains our reports, proxy and information statements, and other information.

Human Capital Management

Jack in the Box recognizes and takes care of its employees by offering a wide range of competitive pay, recognition, and benefit programs.

We are proud to provide our employees, many who begin their career at Jack in the Box with their first entry-level job, the opportunity to grow and advance as we invest in their education and career development.

As of September 27, 2020, we had approximately 5,200 employees, of whom 4,840 were restaurant employees, 330 were corporate management and staff, and 40 were field management.

Most of our employees are paid on an hourly basis, except certain restaurant and operations management and corporate positions.

We employ both full-time and part-time restaurant employees in order to provide the flexibility necessary during peak periods of restaurant operations and meet the individual needs of our employees.

As of the end of fiscal 2020, approximately 60% of our restaurant employees were part-time.

We have not experienced any significant work stoppages.

We are committed to providing market-competitive pay and benefits.

All corporate management and staff and restaurant management positions, including hourly assistant managers and team leaders, are eligible for performance-based cash incentive programs.

Each incentive plan reinforces and rewards individuals for achievement of specific company and/or restaurant business goals.

We strive to ensure pay equity between our female employees and male employees performing equal or substantially similar work.

Each year, we review the median pay of our male and female employees, share the results with the Board of Directors, and take remedial action as appropriate.

We offer comprehensive benefit programs to our employees that provide flexibility of choice through our Total Rewards framework of pay and recognition, health and wellness, financial well-being, work/life happiness, culture and community, and learning and development.

We recognize and support the growth and development of our employees and offer opportunities to participate in internal as well as external learning programs.

An increased focus area has been on educational benefits for our restaurant teams, including enhancing tuition reimbursement and adding new scholarship, high school diploma, and English as a Second Language (“ESL”) programs.

In addition, we hold regular restaurant level talent and development planning reviews to assist us with growing our internal restaurant teams, resulting in a majority of current restaurant managers being promoted from within.

COVID-19 Response

We took early action regarding employee well-being in response to the COVID-19 pandemic, implementing comprehensive protocols to protect the health and safety of our employees and guests.

Remote work for corporate management and staff was adopted ahead of state and county requirements.

We limited reductions in scheduled hours for employees in our company-operated restaurants.

For employees of our company-operated restaurants, we also enhanced our benefits programs to offer expanded supplemental paid sick leave ahead of state and county mandates and in counties where sick leave is not mandated, waived employee cost-sharing for COVID-19 testing, waived employee cost-sharing for all virtual visits, provided COVID-19 401(k) enhancements, and made free meals available for restaurant employees during their work shifts.

We believe that employee sentiment regarding our response to the pandemic is very favorable.

Trademarks and Service Marks

The JACK IN THE BOX ® name and logos are of material importance to us and are registered trademarks and service marks in the United States and elsewhere.

We are not able to predict the impact that the COVID-19 pandemic may have on the seasonality of our business.

Government Regulation

Each restaurant is subject to regulation by federal agencies, as well as licensing and regulation by state and local health, sanitation, safety, fire, zoning, building, consumer protection, taxing, and other agencies and departments.

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We are subject to certain guidelines under the Americans with Disabilities Act of 1990 and various state codes and regulations, which require restaurants and our brand to provide full and equal access to persons with physical disabilities.

Our collection or use of personal information about our employees or our guests is regulated at the federal and state levels, including the California Consumer Privacy Act that is due to take effect January 1, 2020.

Our collection or use of personal information about our employees or our guests is regulated at the federal and state levels, including the California Consumer Privacy Act.

We are also subject to various federal, state, and local laws regulating the discharge of materials into the environment.

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We have processes in place to monitor compliance with applicable laws and regulations governing our company operations.

Available Information

The Company’s corporate website can be found at www.jackintheboxinc.com.

These reports are made available on the website as soon as reasonably practicable after their filing with, or furnishing to, the Securities and Exchange Commission (“SEC”).

The SEC also maintains an Internet site (www.sec.gov) that contains our reports, proxy and information statements, and other information.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business