What changed in this filing

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Item 1. Business

2021-11-23 compared with 2020-11-18 · 59 added, 61 removed, 95 unchanged (56% of the section changed)

1 unchanged sentence

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 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.

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 seven of those major markets.

As of October 3, 2021, we operated and franchised 2,218 Jack in the Box quick-service restaurants, primarily in the western and southern United States, including one in Guam.

Of the 2,218 restaurants at fiscal year-end, 2,055, or 93%, were franchised.

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

In June 2021, we held a virtual Investor Day and provided an overview of our growth strategy, including detail on plans for unit growth, transparency on unit economics, debut of our new store prototype, and focus on future investments in digital.

Our strategies are rooted in two foundational principles:

• Shape a High-Performance Culture - When we serve our people and our franchisees well, we will maximize the guest experience for all who interact with the brand.

• Leverage Innovation and Technology Platforms - Taking our history of strong innovation on menu and operations, and placing that same forward thinking on digital and technology development.

We use these principles as a guide while executing on our four strategic pillars:

• Build Brand Loyalty by transforming our restaurant design, improving the image of existing restaurants, and enhancing the digital experience for our guests.

• Drive Operations Excellence by evolving training efforts in our restaurants, execution of our brand standard systems, and improving speed and consistency.

• Grow Restaurant Profits by developing and implementing financial fundamentals, influencing pricing with a dynamic model, and building our data advantage.

• Expand Jack’s Reach by creating modular and flexible restaurant designs, building company-operated stores to help seed growth, fostering growth capital, and increasing franchise candidate and restaurant site lead generations.

This strategy builds on our historical strengths as a differentiated, challenger brand.

Those strengths include our uniquely broad menu, operational capabilities, passionate and loyal guests, committed team members and franchisees, and ability to invest in development and innovation that will deliver long term growth.

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.

We also offer quality products such as breakfast sandwiches with freshly cracked eggs, and craveable favorites such as tacos and curly fries, along with specialty sandwiches, salads, and real ice cream shakes, among other items.

We allow our guests to customize their meals to their tastes and order any product when they want it, including breakfast items any time of day (or night).

We are known for variety and innovation, which has led to the development of four strong dayparts:

breakfast, lunch, dinner, and late-night.

The Jack in the Box restaurant chain was the first major hamburger chain to develop and expand the concept of drive-thru restaurants.

We also offer quality products such as breakfast sandwiches with freshly cracked eggs, as well as craveable favorites such as tacos, curly fries, egg rolls, specialty sandwiches and real ice cream shakes, among many other items.

We allow our guests to customize meals to their tastes and order any product on the menu when they want it, including breakfast at night, or burgers and chicken in the morning.

Our trademark of variety and innovation has led to the development of five true dayparts:

breakfast, lunch, snack, dinner, and late night.

During our 70 years as a brand, we were the first restaurant and burger chain to develop and expand the concept of drive-thru restaurants.

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.

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

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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

Site selections for all new company-operated restaurants are made after an economic analysis and a review of demographic data and other information relating to population density, traffic, competition, restaurant visibility and access, available parking, surrounding businesses, and opportunities for market penetration.

Restaurants developed by franchisees are built to brand specifications on sites we have approved.

Our company-operated restaurants have multiple restaurant models with different seating capacities to improve our flexibility in selecting locations.

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.

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.

In addition, franchisees who lease an existing restaurant location from us, which primarily relate to when we have refranchised a restaurant, will pay monthly minimum rent, as well as percentage rent based on each month’s gross sales, if applicable.

The typical percentage rent is 9.5% of gross sales.

Site Selection, Design, and Construction

Site selection for all new restaurants is made after an economic analysis and a review of demographic data and other information relating to population density, traffic, competition, restaurant visibility and access, available parking, surrounding businesses, and opportunities for market penetration.

New restaurants developed by franchisees are constructed to brand standards and specifications using brand approved plans on properties that we have approved.

Jack in the Box offers multiple new restaurant prototype designs that feature different configurations and dining room sizes to provide maximum flexibility when considering properties for development.

This flexibility enables the Company and franchisees to optimize the layout and configuration of a new restaurant with the property’s specific economic, demographic, geographic, or physical characteristics.

Based on a potential property’s geographical location, physical characteristics, local requirements, and size, 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 new Company restaurants are constructed on leased land or on land that is purchased and subsequently sold, 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 typically ranges from approximately $0.3 million to $0.5 million.

Restaurant Management and Operations

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In addition, our food safety management program uses American National Standards Institute certified food safety training programs to train our company and franchise restaurant management employees on food safety practices for our restaurants.

All of our company-operated restaurants and franchisees have a long-term contract with a third-party distributor.

All of our company-operated and franchisee restaurants have a long-term contract with a third-party distributor.

Under this contract, the distributor will provide distribution services to our Jack in the Box restaurants through August 2022 through seven distribution centers in the continental United States.

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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.

As of October 3, 2021, we had approximately 5,300 employees, of whom 4,900 were restaurant employees, 350 were corporate management and staff, and 40 were field operations management.

Most of our employees are paid on an hourly basis, except manager, field operations management, and certain 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.

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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.

Our Total Rewards framework includes pay and recognition, health and wellness, financial well-being, work/life happiness, culture and community, and learning and development.

We are committed to providing employees with market-competitive pay and benefits and flexibility with respect to benefit choices.

For our company-operated restaurant positions nationwide, positions are assigned to a pay range that best reflects market pricing of similar jobs in the restaurant industry and in the geographic location, and employees receive an automatic pay increase each time they work a certain number of hours provided performance is satisfactory.

All corporate positions, field operations management, and restaurant management positions, including hourly assistant managers and team leaders, are eligible for performance-based cash incentives.

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.

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 to ensure that male and female employees are paid equally.

We are committed to providing market-competitive, high-quality, and affordable benefits to meet the changing needs of our employees.

We offer a robust benefits package that includes medical, dental, and vision insurance with health savings account (HSA) employer contributions and an HMO plan;

company-paid basic term life insurance;

wellness programs;

an employee assistance program (EAP);

disability insurance;

a flexible spending account (FSA);

legal services;

pet insurance;

and a 401(k) with company matching contributions.

In addition, we recognize and support the growth and development of our employees and offer opportunities to participate in internal and external learning programs.

We also hold regular restaurant level talent and development planning reviews to assist us with growing our internal restaurant teams.

We recognize our responsibility to take the steps necessary to create and maintain a safe and healthy work environment.

All of our corporate and restaurant employees may report safety and security issues either through our risk management department or anonymously through our asset protection helpline.

Reports are reviewed by our asset protection manager and are addressed appropriately by corporate partners and OSHA, if necessary.

All of our corporate and restaurant employees may also report any ethics issues to our ethics hotline.

We take every incident and report seriously and have detailed protocols regarding investigation, assessment and correction, safety communications, employee training, and record keeping.

Trademarks and Service Marks

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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.

Our policy is to pursue registration of our important service marks and trademarks and to vigorously oppose any infringement of them.

Generally, with the appropriate renewal and use, the registration of our service marks and trademarks will continue indefinitely.

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.

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

Government Regulation

3 unchanged sentences

We are subject to federal, state, and local laws governing restaurant menu labeling, as well as laws restricting the use of, or requiring disclosures about, certain ingredients used in food sold at our restaurants.

We are also subject to federal, state, and local laws governing packaging and service ware.

We are also subject to federal and state laws regulating the offer and sale of franchises, as well as judicial and administrative interpretations of such laws.

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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.

Our marketing, advertising, and promotional programs are governed by various federal, state, and local laws and regulations concerning consumer protection, including the Telephone Consumer Protection Act.

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

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In addition to laws and regulations governing restaurant businesses directly, there are also regulations, such as the Food Safety Modernization Act, that govern the practices of food manufacturers and distributors, including our suppliers.

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

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

Available Information

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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.

The SEC also maintains a website with the address of 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