What changed in this filing

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Item 1A. Risk Factors

2023-11-21 compared with 2022-11-22 · 24 added, 22 removed, 367 unchanged (11% of the section changed)

14 unchanged sentences

The growth of our business can make it increasingly difficult to locate and hire sufficient numbers of employees, to maintain an effective system of internal controls, and to train employees to deliver a consistently high-quality product and customer experience, which could materially harm our business and results of operations.

Furthermore, we have experienced, and could continue to experience, a shortage of labor for restaurant positions, including due to concerns around and illnesses arising from COVID-19 and its various novel variants and other factors, which could decrease the pool of available qualified talent for key functions and require restaurants to operate on reduced hours.

Such labor shortages could be further exacerbated by expanded federal, state and local COVID-19 vaccination requirements.

talent for key functions and require restaurants to operate on reduced hours.

In addition, our wages and benefits programs may be insufficient to attract and retain the top performing employees especially in a rising wage market.

6 unchanged sentences

High gasoline prices, increased healthcare costs, declining home prices, and political unrest, foreign or domestic, may potentially contribute to an economic downturn, as may regional or local events, including natural disasters or local regulation.

The impact of these factors may be exacerbated by the geographic profile of our brand.

Specifically, nearly 70% of our restaurants are located in the states of California and Texas.

The impact of these factors may be exacerbated by the geographic profile of our brands.

Specifically, nearly 70% of our systemwide restaurants are located in the states of California and Texas.

Economic conditions, state and local laws, or government regulations affecting those states may therefore more greatly impact our results than would similar occurrences in other locations.

34 unchanged sentences

Additional taxes or requirements to incur additional employee benefit costs, including the requirements of the Patient Protection and Affordable Care Act (the “Affordable Care Act”) or any new or replacement healthcare requirements, could also adversely impact our operating costs.

The enactment of additional state or local minimum wage increases above federal wage rates or regulations related to non-exempt employees has increased and could continue to increase labor costs for employees across our system-wide operations, especially considering our concentration of restaurants in California.

In September 2022, California passed legislation establishing a council to set sector-wide standards on wages, hours and working conditions related to the health, safety, and welfare of fast-food restaurant workers.

This law and other labor related laws enacted at the federal, state, provincial or local level could increase our and our franchisees’ labor costs and decrease profitability.

Labor related laws enacted at the federal, state, provincial or local level could increase our and our franchisees’ labor costs and decrease profitability.

Unionization activities or labor disputes may disrupt our operations and affect our profitability.

66 unchanged sentences

Further, if we react to these problems by changing our menu or other key aspects of the brand experience, we may lose customers who do not accept those changes, and we may not be able to attract enough new customers to generate sufficient revenue to make our restaurants profitable.

Our restaurants currently have an ingredient mix that can be exposed to one or more food allergens, such as eggs, wheat, milk, fish, shellfish, tree nuts, peanuts, and soy.

Our restaurants currently have an ingredient mix that can be exposed to one or more food allergens, such as eggs, wheat, milk, fish, shellfish, tree nuts, peanuts, sesame and soy.

We employ precautionary allergen training steps for food handlers in order to minimize risk of allergen cross contamination and we post allergen information on nutritional posters in our restaurants or otherwise make such information available to guests upon request.

10 unchanged sentences

• delays in completion of construction or shortages of any equipment or construction materials;

• competition for quality cost-efficient property that has a favorable zoning classification allowing drive-thru sales;

• negative impact of delays due to lengthy supply chain lead times for building components and systems;

• negative impact of delays due to longer timelines for permit review and field inspections with the municipal agencies;

• negative impact of delays due to longer than usual design, permitting, approval, procurement, and field installation timelines for utility service providers to supply primary services on new restaurant development projects (i.e.

electrical, gas, sewer, water, etc.)

• the inability to identify, or the unavailability of suitable sites at acceptable cost and other leasing or purchase terms;

30 unchanged sentences

Our highly-franchised business model presents a number of risks, and the failure of our franchisees to operate successful and profitable restaurants could negatively impact our business.

As of October 2, 2022, approximately 93% of our Jack in the Box restaurants and 51% of Del Taco restaurants were franchised restaurants;

As of October 1, 2023, approximately 94% of our Jack in the Box restaurants and 71% of Del Taco restaurants were franchised;

therefore, our success increasingly relies on the financial success and cooperation of our franchisees, yet we have limited influence over their operations.

Our income arises from two sources:

fees from franchised restaurants (e.g., rent and royalties based on a percentage of sales) and, to a lesser degree, profit from our remaining Company-operated restaurants.

fees from franchised restaurants (e.g., royalties and rent based on a percentage of sales) and, to a lesser degree, profit from our remaining Company-operated restaurants.

Our franchisees manage their businesses independently, and therefore are responsible for the day-to-day operation of their restaurants.

7 unchanged sentences

These unrelated risks could adversely affect a franchisee’s ability to make payments to us or to make payments on a timely basis.

We cannot assure you that our franchisees will successfully participate in our strategic or marketing initiatives or operate their restaurants in a manner consistent with our requirements, standards, and

expectations.

As compared to some of our competitors, our brands have relatively fewer franchisees who, on average, operate more restaurants per franchisee.

22 unchanged sentences

Regulatory bodies may enact new laws or promulgate new regulations that are adverse to our business, or they may view matters or interpret laws and regulations differently than they have in the past or in a manner adverse to our business.

For example, a recently enacted law in California purports to codify an employment classification test set forth by the California Supreme Court that established a new standard for determining employee or independent contractor status.

Although we would argue that the law does not change the status of franchisees or their employees, it has been suggested that the law could be read to, for example, make franchisors legally liable for the conduct of franchisee employees.

Acceptance of this or similar arguments by the courts in California or elsewhere could impact our financial results or affect restaurant operations.

These new laws or regulations could negatively impact our financial results or affect restaurant operations.

Governmental regulation, including in one or more of the following areas, may adversely affect our existing and future operations and results, including by harming our ability to profitably operate our restaurants.

Americans with Disabilities Act and Similar State Laws

We are subject to the Americans with Disabilities Act (“ADA”) and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations, and other areas.

The expenses associated with any modifications we may be required to undertake with respect to our restaurants or services, or any damages, legal fees, and costs associated with litigating or resolving claims under the ADA or similar state laws, could be material.

We are subject to the Americans with Disabilities Act and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations, and other areas.

Consumer Protection and Privacy Laws

2 unchanged sentences

Food Regulation

The Food Safety Modernization Act granted the FDA new authority regarding the safety of the entire food system, including through increased inspections and mandatory food recalls.

The Food Safety Modernization Act granted the U.S.

Food and Drug Administration new authority regarding the safety of the entire food system, including through increased inspections and mandatory food recalls.

Although restaurants are not directly implicated by these requirements, our suppliers may initiate or otherwise be subject to food recalls or other consequences impacting the availability of certain products, which could result in adverse publicity, or require us to take actions that could be costly for us or otherwise impact our business and financial results.

81 unchanged sentences

We may be subject to risk associated with disagreements with key stakeholders, such as franchisees.

In addition to its shareholders, we have several key stakeholders, including its independent franchise operators.

In addition to shareholders, we have several key stakeholders, including our independent franchise operators.

Third parties such as franchisees are not subject to the control of the Company and may take actions or behave in ways that are adverse to the Company.

Because the ultimate interests of franchisees and the Company are largely aligned around maximizing restaurant profits, the Company does not believe that any areas of disagreement between the company and franchisees are likely to create material risk to the Company or its shareholders.

Because the ultimate interests of franchisees and the Company are largely aligned around maximizing restaurant profits, the Company does not believe that any areas of disagreement between the Company and its franchisees are likely to create material risk to the Company or its shareholders.

Nevertheless, it is possible that conflict and disagreements with these or other critical stakeholders could distract management or otherwise have a material adverse effect on the Company’s business.

4 unchanged sentences

In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, employees, and joint venture partners, and cause our stock price to experience periods of volatility or stagnation.

Information and Technology Related Risks

Risks Related to Information and Technology

We are subject to the risk of cybersecurity breaches, intrusions, data loss, or other data security incidents.

31 unchanged sentences

Our ability to efficiently manage our business, service our customers and process digital orders through our mobile application and third-party delivery partnerships depends significantly on the reliability and performance of our systems and those managed by our service providers.

The failure of these systems and processes to operate effectively, including an interruption or degradation in such systems or services, could be harmful and cause delays in customer service, loss of digital sales, reduce efficiency or cause delays in operations.

The failure of these systems and processes to operate effectively, including an interruption or degradation in such systems or services, or if such systems or services become outdated, could be harmful and cause delays in customer service, loss of digital sales, reduce efficiency or cause delays in operations.

Significant capital investments may be required to remediate any such problems.

31 unchanged sentences

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 1A. Risk Factors