In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Jack in the Box franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Jack in the Box franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Jack in the Box franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Jack in the Box outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Jack in the Box’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average sales, cost of sales, labor costs (production labor, management compensation, payroll taxes/insurance, and total labor), gross profit, operating costs (advertising, royalty, utilities, occupancy, other operating costs, and total operating costs), and operating margin for the 1,683 franchise-operated Jack in the Box restaurants in the continental United States (i.e. excluding Hawaii/Guam) that were in operation for more than 360 days within the twelve-month period ending September 30, 2017, and were operated by the same franchisee(s) for that entire period (grouped by sales ranges: below $1,000,000; $1,000,000 to $1,250,000; $1,250,000 to $1,500,000; $1,500,000 to $1,750,000; $1,750,000 and above; and total)

Section I – Background Information

17 Things You Need to Know About the Jack in the Box Franchise

Leadership Changes

1.  At the end of January 2018, Jack in the Box announced that Frances Allen had resigned as the brand’s president effective February 9. Lenny Comma, chairman and chief executive officer of Jack in the Box, said, “As I mentioned at the recent ICR Conference, I will take the opportunity to flatten our organizational structure following the expected sale of our QDOBA brand. Frances graciously suggested the elimination of her position so that we could more quickly begin restructuring the brand’s leadership.”

2.  Comma added, “Frances was instrumental in refining the brand’s strategy and positioning, with an emphasis on improving the quality of the food and transforming the business model to be more asset light through refranchising. We’re grateful for her exemplary leadership and believe the Jack in the Box brand is stronger as a result of her many contributions. We wish her all the best.”

3.  Jack in the Box also announced that Marcus Tom would join the company as vice president and chief operating officer on February 12. Tom comes to the company with more than 15 years of experience in operations leadership positions, most recently at JAB Beech Inc., where he was senior vice president, operations of its Caribou Coffee brand from January 2017 to December 2017 and senior vice president, operations for its Einstein Bros. Bagels brand from July 2015 to December 2016.

4.  In his new role, Tom will oversee operations for Jack in the Box and its franchise restaurants, as well as strategic initiatives and operations services.

Appoints New Executive Director of National Franchise Association

5.  At the end of November 2017, Jack in the Box National Franchise Association (JIB-NFA) announced that Tabitha Burke had been appointed as the franchise association’s new executive director. Burke is a franchise veteran with over 25 years of progressive experience in streamlining operations, business development, and franchise relations.

6.  She began her career at Hot Dog on a Stick where, as a member of the executive team, she developed the company’s franchise program and began franchising the company both domestically and internationally. Burke most recently served as the vice president of franchise development at Generation Next Franchise Brands where she supported over 200 franchisees.

7.  As executive director, Burke’s core mission will be implementing JIB-NFA strategies effectively, enhancing executive leadership, and maintaining JIB-NFA day-to-day operations.

Launches Fast Food Industry’s First 100% Ribeye Burger

8.  In early October 2017, Jack in the Box rolled out fast food’s first 100% Ribeye Burger. The brand said that the new burger challenges consumers’ expectations of what’s possible from a quick-service restaurant.

9.  Iwona Alter, Jack in the Box’s chief marketing officer, said, “Jack in the Box has a proven track record for exceeding guest expectations. We thrive on challenging convention. While many of our competitors are narrowing menus or following the movement toward craft, we’re focused on giving our customers what they want, when they want it.”

10.  The pure Ribeye beef burgers were only available for a limited time at participating locations and came in two variations: All American Ribeye, which featured a 100% Ribeye beef patty, red onion, tomato, Provolone cheese, real mayo, and spring mix lettuce on top of an artisan potato bun; and the Havarti & Grilled Onion Ribeye, which also had a 100% Ribeye beef patty, that was topped with sliced tomato, grilled onions, real mayo, Havarti cheese, and a red wine glaze sauce.

11.  Jack in the Box said that the Ribeye burgers marked the beginning of a slate of new menu items that would debut in 2017 and beyond.

Company History

12.  Jack in the Box was founded in 1951 by Robert O. Peterson in San Diego, California. Peterson already owned and operated a small chain of drive-in restaurants, which were first called Topsy’s and then Oscar’s.

13.  A few years before opening the first Jack in the Box location, Peterson obtained the rights for an intercom ordering service from George Manos, who was the first to implement the intercom system for drive-up windows. Peterson converted one of his Oscar’s restaurants into the first Jack in the Box with an expansion of Manos’s intercom concept to create a two-way intercom system. This first location also had a giant jack-in-the-box clown on its roof. Jack in the Box was the first major chain restaurant to use an intercom and the first to focus on drive-through ordering.

14.  Peterson operated his restaurant concepts under a parent company called San Diego Commissary Co. He changed the company’s name to Foodmaker Co. in 1960 and opened the first Jack in the Box location outside of California in Phoenix, Arizona. In 1968, Peterson sold a majority of the company to Ralston Purina Co. Under Ralston Purina, Jack in the Box underwent a major expansion and by the end of the next decade, there were more than 1,000 restaurants across the country.

15.  In 1979, Foodmaker Co. decided to concentrate its efforts and resources in the western and southwestern markets and ended up closing more than 200 Jack in the Box restaurants in the eastern and midwestern markets. An investment group, including members of Foodmaker management, completed a leveraged buyout of the company from Ralston Purina in 1985.

16.  Jack in the Box’s iconic fictional founder, CEO, and ad pitchman Jack made his debut in 1995. Since then, Jack has been featured in all of the brand’s advertising. At the end of the 1990s, Foodmaker Co. divested all of its restaurant concepts except for Jack in the Box and changed the company’s name to Jack in the Box, Inc. Today, there are more than 2,250 Jack in the Box restaurants across the United States.

Entrepreneur’s Franchise 500

17.  Jack in the Box ranked No. 43 on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Jack in the Box franchise costs, based on Item 7 of the company’s 2018 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Jack in the Box’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  1,819
• Outlets at the End of the Year:  1,836
• Net Change:  +17

2016

• Outlets at the Start of the Year:  1,836
• Outlets at the End of the Year:  1,838
• Net Change:  +2

2017

• Outlets at the Start of the Year:  1,838
• Outlets at the End of the Year:  1,975
• Net Change:  +137

Company-Owned

2015

• Outlets at the Start of the Year:  431
• Outlets at the End of the Year:  413
• Net Change:  -18

2016

• Outlets at the Start of the Year:  413
• Outlets at the End of the Year:  417
• Net Change:  +4

2017

• Outlets at the Start of the Year:  417
• Outlets at the End of the Year:  276
• Net Change:  -141

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• The table below represents the sales and operating figures of franchise-operated Jack in the Box restaurants in the continental United States (i.e. excluding Hawaii/Guam) that were in operation for more than 360 days within the twelve-month period ending September 30, 2017, and were operated by the same franchisee(s) for that entire period.

• The table represents data for 1,683 franchise-operated restaurants, which excludes the information for the following franchise-operated restaurants: 18 restaurants that opened in 2017; 9 restaurants that permanently closed in 2017; 176 restaurants that Jack in the Box sold to franchisees in 2017; 39 restaurants that were transferred between franchisees; 28 restaurants with insufficient data; and 31 restaurants operated in Hawaii/Guam.

• The restaurants represented in the table comprise approximately 85% of franchised Jack in the Box restaurants as of September 30, 2017.

• Jack in the Box has divided the restaurants into five ranges based on sales volume. It has calculated the average sales, median sales, and certain expenses of restaurants in each of the five ranges.

Average and Median Sales and Select Costs of Franchise-Owned Restaurants in 5 Sales Ranges in the Continental U.S. (i.e. excluding Hawaii and Guam) for the 12-Month Period Ended September 30, 2017

Below $1,000,000

Number of Restaurants:  254 (15% of total)

Percent by State

• CA:  11%
• AZ:  6%
• TX:  55%
• Other:  28%

Sales