Jack in the Box Inc. Cowen & Company 7 th Annual Consumer Conference January 12, 2009
Jack in the Box Inc. Safe Harbor Statement This presentation includes plans and estimates for the future, which are subject to various risks and uncertainties that may cause actual results to differ from these estimates. Please review the risk factors outlined in the company s recent 10-K and 10-Q s on file with the SEC and available through the Jack in the Box website at www.jackinthebox.com. com Reg G reconciliations for today s presentation are also available on our website. 2
Discussion Topics Strategic plan overview Brand reinvention Growth Financial highlights Refranchising strategy Investment drivers 3
4 Strategic Plan Overview
Strategic Plan Brand reinvention Growth Expand franchising Improve the business model 5
Brand Reinvention 6
Reinvent the Jack in the Box Brand Objective: To integrate the Jack in the Box brand identity into the restaurant experience ENVIRONMENT Service and environment significantly affect how food is perceived MENU SERVICE and food is a major driver of repeat purchase and overall satisfaction 7 Advertising and Communications
What differentiates JIB from Competitors New Product Platforms A unique fast-food menu. The ability to get anything on the menu, any time of day 8
What differentiates JIB from Competitors Wide Variety of Products Jack s Classics SOURDOUGH JACK JUMBO JACK ULTIMATE CHEESEBURGER New Products 9
Environment & Service Initiatives Re-image Program 10
Environment & Service Initiatives Re-image Program Deco 11
Environment & Service Initiatives Re-image Program 12
The Next Generation Jack in the Box Building Design Objectives: Differentiated design Showcase equities Build in flexibility for future growth Maximize productivity through all sales levels Allow for easy customization Incorporate green components
New Restaurant Prototype
Service Initiatives Focus on what guests really want Operations simplification
Environment & Service Initiatives Self-serve Kiosk 16
Growth Strategy 17
Growth Strategy - Our Guests Know Jack Advertising Awareness 60% 58% 56% 49% 49% 0% 20% 40% 60% 80% 100% 18 Source: AUI Study conducted by C.A. Walker - January 2008
JIB Growth Strategy Accelerate unit growth in new markets Franchise and company Franchise seeding strategy Fill in existing markets
Jack in the Box System Growth FY 03 FY 08 2,158 2,132 812 38% 2,079 1,947 394 2,006 2,049 1,346 62% 1,553 FY03 FY04 FY05 FY06 FY07 FY 08 20 Franchise Company
Jack in the Box Growth System Units by State 139 as of 9/28/2008 47 25 75 910 2 3 175 1 3 61 13 25 21 28 26 584 20 21
Jack in the Box Growth Company Units by State 139 as of 9/28/2008 34 20 56 411 3 75 61 13 25 28 21 440 20 22
Jack in the Box Growth New Markets w/ Active Development 1 CORPUS CHRISTI 2 DENVER 3 MIDLAND/ODESSA 4 ABILENE/SWEETWATER 5 SAN ANGELO 6 COLORADO SPRINGS 7 VICTORIA 8 WICHITA FALLS 9 ALBUQUERQUE 2 6 9 8 FY 2007 FY 2008 FY 2009 to date FY 2009 planned 4 3 5 1 7
Qdoba Growth Strategy Continued franchise growth Open more company restaurants in urban, densely populated markets Increase number of company restaurant openings to more quickly achieve critical mass Co-development opportunities with franchisees in certain markets
Qdoba System Growth FY 03 FY 08 250 318 395 454 343 76% 177 111 77 34 111 24% FY03 FY04 FY05 FY06 FY07 FY08 25 Franchise Company
Qdoba Growth System Units by State as of 9/28/2008 17 1 3 6 9 6 4 29 9 16 2 32 12 5 2 20 7 17 24 19 16 12 (MD) 62 1 1 21 15 11 16 2 (D.C.) 3 5 9 8 16 1 1 3 3 3 8 2 11 26
Qdoba Restaurant Growth Total estimated US potential: 1,800 2,000 units 454 units at end of FY 08 Open 75 100 units per year Plan to accelerate corporate openings 30-40 per year, up from 10-15 per year 27
Financial Highlights 28
Average Unit Volumes For QSR Chains $2,068 ($ in 000s) $1,434 $1,343 $1,334 $1,240 $1,105 $1,091 $969 29 Source: Nation s Restaurant News Top 100, June 30, 2008 FYE Aug 2007: Sonic; FYE Sep 2007: JACK FYE Dec 2007: McDonald s, Wendy s, Taco Bell FYE Jan 2008: Carl s, Hardee s; FYE June 2008: Burger King
JIB Average Unit Volumes (All Restaurants) Restaurants Per Range FY 2004 FY 2008 < $1.1M 752 477 $1.1M 1M - $1.5M 771 807 > $1.5M 483 874 TOTAL 2,006 2,158 AUV ($ in millions) $1.280 $1.439
Jack in the Box Daypart Mix 100% 90% 80% * AUV $1.280 M AUV $1.439 M FY 2004 FY 2008 Late Night 14.8% Late Night 14.4% 70% 60% Dinner 31.3% 3% Dinner 30.7% 50% 40% Snack 10.6% Snack 10.8%, 30% Lunch 25.8% 20% Lunch 25.1% 10% 0% Breakfast 17.5% Breakfast 19.0% 31 * FY 04 contained 53 weeks; AUV estimate based on 52-week fiscal year
FY08 Unit Economics for Company-operated Restaurant t Estimated Average Unit ($ in 000s)* Sales $ 1,439 EBITDA $ 210 EBITDA Margin 14.6% Cash Investment $ 1,100 Cash-on-Cash Return 19% 32 * See supplemental information on website at www.jackinthebox.com.
FY08 Unit Economics for Company-operated Restaurant t Estimated Average Unit ($ in 000s)* Sales $ 1,038 EBITDA $ 186 EBITDA Margin 17.9% Cash Investment $ 550 Cash-on-Cash Return 34% 33 * See supplemental information on website at www.jackinthebox.com.
Refranchising i Strategy 34
Refranchising Strategy Expected Outcomes 35 70-80% franchise-operated by FYE 2013 Reduced exposure to volatility Economic pressures on sales Commodity and labor costs Reduced overhead 5% marketing fee paid by operator, not JBX Field supervision and support Reduced cap-ex increased free cash flow Improved ROIC Substantially improved EBIT margin Key driver to business model evolution
49 Refranchising Evolving the Business Model No. of Restaurants Refranchised 109 58 82 76 120-140 2004 2005 2006 2007 (2) 2008 2009 * Franchise Ownership 70-80% 22% 25% 29% 33% 38% 36 * Guidance as of Nov. 18, 2008 2004 2005 2006 2007 2008 FYE 2013*
Refranchising Economics Proceeds Gains $21.5 $16.1 $33.5 $22.1 Proceeds and Gains ($ in millions) (1) $54.44 $51.3 $40.5 $38.1 (2) $85.0 $66.3 2004 2005 2006 2007 (2) 2008 2004 2005 2006 2007 2008 $438 $330 Average Proceeds and Gains ($ in 000s) (1) $663 $674 $578 $493 $501 $381 $780 $609 37 (1) (2) 2004 2005 2006 2007 2008 Before $50,000 franchise fee Includes bridge financing of $28M, of which $8M was repaid in FY08 and $12M was repaid in early FY09
Refranchising Economics Estimated Cash Proceeds Per Restaurant Approximate proceeds on sale $ 650,000 Franchise fee 50,000 Approximate total proceeds $ 700,000 Target of 70% to 80% Franchise-Operated Approximate # of restaurants to be sold 750 1,000 Estimated cash proceeds per restaurant $ 700,000 Estimated total cash proceeds $ 525 700 Million 38
Refranchising Economics Cash Flow Illustration - One Restaurant ($ in 000s) Company-Operated Sales $ 1,439 (1) Unit level cash flow $ 210 Field G & A (25) Cap maint & re-image (2) (32) Company-operated cash flow $ 153 Franchise-Operated Sales $ 1,439 Royalties 50% 5.0% $ 72 Average rent spread 3.5% 50 Field G & A (4) Franchise-operated cash flow $ 118 Cash Flow Company-op $ 153 Fran-op 118 Cash flow gap $ 35 39 (1) (2) Restaurant operating margin less advertising plus depreciation Average annual capital maintenance plus pro-rata re-image every 5-7 years
Refranchising Economics Estimated t Return Necessary to Close Cash Flow Gap One Unit Example ($ in 000s) Approximate proceeds on sale $ 650 Franchise fee 50 Approximate cash proceeds $ 700 Cash Flow Company-op $ 153 Fran-op 118 Cash flow gap $ 35 Pre-tax Return on Cash Required to close Cash Flow Gap 5.0% Hypothetical 100 Units Cash proceeds $ 70.0 million Cash flow gap $ 3.5 million Estimated t EPS gap 3-4 cents 40
Key Investment Drivers Unique brand positioning i with strong awareness and innovative product development process Evolving business model from primarily company- owned to franchised Continued expansion for JBX brand beyond 18 states Growth of high-return Qdoba brand across the country Underappreciated valuation of either gains or potential proceeds from refranchising 41