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Jack in the Box Inc. Reports Fourth Quarter and Full-Year 2021 Earnings

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  • JACK

Systemwide sales growth +8.6% in Q4 2021; +13.1% FY 2021

Same store sales growth +0.1% in Q4 2021; +10.3% FY 2021

Diluted EPS +9.8% at $1.80 in Q4 2021; +91.0% at $7.37 FY 2021(1)

Net units down -1.0% FY 2021

Management provides annual guidance measures for FY 2022

Management provides restaurant level margin outlook for FY 2022

Management provides company-owned restaurant outlook for 2022 and 2023

SAN DIEGO, November 23, 2021--(BUSINESS WIRE)--Jack in the Box Inc. (NASDAQ: JACK) announced financial results for the fourth quarter ended October 3, 2021, comprised of growth in systemwide sales, same store sales and earnings per share.

"I am very proud of the execution and determination shown by our outstanding franchisees and corporate team members, continuing to deliver for our guests during a challenging operating environment," said Darin Harris, Jack in the Box Chief Executive Officer. "We closed the year with strong comps on a two-year basis of +12.3% in Q4, leading us to another record-setting year of store-level profitability — a key element in driving results against our growth strategy in the near future. We continue to focus heavily on making significant progress on our strategic pillars, growth objectives, and unlocking substantial value for JACK shareholders."

Systemwide sales for the fourth quarter increased 8.6%, or 0.2% when excluding the 53rd week for the purpose of comparison to the prior year, driven by positive results in same store sales and partially offset by a slight decline in net unit growth. Systemwide sales for full year 2021 increased 13.1%, or 11.0% when excluding the 53rd week.

The company had a fourth quarter net store decline of one store, comprised of four store openings and five closures. The five store closures included one company-owned location and four related to early terminations and an agreement expiration. In the fourth quarter, there were development agreements signed for 47 future restaurants, bringing the year-to-date total to 111 future restaurant commitments.

Company-operated same-store sales declined 4.4% in the fourth quarter, with decreases in traffic partially offset by increases in average check. Franchise same-store sales grew 0.6%, with increases in average check; partially offset by a decrease in traffic.

(1) Fiscal year 2020 Diluted EPS included non-recurring items, notably a pension settlement charge and the sale of a corporate office building, that affect the comparability to fiscal year 2021 Diluted EPS.

Same-Store Sales:

13 Weeks Ended

12 Weeks Ended

53 Weeks Ended

52 Weeks Ended

October 3, 2021

September 27, 2020

October 3, 2021

September 27, 2020

Company

(4.4)%

9.6%

6.1%

3.1%

Franchise

0.6%

12.4%

10.7%

4.0%

System SSS

0.1%

12.2%

10.3%

4.0%

Restaurant Counts:

2021

2020

Company

Franchise

Total

Company

Franchise

Total

Store count at beginning of Q4

148

2,071

2,219

144

2,100

2,244

New

4

4

7

7

Refranchised

16

(16)

Closed

(1)

(4)

(5)

(10)

(10)

Store count at end of Q4

163

2,055

2,218

144

2,097

2,241

Q4 Net Unit Increase/(Decrease)

15

(16)

(1)

(3)

(3)

Q4/FY 2021 vs. Q4/FY 2020 Unit % Increase/(Decrease)

13.2

%

(2.0)

%

(1.0)

%

5.1

%

(0.4)

%

(0.1)

%

Fourth quarter diluted earnings per share was $1.80, up 9.8% over the prior year quarter or 2.4% excluding the benefit of the 53rd week. Total revenues increased 9.0% to $278.5 million, compared to $255.4 million in the comparable period ended September 27, 2020, driven by the 53rd week in 2021 and growth in same store sales. Net earnings increased to $38.9 million for the fourth quarter of fiscal 2021, compared with $37.8 million for the fourth quarter of fiscal 2020. Adjusted EBITDA(1), a non-GAAP measure, was $74.3 million in the fourth quarter of fiscal 2021 compared with $78.4 million for the prior year quarter.

Restaurant-Level Margin(2), a non-GAAP measure, was 20.1%, a decrease of 6.9% from the fourth quarter a year ago, primarily driven by the take back of lower-volume franchise restaurants; increases in food and packaging costs; wage inflation of 9.8%; and increases in utilities, and maintenance and repair costs, partially offset by lower incentive compensation and menu price increases. Commodity costs increased in the quarter by approximately 11.8%, primarily due to increases in pork, beef and beverages.

Franchise-Level Margin(2), a non-GAAP measure, increased by $6.1 million, or 8.7% from the fourth quarter a year ago, driven by the benefit of the 53rd week in 2021.

G&A expense for the fourth quarter was $16.7 million, an increase of $6.4 million compared to the prior year quarter, driven primarily by a $3.8 million favorable litigation settlement in the prior year quarter; mark-to-market changes in the cash surrender value of company owned life insurance ("COLI") policies, net of a deferred compensation obligation supported by these policies, resulting in a year-over-year increase of $1.1 million; a $1.1 million increase in incentive compensation; and $1.5 million related to the 53rd week in fiscal 2021. G&A for the full-year was $63.1 million. When including selling and advertising expense, SG&A was $82.7 million for fiscal 2021.

(1) Adjusted EBITDA represents net earnings on a GAAP basis excluding income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, impairment and other charges, net, depreciation and amortization, the amortization of franchise tenant improvement allowances and other, and pension settlement charges. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

(2) Restaurant-Level Margin and Franchise-Level Margin are non-GAAP measures. These non-GAAP measures are reconciled to earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

Capital Allocation

The company repurchased 0.7 million shares of our common stock for an aggregate cost of $70.0 million. As of October 3, 2021, there was no remaining amount under the Board-authorized stock buyback program. On November 19, 2021, the Board of Directors authorized an additional $200.0 million stock buy-back program that expires on November 20, 2023.

On November 19, 2021, the Board of Directors declared a cash dividend of $0.44 per share, to be paid on December 23, 2021 to shareholders of record as of the close of business on December 9, 2021. Future dividends will be subject to approval by our Board of Directors.

2022 Guidance & Outlook

The following guidance and underlying assumptions reflect the company’s current expectations for the current fiscal year ending October 2, 2022:

  • 2022 CapEx & Other Investments Guidance of $65-75 million

    • Previously stated at Q3 2021 earnings on August 4, 2021

    • Includes:

      • Capital expenditures (located within cash flows from investing activities)

      • Franchise tenant improvement allowances and incentives (located within cash flows from operating activities)

  • 2022 SG&A Guidance of $92-97 million

    • Excludes net COLI gains/losses, and now includes selling/advertising expense

  • 2022 Commodity Guidance up 6-7% compared to 2021

  • 2022 Company-owned Wage Rate Guidance up 8-10% compared to 2021

  • No change to 3-5 Year Outlook as provided at Investor Day on June 29, 2021

    • Same store sales up 2 to 3%

    • Unit growth up 1 to 3%

    • Systemwide sales up 3 to 5%

2022 Restaurant Level Margin Outlook

  • Due to an anticipated unique cost environment, we are providing one-time Company-owned restaurant level margin annual guidance for 2022

    • Restaurant Level Margin is expected to be 20-21%, which includes mid-to-high single digit price increases

Company-owned Restaurant Funding Outlook

  • 2022: Planning to fund up to 5 company-owned restaurants

  • 2023: Planning to fund between 7 and 15 company-owned restaurants

Conference Call

The company will host a conference call for analysts and investors on Tuesday, November 23, 2021, beginning at 7:30 a.m. PT (10:30 a.m. ET). The call will be webcast live via the Investors section of the Jack in the Box company website at http://investors.jackinthebox.com. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days. The call can be accessed via phone by dialing (833) 513-0565 and using ID 7573711.

About Jack in the Box Inc.

Jack in the Box Inc. (NASDAQ: JACK), founded and headquartered in San Diego, California, is a restaurant company that operates and franchises Jack in the Box® restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam. For more information on Jack in the Box, including franchising opportunities, visit www.jackinthebox.com.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may be identified by words such as "anticipate," "believe," "estimate," "expect," "forecast," "goals," "guidance," "intend," "plan," "project," "may," "will," "would" and similar expressions. These statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate. These estimates and assumptions involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Factors that may cause our actual results to differ materially from any forward-looking statements include, but are not limited to: the potential impacts to our business and operations resulting from the coronavirus COVID-19 pandemic, the success of new products, marketing initiatives and restaurant remodels and drive-thru enhancements; the impact of competition, unemployment, trends in consumer spending patterns and commodity costs; the company's ability to reduce G&A and operate efficiently; the company’s ability to achieve and manage its planned growth, which is affected by the availability of a sufficient number of suitable new restaurant sites, the performance of new restaurants, risks relating to expansion into new markets and successful franchise development; the ability to attract, train and retain top-performing personnel, litigation risks; risks associated with disagreements with franchisees; supply chain disruption; food-safety incidents or negative publicity impacting the reputation of the company's brand; increased regulatory and legal complexities, including federal, state and local policies regarding mitigation strategies for controlling the coronavirus COVID-19 pandemic, risks associated with the amount and terms of the securitized debt issued by certain of our wholly owned subsidiaries; and stock market volatility. These and other factors are discussed in the company’s annual report on Form 10-K and its periodic reports on Form 10-Q filed with the Securities and Exchange Commission, which are available online at http://investors.jackinthebox.com or in hard copy upon request. The company undertakes no obligation to update or revise any forward-looking statement, whether as the result of new information or otherwise.

JACK IN THE BOX INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data) (Unaudited)

13 Weeks Ended

12 Weeks Ended

53 Weeks Ended

52 Weeks Ended

October 3,
2021

September 27,
2020

October 3,
2021

September 27,
2020

Revenues:

Company restaurant sales

$

95,634

$

86,799

$

387,766

$

348,987

Franchise rental revenues

84,386

78,657

346,634

320,647

Franchise royalties and other

49,264

44,850

204,725

178,319

Franchise contributions for advertising and other services

49,170

45,095

204,545

173,553

278,454

255,401

1,143,670

1,021,506

Operating costs and expenses, net:

Food and packaging

29,630

24,787

113,006

102,449

Payroll and employee benefits

30,306

25,304

119,033

106,540

Occupancy and other

16,456

13,295

61,743

54,157

Franchise occupancy expenses

52,016

48,568

214,913

210,038

Franchise support and other costs

3,716

2,720

13,052

13,059

Franchise advertising and other services expenses

51,361

47,660

210,328

180,794

Selling, general and administrative expenses

21,578

14,710

82,734

80,841

Depreciation and amortization

10,844

11,647

46,500

52,798

Impairment and other (gains) charges, net

(5,080)

1,344

(3,382)

(6,493)

Gains on the sale of company-operated restaurants

(1,124)

(636)

(4,203)

(3,261)

209,703

189,399

853,724

790,922

Earnings from operations

68,751

66,002

289,946

230,584

Other pension and post-retirement expenses, net

203

748

881

41,720

Interest expense, net

16,338

15,692

67,458

66,743

Earnings from continuing operations and before income taxes

52,210

49,562

221,607

122,121

Income taxes

13,276

11,704

55,852

32,727

Earnings from continuing operations

38,934

37,858

165,755

89,394

(Losses) earnings from discontinued operations, net of income taxes

(9)

370

Net earnings

$

38,934

$

37,849

$

165,755

$

89,764

Net earnings per share - basic:

Earnings from continuing operations

$

1.81

$

1.65

$

7.40

$

3.87

Earnings (losses) from discontinued operations

0.02

Net earnings per share (1)

$

1.81

$

1.65

$

7.40

$

3.88

Net earnings per share - diluted:

Earnings from continuing operations

$

1.80

$

1.65

$

7.37

$

3.84

Earnings (losses) from discontinued operations

0.02

Net earnings per share (1)

$

1.80

$

1.64

$

7.37

$

3.86

Weighted-average shares outstanding:

Basic

21,537

22,903

22,402

23,125

Diluted

21,594

23,012

22,478

23,269

Cash dividends declared per common share

$

0.44

$

0.40

$

1.68

$

1.20

______________________

(1)

Earnings per share may not add due to rounding.

JACK IN THE BOX INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data) (Unaudited)

October 3,
2021

September 27,
2020

ASSETS

Current assets:

Cash

$

55,346

$

199,662

Restricted cash

18,222

37,258

Accounts and other receivables, net

74,335

78,417

Inventories

2,335

1,808

Prepaid expenses

12,682

10,114

Current assets held for sale

1,692

4,598

Other current assets

4,346

3,724

Total current assets

168,958

335,581

Property and equipment, at cost:

Land

105,393

100,460

Buildings

907,792

914,311

Restaurant and other equipment

112,959

112,675

Construction in progress

6,894

4,984

1,133,038

1,132,430

Less accumulated depreciation and amortization

(810,124)

(796,448)

Property and equipment, net

322,914

335,982

Other assets:

Operating lease right-of-use assets

934,066

904,548

Intangible assets, net

470

277

Goodwill

47,774

47,161

Deferred tax assets

51,517

72,322

Other assets, net

224,438

210,623

Total other assets

1,258,265

1,234,931

$

1,750,137

$

1,906,494

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

Current maturities of long-term debt

$

894

$

818

Current operating lease liabilities

150,636

179,000

Accounts payable

29,119

31,105

Accrued liabilities

148,417

129,431

Total current liabilities

329,066

340,354

Long-term liabilities:

Long-term debt, net of current maturities

1,273,420

1,376,913

Long-term operating lease liabilities, net of current portion

809,191

776,094

Other long-term liabilities

156,342

206,494

Total long-term liabilities

2,238,953

2,359,501

Stockholders’ deficit:

Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued

Common stock $0.01 par value, 175,000,000 shares authorized, 82,536,059 and 82,369,714 issued, respectively

825

824

Capital in excess of par value

500,441

489,515

Retained earnings

1,764,412

1,636,211

Accumulated other comprehensive loss

(74,254)

(110,605)

Treasury stock, at cost, 61,523,475 and 59,646,773 shares, respectively

(3,009,306)

(2,809,306)

Total stockholders’ deficit

(817,882)

(793,361)

$

1,750,137

$

1,906,494

JACK IN THE BOX INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

53 Weeks Ended

52 Weeks Ended

October 3, 2021

September 27, 2020

Cash flows from operating activities:

Net earnings

$

165,755

$

89,764

Earnings from discontinued operations

370

Earnings from continuing operations

165,755

89,394

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization

46,500

52,798

Amortization of franchise tenant improvement allowances and incentives

3,450

3,028

Amortization of debt issuance costs

5,595

5,628

Excess tax benefits from share-based compensation arrangements

(1,160)

(449)

Deferred income taxes

8,008

5,162

Share-based compensation expense

4,048

4,394

Pension and postretirement expense

881

41,720

Gains on cash surrender value of company-owned life insurance

(12,753)

(4,262)

Gains on the sale of company-operated restaurants

(4,203)

(3,261)

Gains on the disposition of property and equipment

(6,888)

(9,768)

Impairment charges and other

2,889

322

Changes in assets and liabilities, excluding acquisitions and dispositions:

Accounts and other receivables

5,072

(27,865)

Inventories

(269)

41

Prepaid expenses and other current assets

(2,766)

(2,780)

Operating lease right-of-use assets and lease liabilities

(24,784)

490

Accounts payable

(3,091)

2,018

Accrued liabilities

28,990

4,222

Pension and postretirement contributions

(6,084)

(6,243)

Franchise tenant improvement allowance and incentive disbursements

(8,568)

(10,239)

Other

500

(825)

Cash flows provided by operating activities

201,122

143,525

Cash flows from investing activities:

Purchases of property and equipment

(41,008)

(19,528)

Proceeds from the sale and leaseback of assets

3,884

19,828

Proceeds from the sale of company-operated restaurants

1,827

3,395

Proceeds from the sale of property and equipment

11,742

22,774

Other

2,626

2,654

Cash flows (used in) provided by investing activities

(20,929)

29,123

Cash flows from financing activities:

Borrowings on revolving credit facilities

114,376

Repayments of borrowings on revolving credit facilities

(107,875)

(6,500)

Principal repayments on debt

(829)

(10,536)

Debt issuance costs

(216)

Dividends paid on common stock

(37,322)

(27,538)

Proceeds from issuance of common stock

6,647

4,647

Repurchases of common stock

(200,000)

(155,576)

Payroll tax payments for equity award issuances

(4,166)

(5,946)

Cash flows used in financing activities

(343,545)

(87,289)

Net (decrease) increase in cash and restricted cash

(163,352)

85,359

Cash and restricted cash at beginning of year

236,920

151,561

Cash and restricted cash at end of year

$

73,568

$

236,920

JACK IN THE BOX INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

The following table presents certain income and expense items included in our consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA

(Unaudited)

13 Weeks Ended

12 Weeks Ended

53 Weeks Ended

52 Weeks Ended

October 3,
2021

September 27,
2020

October 3,
2021

September 27,
2020

Revenues:

Company restaurant sales

34.3

%

34.0

%

33.9

%

34.2

%

Franchise rental revenues

30.3

%

30.8

%

30.3

%

31.4

%

Franchise royalties and other

17.7

%

17.6

%

17.9

%

17.5

%

Franchise contributions for advertising and other services

17.7

%

17.7

%

17.9

%

17.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Operating costs and expenses, net:

Food and packaging (1)

31.0

%

28.6

%

29.1

%

29.4

%

Payroll and employee benefits (1)

31.7

%

29.2

%

30.7

%

30.5

%

Occupancy and other (1)

17.2

%

15.3

%

15.9

%

15.5

%

Franchise occupancy expenses (2)

61.6

%

61.7

%

62.0

%

65.5

%

Franchise support and other costs (3)

7.5

%

6.1

%

6.4

%

7.3

%

Franchise advertising and other services expenses (4)

104.5

%

105.7

%

102.8

%

104.2

%

Selling, general and administrative expenses

7.7

%

5.8

%

7.2

%

7.9

%

Depreciation and amortization

3.9

%

4.6

%

4.1

%

5.2

%

Impairment and other (gains) charges, net

(1.8)

%

0.5

%

(0.3)

%

(0.6)

%

Gains on the sale of company-operated restaurants

(0.4)

%

(0.2)

%

(0.4)

%

(0.3)

%

Earnings from operations

24.7

%

25.8

%

25.4

%

22.6

%

Income tax rate (5)

25.4

%

23.6

%

25.2

%

26.8

%

______________________

(1)

As a percentage of company restaurant sales.

(2)

As a percentage of franchise rental revenues.

(3)

As a percentage of franchise royalties and other.

(4)

As a percentage of franchise contributions for advertising and other services.

(5)

As a percentage of earnings from continuing operations and before income taxes.

Jack in the Box system sales (in thousands):

13 Weeks Ended

12 Weeks Ended

53 Weeks Ended

52 Weeks Ended

October 3,
2021

September 27,
2020

October 3,
2021

September 27,
2020

Company-operated restaurant sales

$

95,634

$

86,799

$

387,766

$

348,987

Franchised restaurant sales (1)

914,828

843,683

3,767,574

3,323,745

Systemwide sales (1)

$

1,010,462

$

930,482

$

4,155,340

$

3,672,732

______________________

(1)

Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. System sales include company and franchised restaurant sales. We do not record franchised sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchised sales. We believe franchised and system restaurant sales information is useful to investors as they have a direct effect on the company's profitability.

The following table summarizes the changes in the number and mix of Jack in the Box company and franchise restaurants:

SUPPLEMENTAL RESTAURANT ACTIVITY INFORMATION

(Unaudited)

2021

2020

Company

Franchise

Total

Company

Franchise

Total

Beginning of year

144

2,097

2,241

137

2,106

2,243

New

14

14

27

27

Acquired from franchisees

20

(20)

Closed

(1)

(36)

(37)

(1)

(28)

(29)

End of period

163

2,055

2,218

144

2,097

2,241

% of system

7

%

93

%

100

%

6

%

94

%

100

%

JACK IN THE BOX INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS

(Unaudited)

To supplement the consolidated financial statements, which are presented in accordance with GAAP, the company uses the following non-GAAP measures: Adjusted EBITDA, Restaurant-Level Margin and Franchise-Level Margin. Management believes that these measurements, when viewed with the company's results of operations in accordance with GAAP and the accompanying reconciliations in the tables below, provide useful information about operating performance and period-over-period changes, and provide additional information that is useful for evaluating the operating performance of the company's core business without regard to potential distortions.

Adjusted EBITDA

Adjusted EBITDA represents net earnings on a GAAP basis excluding earnings from discontinued operations, income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, impairment and other charges (gains), net, depreciation and amortization, the amortization of franchise tenant improvement allowances and incentives, and pension settlement charges. Adjusted EBITDA should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Adjusted EBITDA is useful to investors to gain an understanding of the factors and trends affecting the company's ongoing cash earnings, from which capital investments are made and debt is serviced. Below is a reconciliation of non-GAAP Adjusted EBITDA to the most directly comparable GAAP measure, net earnings (in thousands).

13 Weeks
Ended

12 Weeks
Ended

53 Weeks
Ended

52 Weeks
Ended

October 3,
2021

September 27,
2020

October 3,
2021

September 27,
2020

Net earnings - GAAP

$

38,934

$

37,849

$

165,755

$

89,764

Losses (earnings) from discontinued operations, net of taxes

9

(370)

Income taxes

13,276

11,704

55,852

32,727

Interest expense, net

16,338

15,692

67,458

66,743

Pension settlement charges

188

39,218

Gains on the sale of company-operated restaurants

(1,124)

(636)

(4,203)

(3,261)

Impairment and other (gains) charges, net

(5,080)

1,344

(3,382)

(6,493)

Depreciation and amortization

10,844

11,647

46,500

52,798

Amortization of franchise tenant improvement allowances and incentives

1,120

645

3,450

3,028

Adjusted EBITDA – non-GAAP

$

74,308

$

78,442

$

331,430

$

274,154

Restaurant-Level Margin

Restaurant-Level Margin is defined as company restaurant sales less restaurant operating costs (food and packaging, labor, and occupancy costs) and is neither required by, nor presented in accordance with GAAP. Restaurant-Level Margin excludes revenues and expenses of our franchise operations and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, impairment and other (gains) charges, net, gains or losses on the sale of company-operated restaurants, and other costs that are considered normal operating costs. As such, Restaurant-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Restaurant-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Restaurant-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Restaurant-Level Margin as a key performance indicator to evaluate the profitability of company-owned restaurants.

Below is a reconciliation of non-GAAP Restaurant-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):

13 Weeks
Ended

12 Weeks
Ended

53 Weeks
Ended

52 Weeks
Ended

October 3,
2021

September 27,
2020

October 3,
2021

September 27,
2020

Earnings from operations - GAAP

$

68,751

$

66,002

$

289,946

$

230,584

Franchise rental revenues

(84,386)

(78,657)

(346,634)

(320,647)

Franchise royalties and other

(49,264)

(44,850)

(204,725)

(178,319)

Franchise contributions for advertising and other services

(49,170)

(45,095)

(204,545)

(173,553)

Franchise occupancy expenses

52,016

48,568

214,913

210,038

Franchise support and other costs

3,716

2,720

13,052

13,059

Franchise advertising and other services expenses

51,361

47,660

210,328

180,794

Selling, general and administrative expenses

21,578

14,710

82,734

80,841

Impairment and other (gains) charges, net

(5,080)

1,344

(3,382)

(6,493)

Gains on the sale of company-operated restaurants

(1,124)

(636)

(4,203)

(3,261)

Depreciation and amortization

10,844

11,647

46,500

52,798

Restaurant-Level Margin- Non-GAAP

$

19,242

$

23,413

$

93,984

$

85,841

Company restaurant sales

$

95,634

$

86,799

$

387,766

$

348,987

Restaurant-Level Margin % - Non-GAAP

20.1

%

27.0

%

24.2

%

24.6

%

Franchise-Level Margin

Franchise-Level Margin is defined as franchise revenues less franchise operating costs (occupancy expenses, advertising contributions, and franchise support and other costs) and is neither required by, nor presented in accordance with GAAP. Franchise-Level Margin excludes revenue and expenses of our company-operated restaurants and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, impairment and other (gains) charges, net, and other costs that are considered normal operating costs. As such, Franchise-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Franchise-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Franchise-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Franchise-Level Margin as a key performance indicator to evaluate the profitability of our franchise operations.

Below is a reconciliation of non-GAAP Franchise-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):

13 Weeks
Ended

12 Weeks
Ended

53 Weeks
Ended

52 Weeks
Ended

October 3,
2021

September 27,
2020

October 3,
2021

September 27,
2020

Earnings from operations - GAAP

$

68,751

$

66,002

$

289,946

$

230,584

Company restaurant sales

(95,634)

(86,799)

(387,766)

(348,987)

Food and packaging

29,630

24,787

113,006

102,449

Payroll and employee benefits

30,306

25,304

119,033

106,540

Occupancy and other

16,456

13,295

61,743

54,157

Selling, general and administrative expenses

21,578

14,710

82,734

80,841

Impairment and other (gains) charges, net

(5,080)

1,344

(3,382)

(6,493)

Gains on the sale of company-operated restaurants

(1,124)

(636)

(4,203)

(3,261)

Depreciation and amortization

10,844

11,647

46,500

52,798

Franchise-Level Margin - Non-GAAP

$

75,727

$

69,654

$

317,611

$

268,628

Franchise rental revenues

$

84,386

$

78,657

$

346,634

$

320,647

Franchise royalties and other

49,264

44,850

204,725

178,319

Franchise contributions for advertising and other services

49,170

45,095

204,545

173,553

Total franchise revenues

$

182,820

$

168,602

$

755,904

$

672,519

Franchise-Level Margin % - Non-GAAP

41.4

%

41.3

%

42.0

%

39.9

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20211123005641/en/

Contacts

Chris Brandon
Vice President, Investor Relations
chris.brandon@jackinthebox.com
619.902.0269