Revenue

12 Months Ended

Oct. 01, 2023

Revenue from Contract with Customer [Abstract]

Revenue

REVENUE

Nature of products and services — We derive revenue from retail sales at Jack in the Box and Del Taco company-operated restaurants and rental revenue, royalties, advertising, and franchise and other fees from franchise-operated restaurants.

Our franchise arrangements generally provide for an initial franchise fee per restaurant for a 20-year term, and generally require that franchisees pay royalty and marketing fees based upon a percentage of gross sales. The agreements also require franchisees to pay technology fees, as well as sourcing fees for Jack in the Box franchise agreements.

Disaggregation of revenue — The following table disaggregates revenue by segment and primary source for the fiscal year ended October 1, 2023 (in thousands):

	Jack in the Box		Del Taco		Total
Company restaurant sales	$	413,748	$	432,530	$	846,278
Franchise rental revenues	351,283		13,308		364,591
Franchise royalties	207,064		25,669		232,733
Franchise advertising contributions	199,917		21,025		220,942
Technology and sourcing fees	16,073		3,907		19,980
Franchise fees and other services	7,226		556		7,782
Total revenue	$	1,195,311	$	496,995	$	1,692,306

The following table disaggregates revenue by segment and primary source for the fiscal year ended October 2, 2022 (in thousands):

	Jack in the Box		Del Taco		Total
Company restaurant sales	$	414,225	$	286,845	$	701,070
Franchise rental revenues	335,936		4,455		340,391
Franchise royalties	188,902		13,414		202,316
Franchise advertising contributions	183,076		10,907		193,983
Technology and sourcing fees	14,740		1,078		15,818
Franchise fees and other services	14,309		196		14,505
Total revenue	$	1,151,188	$	316,895	$	1,468,083

The following table disaggregates revenue by segment and primary source for the fiscal ended October 3, 2021 (in thousands):

	Jack in the Box		Del Taco		Total
Company restaurant sales	$	387,766	$	—	$	387,766
Franchise rental revenues	346,634		—		346,634
Franchise royalties	193,908		—		193,908
Franchise advertising contributions	188,184		—		188,184
Technology and sourcing fees	16,361		—		16,361
Franchise fees and other services	10,817		—		10,817
Total revenue	$	1,143,670	$	—	$	1,143,670

In October 2022, a Jack in the Box franchise operator paid the Company $7.3 million in order to sell his restaurants to a new franchisee at the current standard royalty rate, which is lower than the royalty rate in the existing franchise agreements. The payment represented the difference between the existing royalty rate and the new royalty rate based on projected future sales for the remaining term of the existing agreements. The payment is non-refundable and not subject to any adjustments based on actual future sales. The Company determined the transaction represented the termination of the existing agreement rather than the transfer of an agreement between franchisees. As such, the $7.3 million was recognized in franchise royalty revenue during the first quarter of 2023.

Contract liabilities — Our contract liabilities consist of deferred revenue resulting from initial fees received from franchisees for new restaurant openings or new franchise terms, which are generally recognized over the franchise term. We classify these contract liabilities within “Accrued liabilities” and “Other long-term liabilities” in our consolidated balance sheets.

A summary of significant changes in our contract liabilities is presented below (in thousands):

	2023		2022
Deferred franchise and development fees at beginning of period	$	46,449	$	41,520
Changes due to business combinations	—		6,193
Revenue recognized during the period	(5,469)		(5,891)
Additions during the period	9,494		4,627
Deferred franchise and development fees at end of period	$	50,474	$	46,449

As of October 1, 2023, approximately $8.1 million of development fees related to unopened stores are included in deferred revenue. Timing of revenue recognition is dependent upon the timing of store openings and are recognized over the franchise term at the date of opening.

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period (in thousands):

2024	$	5,191
2025	$	4,966
2026	$	4,638
2027	$	4,290
2028	$	3,657
Thereafter	$	19,660
	$	42,402

We have applied the optional exemption, as provided for under ASC Topic 606, Revenue from Contracts with Customers, which allows us to not disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty.