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REVENUE | 6 Months Ended
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Apr. 16, 2023
Revenue from Contract with Customer [Abstract] |
REVENUE | REVENUE Nature of products and services — The Company derives 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 quarter ended April 16, 2023 (in thousands):
| Quarter |  | Year-to-date
| Jack in the Box |  | Del Taco |  | Total |  | Jack in the Box |  | Del Taco |  | Total
Company restaurant sales | $ | 95,489 |  |  | $ | 107,115 |  |  | $ | 202,604 |  |  | $ | 221,631 |  |  | $ | 251,164 |  |  | $ | 472,795 |
Franchise rental revenues | 80,910 |  |  | 2,610 |  |  | 83,520 |  |  | 187,006 |  |  | 5,344 |  |  | 192,350 |
Franchise royalties | 46,401 |  |  | 5,657 |  |  | 52,058 |  |  | 113,970 |  |  | 12,591 |  |  | 126,561 |
Marketing fees | 46,486 |  |  | 4,609 |  |  | 51,095 |  |  | 106,830 |  |  | 10,263 |  |  | 117,093 |
Technology and sourcing fees | 3,875 |  |  | 668 |  |  | 4,543 |  |  | 8,844 |  |  | 1,386 |  |  | 10,230 |
Franchise fees and other services | 1,671 |  |  | 253 |  |  | 1,924 |  |  | 3,468 |  |  | 343 |  |  | 3,811 |
Total revenue | $ | 274,832 |  |  | $ | 120,912 |  |  | $ | 395,744 |  |  | $ | 641,749 |  |  | $ | 281,091 |  |  | $ | 922,840 |
The following table disaggregates revenue by segment and primary source for the quarter ended April 17, 2022 (in thousands):
| Quarter |  | Year-to-date
| Jack in the Box |  | Del Taco |  | Total |  | Jack in the Box |  | Del Taco |  | Total
Company restaurant sales | $ | 94,250 |  |  | $ | 57,059 |  |  | $ | 151,309 |  |  | $ | 214,306 |  |  | $ | 57,059 |  |  | $ | 271,365 |
Franchise rental revenues | 75,692 |  |  | 864 |  |  | 76,556 |  |  | 178,791 |  |  | 864 |  |  | 179,655 |
Franchise royalties | 42,933 |  |  | 2,645 |  |  | 45,578 |  |  | 100,581 |  |  | 2,645 |  |  | 103,226 |
Marketing fees | 41,390 |  |  | 2,158 |  |  | 43,548 |  |  | 97,191 |  |  | 2,158 |  |  | 99,349 |
Technology and sourcing fees | 3,575 |  |  | 205 |  |  | 3,780 |  |  | 8,575 |  |  | 205 |  |  | 8,780 |
Franchise fees and other services | 1,497 |  |  | 26 |  |  | 1,523 |  |  | 4,604 |  |  | 26 |  |  | 4,630 |
Total revenue | $ | 259,337 |  |  | $ | 62,957 |  |  | $ | 322,294 |  |  | $ | 604,048 |  |  | $ | 62,957 |  |  | $ | 667,005 |
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 — Contract liabilities consist of deferred revenue resulting from initial franchise and development fees received from franchisees for new restaurant openings or new franchise terms, which are recognized over the franchise term. The Company classifies these contract liabilities as “Accrued liabilities” and “Other long-term liabilities” in our condensed consolidated balance sheets. A summary of significant changes in contract liabilities is presented below (in thousands):
| Year-to-date
| April 16, 2023 |  | April 17, 2022
Deferred franchise and development fees at beginning of period | $ | 46,449 |  |  | $ | 41,520 |
Changes due to business combinations | — |  |  | 6,193 |
Revenue recognized | (2,934) |  |  | (2,995) |
Additions | 3,332 |  |  | 2,379 |
Deferred franchise and development fees at end of period | $ | 46,847 |  |  | $ | 47,097 |
As of April 16, 2023, approximately $6.6 million of development fees related to unopened stores are included in deferred revenue. Timing of revenue recognition for development fees related to unopened stores 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 as of April 16, 2023 (in thousands):
Remainder of 2023 |  | $ | 2,359 |
2024 |  | 4,924 |
2025 |  | 4,688 |
2026 |  | 4,361 |
2027 |  | 4,004 |
Thereafter |  | 19,892 |
|  | $ | 40,228 |
The Company has 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.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-9 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-15 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-13 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org//606/tableOfContent + Details
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