GENERAL
All comparisons between 2012 and 2011 refer to the 12-weeks ("quarter") and 40-weeks ("year-to-date") ended July 8, 2012 and July 10, 2011, respectively, unless otherwise indicated.
For an understanding of the significant factors that influenced our performance during the quarterly periods ended July 8, 2012 and July 10, 2011, our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes included in this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended October 2, 2011.
Our MD&A consists of the following sections:
• Overview - a general description of our business and fiscal 2012 highlights.

• Results of operations - an analysis of our consolidated statements of earnings for the periods presented in our condensed consolidated financial statements.

• Liquidity and capital resources - an analysis of our cash flows including capital expenditures, share repurchase activity, known trends that may impact liquidity and the impact of inflation.

• Discussion of critical accounting estimates - a discussion of accounting policies that require critical judgments and estimates.

• New accounting pronouncements - a discussion of new accounting pronouncements, dates of implementation and the impact on our consolidated financial position or results of operations, if any.

• Cautionary statements regarding forward-looking statements - a discussion of the risks and uncertainties that may cause our actual results to differ materially from any forward-looking statements made by management.

OVERVIEW
As of July 8, 2012, we operated and franchised 2,247 Jack in the Box quick-service restaurants, primarily in the western and southern United States, and 614 Qdoba Mexican Grill ("Qdoba") fast-casual restaurants throughout the United States.
Our primary source of revenue is from retail sales at Jack in the Box and Qdoba company-operated restaurants. We also derive revenue from Jack in the Box and Qdoba franchise restaurants, including royalties (based upon a percent of sales), rents, franchise fees and distribution sales of food and packaging commodities. In addition, we recognize gains from the sale of company-operated restaurants to franchisees, which are presented as a reduction of operating costs and expenses, net in the accompanying condensed consolidated statements of earnings.
The following summarizes the most significant events occurring in fiscal 2012 and certain trends compared to a year ago:
• Restaurant Sales - Sales at restaurants open more than one year ("same-store sales") increased as follows:

                       Quarter              Year-to-Date
                 July 8,    July 10,    July 8,     July 10,
                   2012       2011        2012        2011
Jack in the Box:
Company             3.4 %      4.7 %      4.9 %        2.4 %
Franchise           2.6 %      2.4 %      3.0 %        0.9 %
System              2.8 %      3.2 %      3.5 %        1.4 %
Qdoba:
Company             3.3 %      5.3 %      3.5 %        5.4 %
Franchise           0.9 %      5.0 %      2.5 %        6.1 %
System              2.1 %      5.1 %      3.0 %        5.8 %

• Commodity Costs - In the quarter, Jack in the Box commodity costs decreased approximately 0.3% compared to a year ago, while Qdoba commodity costs increased approximately 2.5%. Jack in the Box and Qdoba commodity costs increased by 3.1% and 7.8%, respectively, year-to-date. We expect our overall commodity costs to increase

approximately 3.5% in fiscal 2012 compared to a year ago.
• New Unit Development - We continued to grow our brands with the opening of new company-operated and franchise-operated restaurants. Year-to-date, we opened 30 Jack in the Box locations and 34 Qdoba locations system-wide.

• Franchising Program - Qdoba and Jack in the Box franchisees opened a total of 36 restaurants year-to-date. Our Jack in the Box system was approximately 74% franchised at the end of the third quarter and we plan to further increase franchise ownership to approximately 80% over the next couple years.