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Yesterday I attended Jack in the Box's (NASDAQ:JACK) annual shareholder meeting in San Diego. The PowerPoint presented by the executive team went over many of the same issues presented in the Q4 2009 conference call. Quoted segments of this article were taken from the conference call transcript (here).

Over the last year, California has seen unemployment penetrate double digit territory and the official figures still don’t account for the people who have had to go to part-time work or who have given up the job search altogether. Jim Cramer has spent a great deal of time ballyhooing the de facto unemployment rate, so I won’t belabor the point. Texas too, despite being one of the most business friendly states, has hit a quarter century high unemployment rate. As it stands, the majority of JACK's franchises are within these two states, with Texas commanding the most franchises by a slim margin.

Unemployment numbers are especially important when looking at a consumer stock such as JACK, as it disproportionately affects the demographics of JACK's patrons:

Unemployment rates for our core customer demographic which skews towards young males and Hispanics are substantially higher than the overall rates. According to the Department of Labor, on a seasonally adjusted basis, 16 to 24 year olds had a very rough summer in 2009, with fewer than 50% working.

With the exception of Yum! Brands (NYSE:YUM), all of the major fast food competitors to JACK's share prices have declined over 2009 and JACK is no exception, having fallen about 10%. Same store sales at franchises for Jack in the Box and Qdoba, their Mexican food chain, are down in YoY numbers. Questions presented at the shareholder meeting focused on further investment into food quality over advertising investment and a few impassioned pleas to start paying dividends to curb short selling and provide some share downward resistance. As it stands, short sellers constitute 10% of the float, 10x more than McDonald's' (NYSE:MCD) 1%, 5x more than CKE Restaurants' (CKR) 2.7%, but still less than Burger King's (BKC) 13.2%.

Despite stagnant sales, YoY EPS growth is solid at 14% and earnings last beat estimates by 27.3% in September 2009. Analysts expect earnings to grow at a similar modest clip from 2.03 to 2.24 in 2011.

Disclosure: Author holds a long position in JACK

Source: Notes From Jack in the Box's Shareholder Meeting