Jack in the Box Inc. (JACK) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates mixed signals: modest improvements in same-store sales and effective marketing spend are positive, but negative sales projections and planned restaurant closures are concerning. The strategic focus on technology and innovation is promising, yet the lack of strong guidance and financial pressures on franchisees temper optimism. The Q&A reveals cautious macro assumptions and supportive franchisee sentiment, but also highlights financial challenges. Overall, these factors suggest a neutral stock price movement, with no strong catalysts for significant change.
Key Financial Performance
Jack in the Box system same-store sales Declined 7.4% year-over-year. Franchise same-store sales decreased 7.6%, and company-owned same-store sales were down 5.3%. The decline was due to a decrease in transactions and negative mix, partially offset by a 2.4% increase in price.
Jack in the Box restaurant level margin Decreased by 240 basis points year-over-year to 16.1%. The decline was driven by sales deleverage, commodity inflation of 6.9%, and elevated labor costs due to opening 8 new restaurants in Chicago.
Food and packaging costs for Jack in the Box Remained flat at 30.3% of company-owned sales. Favorable funding from a new beverage contract and price increases offset commodity inflation and negative mix as consumers shifted to price-pointed promotions.
Labor costs for Jack in the Box Increased by 100 basis points to 33.7% of company-owned sales. This was primarily due to elevated labor costs at new restaurant openings in Chicago, partially offset by a reversal of additional FUTA taxes in California.
Occupancy and other operating costs for Jack in the Box Increased by 130 basis points to 19.9% of company-owned sales. This was driven by higher costs for rent, security, and third-party delivery fees.
Del Taco system same-store sales Declined 3.9% year-over-year. Company-owned same-store sales were down 3.1%, and franchise same-store sales decreased 4.2%. The decline was driven by a decrease in transactions and unfavorable mix, partially offset by a 2.8% increase in price.
Del Taco restaurant level margin Decreased to 6.8% from 9.3% in the prior year. The decline was due to the impact of opening 17 locations in Colorado, transaction declines, and inflationary increases in commodities, slightly offset by menu price increases.
Food and packaging costs for Del Taco Increased by 260 basis points to 27.8% due to unfavorable mix and commodity inflation of 5.1%.
Labor costs for Del Taco Remained flat at 39% of company-owned sales. Elevated labor costs from reopening 17 locations in Colorado were offset by a reversal of additional FUTA taxes in California.
Consolidated adjusted EBITDA Decreased to $45.6 million from $65.5 million in the prior year. The decline was primarily due to lower same-store sales at both brands.
GAAP diluted earnings per share Decreased to $0.30 for the quarter compared to $1.12 in the prior year. Operating earnings per share, including certain adjustments, was $0.30 for the quarter versus $1.16 in the prior year.
Cash flows from operations For the quarter, cash flows were $33.7 million, and for the full fiscal year, they were $162.3 million.
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Operating Highlights
Menu Changes: Implemented a barbell promotional strategy featuring $4.99 Bonus Jack combo and $5 Smashed Jack. Adjusted pricing on signature combos and increased cup sizes for small combos.
Culinary Innovation: Welcomed new executive chef, Ciaran Duffy, to lead innovation and improve food quality and craveability. Plans to bring back customer fan favorites for the 75th anniversary.
Market Expansion: Opened 8 new restaurants in Chicago, marking one of the fastest new market openings in recent history. Annual unit volumes in Chicago projected to exceed $2 million.
Operational Excellence: Restructured field teams to spend more time in restaurants, providing real-time coaching and accountability. Retrained the entire system with a focus on operational basics.
Restaurant Closures: Closed 38 restaurants under the JACK on Track initiative in Q4, with plans to close more underperforming locations in 2026.
Divestiture of Del Taco: Announced the pending sale of Del Taco to focus on the Jack in the Box brand. Proceeds will be used to pay down $263 million in debt.
Reimaging Program: Testing a proof of concept for a mini refresh of restaurants to generate modest uplift and planning a comprehensive reimage program for 2026.
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Risk or Challenges
Divestiture of Del Taco: The pending divestiture of Del Taco may pose transitional challenges, including potential disruptions in operations and the need to refocus entirely on the Jack in the Box brand.
Closure Program: The closure of underperforming restaurants could lead to short-term revenue losses and operational disruptions, even as it aims to improve long-term profitability.
Value Perception and Pricing: Challenges in maintaining a competitive value perception among customers, particularly as price increases to combat wage inflation have pressured customer check sizes.
Operational Discipline: Rebuilding operational discipline and retraining staff may take time and resources, potentially delaying improvements in performance.
Competitive Market Conditions: The quick-service restaurant (QSR) category is highly competitive, with consumers being cautious about spending, which could impact sales and profitability.
Commodity Inflation: Inflation in key commodities, particularly beef, is driving up costs and pressuring margins.
Labor Costs: Elevated labor costs, especially in new markets like Chicago, are compressing margins and impacting profitability.
Debt Levels: High debt levels (6x net debt to adjusted EBITDA leverage ratio) pose financial risks, particularly if revenue growth does not materialize as expected.
Restaurant Modernization: The reimage program and modernization efforts require significant investment and may not yield immediate returns.
Economic Uncertainty: External factors like government shutdowns and economic conditions are causing downward pressure on sales.
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Guidance & Outlook
Same-store sales: Expect same-store sales for Jack in the Box brand to return to positive in 2026, utilizing a barbell promotional approach, enhancing operations, and improving the overall guest experience.
Del Taco divestiture: The divestiture and associated TSA are expected to be fully completed in Q1 2026, with the organization rightsized as a stand-alone Jack in the Box brand.
Restaurant closures: Closure of underperforming restaurants will be substantially completed in 2026, benefiting remaining restaurants through sales transfer and improved profitability.
Reimage program: A reimage program will begin later in 2026, impacting the majority of restaurants to drive stronger volumes and guest excitement.
Debt reduction: Significant progress in paying down debt is expected, with a market improvement in reducing overall debt levels by retiring the August 2026 tranche of securitization.
Adjusted EBITDA: Guidance for adjusted EBITDA is $225 million to $240 million for fiscal 2026.
Restaurant count: Expected to end fiscal 2026 with 2,050 to 2,100 restaurants.
Company restaurant level margin: Guidance for company restaurant level margin is 17% to 18%, including mid-single-digit commodity inflation and low single-digit wage inflation.
Franchise level margin: Guidance for franchise level margin is $275 million to $290 million, impacted by closures and real estate sales.
SG&A expenses: Expected SG&A expenses are $125 million to $135 million, with improvements anticipated in the second half of 2026 following the Del Taco sale.
Capital expenditures: Capital expenditures are expected to be less than $0.5 million in 2026.
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Shareholder Return Plan
Dividend Program: No specific mention of a dividend program or any changes to dividend payouts was discussed in the transcript.
Share Buyback Program: The company did not repurchase any shares in the fourth quarter. For the full year, the company repurchased 0.1 million shares for $5 million. As of year-end, $175 million remained under the Board-authorized share repurchase program.
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Key Q&A
Q:What are the main drivers of improvement in same-store sales for 2026?
A:The main drivers include the 75th anniversary celebrations with ads and innovation, softer comparisons in the second half of the year, improvements in the value equation and barbell strategy, benefits from tech modernization, and new innovations from a restructured innovation team.
Q:What is the assumption in the current EBITDA guidance regarding real estate sales and block closures?
A:The guidance includes 60 to 100 total closures in 2026 and $50 million to $70 million of real estate sales. The pace of real estate sales is limited by debt repayment dynamics within securitization.
Q:What are the trends in first-quarter same-store sales compared to fiscal Q4?
A:There was modest improvement in same-store sales compared to fiscal Q4, but recent weeks saw a slowdown due to stronger comparisons and the government shutdown. Trends are beginning to normalize.
Q:Was the $5.5 million incremental marketing spend in Q4 effective?
A:Yes, the spend was effective. It improved transactions, introduced consumers to the $5 Smashed Jack, and made significant impressions with key demographic groups. The company is happy with the results and open to similar initiatives if needed.
Q:What are the macro assumptions underlying the same-store sales guidance for 2026?
A:The guidance assumes macro conditions will remain flat throughout the year, with no significant tailwinds. There has been slight sequential improvement in low-income and Hispanic cohorts, but not enough to build into the guidance.
Q:What is the G&A guidance for 2026?
A:G&A is expected to be flat on an adjusted basis. The second half of the year will see lower G&A, around 2.3%-2.4% of system-wide sales, as stranded costs are eliminated and restructuring is completed.
Q:What is the franchisee sentiment regarding the JACK on Track plan and investments?
A:Franchisees are supportive but face financial pressures due to a difficult 2025. They are willing to invest in a reimage program, but a more affordable mini reimage option is being tested to accommodate less well-capitalized franchisees.
Q:What are the long-term growth expectations for Jack in the Box?
A:The company plans to provide long-term guidance after further progress in the JACK on Track program. The focus will be on a primarily franchise model, reduced CapEx, moderate G&A, low single-digit comps, and responsible unit growth with strong unit economics.
Q:Why is the company considering smaller remodels before a comprehensive reimage program?
A:Smaller remodels are being considered to provide immediate, modest benefits while giving franchisees time to plan for larger investments. The company does not plan to raise equity capital for these initiatives.
Q:Have value scores improved recently, and what is the plan for value in 2026?
A:Value scores have improved slightly, driven by adjustments to the barbell strategy. The plan for 2026 includes consistent value offerings at both ends of the barbell to ensure consumers always have affordable options.
Q:Is there a current prototype for the reimage program, and how does it differ from past efforts?
A:Yes, there is a current prototype, and the focus is on drive-through improvements, signage, and digital menu boards. The primary difference from past efforts is leadership focus and the necessity to address building appearance issues.
Q:What do customers want from Jack in the Box, and how is the company addressing quality perception gaps?
A:Customers want solid value, innovation, variety, and a better experience. The company is focusing on operational improvements, innovation, and building appearance to address quality perception gaps.
Q:What drove the sequential 300 basis point improvement in same-store sales in Q4?
A:The improvement was driven by a pivot to price-pointed value offerings, such as the Bonus Jack, which resonated with consumers.
Q:What is the outlook for store margins at Jack in the Box?
A:Store margins are expected to improve as the company works on supply chain and labor initiatives. The Q4 margin was impacted by overstaffing in new Chicago market openings.
Q:How is Jack in the Box performing in its core California market compared to peers?
A:California is a challenging market for many brands, but Jack in the Box is likely performing no worse and possibly better than peers due to its strong presence in the region.
Q:Are franchisees supportive of recent affordability initiatives?
A:Yes, franchisees have been supportive of initiatives like the cup size change and price-pointed combos, with minimal pushback.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the long-term growth algorithm, stating that they would update guidance after further progress in the JACK on Track program. Additionally, they did not disclose franchisee store-level cash flow for 2025, only stating it should align with company-owned stores.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Box brand
Chief Executive
Del Taco
JACK Track
Officer Chief
Stockholders
Track plan
Way
anniversary
base
burger
change
combo
component
concept
connection
consistency
divestiture
effort
field
focus
food
foundation
fundamental
guest experience
month Box
offer
participant
price
profitability
program progress
quality
reimage program
shareholder value
statement material
team
value perception
value result
JACK Transcript
Jack in the Box Inc. (JACK) Q4 2025 Earnings Call Transcript
Unknown11-19
The earnings call summary indicates mixed signals: modest improvements in same-store sales and effective marketing spend are positive, but negative sales projections and planned restaurant closures are concerning. The strategic focus on technology and innovation is promising, yet the lack of strong guidance and financial pressures on franchisees temper optimism. The Q&A reveals cautious macro assumptions and supportive franchisee sentiment, but also highlights financial challenges. Overall, these factors suggest a neutral stock price movement, with no strong catalysts for significant change.
Jack in the Box Inc. (JACK) Q3 2025 Earnings Call Transcript
Unknown8-6
The earnings call highlights a mixed picture: there are positive developments such as digital sales growth and strong franchisee support, but challenges remain with same-store sales and significant debt. The Q&A section reveals management's cautious optimism and some lack of clarity on critical metrics, which tempers enthusiasm. The lack of a new partnership announcement or significant positive catalyst, combined with ongoing operational challenges, suggests a neutral stock price reaction in the short term.
Jack in the Box, Inc. (JACK) Q2 2025 Earnings Call Transcript
Unknown5-14
The earnings call revealed several negative factors: declining same-store sales, reduced margins, and a substantial noncash goodwill impairment leading to a significant GAAP loss. Despite maintaining guidance and some operational initiatives, the Q&A highlighted industry challenges, IT issues, and a cautious consumer base. The strategic alternatives for Del Taco and lack of clarity on closures add uncertainty. These factors, combined with reduced share repurchases and high debt, suggest a negative sentiment for the stock price in the near term.
Earnings call transcript: Jack In The Box Q2 2025 beats EPS forecast
Unknown5-14
The earnings call reveals several concerning factors: declining same-store sales, reduced margins, significant goodwill impairment, and a GAAP loss per share. Despite maintaining guidance, the financial health is weak with high debt levels and reduced share repurchase plans. The Q&A highlights industry challenges and company-specific headwinds, with management providing vague responses. The combination of these factors suggests a strong negative market reaction, potentially exacerbated by the lack of market cap information to gauge the impact.
JACK Report
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