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    JACK
    Earnings call· Jun 2026(Q3 FY26)

    JACK IN THE BOX Q3 FY26 earnings call JACK

    Aug 12, 2026 Source

    Executive summary

    Jack in the Box Q3 FY26 — Strategic Priorities and Operational Pivots Amidst Sales Challenges

    Jack in the Box's interim CEO outlined five strategic priorities focused on customer obsession, quality, restaurant experience, operational ease, and franchisee profitability, aiming to drive consistent same-store sales growth. While Q3 performance was below expectations, operational pivots, including a successful Philly Cheesesteak launch, have led to positive low-single-digit same-store sales quarter-to-date. The company is also making progress on debt reduction and restaurant refreshes, but franchisee profitability and the pace of restaurant closures remain key challenges.

    Highlights

    4

    • Q4 to date same-store sales are positive in the low-single-digit range, driven by a successful Philly Cheesesteak platform.

    • Total debt has been reduced by $244 million since April 2025, following a refinancing that paid down the August 2026 tranche and substantially reduced the February 2027 tranche.

    • SG&A decreased by $3.5 million year-over-year, partly due to a legal reversal and lower stock-based compensation.

    • Approximately 25% of franchise restaurants have signed up for a refresh program within weeks of its announcement, supported by a $2,000 company contribution per restaurant.

    Concerns

    7

    • Q3 same-store sales decreased 1.1%, with franchise restaurants down 1.2% and company-owned down 0.9%.

    • The Hot Ones promotion underperformed expectations, leading to lower average check and softer overall sales.

    • Franchisee profitability remains under pressure due to multiple quarters of same-store sales decline and continued inflation.

    • Restaurant-level margin decreased to 17.6% in Q3 FY26 from 17.9% in the prior year.

    • Commodity inflation was 5.4% in Q3, with elevated beef costs expected to remain high.

    • The net debt to adjusted EBITDA leverage ratio remains high at 6.3x at quarter-end.

    • Accelerated restaurant closures are expected to extend into 2027 and 2028, and select franchisees continue to experience payment delays and potential deferrals.

    Guidance & targets

    7
    CategoryTargetConfidence
    Restaurant count
    approximately 2,100
    medium materiality
    High
    Restaurant-level margin
    approximately 16.5%
    high materiality
    High
    Franchise-level margin
    approximately $265 million
    high materiality
    High
    SG&A
    between $112 million and $115 million
    medium materiality
    High
    Adjusted EBITDA
    between $225 million to $230 million
    high materiality
    High
    Interest expense
    roughly $81 million
    medium materiality
    High
    Q4 FY26 Same-store sales
    flat to slightly up
    high materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Franchise Restaurants
    Same-store sales decreased for franchise restaurants in Q3 FY26.
    Same-store sales: -1.2%
    		—-1.2%——
    Company-Owned Restaurants
    Same-store sales decreased for company-owned restaurants in Q3 FY26.
    Same-store sales: -0.9%
    		—-0.9%——

    Operational metrics

    35
    Restaurant-level margin
    17.6%decreased from 17.9% YoY
    Q3 FY26

    Decrease driven by commodity inflation, partially offset by lower labor costs.

    Food and packaging costs
    29.3%increased 70 bps YoY
    Q3 FY26

    Driven by commodity inflation of 5.4%.

    Commodity inflation
    5.4%
    Q3 FY26

    Elevated beef costs, with expected deflation in other commodities like dairy.

    Labor costs
    33.7%decreased 80 bps YoY
    Q3 FY26

    Primarily related to a rollover of elevated unemployment taxes in California in the prior year.

    Occupancy and other costs
    30 bpsincreased YoY
    Q3 FY26

    Driven primarily by sales deleverage and higher rent.

    Franchise-level margin
    $60.3 milliondecreased from $66.2 million YoY
    Q3 FY26

    Compared to 39.3% of franchise revenues a year ago.

    Franchise-level margin (prior year)
    39.3%
    Q3 FY25

    Franchise-level margin was $66.2 million, or 39.3% of franchise revenues, a year ago.

    Franchise-level margin decrease from lower same-store sales
    $1.7 million
    Q3 FY26

    Component of the decrease in franchise-level margin.

    Franchise-level margin decrease from lower restaurant count
    $1.5 million
    Q3 FY26

    Component of the decrease in franchise-level margin.

    Franchise-level margin decrease from higher bad debt expense
    $1 million
    Q3 FY26

    Component of the decrease in franchise-level margin.

    SG&A
    $17 milliondecreased from $20.6 million YoY
    Q3 FY26

    Decrease of $3.5 million primarily due to a legal reversal and lower stock-based compensation, partially offset by COLI market fluctuation and higher incentive compensation.

    SG&A (prior year)
    $20.6 million
    Q3 FY25

    SG&A for the same quarter a year ago.

    SG&A (excluding net COLI gains)
    1.4%
    Q3 FY26

    Driven lower by the legal reversal.

    Effective tax rate for continuing operations
    36.9%compared to 20.9% YoY
    Q3 FY26

    Compared to 20.9% for the same quarter a year ago.

    Effective tax rate for continuing operations (prior year)
    20.9%
    Q3 FY25

    Effective tax rate for continuing operations for the same quarter a year ago.

    Adjusted tax rate (non-GAAP EPS)
    35.7%
    Q3 FY26

    Used to calculate non-GAAP operating earnings per share.

    Earnings from continuing operations
    $21 millioncompared to $22.8 million YoY
    Q3 FY26

    Compared to $22.8 million for the same quarter of the prior year.

    Earnings from continuing operations (prior year)
    $22.8 million
    Q3 FY25

    Earnings from continuing operations for the same quarter of the prior year.

    GAAP diluted EPS from continuing operations
    $1.08compared to $1.19 YoY
    Q3 FY26

    Compared to $1.19 in the same period of the prior year.

    Operating EPS
    $0.96versus $1.04 YoY
    Q3 FY26

    Compared to $1.04 in the same quarter of the prior year.

    Operating EPS (prior year)
    $1.04
    Q3 FY25

    Operating EPS for the same quarter of the prior year.

    Adjusted EBITDA
    $61.2 millioncompared to $57.1 million YoY
    Q3 FY26

    Due primarily to favorable SG&A decrease and partially offset by lower sales performance and restaurant closures.

    Debt prepaid (August 2026 tranche)
    $110 million
    Q3 FY26

    Prepaid prior to the refinancing, using withdrawals of excess COLI funding along with cash on hand.

    Total debt decreased since April 2025
    $244 million
    April 2025 - Q3 FY26

    Total debt reduction since JACK on Track was announced.

    Total debt outstanding
    $1.5 billion
    Q3 FY26

    Total debt outstanding at quarter end.

    Net debt to adjusted EBITDA leverage ratio
    6.3xdecreased from 6.9x prior quarter
    Q3 FY26

    Leverage ratio at quarter end.

    Real estate sales proceeds
    $26.7 million
    YTD Q3 FY26

    Proceeds generated year-to-date.

    Real estate sales proceeds
    $1 million
    Q4 FY26 to date

    Proceeds generated so far in the fourth quarter, with no further sales anticipated in Q4.

    Restaurants closed
    40
    YTD Q3 FY26

    Year-to-date closures.

    Additional restaurants expected to close
    10 to 20
    Q4 FY26

    Expected closures during the fourth quarter.

    Capital expenditures
    $44.1 million
    YTD Q3 FY26

    Primarily included spending on restaurant information technology and new restaurants.

    Same-store sales
    positive in the low-single-digit range
    Q4 FY26 to date

    Reflecting successful balance of premium and value in promotional calendar with Philly Cheesesteak platform.

    Digital percent of sales
    22%
    Q3 FY26

    Overall digital sales mix for the quarter.

    Impact of franchise closure on franchise-level margin
    $80,000
    per closure

    Impact for each underperforming franchise restaurant closure.

    Chicago restaurant-level margin (ex-Chicago)
    18.5%
    Q3 FY26

    If Chicago market was excluded, consolidated restaurant-level margin would have been 18.5%.

    Industry KPIs

    2
    MetricValueDetails
    Comparable sales comps-1.1%%
    Net unit growth development pipeline40units

    Product announcements

    4
    ProductTypeDetails
    Updated menu layoutupdate
    New brand campaignlaunch
    New burger platformlaunch
    New uniformslaunch

    Risks & headwinds

    6
    Franchisee profitability under pressureOngoing

    Multiple quarters of same-store sales decline coupled with continued inflation.

    Mitigation: Developing plans to stabilize franchisee economics; details to be provided with 2027 guidance.

    Elevated beef costsQ4 FY26 and potentially beyond

    Commodity inflation of 5.4% in Q3 FY26, with beef costs remaining high.

    Mitigation: Expected deflation in other commodities (e.g., dairy) to offset some pressure.

    Slower-than-anticipated restaurant closuresExtending into 2027 and 2028

    40 restaurants closed YTD, 10-20 additional expected in Q4, but pace is slower than expected due to lease obligations.

    Mitigation: Hired a third-party firm to work on exiting leases; reevaluating closure program as a whole.

    Franchisee payment delays and deferralsOngoing

    Select franchisees continue payment delays and potentially include continued deferrals.

    Mitigation: Working through specifics to improve franchise profitability.

    Digital channel profitability pressureOngoing

    Digital fees impact the middle of the P&L, especially in newer markets with higher digital sales mix.

    Mitigation: Working to make every transaction profitable; evolving digital strategy to be less promotional and more brand-specific.

    Operational execution and core leadership in Chicago marketOngoing

    Impacted sales and AUVs running under company averages.

    Mitigation: New VP in market focusing on people, leadership, and controllables to turn the market around.

    What to watch in Q4 FY26

    5

    Franchisee Profitability Details

    November earnings call (with 2027 guidance)
    CurrentUnder pressure due to sales decline and inflation
    TargetMore detail on plans to stabilize franchisee economics

    Why it matters

    Franchisee success is foundational to the franchise system's health and future unit growth.

    We are developing plans now to stabilize franchisee economics and expect to be in a position to provide more detail on that with the 2027 guidance.

    Q&A highlights

    10

    Given positive Q4 trends, do you expect comps to remain positive for the full quarter?

    Management expects Q4 same-store sales to be flat to slightly up.

    “Yes, I think it'll be somewhere around flat to slightly up.”

    asked by Brian Bittner · answered by Mark King

    2 min read5 chapters

    Detailed Narrative

    01

    CEO's Strategic Priorities for Sustainable Growth

    Interim CEO Mark King outlined five key priorities to drive consistent same-store sales growth: obsessing over customer wants, elevating food quality, improving the restaurant experience, making operations easier, and enhancing franchisee profitability. These priorities emerged from extensive engagement with franchisees, employees, and customers, and are intended to simplify the business and improve execution across the system. The company plans to provide more details on these plans and expected outcomes during the November earnings call.

    02

    Operational Pivots and Q4 Sales Momentum

    Following an underperforming Hot Ones promotion in Q3, the team quickly pivoted by adding less polarizing options, replacing value promotions with higher-priced core products, and pulling forward the Philly Cheesesteak platform launch. This strategic shift has resulted in positive low-single-digit same-store sales quarter-to-date in Q4, demonstrating a successful rebalancing of premium and value offerings in the promotional calendar. Management expects this momentum to continue through the end of the year.

    03

    Franchisee Profitability and Restaurant Closures

    Franchisee profitability remains a significant challenge due to declining same-store sales and persistent inflation. The company is developing plans to stabilize franchisee economics, with details expected in the 2027 guidance. While 40 restaurants have closed year-to-date, the pace has been slower than anticipated due to lease obligations. A third-party firm has been engaged to accelerate lease exits, and elevated closures are now expected to extend into 2027 and 2028, with some franchisees continuing payment delays.

    04

    Debt Reduction and Capital Allocation

    Jack in the Box completed a refinancing on June 23rd, paying down the August 2026 debt tranche and substantially reducing the February 2027 tranche. This contributed to a total debt reduction of $244 million since April 2025. The company generated $26.7 million in real estate sales proceeds year-to-date and incurred $44.1 million in capital expenditures, primarily for IT and new restaurants, reflecting a strategic approach to capital allocation.

    05

    Menu and Marketing Evolution

    The company is testing an updated menu layout to improve navigation and better communicate quality and value, with a system-wide rollout of a new burger platform expected in 2027. A new brand campaign is being developed for calendar 2027 to strengthen existing customer connections and reintroduce the brand. Additionally, the number of promotions per marketing window has been reduced from three to two in 2026, with further simplification planned for 2027 to enhance focus and execution.

    AI-generated summary of the company’s earnings call. Not investment advice.