Jack in the Box Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Jack on Track Progress: Pending divestiture of Del Taco, closure program in progress, field teams restructured for more restaurant support, menu adjusted for value, focus on operational excellence (retraining teams, real-time coaching), culinary innovation with new executive chef, and pilot reimage of restaurants.
• Fourth Quarter Performance: Sales trends improved 300 basis points in Q4, barbell promotional strategy implemented, menu pricing adjusted, emphasis on food quality and guest experience.
• 2026 Outlook: Expect same-store sales to return positive, Del Taco divestiture completion, restaurant base cleanup, reimage program execution, and debt paydown.

Segment Performance

• Jack in the Box: Fourth quarter system same-store sales declined 7.4%, franchise same-store sales decreased 7.6%, company-owned same-store sales down 5.3%. Ended the year with 2,136 restaurants. Restaurant level margin decreased 240 basis points to 16.1%.
• Del Taco: Fourth quarter system same-store sales declined 3.9%, company-owned same-store sales down 3.1%, franchise same-store sales down 4.2%. Ended the year with 576 locations. Restaurant level margin was 6.8% compared to 9.3% in the prior year.

Guidance

• 2026 restaurant count expected to be between 2,050-2,100.
• Same-store sales expected to be negative 1% to positive 1%.
• Company restaurant level margin expected 17%-18%.
• Franchise level margin expected $275M-$290M.
• SG&A expenses expected $125M-$135M.
• Adjusted EBITDA expected $225M-$240M.
• Plan to pay down $263M in debt by 2026.

Risks

• Uncertainty in Jack on Track initiatives: Timing of restaurant closures and real estate transactions may vary, impacting sales, restaurant counts, and franchise level margin.

Question and Answer

• Q: Just as it relates to your '26 guidance for same-store sales down one to up one, you talked about how you anticipate comps to remain pressured in 1Q and then sequentially improve. Can you first talk about what are the main drivers of this improvement throughout the year? Is it comparison-driven or something else? And maybe you could help us understand how you are thinking about the shape of the recovery in 2026, maybe first half or second half so we can all get on the same page with that.

A: Hi, Brian. It's Lance. So first of all, we do expect the first quarter to be soft as we have mentioned. And you guys see credit card data probably just like we do, so you are already aware of that. As we get into the second quarter, though, which for us begins in mid-January, we will be entering our seventy-fifth anniversary, where we have a number of pretty exciting things going on relative to ads and innovation and bringing back some old customer favorites. We will also have some softer compares, particularly as you get into the second half of the year, that will contribute as well. And then there are a number of other things that we are doing. We will be obviously working on the value equation and continuing to ensure that we have the barbell strategy correct. We expect to continue to see sales benefit as we continue to improve on the tech side. Tech modernization, as you guys know, we have put a lot of time in the tech modernization. It is ongoing, and I think it will build throughout the year and help us a little bit. And then we do have, again, some interesting innovation coming. We have a new chef, a restructured innovation team, and structure that we think is going to draft some interesting things. So we have a lot of things that we are excited about as we go into 2026. But it's more of a calendar '26 comment than it is necessarily here in the first quarter.

• Q: Hey, thanks for taking the question. Just as it relates to your '26 guidance for same-store sales down one to up one, you talked about how you anticipate comps to remain pressured in 1Q and then sequentially improve. Can you first talk about what are the main drivers of this improvement throughout the year? Is it comparison-driven or something else? And maybe you could help us understand how you are thinking about the shape of the recovery in 2026, maybe first half or second half so we can all get on the same page with that.

A: Hi, Brian. It's Lance. So first of all, we do expect the first quarter to be soft as we have mentioned. And you guys see credit card data probably just like we do, so you are already aware of that. As we get into the second quarter, though, which for us begins in mid-January, we will be entering our seventy-fifth anniversary, where we have a number of pretty exciting things going on relative to ads and innovation and bringing back some old customer favorites. We will also have some softer compares, particularly as you get into the second half of the year, that will contribute as well. And then there are a number of other things that we are doing. We will be obviously working on the value equation and continuing to ensure that we have the barbell strategy correct. We expect to continue to see sales benefit as we continue to improve on the tech side. Tech modernization, as you guys know, we have put a lot of time in the tech modernization. It is ongoing, and I think it will build throughout the year and help us a little bit. And then we do have, again, some interesting innovation coming. We have a new chef, a restructured innovation team, and structure that we think is going to draft some interesting things. So we have a lot of things that we are excited about as we go into 2026. But it's more of a calendar '26 comment than it is necessarily here in the first quarter.

• Q: Okay. Thank you. I guess a follow-up question on the top line outlook and then a question on G&A. So the top line, I know that your same-store sales guide is predicated on company-specific initiatives. And it sounds like you're very confident in those. Do you have any kind of underlying macro assumptions that you're making? I mean, we've seen I know you've talked about sort of exposure to different income cohorts. Anything that might signal, I guess, sort of expectation that things improve in sort of the macro backdrop? And then the G&A guide, I guess it's flat on an adjusted basis. I just want to make sure我 understand that the second half is that more that will be lower. So is that the right run rate that the sort of lower G&A in the second half is actually the right run rate and so perhaps a little bit below that 2.5% of system-wide sales. It's just the first half is more, you might still have some stranded costs or still be working on restructuring. So, you know, as a go-forward basis. Thanks.

A: Sarah, I'll take the first one, and then I'll ask Dawn to pitch in on the G&A question. But relative to kind of the macro conditions, really, the assumptions we've made are certainly that it's not going to get any worse, but that it's going to remain pretty flat throughout the year. We didn't build in a significant tailwind from anything going on in the environment that would necessarily be a benefit. So the numbers you kind of see are largely a status quo is what I would say. You know, we've seen just the slightest bit of consequential improvement kind of both in the low-income cohorts and in the Hispanic cohorts, but still a lot of work to do on both. And so not enough that we felt comfortable building any tailwind into that guidance. Dawn, on the G&A, I'll let you run with that piece.

• Q: Hey, thanks for the question. Just trying to look more closely at your current performance and the outlook into fiscal '26. Maybe you can provide some learnings on what worked best that generated that sequential 300 basis point improvement in comp, if that was a consumer reaction among any specific income levels, regions, day parts, any texture on what really worked well relative to the promotions you offered.

A: Yeah. Jim, I think more than anything else, we really came out of the third quarter and started the fourth quarter with not quite enough price point of value. I mean, it's the biggest singular driver of that move by far was when we pivoted and put dollars behind the bonus jack and more price-pointed value. When you think about geographies, there weren't differences in geographies. There weren't great differences in the various income or other demographic cohorts for that matter. I think it really was just a matter of, you know, we had a lot of abundant value, and we thought what we had was good value, and I still believe it was. But it wasn't price-pointed. It wasn't bringing people in as much. So when we made that switch, that's what drove that 300 basis point change.