Summary of Jack in the Box Q3 2026 Earnings Call

1Key Financial Results and Metrics

Same-store Sales: Decreased by 1.1% overall, with franchise restaurants down 1.2% and company-owned locations down 0.9%.

Restaurant-level Margin: Decreased to 17.6% from 17.9% year-over-year.

Food and Packaging Costs: Increased to 29.3% of sales, driven by 5.4% commodity inflation.

Labor Costs: Decreased to 33.7% of sales, primarily due to a rollover of elevated unemployment taxes.

Franchise-level Margin: $60.3 million, or 37.4% of franchise revenues, down from $66.2 million, impacted by lower same-store sales and closures.

SG&A Expenses: $17 million (6.6% of revenues), down from $20.6 million (7.8% a year ago), mainly due to a legal reversal.

Earnings: GAAP diluted EPS from continuing operations was $1.08, down from $1.19 in the prior year; operating EPS was $0.96, down from $1.04.

Adjusted EBITDA: Increased to $61.2 million from $57.1 million year-over-year.

2Strategic Updates and Business Highlights

Leadership Changes: Mark King is serving as Interim CEO, focusing on operational improvements and franchisee engagement.

JACK on Track Initiative: Progress made in debt reduction, with a total decrease of $244 million since its announcement. Refinancing completed, reducing upcoming debt maturities.

Menu and Marketing Strategy: Emphasis on improving quality and value, with plans for a new menu layout and brand campaign aimed at enhancing customer engagement.

Operational Improvements: Focus on simplifying operations, reducing promotional complexity, and enhancing the restaurant experience through modest refresh investments.

3Forward Guidance and Outlook

Q4 Performance: Positive same-store sales trends in early Q4, driven by the Philly Cheesesteak promotion.

Fiscal Year 2026 Guidance:

Expected restaurant count of approximately 2,100.

Anticipated restaurant-level margin of around 16.5%.

Franchise-level margin projected at $265 million.

Adjusted EBITDA forecasted between $225 million to $230 million.

Franchisee Profitability: Ongoing challenges, with expectations for closures to continue into 2027.

4Bad News, Challenges, or Points of Concern

Declining Sales: Multiple quarters of same-store sales declines have pressured franchisee profitability.

Inflationary Pressures: Continued commodity inflation, particularly in beef, is expected to impact margins.

Franchisee Closures: Slower-than-anticipated pace of restaurant closures due to lease obligations, with an expectation of elevated closures extending into 2027.

Operational Execution: Need for improved consistency across restaurants remains a challenge, particularly in operational excellence.

5Notable Q&A Insights

Same-store Sales Outlook: Management expects comps to remain flat to slightly positive for the remainder of the year.

Digital Strategy: Digital sales represent 22% of total sales, with ongoing efforts to improve profitability in this channel.

Chicago Market Performance: Improvements noted, but AUVs remain below company averages; focus on operational execution and leadership changes to drive better results.

Menu Simplification: Plans to reduce SKU count slightly, but primarily focused on improving menu layout for better customer navigation. Overall, while Jack in the Box is implementing strategic initiatives aimed at improving operations and profitability, the company faces significant challenges related to declining sales, inflationary pressures, and franchisee profitability.