Core Insights - Jack in the Box reported disappointing fourth quarter financial results for both Jack in the Box and Del Taco brands, with significant declines in same-store sales and overall systemwide sales [1] Jack in the Box Performance - Same-store sales at Jack in the Box fell by 7.4%, with company-operated same-store sales decreasing by 5.3% and franchise same-store sales decreasing by 7.6%, driven by a decline in transactions and an unfavorable menu mix, partially offset by price increases [2] - Systemwide sales for the fourth quarter decreased by 7.2% [2] - Restaurant-level margin was 16.1% for the fourth quarter, down from 18.5% in the prior-year quarter, impacted by inefficiencies from entering the Chicago market, transaction declines, and inflationary increases in commodity costs, particularly beef [3] Strategic Initiatives - The CEO expressed a commitment to restoring positive momentum for the Jack in the Box brand through operational and marketing initiatives, emphasizing a return to basics and leveraging brand equities [4] - The "Jack on Track" plan, introduced in April, aims to close up to 200 units and divest the Del Taco brand, which was acquired for approximately $585 million in 2022; Yadav Enterprises agreed to acquire Del Taco for $115 million [4] - During the fourth quarter, 38 out of 47 restaurants were closed as part of the restructuring plan, with a total of 31 new restaurants opened and 86 closed in fiscal year 2025 [4] Del Taco Performance - Del Taco's same-store sales decreased by 3.9% in Q4, with franchise same-store sales down by 4.2% and company-operated same-store sales down by 3.1%, driven by transaction declines and an unfavorable mix, partially offset by menu price increases [5] - Systemwide sales for Del Taco in the fourth quarter decreased by 5.4% [5]

Financial Data and Key Metrics Changes - For Q4 2025, same-store sales for Jack in the Box declined 7.4%, with franchise same-store sales down 7.6% and company-owned same-store sales down 5.3% [19] - Jack restaurant level margin decreased by 240 basis points to 16.1% due to sales deleverage, commodity inflation of 6.9%, and elevated labor costs [20] - Consolidated adjusted EBITDA was $45.6 million, down from $65.5 million in the prior year, primarily due to lower same-store sales [26] Business Line Data and Key Metrics Changes - Jack in the Box had 15 restaurant openings and 47 closures in Q4, ending the year with 2,136 restaurants [19] - Del Taco's system same-store sales declined 3.9%, with company-owned same-store sales down 3.1% and franchise same-store sales down 4.2% [24] - Del Taco restaurant level margin decreased to 6.8% from 9.3% in the prior year, driven by transaction declines and inflationary increases in commodities [24] Market Data and Key Metrics Changes - The Chicago market had a negative 130 basis point drag on overall company restaurant level margin due to elevated labor costs from new restaurant openings [21] - Franchise level margin for Jack in the Box was $62.6 million, or 38.9% of franchise revenues, compared to $70.9 million, or 40.4% a year ago [22] Company Strategy and Development Direction - The company is focused on the "Jack on Track" plan, which includes simplifying the business and divesting Del Taco to strengthen the Jack in the Box brand [8][9] - A comprehensive reimage program is in progress, with a focus on modernizing restaurants and enhancing customer experience [15][99] - The company aims to achieve same-store sales growth and improve operational efficiency while managing costs effectively [16][12] Management's Comments on Operating Environment and Future Outlook - Management expects 2026 to be a rebuilding year, with same-store sales returning to positive as operational improvements are implemented [16] - The company anticipates challenges in the first quarter due to comparisons with stronger results from the previous year and external factors like government shutdowns [40][48] - Management is optimistic about the long-term potential, aiming for a stronger, more disciplined brand by the end of 2026 [18] Other Important Information - The company plans to pay down $263 million in debt by retiring the August 2026 tranche of its securitization with proceeds from the Del Taco divestiture and real estate sales [34] - Capital expenditures for Q4 were $17.9 million, with cash flows from operations for the quarter at $33.7 million [28] Q&A Session Summary Question: What are the main drivers of same-store sales improvement in 2026? - Management expects the first quarter to be soft but anticipates improvements in the second quarter due to marketing initiatives and anniversary promotions [39] Question: What is the assumption in the current EBITDA guidance regarding real estate sales and closures? - Management confirmed that block closures are included in the guidance, with expectations of 60-100 closures and $50 million to $70 million in real estate sales [41][42] Question: How is franchisee sentiment regarding the brand and investment in the Jack on Track plan? - Franchisees are under pressure but remain supportive, with a willingness to invest in the brand as conditions improve [66][69] Question: What are the expectations for top and bottom line growth in the long term? - Management indicated that long-term guidance will be provided once the company is further along in the Jack on Track program, with expectations for moderate growth in the future [73] Question: What is the current status of the reimage program? - The company has a reimage plan in place and is focused on ensuring that significant contributions are made to enhance restaurant appearances [96][99]

Financial Data and Key Metrics Changes - In Q4 2025, Jack in the Box reported a system same-store sales decline of 7.4%, with franchise same-store sales down 7.6% and company-owned same-store sales down 5.3% [17] - The overall sales trends improved by approximately 300 basis points throughout the quarter, despite ongoing pressure on check sizes due to previous price increases [9][10] - Adjusted EBITDA for Q4 was $45.6 million, down from $65.5 million in the prior year, primarily due to lower same-store sales [24] Business Line Data and Key Metrics Changes - Jack in the Box opened 15 restaurants and closed 47 in Q4, ending the year with 2,136 locations [17] - Del Taco experienced a system same-store sales decline of 3.9%, with company-owned same-store sales down 3.1% and franchise same-store sales down 4.2% [21] - Del Taco's restaurant level margin decreased to 6.8% from 9.3% in the prior year, driven by transaction declines and inflationary increases in commodities [22] Market Data and Key Metrics Changes - The Chicago market had a negative impact on overall company restaurant level margin, contributing a drag of 130 basis points due to elevated labor costs from rapid new restaurant openings [19] - Franchise level margin for Jack in the Box was $62.6 million, or 38.9% of franchise revenues, compared to $70.9 million, or 40.4% a year ago [20] Company Strategy and Development Direction - The company is focused on the "Jack on Track" plan, which includes divesting Del Taco to concentrate on strengthening the Jack in the Box brand [6][14] - A comprehensive reimage program is in development, with a focus on modernizing restaurants and enhancing customer experience [13][62] - The company aims to achieve positive same-store sales in 2026 through operational improvements and a barbell promotional strategy [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 was a challenging year but expressed confidence in the company's ability to restore momentum and drive long-term shareholder value [15] - The outlook for 2026 includes expectations for same-store sales to return to positive, completion of the Del Taco divestiture, and significant debt reduction [14][29] - Management noted that the competitive landscape is more intense, and consumer spending is cautious, necessitating a focus on value perception and operational excellence [10][11] Other Important Information - The company ended the year with total debt of $1.7 billion and a net debt to adjusted EBITDA leverage ratio of six times [26] - Capital expenditures for Q4 were $17.9 million, with cash flows from operations for the quarter at $33.7 million [26] Q&A Session Summary Question: What are the main drivers of improvement in same-store sales for 2026? - Management expects the first quarter to be soft but anticipates improvements in the second quarter due to promotional activities and the 75th anniversary celebrations [32] Question: What is the assumption in the current EBITDA guidance? - The guidance includes block closures and real estate sales, with expectations of $50 million to $70 million in real estate sales built into the guidance [34][35] Question: How is franchisee sentiment amid competitive pressures? - Franchisees are focused on driving sales and are willing to support the brand, although profitability pressures exist [44][46] Question: What are the expectations for G&A expenses in 2026? - G&A is expected to be elevated in the first half of the year but should improve in the second half as the company restructures following the Del Taco sale [41]

Financial Data and Key Metrics Changes - Second quarter same store sales decreased by 4.4%, with franchise restaurant comp down 4.5% and company-owned sales down 4% [12][14] - Consolidated adjusted EBITDA was $66.5 million, down from $75.7 million in the prior year, primarily due to Del Taco refranchising and sales deleverage [19] - The company reported a consolidated GAAP diluted loss per share of negative $7.47 compared to diluted earnings per share of $1.26 in the prior year [19] Business Line Data and Key Metrics Changes - Jack brand's restaurant level margin percentage decreased to 19.6% from 23.6% a year ago, driven by lower sales and inflation [14] - Del Taco's system same store sales declined 3.6%, with franchise sales down 4.2% and company-owned comp down 1.7% [15][16] - Del Taco restaurant level margin was 12.8%, down 400 basis points from the prior year, primarily due to lower sales and inflation [17] Market Data and Key Metrics Changes - Digital sales now account for 18% of system-wide sales, aided by the implementation of kiosks and mobile ordering [9][16] - The company experienced a decline in transactions across both brands, impacting overall sales performance [12][15] Company Strategy and Development Direction - The company is focused on becoming a simpler, asset-light organization to drive sustainable growth for franchisees and investors [6] - The "Jack on Track" plan aims to strengthen the balance sheet, accelerate cash flow, and close underperforming restaurants [11] - The company is committed to technology modernization, including the rollout of a new point of sale system [9][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant pressure on multiple income cohorts, leading to negative traffic [8] - The company remains focused on driving same store sales as a top priority despite current challenges [9] - Management expressed optimism about the long-term transformation and growth potential of the company [6][11] Other Important Information - The company recorded a non-cash goodwill and intangible asset impairment of $203.2 million for the Del Taco reporting unit [19] - Capital expenditures for the quarter were $21.5 million, focusing on technology and digital initiatives [20] Q&A Session Summary Question: Current trends at Jack relative to the down 4.4% in Q2 - Management indicated that trends in Q3 are in line with Q2, facing a challenging industry environment [25][26] Question: Comp pressure driven by company-specific headwinds - Management noted IT issues impacting 1% to 2% in same store sales and highlighted the over-indexing on low-income consumers [30][31] Question: Key priorities for Del Taco during strategic alternatives exploration - Management emphasized the need for operational execution and revamping marketing strategies [36][38] Question: Allowance for doubtful accounts and potential bad debt expense - Management clarified that the increase is related to a specific franchise matter and does not anticipate an impact from the closure program [41] Question: Value positioning in the current environment - Management discussed the importance of perceived value and satisfaction rather than just low prices [45][46] Question: Conversations with franchisees post Jack on Track rollout - Management reported positive feedback from franchisees, who are supportive of long-term changes [50][51] Question: Geographic concentration of closures - Management stated that closures will be spread throughout the system, focusing on economic factors [55][56] Question: Strategic alternatives for Del Taco - Management indicated significant interest in the brand and is exploring various options, including potential divestiture [62][63] Question: Update on new unit development commitments - Management expressed excitement about new unit growth and ongoing developments in various markets [67][68] Question: Performance across different dayparts - Management noted even pressure across lunch and dinner, with some successful promotions [70][72]

Financial Data and Key Metrics Changes - Second quarter same store sales for Jack brand decreased by 4.4%, with franchise restaurant comp decrease of 4.5% and company-owned sales decrease of 4% [11] - Consolidated adjusted EBITDA was $66.5 million, down from $75.7 million in the prior year, primarily due to Del Taco refranchising and sales deleverage [18] - The company reported a consolidated GAAP diluted loss per share of negative $7.47 compared to diluted earnings per share of $1.26 in the prior year [18] Business Line Data and Key Metrics Changes - Jack brand's restaurant level margin percentage decreased to 19.6% from 23.6% a year ago, driven by lower sales and inflation [13] - Del Taco's system same store sales declined by 3.6%, with franchise sales decline of 4.2% and company-owned comp decrease of 1.7% [14] - Del Taco's restaurant level margin was 12.8%, down 400 basis points from the prior year, mainly due to lower sales and inflation [15] Market Data and Key Metrics Changes - Digital sales now account for 18% of system-wide sales, with a target of reaching 20% ahead of schedule [12] - The company experienced commodity inflation of 3.4% for Jack and 5.7% for Del Taco during the quarter [13][15] - Labor costs as a percentage of sales increased to 33.8% for Jack and 38.2% for Del Taco, primarily due to wage inflation [13][16] Company Strategy and Development Direction - The company is focused on becoming a simpler asset-light organization that drives sustainable growth for franchisees and investors [5] - The "Jack on Track" plan aims to strengthen the balance sheet, accelerate cash flow, and close underperforming restaurants [10] - The company is committed to technological advancements, including the rollout of a new point of sale system and modernization of legacy systems [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant pressure on multiple income cohorts leading to negative traffic and emphasized the importance of driving same store sales [6] - The company is facing challenges from cautious consumer behavior and self-inflicted issues related to technology integration [24] - Management remains optimistic about long-term growth despite current challenges, with a focus on core strengths and value offerings [26] Other Important Information - The company recorded a non-cash goodwill and intangible asset impairment of $203.2 million for the Del Taco reporting unit [18] - Capital expenditures for the quarter were $21.5 million, focusing on technology and digital initiatives [19] - The company has discontinued its dividend and did not repurchase any shares during the quarter [20] Q&A Session Summary Question: Current trends at Jack relative to the down 4.4% in 2Q - Management indicated that trends in the third quarter are in line with the second quarter, facing a challenging industry environment [24] Question: Company-specific headwinds affecting comp pressure - Management noted IT issues impacting 1% to 2% in same store sales and highlighted the brand's over-indexing on low-income consumers [29] Question: Key priorities for Del Taco during strategic alternatives exploration - Management emphasized the need for operational execution and revamping marketing strategies for Del Taco [36] Question: Allowance for doubtful accounts and potential bad debt expense - Management clarified that the increase is related to a specific franchise matter and does not anticipate it affecting the closure program [40] Question: Value positioning in the current environment - Management discussed the importance of perceived value rather than just low prices, focusing on core offerings and Munchie Meals [46] Question: Conversations with franchisees post Jack on Track rollout - Management reported positive feedback from franchisees, who are supportive of long-term changes [51] Question: Geographic concentration of upcoming closures - Management stated that closures will be spread throughout the system and will not concentrate in any specific area [56] Question: Strategic alternatives for Del Taco and potential divestiture - Management indicated significant interest in Del Taco and is exploring various options, with divestiture being a strong possibility [63] Question: Update on new unit development commitments - Management expressed excitement about new unit growth and mentioned ongoing developments in various markets [68] Question: Performance across different dayparts - Management noted even pressure across dayparts, with some successful promotions and partnerships [73]