Jack in the Box(US:JACK)2025-11-19 23:00Financial 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]