Jack in the Box(US:JACK)2025-11-19 23:02Financial 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]