Business Context and Reporting Period
Company: Jack in the Box Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: April 12, 2026 (Second Quarter of Fiscal 2026)
Business Overview: The Company operates and franchises Jack in the Box quick-service restaurants. As of April 12, 2026, the system consisted of 149 company-operated and 1,979 franchise-operated locations. Following the sale of Del Taco Holdings Inc. in December 2025, the Company now reports as a single operating segment.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Total Revenues | $254,264 | $265,731 | $603,781 | $636,795 |
| Earnings from Operations | $35,468 | $48,283 | $82,106 | $118,763 |
| Net Earnings (Loss) | $10,245 | $(142,228) | $7,787 | $(108,542) |
| Diluted EPS (Continuing Ops) | $0.65 | $1.09 | $1.40 | $2.71 |
| Operating Cash Flow (YTD) | $17,084 | $61,041 | $17,084 | $61,041 |
| Total Debt (Gross) | $1,596,065 | $1,715,583 | $1,596,065 | $1,715,583 |
| Cash & Restricted Cash | $69,364 | $45,592 | $69,364 | $45,592 |
Note: Prior year results include significant losses from discontinued operations (Del Taco) which have been recast. Q2 2025 Net Loss was heavily impacted by a $162.9 million loss from discontinued operations.
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 4.3% in Q2 2026 compared to Q2 2025, driven by a 3.8% decline in systemwide same-store sales. Company restaurant sales fell 0.4%, while franchise rental revenues dropped 7.5% due to lower percentage rent and fewer franchise restaurants.
- Operating Profitability: Earnings from operations decreased 26.5% year-over-year in the quarter. This was primarily due to lower revenues and increased operating costs, including a 1.1% increase in food and packaging costs as a percentage of sales due to commodity inflation.
- Discontinued Operations: The Company sold Del Taco in December 2025. Consequently, Q2 2025 results included a massive $162.9 million loss from discontinued operations, whereas Q2 2026 reflects only a $2.3 million loss from discontinued operations (transaction costs and residual items).
- Debt Reduction: The Company prepaid $105.0 million of its Series 2019-1 Class A-2-II Notes in January 2026 using proceeds from the Del Taco sale. Total debt decreased by approximately $119.5 million year-over-year.
- Dividend Suspension: The Company discontinued its cash dividend program effective April 23, 2025, to prioritize debt reduction. No dividends were declared in the current period.
Guidance, Outlook, and Risks
- Strategic Focus ("JACK on Track"): Management is prioritizing debt reduction. The Company plans to withdraw approximately $71.0 million from excess Corporate Owned Life Insurance (COLI) funding to prepay an additional $99.0 million of debt in Q3 2026.
- Liquidity: As of April 12, 2026, the Company had $69.4 million in cash and restricted cash, plus $95.3 million in available borrowing capacity under its Variable Funding Notes. Management expects cash flows to be sufficient for the next 12 months.
- Leadership Change: Lance Tucker stepped down as CEO effective May 13, 2025. Mark King was appointed Interim CEO and Executive Chairman.
- Key Risks:
- Commodity Inflation: Food costs remain elevated (5.0% inflation in Q2), impacting margins.
- Legal Contingencies: The Company has accrued $17.1 million for legal matters, including a $10.5 million accrual for the Gessele v. Jack in the Box Inc. wage and hour case, which is currently on appeal.
- Same-Store Sales Pressure: Systemwide same-store sales declined 3.8% in the quarter, driven by a 4.3% drop in transactions despite a 1.5% increase in average check.
Investor Verification Checklist
- Debt Covenants: Verify the Company's leverage ratio status relative to the 5.0x threshold required to suspend quarterly principal payments on Class A-2 Notes.
- COLI Withdrawal: Confirm the timing and execution of the planned $71.0 million withdrawal from COLI policies to fund the Q3 2026 debt prepayment.
- Legal Accruals: Monitor the status of the Gessele litigation and the potential for additional interest accruals or appellate outcomes.
- Franchisee Health: Review the increase in bad debt expense within franchise support costs, which rose $0.7 million in the quarter.
- Capital Expenditures: Assess the shift in CapEx allocation, noting a decrease in restaurant IT costs but an increase in facility expenditures for beverage dispenser replacements.