Business Context and Reporting Period
Company: Jack in the Box Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period: 16 weeks ended January 18, 2026 (Fiscal Q1 2026)
Business Overview: The Company operates and franchises Jack in the Box quick-service restaurants. As of January 18, 2026, the system consisted of 149 company-operated and 1,979 franchise-operated locations. Following the sale of Del Taco Holdings Inc. on December 22, 2025, the Company now reports a single operating segment.
Key Financial Metrics
| Metric (in thousands) | 16 Weeks Ended Jan 18, 2026 | 16 Weeks Ended Jan 19, 2025 |
|---|---|---|
| Total Revenues | $349,517 | $371,064 |
| Earnings from Operations | $46,638 | $70,480 |
| Net (Loss) Earnings | $(2,458) | $33,686 |
| Net Earnings (Loss) Per Share (Diluted) | $(0.13) | $1.75 |
| Cash Flows from Operating Activities | $30,546 | $101,583 |
| Cash and Restricted Cash (Ending) | $99,371 | $104,633 |
| Total Debt (Gross) | $1,603,185 | $1,715,583 |
| Available Borrowing Capacity | $95,300 | N/A |
Margins: Operating margin for continuing operations was approximately 13.3% in the current period compared to 19.0% in the prior year. The effective tax rate was 32.4% for the current period.
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased $21.5 million (5.8%) year-over-year. This was driven by a 6.7% decline in systemwide same-store sales, with company-operated same-store sales down 4.7% and franchise same-store sales down 7.0%.
- Discontinued Operations: The Company recorded a net loss of $16.8 million from discontinued operations (Del Taco), compared to earnings of $2.7 million in the prior year. This includes a $47.4 million pre-tax loss on the sale of Del Taco, partially offset by a $32.8 million income tax benefit.
- Cost Pressures: Food and packaging costs as a percentage of company sales increased to 29.7% from 25.9%, driven by 7.1% commodity inflation. Payroll costs rose to 35.3% of sales.
- Debt Reduction: The Company prepaid $105.0 million of its Series 2019-1 Class A-2-II Notes using proceeds from the Del Taco sale.
- Dividend Suspension: The Company discontinued cash dividends effective April 23, 2025, to prioritize debt reduction. No dividends were declared in the current quarter.
Guidance, Outlook, and Risks
Management Commentary: Management is executing the "JACK on Track" plan, focusing on debt reduction and operational efficiency. The Company expects cash flows from operations and its securitized financing facility to be sufficient to meet requirements for the next twelve months. Capital expenditures for the quarter were $23.2 million, primarily for new restaurants and IT infrastructure.
Risks and Contingencies:
- Legal Proceedings: The Company has accrued $17.9 million for legal matters. Notable cases include Gessele v. Jack in the Box Inc. (wage and hour claims), where a $6.4 million jury award was remanded for further proceedings, and J&D Restaurant Group, where a plaintiff petitioned the Texas Supreme Court for review after a lower court ruled in the Company's favor.
- Operational Risks: Risks include labor availability and costs, commodity inflation, franchisee performance, and cybersecurity threats.
- Debt Covenants: The Company maintains a leverage ratio greater than 5.0x, requiring scheduled amortization payments on its Class A-2 Notes. It remains in compliance with all debt covenants.
Investor Verification Checklist
- Del Taco Sale Finalization: Verify the final working capital adjustments and any remaining indemnification obligations related to the $115.0 million Del Taco sale.
- Legal Accruals: Monitor the status of the Gessele and J&D Restaurant Group litigation to assess potential changes to the $17.9 million legal accrual.
- Debt Maturities: Review the repayment schedule for the Class A-2 Notes, specifically the $176.9 million due in the remainder of fiscal 2026.
- Same-Store Sales Trend: Track the recovery of same-store sales, which declined 6.7% systemwide, to gauge the effectiveness of pricing and marketing strategies against inflation.
- Dividend Policy: Confirm the permanent discontinuation of dividends and the allocation of capital toward debt service versus share repurchases ($175.0 million authorization remains).