Business Context and Reporting Period
Company: Jack in the Box Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: July 5, 2026 (Third Quarter of Fiscal Year 2026)
Business Overview: The Company operates and franchises Jack in the Box quick-service restaurants. As of July 5, 2026, the system consisted of 149 company-operated and 1,966 franchise-operated locations. Following the sale of Del Taco Holdings Inc. in December 2025, the Company now reports a single operating segment.
Key Financial Metrics
| Metric (in thousands) | Q3 2026 | Q3 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Total Revenues | $257,657 | $262,401 | $861,438 | $899,196 |
| Earnings from Operations | $52,797 | $48,365 | $134,903 | $167,128 |
| Net Earnings (Continuing Ops) | $21,041 | $22,839 | $47,971 | $74,534 |
| Net Earnings (Total) | $20,122 | $22,027 | $27,909 | $(86,515) |
| Diluted EPS (Total) | $1.03 | $1.15 | $1.44 | $(4.51) |
| Operating Cash Flow (YTD) | $56,553 | $118,147 | $56,553 | $118,147 |
| Total Debt (Gross) | $1,491,984 | $1,715,583 | $1,491,984 | $1,715,583 |
| Cash & Restricted Cash | $71,771 | $68,111 | $71,771 | $68,111 |
Note: YTD 2025 Net Earnings includes a significant loss from discontinued operations (Del Taco) of $161.0 million. Q3 2026 Net Earnings includes a loss from discontinued operations of $0.9 million.
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 1.8% in Q3 and 4.2% YTD compared to the prior year. This was driven by a 4.6% decrease in franchise rental revenues and a 3.4% decrease in franchise royalties, primarily due to lower franchise Average Unit Volumes (AUVs) and a reduction in the number of franchise restaurants.
- Same-Store Sales: Systemwide same-store sales decreased 1.1% in Q3 and 4.2% YTD. Company-operated same-store sales declined 0.9% in Q3 and 3.0% YTD, driven by a 1.9% decrease in transactions, partially offset by a 1.0% increase in average check.
- Cost Pressures: Food and packaging costs as a percentage of company sales increased to 29.3% in Q3 (from 28.6% prior year) due to commodity inflation (5.4% in Q3). Payroll costs decreased slightly as a percentage of sales in Q3 due to the rollover of FUTA taxes in the prior year.
- Discontinued Operations: The sale of Del Taco closed in December 2025. Results are now classified as discontinued operations. The Company recorded a $47.4 million loss on the sale in the prior fiscal year, which significantly impacted the prior year's YTD net loss.
- Real Estate Gains: The Company recognized a $9.6 million gain on the sale of real estate in Q3 2026, contributing to a net operating income of $(3.1) million in the "Other operating (income) expense" line item.
Guidance, Outlook, and Risks
- Capital Structure Refinancing: In June 2026, the Company completed a securitization refinancing, issuing $500.0 million in Series 2026-1 Fixed Rate Senior Secured Notes. Proceeds were used to repay $46.1 million of 2019 Notes and $479.9 million of 2022 Notes. The Company also established a $150.0 million Variable Funding Notes facility, with $54.6 million currently available.
- Liquidity: As of July 5, 2026, the Company held $71.8 million in cash and restricted cash. Management expects cash flows from operations and the securitized financing facility to be sufficient to meet requirements for the next twelve months.
- Dividends and Buybacks: The Company discontinued its dividend in April 2025 to focus on leverage reduction. No dividends were declared in the current year. No share repurchases were made in Q3 2026, though $175.0 million remains authorized under existing programs.
- Legal Contingencies: The Company maintains an aggregate accrual of $10.6 million for legal matters. Significant ongoing litigation includes Gessele v. Jack in the Box Inc. (wage and hour claims), where a portion of a prior verdict was remanded for further proceedings, and a dispute with the Del Taco buyer regarding unpaid Transition Services Agreement fees.
- Risk Factors: Key risks include labor cost inflation, commodity price increases, franchisee profitability impacting royalty collections, and the Company's high leverage ratio (currently >5.0x HoldCo Leverage Ratio and >5.25x Senior ABS Leverage Ratio), which triggers mandatory cash sweep prepayments.
Investor Verification Checklist
- Debt Covenants: Verify the Company's ability to maintain leverage ratios below the 5.25x threshold to avoid mandatory cash sweeps on the new 2026 Notes.
- Franchisee Health: Monitor franchisee payment delays and deferrals, which management noted are impacting operating cash flows.
- Legal Exposure: Track the outcome of the remanded issues in the Gessele wage and hour case and the status of the lawsuit against the Del Taco buyer.
- Same-Store Sales Trend: Assess whether the decline in same-store sales (down 4.2% YTD) stabilizes given the headwinds of lower transaction volumes.
- Real Estate Strategy: Evaluate the impact of continued asset-light strategies and the frequency of property sales on future depreciation and rental revenue.