8-K: Jack in the Box Inc. Reports Disappointing Second Quarter 2025 Earnings, Impacted by Del Taco Impairment

Jack in the Box Inc. announced its second quarter fiscal 2025 financial results, revealing a diluted loss per share of ($7.47) due to a non-cash goodwill and intangible impairment charge for Del Taco, alongside declines in same-store sales for both Jack in the Box and Del Taco brands.

Summary

• Jack in the Box Inc. reported its second quarter fiscal 2025 results, which ended on April 13, 2025.
• The company experienced a diluted loss per share of ($7.47), heavily impacted by a non-cash goodwill and intangible impairment charge of $203.2 million related to Del Taco.
• Operating EPS was $1.20, compared to $1.46 in the prior year quarter.
• Total revenues decreased by 7.8% to $336.7 million, primarily due to Del Taco refranchising transactions.
• Net loss was $142.2 million, a significant downturn from the $25.0 million net earnings in the same quarter of the previous year.
• Adjusted EBITDA was $66.5 million, down from $75.7 million in the prior year quarter.
• Jack in the Box same-store sales decreased by 4.4%, with franchise same-store sales down 4.5% and company-owned same-store sales down 4.0%.
• Del Taco same-store sales decreased by 3.6%, with franchise same-store sales down 4.2% and company-operated same-store sales down 1.7%.
• Jack in the Box net restaurant count decreased by 7 in the second quarter, with 5 openings and 12 closures.
• Del Taco restaurant count increased by 2 in the second quarter, with 6 openings and 4 closures.
• The company did not repurchase any shares during the quarter, with $175.0 million remaining under the stock buyback program.
• Jack in the Box discontinued its dividend.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the reported net loss, decline in same-store sales, and the significant impairment charge related to Del Taco. While management expresses confidence in future plans, the current results are clearly unfavorable.

Positives

• Del Taco restaurant count increased by 2 in the second quarter, with 6 openings and 4 closures.
• The company has $175.0 million remaining under the Board-authorized stock buyback program.

Negatives

• Diluted loss per share was ($7.47) due to a $203.2 million non-cash goodwill and intangible impairment charge for Del Taco.
• Jack in the Box same-store sales decreased 4.4%, and Del Taco same-store sales decreased 3.6%.
• Total revenues decreased 7.8% to $336.7 million, primarily due to Del Taco refranchising.
• Adjusted EBITDA decreased to $66.5 million from $75.7 million in the prior year quarter.
• Jack in the Box net restaurant count decreased by 7, with 5 openings and 12 closures.
• Restaurant-Level Margin for Jack in the Box was 19.6%, down from 23.6% a year ago.
• Restaurant-Level Margin for Del Taco was 12.8%, down from 16.8% a year ago.
• Franchise-Level Margin for Jack in the Box was 40.0%, a decrease from 40.4% a year ago.
• Franchise-Level Margin for Del Taco was 24.4%, compared to 28.9% a year ago.
• Jack in the Box discontinued its dividend.

Risks

• The company faces risks related to competition, unemployment, consumer spending patterns, and commodity costs.
• Achieving and managing planned growth is affected by the availability of suitable new restaurant sites and the performance of new restaurants.
• The company is exposed to litigation risks and risks associated with disagreements with franchisees.
• Supply chain disruptions and food-safety incidents could negatively impact the company's reputation.
• Increased regulatory and legal complexities pose a risk.
• The company faces risks associated with the amount and terms of securitized debt.
• Stock market volatility could impact the company's performance.

Future Outlook

All guidance measures remain the same as provided on April 23, 2025, as part of the 'JACK on Track' plan announcement.

Management Comments

• I am encouraged by our marketing plans in the back half of 2025, which we expect to energize sales despite the difficult industry-wide macro environment in which we continue to operate, said Lance Tucker, Jack in the Box Chief Executive Officer.
• As we stated when announcing the recent 'JACK on Track' plan, we are addressing the areas of need to improve the business, and I am confident in our ability to establish consistent top-line trends while becoming a more simple, efficient company and investor story.

Industry Context

The results reflect a challenging macro environment affecting the restaurant industry, with inflation impacting costs and consumer behavior.

Comparison to Industry Standards

• Given the decline in same-store sales for both Jack in the Box and Del Taco, the company is underperforming compared to industry leaders like McDonald's and Starbucks, which have shown more resilience in maintaining or growing same-store sales.
• The restaurant-level margins for both brands are also lower than those of competitors such as Chipotle, which boasts significantly higher margins due to its operational efficiency and pricing power.
• The impairment charge related to Del Taco suggests that the acquisition has not met initial expectations, contrasting with successful acquisitions in the restaurant space like Restaurant Brands International's acquisition of Tim Hortons.

Stakeholder Impact

• Shareholders are negatively impacted by the net loss and diluted loss per share.
• Franchisees are affected by the decline in same-store sales, which impacts their revenue.
• Employees may be concerned about potential cost-cutting measures due to the company's financial performance.

Key Dates

Keywords

earnings, same-store sales, financial results, Del Taco, Jack in the Box, restaurant