8-K: Jack in the Box Q3 2026: Sales Dip, EBITDA Rises

Jack in the Box reported a 1.1% decline in same-store sales for its third quarter of fiscal year 2026, alongside a decrease in total revenues, though Adjusted EBITDA saw an increase.

Summary

• Jack in the Box Inc. reported its third quarter fiscal year 2026 financial results.
• Same-store sales decreased by 1.1%, with franchise sales down 1.2% and company-owned sales down 0.9%.
• Total revenues declined by 1.8% to $257.7 million.
• Diluted EPS from continuing operations was $1.08, down from $1.19 in the prior year.
• Operating EPS was $0.96, compared to $1.04 in the prior year.
• Adjusted EBITDA increased to $61.2 million from $57.1 million in the prior year.
• The company prepaid $110.0 million of debt and completed a $500 million financing of 2026-1 Class A-2 Notes.
• The restaurant count decreased by 13 net locations during the quarter.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a slightly negative score due to declining same-store sales and a decrease in restaurant count, despite some positive adjustments in EBITDA and capital structure.

Positives

• Adjusted EBITDA increased to $61.2 million from $57.1 million in the prior year.
• Completed a significant refinancing with $500 million in new notes.
• Prepaid $110.0 million of existing debt.
• Gains on the sale of real estate contributed positively to other operating income.
• SG&A expenses decreased by $3.5 million due to lower legal costs and stock compensation.

Negatives

• Same-store sales declined by 1.1% (franchise: -1.2%, company-owned: -0.9%).
• Total revenues decreased by 1.8% to $257.7 million.
• Diluted EPS from continuing operations decreased to $1.08 from $1.19.
• Operating EPS decreased to $0.96 from $1.04.
• Franchise-Level Margin decreased to 37.4% from 39.3% due to lower sales and fewer restaurants.
• Restaurant count decreased by 13 net locations (4 openings, 17 closures).
• Losses from discontinued operations were $0.9 million.

Risks

• Commodity cost inflation and changes in the mix of restaurants impacted Restaurant-Level Margin.
• Decline in transactions contributed to same-store sales performance.
• The 'JACK on Track' closure program continues to influence Franchise-Level Margin.
• Potential for increased regulatory and legal complexities.
• Supply chain disruptions could impact operations.
• Food-safety incidents or negative publicity could harm brand reputation.
• Risks associated with disagreements with franchisees.
• Stock market volatility can affect the company.

Future Outlook

For the fiscal year ending September 27, 2026, the company updated guidance to include approximately 2,100 restaurants, with 25 new openings and 50-60 closures. Company-owned restaurant-level margin is expected to be around 16.5%, with mid-single-digit commodity inflation and low-single-digit wage inflation. Franchise Level Margin is projected at approximately $265 million. SG&A is expected to be between $112-$115 million. Adjusted EBITDA is forecasted to be between $225-$230 million. Guidance for a low single-digit same-store sales decline versus FY2025, depreciation/amortization of $45-$50 million, and capital expenditures of $45-$55 million remains unchanged.

Management Comments

• "While we have more work ahead, I'm increasingly confident that our path forward is becoming clearer to strengthen franchisee profitability, improve execution, and build a stronger foundation for sustainable growth," said Mark King, Interim Chief Executive Officer.
• Management is focused on improving restaurant performance and executing priorities to create long-term value.
• The company has completed its refinancing and is now fully focused on operational improvements.

Industry Context

StockSavvy.ai notes that the declining same-store sales and restaurant count at Jack in the Box are concerning trends within the highly competitive fast-food sector, where many operators are focusing on traffic growth and unit expansion. The increase in Adjusted EBITDA, however, suggests some success in cost management or operational efficiencies, potentially driven by strategic initiatives like debt reduction and refinancing.

Comparison to Industry Standards

• Competitors like McDonald's and Starbucks have generally reported positive same-store sales growth in recent periods, driven by strong digital strategies and menu innovation, making Jack in the Box's decline a point of concern.
• The focus on debt reduction and refinancing is a common strategy across the industry to improve financial flexibility, but the impact on operational performance needs to be closely monitored.
• Restaurant closures, while part of a strategic plan ('JACK on Track'), contrast with industry peers who are often expanding their footprint or optimizing existing locations for higher throughput.

Legal Proceedings

• Lower legal costs were noted as a reason for SG&A decrease, implying a reduction in ongoing litigation or a favorable resolution in a prior period.

Stakeholder Impact

• Shareholders may be impacted by the decline in EPS and same-store sales, although the debt refinancing could be viewed positively for long-term financial stability.
• Franchisees are directly affected by the decline in franchise same-store sales and the overall strategy to improve profitability.
• Employees may face uncertainty due to restaurant closures, though the focus on operational improvement could lead to better performance in remaining locations.

Next Steps

• Continue to focus on improving restaurant performance.
• Execute against priorities aimed at creating long-term value.
• Strengthen franchisee profitability.
• Improve execution across operations.
• Build a stronger foundation for sustainable growth.
• Continue with the 'JACK on Track' plan, including restaurant closures.

Key Dates

Recommendation

The mixed results, with declining sales and EPS but improved EBITDA and a completed debt refinancing, warrant a cautious 'hold' rating. While the strategic debt management is positive, the core business performance (same-store sales, restaurant count) shows weakness that needs to be addressed before a more positive outlook can be established.

Keywords

Jack in the Box, Q3 Earnings, Same-Store Sales, Adjusted EBITDA, Restaurant Operations, Franchise, Financial Results, EPS