Jack in the Box Inc.

Q3 same-store sales decreased 1.1%, including a 1.2% decline at franchise restaurants and a 0.9% decline at company-owned restaurants, mainly due to lower transactions partially offset by menu price increases. Restaurant-level margin was 17.6% versus 17.9% last year; food and packaging costs were 29.3% of sales, up 70 basis points, with 5.4% commodity inflation. Labor costs were 33.7% of sales, down 80 basis points, and occupancy and other costs rose 30 basis points. Franchise-level margin was $60.3 million versus $66.2 million a year ago; SG&A was $17 million versus $20.6 million; earnings from continuing operations were $21 million versus $22.8 million; GAAP diluted EPS was $1.08 versus $1.19; operating EPS was $0.96 versus $1.04; and adjusted EBITDA was $61.2 million versus $57.1 million. For fiscal 2026, management now expects about 2,100 Jack in the Box restaurants, restaurant-level margin of about 16.5%, franchise-level margin of about $265 million, SG&A of $112 million to $115 million, and adjusted EBITDA of $225 million to $230 million. They also said Q4-to-date same-store sales are positive in the low-single-digit range and that full-year interest expense should be roughly $81 million.

Mark King framed the quarter as a reset around guest listening, operational simplification, and franchisee economics. He said he spent time in restaurants and with franchisees to identify five priorities: better understanding customers, emphasizing quality, improving the restaurant experience, making operations easier, and lifting franchisee profitability. His tone was candid and restrained: he said performance remained below expectations, but expressed greater conviction that the company is focusing on the right priorities and will share more detail in November and with 2027 guidance.

Dawn Hooper focused on the quarter’s operating pressure and the balance sheet work under JACK on Track. She cited the 1.1% comp decline, 17.6% restaurant-level margin, 70 bps food and packaging inflation, and a Q3 adjusted EBITDA result of $61.2 million. On capital structure, she said the company completed refinancing on June 23, prepaid $110 million of the August 2026 tranche, reduced debt by $244 million since JACK on Track began, ended the quarter with $1.5 billion of debt and 6.3x net debt to adjusted EBITDA leverage, and now expects full-year interest expense of about $81 million. She also noted year-to-date capex of $44.1 million, $26.7 million of year-to-date real estate proceeds, and updated full-year guidance tied to closures and margin pressure.

Analysts pressed management on whether Q4 would stay positive; Mark King said comp trends should be “somewhere around flat to slightly up” for the year. Questions also focused on the simplification strategy, and King said reducing promotional complexity is meant to improve execution, not shrink opportunities. On franchise-level margin and closures, Hooper said each closure impacts franchise-level margin by about $80,000 and that closures are running slower than expected because of lease burdens, though she expects them to accelerate into 2027 and even 2028. Analysts also asked about digital economics, Chicago, and menu strategy; management said digital is about 22% of sales but still needs work to be consistently profitable, Chicago is improving but still below company averages, and the menu will likely see a small SKU reduction plus a more intuitive layout.