Jack In The Box (NASDAQ:JACK) reported a 1.1% decline in third-quarter fiscal 2026 same-store sales, as a drop in transactions more than offset menu price increases. Interim Chief Executive Officer Mark King said the company is focused on improving execution, restaurant quality, customer relevance and franchisee economics as it seeks to return to sustainable sales growth.
Franchise same-store sales fell 1.2% during the quarter, while company-owned restaurant sales declined 0.9%. Chief Financial Officer Dawn Hooper said results varied substantially between marketing windows: the Smashed Jack Sliders platform began the quarter strongly, but the subsequent Hot Ones promotion failed to meet expectations.
According to Hooper, fourth-quarter-to-date same-store sales are positive in the low-single-digit range, supported by the Philly Cheesesteak offering, which has generated customer interest and a higher average check. King said he expects full-year fourth-quarter same-store sales to be “somewhere around flat to slightly up.”
Five priorities for sales recovery
King, who became interim CEO several months ago, said his visits with franchisees, corporate employees and restaurant teams helped shape five priorities intended to support consistent same-store sales growth.
- Using customer research and feedback to guide menu, marketing and innovation decisions.
- Strengthening the brand’s quality and value positioning.
- Improving restaurant appearance and the overall guest experience.
- Making restaurants easier to operate by reducing complexity.
- Improving franchisee profitability and restaurant-level economics.
The company plans to test an updated menu layout this fall designed to improve navigation and better communicate quality and value. It is also developing a new brand campaign under new Chief Marketing Officer Katelyn Zborowski, with lessons from the effort expected to influence broader marketing activity into calendar 2027.
King said Jack in the Box has been testing a new burger platform featuring premium ingredients, a juicier patty, updated preparation and presentation, and new packaging. The company expects to roll out its preferred burger platform systemwide in 2027.
On restaurant appearance, the company announced a $2,000-per-restaurant contribution to support modest refresh projects. King said approximately 25% of franchise restaurants had signed up within a few weeks of the announcement. The refreshes are expected to occur over the next several quarters, while a wider remodel strategy may be considered longer term.
The company has already reduced the number of promotions per marketing window from three to two during 2026 and plans to continue simplifying its marketing calendar for 2027. King said simplification is intended to improve focus and execution rather than reduce sales opportunities.
Margins, earnings and commodity pressure
Jack in the Box’s restaurant-level margin declined to 17.6% in the third quarter from 17.9% a year earlier. Food and packaging costs rose 70 basis points to 29.3% of sales, driven by 5.4% commodity inflation, including elevated beef costs. Hooper said commodity inflation as a percentage of sales is expected to ease in the fourth quarter, though beef costs are expected to remain high. Deflation in commodities including dairy is expected to offset some of that pressure.
Labor costs fell 80 basis points to 33.7% of sales, primarily due to the comparison with elevated California unemployment taxes in the prior year. Occupancy and other costs increased 30 basis points, reflecting sales deleverage and higher rent.
Franchise-level margin was $60.3 million, or 37.4% of franchise revenue, compared with $66.2 million, or 39.3%, a year earlier. Hooper attributed the decline to lower same-store sales, a lower restaurant count and higher bad-debt expense.
GAAP diluted earnings per share from continuing operations declined to $1.08 from $1.19 a year earlier. Operating earnings per share were $0.96, compared with $1.04 in the prior-year period. Adjusted EBITDA increased to $61.2 million from $57.1 million, primarily due to lower general and administrative expense, partially offset by weaker sales and restaurant closures.
Debt reduction and accelerating closures
The company said its JACK on Track plan continued to progress during the quarter. It completed a refinancing on June 23, fully repaying its August 2026 debt tranche and substantially reducing its February 2027 tranche. Before the refinancing, the company prepaid $110 million of August 2026 debt using excess corporate-owned life insurance funding and cash on hand.
Since JACK on Track was announced in April 2025, Jack in the Box has reduced debt by $244 million. Total debt outstanding was $1.5 billion at quarter-end, and net debt to adjusted EBITDA leverage declined to 6.3 times from 6.9 times in the prior quarter. The company now expects approximately $81 million in interest expense for fiscal 2026.
Jack in the Box has closed 40 restaurants year to date and expects to close another 10 to 20 in the fourth quarter. Hooper said closures have moved more slowly than anticipated because lease obligations can sometimes exceed the losses associated with continuing to operate an underperforming restaurant. The company has hired a third-party firm to help exit leases and expects the closure pace to accelerate.
Management said elevated closures are expected to continue into 2027 and potentially into 2028 as it reassesses the overall closure program following additional quarters of same-store sales declines. Hooper noted that each franchise closure of an underperforming restaurant reduces franchise-level margin by roughly $80,000.
Updated fiscal 2026 outlook
For fiscal 2026, Jack in the Box now expects approximately 2,100 restaurants, restaurant-level margin of about 16.5%, franchise-level margin of roughly $265 million, and SG&A expense between $112 million and $115 million, excluding gains or losses from corporate-owned life insurance policies. The company expects adjusted EBITDA of $225 million to $230 million.
Management also identified Chicago as a key factor in consolidated restaurant margins. Hooper said restaurant-level margin would have been 18.5% in the third quarter excluding Chicago. The company has installed a new vice president in the market and is focused on improving leadership, operating execution and controllable costs. While Jack in the Box has long intended to franchise the Chicago market, Hooper said the immediate priority is improving its performance.
About Jack In The Box (NASDAQ:JACK)
Jack in the Box (NASDAQ: JACK) is a publicly traded quick-service restaurant company best known for its Jack in the Box brand of fast-food restaurants. Founded in 1951 by Robert O. Peterson and headquartered in San Diego, California, the company has operated for decades as a franchisor and operator of drive-thru and dine-in restaurants. Its business model combines company-owned locations with franchise arrangements, and the company focuses on building brand recognition through menu innovation, marketing and service convenience.
The company’s core offerings center on a broad fast-food menu that includes hamburgers (notably the Jumbo Jack), tacos, breakfast items, sandwiches, salads, sides and specialty limited-time items.
