Q3 2025 Jack in the Box Inc Earnings Call
Hello, and thank you for standing by. My name is Lacey and I will be your conference operator. Today at this time I would like to welcome everyone to the Jack in the Box third quarter, 2025 earnings webcast.
All lines have been placed on mute to prevent background noise after the speakers remarks. There will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again,
Please limit yourself to 1 question and 1 follow-up. Thank you. I would now like to turn the conference over to Rachel Webb Vice President of Finance and investor relations you may begin.
Things operator and good afternoon everyone. We appreciate you joining today's conference, call highlighting results from our third quarter 2025 with me today are chief executive officer, Lance Tucker and our Chief Financial Officer. Don, Hooper following their prepared remarks, we will be happy to take questions from our covering sell side analysts.
During both our discussion and Q&A, we may refer to certain non-gaap items. Please refer to the non-gaap reconciliations provided in the earnings release, which is available on our investor relations website at Jack in thebox.com,
We will also be making forward-looking statements based on current information, and judgments that reflect Management's outlook for the future. However, actual results May differ materially from these expectations because of business risk.
We therefore consider the Safe Harbor statement in the earnings release and the cautionary statements in our most recent 10K, to be part of our discussion, material, risk factors as well as information relating to company operations are detailed in our most recent 10K. 10q and other public documents filed with the SEC and are available on our investor relations website.
With that, I would like to turn the call over to our chief executive officer. Lance Stucker.
Thanks Rachel. And I appreciate everyone joining us today.
I continue to be grateful for the opportunity to lead such an amazing group of people, as we work to drive these Brands forward.
Another reason for my confidence is the excitement generated, by our recent entrance, in the new markets, highlighting the relevance and potential of both Brands back in the Box. Fantastic New Market openings.
Recently opened a restaurant in Chicago, while Del Taco entered the Durham North Carolina market in both cases, these restaurants are opening with very high volumes and are expected to be excellent performers.
I want to thank the operations teams at both Brands as well as our newly appointed Chief development Officer Van Ingram.
And the entire development team for their contributions to these fantastic New Market openings.
Turning the third quarter results, there were several challenges, we had to contend with during the quarter.
As many in the qsr industry have already called out, the macro, environment is very difficult and consumers remain cautious.
Jack in the Box significantly over indexes with this, being at gas to especially in our core markets, face uncertainty and have pulled back their spending, this issue is having an outside impact on our sales.
In addition, we have seen lower income cohorts, pull back as well in line with industry trends.
Significant price taken by many of our restaurants in 2024. As a result of California minimum wage increases
Both of these have negatively impacted check growth on a year-over-year basis.
As I look at our Q3 results and what is needed to drive better sales performance, in spite of the headwinds, we need to get back to our barbell strategy and, more specifically, provide more demonstrable value to our customers.
so, we're doing just that as we move through the fourth quarter,
To start. Last week, we reintroduced our Bonus. Jack Combo, a fan. Favorite at a very compelling introductory price point.
In addition, we have launched our popular spicy chicken strips, featuring a new craveable hot and honey flavor. That really resonates with our core guests.
Are always popular sauce and loaded. Potato, wedges are also back for a limited time.
And to combat late night competition and help bolster some of the softness and check. We'll continue to pulse our munchie meals with culturally relevant, collabs including our current Munchie Meal, featuring Coca-Cola Starlight,
As you can tell our current lineup is strong and we are investing 5 and a half million dollars in incremental marketing across the fiscal fourth quarter to make sure we're fully supporting it.
Part of this spend is to overcome the shortfall created by our sales performance in Q3, while the majority is to add media rate. So our guests are fully aware of these craveable offerings.
As I look longer term.
The entire guest experience requires Improvement in the coming months and years.
The value equation has gotten a bit off track across the broader qsr industry and Jack in the Box is no different.
So we need to work on the entire guest experience not just promotion or price.
As such we are refocusing on 3 key areas to enable staying power of the Jack brand.
They'll do this by getting back to our roots and leaning on our 75 year Heritage by going back to doing things as we call it, Jack's way.
While Jack on track is intended to quickly fortify the financial foundation for both the company and franchisees.
It is comprised of structural actions. It's not an actual operating plan.
A contrast Jack's way will be our ongoing strategy for driving a better overall experience for our guests.
First doing things, Jack's way means improving service quality and getting back to FS housing, operational excellence.
In a sense, it's as simple as getting back to basics.
Initially this means delivering a better experience to improved guest interactions. And focusing on consistent service quality across our core menu items from Burgers to our fried offerings
It includes additional training and support for employees, at both, our restaurant and field levels.
And it also includes holding our restaurants more accountable for performance.
And also rewarding them for outstanding work. Now, reintroducing key recognition programs to motivate and recognize our team members in every restaurant.
While operational changes don't impact sales overnight.
We know these are table stakes for long-term brand success.
That's why we are thrilled to have Shannon McKinney back at Jack In The Box as our coo.
Shannon has hit the ground running and is already building a great rapport with our team members and franchises to improve our system while operations.
Second doing things, Jack's way means serving high quality food at a good value.
Recently, we have missed the mark on, delivering the value to our guests, that they've come to expect.
What? I like the most about the rest of this year is the marketing lineup. Has a strong balance of innovation and ownable value that will keep guests coming back more often.
In addition we are entering Jack's 705th anniversary in 2026. We are fully embracing the out-of-the-box qualities that make Jack in the Box. Such a distinctive iconic brand.
While I won't get into specifics, you'll see more Innovation and improved quality across our core products.
As well as the return of some classic Jack throwback products. Our loyal fans have been asking for
you'll also see nods to Jack's history in our marketing including a modern Twist on iconic commercials from the brands past that will feature Jack's irreverent quirky personality in a way that we expect will really resonate
These improvements coupled with the improved operations will deliver that incredibly hot flavorful food. Our guests crate,
The third key element of doing things Jax away is the modernization of our restaurants.
As many of our restaurants have not received, commonly reim images.
To remedy this, we intend to deploy a multi-year re-image initiative to touch at least 1,000 additional restaurants beyond our current program. We'll share more plans about this in November as part of our capital planning discussions. But please know, I am committed to the revival of the Jack in the Box brand stores.
Underlying all of our plans around and improved guest experience is a solid foundation and Technology.
The digital mix reached a total of 18 and 1.5% of sales for the Jack brand, this quarter.
We're pleased with the progress, the teams have made and enabling our restaurants with technology and we're well ahead of schedule and achieving our initial goal at 20% of sales through digital channels.
I'm also pleased to announce that as of last week, over 2,000 restaurants now have the new point of sale system installed.
I want to thank Doug Cook and the IT organization.
Our office team, our vendor partners and our franchisee for installing these ahead of schedule. It's been a true team effort.
We anticipate the new PS will be fully rolled out to the entire Jack system by the end of this month.
While we continue to see implementation impacts.
From temporary downtime. We anticipate these impacts will be short-term in nature.
And of note, the vast majority of issues, we discussed last quarter related to our technology modernization have been mitigated.
While there's been a lot of progress, we do still have a number of items on our technology roadmap.
With feature enhancements to our digital platforms. Loyalty program, and data capabilities, you have to come
There's a lot of long-term upside from, enabling our restaurants with better Tech.
Switching, gears Dawn, will speak to the specifics regarding the Jack contract program and updates. But I am pleased with the progress we've made thus far.
There are many puts and takes throughout the plan.
And my commitment is to provide as much transparency as I can. Knowing timing will be challenging to predict on our end.
Spend a moment on the balance sheet, component of the program. We remain committed to reducing our leverage but want to be very clear about why this is a priority
Jack in the Box, has a very flexible existing securitization debt structure and is well over 100 million dollars from approaching its debt covenants. So our cash flow easily supports our debt
We simply feel it is prudent to operate with more modest leverage as we move forward. And we also want to mitigate increases in our interest expense. As we begin to refinance the various tranches in this higher interest rate environment.
and lastly, while there are certainly, a lot of activities occurring in Jack in the Box,
I want to make it very clear that my number 1. Priority is improving performance at our restaurants to ensure long-term Health across the system now. And for years to come
Before I pass it over to Don.
I want to take a moment to acknowledge John's much deserved promotion to Chief Financial Officer.
Stability consistency and over 20 years of Jack knowledge, she provides gives me great confidence in her ability to drive shareholder value.
now I'll turn the call over to her for her prepared remarks after which we'll take your questions, Don,
Thanks, Lance, and good afternoon, everyone. I will start by reviewing our two brands individually, followed by details on our consolidated performance and capital allocation, as well as an update on guidance.
Of 6.4%.
This resulted from a decrease in transactions and mixed negativity partially offset by many price increases.
Now looking at restaurant level performance.
Jack's, restaurant level margin percentage in the quarter. Decreased to 17.9% down from 21% a year ago, driven primarily by sales deleverage
Food and packaging costs as a percentage of sales were favorable in the quarter. Declining 60 basis points from the prior year to 28.6%.
This was driven by an increase in beverage, funding relating to a new contract and menu. Price increases partially offset by commodity inflation of 4% in the quarter.
Labor costs as a percentage of sales were 34.5% increasing 220 basis points from the prior year.
This increase was primarily driven by a, California unemployment payroll tax adjustment as well as wage inflation, which was 1.5% for the quarter.
Wage inflation was relatively low for the quarter as we lacked the impacts of ab 1228 and we expect wage inflation to be 2 to 3 percentage points on a go forward basis.
Occupancy and other operating expenses increased by 160 basis points, driven primarily by sales to leverage and higher costs for rent, utilities, and other operating expenses.
Franchise level margin was 66.2 million or 39.3% of franchise revenues compared to 74.6 million or 41.1% a year ago.
The decrease in dollars was mainly driven by lower sales. Driving lower rent, revenue, and royalties partially offset by franchise. Lease buyout transactions in the current year.
Turning to restaurant count. There were 6 restaurant, openings and 21 restaurant closures in the quarter of which 13 were associated with our Jack, on track closure program.
Turning now to Del Taco system, same store sales declined 2.6% with a franchise, same store sales, decline of 2.7% and a company-owned, same store sales decrease of 2.2%.
The lower sales were the result of a decline in transactions and mix partially offset by an increase in price.
Deltaco benefited from a strong value promotion in lb big boxes and bolster check later in the quarter by adding a premium protein promotion in carnus.
All Del taco company-owned restaurants, have kiosks installed, and we are continuing to see franchisees increasing their adoption rate as well.
Including kiosks along with third-party delivery and mobile. Digital mix now makes up roughly, 20% of systemwide sales.
Del Taco, restaurant level margin was 9.7% down 370 basis points from the prior year.
The margin percentage decline was driven primarily by lower sales and higher costs including higher utilities, labor, and other operating costs, as well as commodity inflation.
Food and packaging costs as a percentage of sales increased 100 basis points.
To 26.6% due to unfavorable menu. Mix and commodity inflation of 4.7% in the quarter.
Labor costs as a percentage of sales, increased 100 basis, points to 39.6%, primarily due to higher Insurance. In a California unemployment, payroll tax adjustment partially offset by wage deflation of 0.5% for the quarter.
Occupancy and other operating expenses, increased 170, basis points driven primarily by higher utility costs and other operating expenses.
Franchise level margin was 6.4 million or 27% of franchise revenues compared to 5.8 million or 27.1% last year.
The increase was driven by the benefit of reffing early, termination fees and lower it costs.
Partially offset by negative sales and higher, bad debt expense.
Del Taco restaurant count at quarter, end was 585 with 3 openings and 9 closures during the quarter.
Moving on now to our Consolidated results.
Sgna for the quarter was 26.8 million or 8.1% of revenues as compared to 29.6 million or 8% a year ago.
The decrease of 2.7 million was primarily due to fluctuations in the cash surrender value of our company-owned life insurance policies. Net of changes in our non-qualified deferred compensation obligation to supported by these policies of 2.6 million.
Lower incentive based compensation of 1.7 million. Also contributed to the decrease. These decreases were partially offset by increases in Insurance of 3.3 million.
Excluding net COI gains of 6.1 million as well as advertising costs GNA was 2.2% of total systemwide sales for the quarter. And total GNA spend was 25.5 million, which is an increase of 1 million versus the prior year.
Consolidated adjusted ebita was 61.6 Million down from 7 8. 9 0.
We reported a Consolidated Gap, diluted earnings per share for the third quarter of $1.15 compared to a net loss per share of $6.26 in the third quarter of the prior year.
Operating earnings per share, which includes adjustments for certain items was $12 for the quarter versus $165 cents in the third quarter of the prior year.
The effective tax rate for the third quarter of 2025 was -2.4 compared to a negative 0.1% for the same quarter a year ago.
The lower tax rate in the current year was primarily driven by non- taxable, gains from the market performance of insurance products.
The adjusted tax rate used to calculate the non-gaap operating earnings per share. This quarter was 26.1%.
On the investing front, our Capital expenditures were 22.5 million for the quarter and 70.3 million on a year-to-date basis and included investments in our restaurant technology and digital initiatives as well as the development of new company restaurants.
We did not repurchase. Any shares of stock during the quarter? And I've previously announced we discontinued our dividend.
As of quarter-end, we had available borrowing capacity of $96.5 million under our variable funding notes, net of letters of credit issued.
Our total debt outstanding at quarter end was 1.7 billion and our net debt to adjusted. EBA leverage ratio was 5.7 times,
I'd like to spend a few moments reiterating our Jack on track plan elements and provide a progress update.
As discussed during our April 23rd. Call our objective is to position Jack in the Box for long term, sustainable growth.
Reviewing the primary actions as part of this plan, I'll start with the restaurant block closure program.
In Q3, we close 13 restaurants as part of this program.
5 of these closures were company-owned restaurants and we don't anticipate any more company-owned closures as part of the program.
To give you more color on the roughly 200 restaurants in the jack on track closure program. We expect the profile of a restaurant to resemble the following
Average annual sales volumes of roughly 1.2 million per restaurant.
Average annual 4-wheel, ebita of -70,000 per restaurant, which has been a drag on our franchise operators.
The average annual Jack in the Box contribution from rent and royalties to franchise level margin of 80,000 per restaurant.
By closing, these restaurants, we expect the health of our franchisees overall portfolios to improve.
We do expect there will be a sales transfer benefit to nearby restaurants, many of which are owned by the same franchise operator.
Because we are closing these restaurants over a span of years, the total impact depends on restaurant closure dates.
Party of these perform more poorly than the averages I just outlined.
As it pertains to real estate sales, we did not sell any real estate in the third quarter. We do expect to sell real estate with proceeds of at least $100 million, most of which will occur within the next fiscal year.
And for the last component of Jack on track, the deltaco Strategic process, we have good interest in our progressing through the process.
Ideally, we will have news to share with you by the end of this calendar year.
lastly, we have updated our outlook for the remainder of fiscal year, 2025
These are updated from our April, Jack on track call.
As a reminder, we do not include the impacts of future, Jack on track activities in these estimates.
On a companywide basis. We expect total Capital expenditures for the year of 85 to 90 million.
We do not plan to repurchase any additional shares beyond the 5 million that were repurchased in the first quarter.
Our tax rate, expectations remain. The same at about 26%.
we expect sgna spend of 155 to 160 million for the full year, which includes the 5.5 million in incremental marketing spend in the fourth quarter, that Lance mentioned, but does not include any COI gains
We expect GNA as a percentage of systemwide sales also excluding COI gains to be roughly 2.3%.
Appreciation and amortization are expected to be closer to $57 million to $59 million for the full year.
We expect adjusted ebita of 270 to 275 million, which includes the 5.5 million in incremental marketing spend in the fourth quarter.
And we expect operating EPS of $4.55 to $4.73.
For Jack in the Box. Specifically, we expect same Source sales of negative low to mid single digits, consistent with our expectations from April.
30 to 35, Grouse restaurant openings and restaurant level margin of 19 to 21%. This includes the full year impact of ab 1228, as well as higher costs for utilities and low to mid single digit commodity inflation.
We look forward to sharing our outlook for fiscal year 2026 on our upcoming earnings, call in November.
In closing, we expect the jack on track program to set the groundwork to improve the long-term financial performance of the company.
As we refocus on our customer experience from improving, the value equation, to modernizing the image of our restaurants, we expect to get back to Jack's way of delivering best-in-class results.
We look forward to speaking with you again in November, when we release the fourth quarter results and set expectations for fiscal 2026,
Thanks again for your time. This afternoon, operator. Please open the line for questions.
At this time, I would like to remind everyone in order to ask a question. Please press star then the number 1 on your telephone keypad. We ask that you limit yourself to 1 question and 1 follow-up. We will pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Brian brittner with Oppenheimer. You may go ahead.
Thanks, good afternoon. Uh, 2 questions first is the guidance for Jack in the boxing store sales. Download the mid single digits for, for the fiscal year. It does imply, a very wide range for the fourth quarter.
So any help on the rate of change, we should be expecting relative to 3, Q's performance, would be helpful particularly given the incremental advertising your deploying, um, in 42, if you could kind of help us understand what that's going to be used for specifically,
Sure, Brian, it's Lance. Um,
On Q4. Um, you know what we're really doing is we're we're kind of pivoting.
To a little bit better value. Um,
Since we rolled a new window, we've rolled out a very attractive price pointed uh, combo in our bonus track. We have also rolled out our spicy chicken strips with a, with a really good new flavor and hot hunting. Um,
we also are rolling out soft and loaded potato wedges, which is a fan favorite. We're bringing those back for a limited time.
Continuing to pulse in Munchie Meals, um, which is 1 of our best performing products. And right now we have a collab with Coca-Cola Starlight. Um, we're going to put the media weight behind, uh, mainly behind the Bonus, Jack Combo. And so again, that's price pointed, I think that's been a little bit of a Miss for us um, throughout the quarter. We didn't have quite enough price point of value. So as we look to Q4, what I'll tell you is the the first few weeks started off a little bit at Rough. The last couple of weeks while it is still early, the trends have looked much improved. So we definitely think we're on the right track. Uh and and I think you know, kind of the theme is going to be. We probably need to be looking at a little more price point of value, a little more consistent value honestly and and making sure it's visible by being on the menu board which are also doing which we don't always do when we do an lto.
Okay, thank you. And my follow-up is just on the jack, on track strategy and specifically the real real estate sales of potential 100 million dollars over the next fiscal year. How did you decide on that dollar amount figure? Um, without knowing the final result of the Del Taco, strategic review? I was assuming that that the Del Taco Dynamic, could have an impact on the amount of real estate sales. You may have been targeting. So if you could just help us better understand the 100 million and and how that you know that constructed
Absolutely. And and really the way you should think about that 100 million. It's kind of an at least 100 million um the way I'm the way I'm thinking, we're going to use a real estate sales is really is the balancer. So very similar I think to to what your expectation was, as I heard you explain it um we'll see where the bail Taco process lands. We'll also see what cash we're able to accumulate. The other means a little bit less capex. Spend Etc, what are operating results? Look like all those things.
Um, we know we'll want to sell at least a hundred million dollars of real estate and then beyond that, we'll we'll kind of wait and see.
Your next question comes from the line of Gregory Frankfurt with Guggenheim. You may go ahead.
Hi, good afternoon. This is Arien lzi for Greg. Um, thanks for taking our questions. Um, Lance would share them within you coming back to Jack. What do you think he can bring or change operationally? And then I have a quick follow-up on income cohorts, um, since like since like the low income consumer has been struggling for the last. I don't know, 2 or 2 and a half years and the meeting can consumer for the past 6, 6, 6, 8 months. Can you provide more color on what you're seeing at Jag Within These 2 and how tracks of the recent quarters? Thank you.
Sure. So let me start with, uh, with Shannon. Um, so we're we are thrilled to have Shane and back. He used to be in the system um a number of years ago and a senior role at that time too. And I think what you'll see Sheen and bring back is a real focus on operations um and I guess to be a little bit more specific and and we mentioned this in some of our scripting we're going to get back to the basics on some things that we can do. They're really, we're falling a little bit short of. So even just things like friendliness, making sure some real Basics are taking care of, in our food prep. Um, and then we're going to be holding our franchisees and ourselves as the company, operators, uh, more accountable as well. And so sheanon will be meeting the leading that charge. I can tell you just in the first
Month or so that he's been here, he's already been out. And um, several of our major markets. He spent the last couple weeks in 50 or 60 restaurants
Both in the in Texas and and over on the east coast. So he's been all over the place and he's going to be bring that real field-based leadership and being out there in the field, a good bit more, really driving results.
Um, as it relates to income.
And I think the only thing to add in there is is as we have a higher propensity for the Hispanic communities, just just noting that we kind of got a little hit more by that and and really working on how we bring that uh customer back in as well.
That's helpful. Thank you so much.
Your next question comes from the line of John Tower with City. You may go ahead.
Great, thanks. Um, it's just wondering, maybe you could talk, I know you're discussing the um, tenant to doing more value. In the fourth quarter and you outlined a handful of the, the lto that are coming. The Bonus, Jack spicy chicken strips. I'm just
curious how how you can get the franchisees to buy into say a more consistent ongoing, everyday, value menu, and messaging around that, um, Beyond these lto windows, you know, is that 1 of the efforts that you're hoping to kind of pursue going forward. Um, you know, I think you were hitting on earlier Lance during the discussion that pricing has gotten a little out of hand. Not only for you guys, but certainly the category and you know there needs to be kind of a a broader pivot to Value um and and lto worked for a while but then they come off the menu. So how are you getting them more aligned on an everyday basis.
Yeah, I think there's a couple of things I'd say, John. Um,
First of all, we're we're kind of taking a fresh look at our menu architecture at at the way our menu is built at our pricing overall. Um,
We're engaging, the third party to actually help us do so. Um, so I think the first thing is make sure we've got the menu constructed, right? I think, without going into too much detail, we are, we don't have enough kind of entry level. Um, if you think about a good better best structure, we don't have enough sitting in the good category. Um, so we looking at that but as far as specifically, how we get the franchise, he's on board,
I think our our franchise, they understand the need to to bring customers back in. Um, obviously you can you can tell that that we haven't brought them in at the pace. We would expect and I think by really focusing on profitability and making sure we're balanced with when, and where we do, um, add a little bit more value, and make sure we're really sticking to that barbell approach. Where yes we do have the value that's going to bring that lower income consumer in. But we also have some of the higher-end products that are going to that are going to keep the folks that are able to spend a little bit more coming in. That is how you get the franchisees on board. But with franchisees, these Don't Want, Is Everything discounting and, you know, quote unquote, just giving away a lot of food. The reality is they're fine to to bring people in. Um try to upsell them where they can, it's just got to be balanced and still got to be
Profitable transactions were their concern.
Got it and and maybe just, you know, you get on the idea of the menu, architecture included in that. Are you thinking about the size of the menu as well, is that part of the discussion or is it more around just price and pricing architecture?
I'll start with that 1.
I'll let run run jump in here on a couple of things, but, you know, I think we'll look at it. A lot of our brand equity, though, at Jack in the Box, does come from our variety and the...
You know, the fact that we have 24-hour breakfast and we have 24-hour menu, General, and you can get integral or trios or tacos or things that you can't traditionally get elsewhere. So I think we do need to look and make sure we're being smarter about our menu. Um, but it is
you know, it's a difficult task at Jack In The Box simply because
so much for the equity that allows on variety. So it's making sure, how do you keep as much variety out there on the menu for the for the guests. While I may be trying to make it a little simpler in the back of the house. And what am I missing there? I think, when you look at our menu, we look at our menu, our architecture. I think we have a really strong entry left, point value around Munchies under 4, but those are all the card items. And then we have our combos which which are uh priced you know mainly ten dollars or more. So we're really trying to figure out how we create some ownable value on the menu in between that $4 price point and the ten dollar price point and so that's where you see this.
Leverage, creating some honorable value, but that's on the menu panel, which is what we haven't had for the past, uh, 2 windows.
We're ready for the next question, Lacey.
Hi, thanks for taking the question. Um, you talked about it in Broad terms, but would you mind giving the uh, specifics on the same store sales breakout uh, for both Jack and Del Taco?
Yeah, and this is going to be. We only give it for company restaurants, but for Jack company. Same store sales. We're down 6.4%, that included, trans stand 6.6.
and price of 2.2 with the balance of mixed down to
And then, on the Del taco side. Company was down. 2.2 trans down, 5.2 mix, unfavorable, 1%, and price up 4.1.
Awesome. Thank you.
Yep.
Again, if you would like to ask a question press star 1 on your telephone keypad,
your next question comes from the line of Jim Sanderson with North Coast resource research, you may go ahead.
Hey, thanks for the question. I was hoping you could update us on average weekly sales Trends in Salt Lake City in Lexington Kentucky and how they compare to the new store openings you've seen in Chicago today.
We won't give the exact numbers Jim, but I can tell you Salt Lake continues to perform very strongly. Um and it's actually Louisville not Lexington Kentucky. And and again, it continues to be very strong. Chicago has opened. Um,
In excess of where both of those are today, and has been a very strong opening overall. Now, you of course are only a few weeks into Chicago, but we do already have 3 restaurants up, and we're actually going to have 8 restaurants within about a 2-month period. Um, so we're excited about the early returns on Chicago.
All right, thank you for that. I had just 1 other follow-up question on. Uh, your commentary regarding low-income consumers in Hispanics, can you provide any type of sense of what share of traffic, those groups drive for Jack in the bar?
I can tell you, we significantly over index on the Hispanic consumer. Um and by that I mean, at least 1.7 times kind of the General Industry, in some cases, versus some of our major competitors is twice as high.
Um, the lower income consumer, we look more similar to the rest of the industry. Um, so I can't give you the exact percentages of, of what they make up on our sales base, but I give you a feel for for how we compare to our competition. Anyway,
your next question comes from the
Live. This is Ella um for Chris. Thanks for the question. Um, so if it was better than we would have expected for uh Wisconsin at Jack and can you help us understand how sensitive Jack's restaurant? Margin is to like a 1% change in comps and then I have a follow-up question.
So relative to A A 1 Don's gonna gonna look up the number here and give me some guidance. But, um,
so give us just 1 second while we while we kind of look at this.
I'm sorry. Can you repeat your question just one more time?
Yes. Um so is that always better than what we have expected um with like constants and percentage. Um,
Which is more than what we, uh, projected. And we want to understand how sensitive is the restaurant margin to 1% changing pump,
Okay, that's 1 SEC here.
so,
The it would be 10 basis points.
Based on a 1% change in comp.
Um, and then, um, is there a risk that the soft cells would impact timing or sequencing of the jack on track? I'm so sorry. I'm having a hard time hearing you. If you could repeat that question, please.
I'm so sorry. Um, my question is, is there a risk that a soft sales impact timing or sequencing of the jack on track plan? I think, um, no there really isn't. Um, you know, the certainly we we'd rather not
You know.
In a down sales environment. But with that said, the downturn certainly has not been so severe that it's impacting anything.
We're doing relative to, uh, to the Jack contract program. And, and 1 thing that I would kind of remind the group is that.
You know, with the, with the closures, happening over 4 to 5 years, daddy that impact is actually going to be leaked in um, over a number of years and there's going to be some sales transfer. So, you know, once you get beyond that, that initial 80 to 120 closures.
Um you're you're going to see the impact spread out over a fairly significant number of time and similarly, the real estate sales role they. While they will have a little bit of a NEPA by impact, that'll happen, kind of throughout 2026. So, there's nothing happening in the current environment that would slow down what we're doing for Jack on track.
And Ella, I apologize. We must heard you. Um, when you asked your initial question and we'll follow up with you on on the basis, point change to restaurant level margin.
Great, thank you so much.
Your final question comes from the line of Jake Bartlett with truist security. So you may go ahead.
Great. Thanks for taking the question. You know, mine was on the, um, the operational improvements that you're targeting in in the exact way. Um, you know, if you can just maybe frame the opportunity, meaning, you know, where have some key metrics landed today versus maybe where they've been a few years ago? Um, you know, and how much opportunity do you do you see there to whether it's speed of service or customer satisfaction? Um just other ways you can measure, I'm just trying to understand, you know, really, you know what, what the um opportunity is here.
And when we look at, at the operational opportunities that are jacked ways, it's really going back to the basics and it's just like Lance said, but it's going to be really focused. And when we look at that, overall guest experience and satisfaction 1 of the key drivers of, that will be overall accuracy as well as friendliness, um, of the execution at our stores. And that's really what we're going to focus on for the next 6 months, as well as just making sure the consistent quality. So, when you look at consistent quality, it's just making sure. As you look at our fries, you're looking at our Burgers. You're looking at our core items, they're working, consistently executing, that quality on an ongoing basis. And we're really going to get the the fields focused. We're getting our team members focused and and we're going to stay on that topic. For some time to make sure reassured. What Jack's way means all the way down to the team. I'm looking
Great. And this another concept, um, that, you know, out of the knot in the qsr segment had had made comments about, um, Hispanic consumer and, you know, impact, um, in certain markets and I think kind of timed around the, the protests in Los Angeles in the reactions. All the all the headlines that were hitting as well at that time. Is that the is, was that, um, you know, was vandermint comes through of event, um, did that have a big impact on Jack and box Saints or sales, has it has it improved as you've um, you know, as we've gotten further from that time in trying to understand the impact, um, of of some of the, um, some of the, the, the environmental stuff that's going on right now. And and whether that's, um, whether you're seeing already seeing some sort of, um, change in trajectory there,
Yep. Jack, we it's been honestly pretty consistent um, for us over the last really since, you know, the beginning of the year, call it uh, it has not been acute. It doesn't mean you, you know, you don't have a a day or 2, where it's worse here and there. But, by and large, um, it's really been pretty consistent. And, and that's kind of a trade that'll attributable to our footprint. I think, if you look at where we're heavy, uh, footprint, where obviously huge in California and Texas and then throughout the Southwest,
And so, you know, it's been relatively constant for us.
And your final question comes from the line of Alex slagel with Jeffries, you may go ahead.
All right. Hey, thanks for putting me in, um, wanted to ask on the remodels. I know it's early to talk about the new program but kind of curious what the franchisee interests look like on the original program. Uh, when you kind of set that up and sort of what the franchisee conversation like,
You know, Alex, it was actually very favorable. We, um,
System, honestly, touching 3 to 400 restaurants at nearly enough. When you look at our system,
So we are going to attempt to touch, you know, an additional thousand, which honestly ought to get us to a spot where we've touched the vast majority of the system when we're finished with it. Um, and and it's a, it'll be a meaningful contribution from corporate. I'm not ready to to give the exact numbers quite yet and we'll do that in November. But you know, you can look and say, well gosh we did 50 million dollars before and it touched 3 to 400. So if you're looking for kind of a guidepost um that would at least give you a feel for what an additional contribution would look like. Um and the reason we're not we're not giving a quite as much detail yet from a timing standpoint as you would imagine. I want to get through the next few quarters and uh get a little bit of the debt paid down and and kind of get through that first part of Jack on track. And then and then once we're in a position to to start making big significant contributions to uh re-image as that would be the plan.
I think the franchise needs to be excited. Um, they they certainly were when we did this last year.
For sure. Yeah that's helpful. Um and on the franchisee store closure is part of the the jack on track.
Program. Uh, the block closures, I guess there were 13 in the third quarter and just trying to think about the cadence of the remaining balance, like what might show up in Q4. I know it's a range of 80 to 120 through the calendar year, so I don't know if you can narrow that down at all, just to get us a little closer.
You know, Alex, I can, I can probably give you a little tighter range on that by the end of the fiscal year, but there are still a lot of conversations happening. There's a reason we haven't narrowed it down too much, um, but but I would think of the, you know, let's call it remaining 65 Plus.
For the remainder of the calendar year, or 70 plus the remainder of the count of the calendar year.
You know, at least half of those probably a little bit more will happen in the fiscal year. Um
and then you'll see as you as you get going through the program throughout the rest of the program. Um you'll see the remainder of the kind of the early closures of the ones that are pulling forward against their franchise agreement happening in 26.
And then everything else will just fall pretty evenly. According to win, franchise agreements. Um, run through
so, I don't know if that was at all helpful but, um, you know, we'll get a good bit of them done by the end of the fiscal year, but I don't think it'll be all
Of them, got it.
All right, thanks for that.
Thank you.
This concludes today's question and answer session.
All right, thanks everybody.
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