Jack in the Box (JACK) Q1 2026 Earnings Transcript

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Date

Wednesday, Feb. 18, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Lance Tucker
• Chief Financial Officer — Dawn Hooper
• Chief Marketing & Digital Officer — Ryan Ostrom
• Senior Vice President, Investor Relations & Corporate Communications — Rachel Webb

Takeaways

• Same-Store Sales -- Decreased 6.7%, with franchise units down 7% and company-owned locations down 4.7%.
• Restaurant-Level Margin -- Declined to 16.1% from 23.2%.
• Food and Packaging Costs -- Represented 29.7% of sales, up 380 basis points, led by 7.1% commodity inflation.
• Labor Costs -- Accounted for 35.3% of sales, rising 200 basis points, mainly affected by Chicago operations.
• Franchise-Level Margin -- $84.1 million, or 38.6% of franchise revenues, compared to $97.1 million, or 40.9%.
• Store Count -- Net decrease of eight restaurants: Six openings, 14 closures, with 12 closures by franchisees.
• SG&A Expense -- $37.0 million, or 10.6% of revenues, down from $41.2 million, or 11.1%.
• Adjusted Operating EPS -- $1.00, versus $1.86.
• GAAP Diluted EPS from Continuing Operations -- $0.75, compared to $1.61.
• Adjusted EBITDA -- $68.2 million, down from $88.8 million, due to sales deleverage.
• Capital Expenditures -- $23.2 million, primarily restaurant information technology; $8 million related to timing of Chicago projects.
• Debt Reduction -- $105 million partial prepayment; quarter-end total debt $1.6 billion; net debt/adjusted EBITDA leverage ratio 6.5x post-Del Taco divestiture.
• Real Estate Sales -- $10.9 million in proceeds, with $6.3 million recognized as gains.
• January Performance -- Lance Tucker said, "January featured the launch of our 75th anniversary marketing calendar, including a throwback combo, the Chicken Supreme Munchie Meal, coupled with a new fan favorite, Jibby, a backpack charm," contributing to higher Munchie Meal sales and average check.
• Early Q2 Same-Store Sales Trend -- Lance Tucker said, "We started second quarter really a couple hundred basis points better than we were in the first quarter... when you factor out the weather, we are really low single digits right now."
• Franchisee Closures Sales Transfer -- Dawn Hooper reported, "Based on closures so far, we have generally seen a roughly 30% sales benefit to nearby restaurants."
• Expense Management -- G&A excluding COLI gains and advertising: 2.5% of total systemwide sales.
• Commodity Inflation Outlook -- Guidance remains at mid single digits for the year, with beef up double digits and expected to moderate as the year progresses.
• Technology Deployment -- Completion of new POS and back-office systems; plans to leverage for operational and upsell efficiencies.
• Mini Refresh Program -- About 20 restaurants tested, achieving a low single-digit sales lift at under $20,000 cost per company site and under $10,000 per franchise site.
• 75th Anniversary Promotions -- Continued marketing activations, limited-time offers, and experiential events driving transactional growth in select menu items.
• Guidance Reaffirmation -- Fiscal 2026 guidance from November 2025 maintained, as announced on the call.

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Risks

• Margin Compression -- Jack’s restaurant-level margin fell to 16.1% from 23.2%, and labor costs increased 200 basis points largely due to Chicago operations.
• Same-Store Sales Decline -- System same-store sales fell 6.7%, reflecting broad transaction declines.
• Commodity Inflation -- Dawn Hooper said, "Beef is definitely the most impactful one—actually came in a little higher than we had anticipated," with double-digit increases not expected to reverse in the next 12-18 months.
• Franchisee Profitability Pressures -- Lance Tucker said, "you can imagine right now, particularly with where beef is, the four-wall margins are not where they need to be," and confirmed no broad-based corporate relief underway.

Summary

Jack in the Box (NASDAQ:JACK) reported a consolidated revenue decline driven by same-store sales decreases and significant margin contraction, especially within franchise and company-operated segments. The company executed the sale of Del Taco and applied proceeds to reduce debt, lowering the leverage ratio, while cash-conserving actions included targeted restaurant closures and focused capital outlays on technology and small-scale remodels. New technology rollouts, including point-of-sale and back-office labor systems, are expected to support both transaction growth and operational cost controls as they are further leveraged. January and early second-quarter trends showed improvement, especially as 75th anniversary campaigns boosted higher-margin transactions and sales mix, although broad transaction softness and elevated commodity inflation, particularly in beef, persist. Updated real estate strategies and disciplined G&A management accompanied the reaffirmed 2026 guidance, underlining the emphasis on value-focused and innovation-driven promotions to stabilize customer traffic and cash flows.

• The closure of underperforming stores led to a roughly 30% sales benefit at nearby locations, partially offsetting sales contraction.
• Mini refresh investments drove modest sales lifts with low upfront costs, facilitating larger-scale remodel planning without material capital strain.
• The transition services agreement related to Del Taco generated approximately $0.9 million income in the quarter, with remaining TSAs expected to conclude by the end of next quarter.
• California market, representing over 40% of the restaurant base, was repeatedly identified as a headwind for both sales and labor-driven profitability.
• Management confirmed full-year commodity guidance at mid single digits, although beef's high prices remain an unresolved challenge for margins and franchisee four-wall economics.
• All-day breakfast and late-night segments remain steady, with no daypart-driven weakness except for late-night gains following new promotions.
• Franchise-level margin decline was attributed to lower rent, royalty revenues, and a decreased restaurant base.
• No material sequential improvement has occurred in low-income or Hispanic-consumer demand, with both categories tracking in line with broader performance trends.

Industry glossary

• Same-store sales: Revenue generated by locations open for at least one year, excluding new and closed units, used to track organic sales growth or decline.
• Four-wall margin: Store-level profitability before corporate overhead and other centralized costs, typically measuring EBITDA relative to restaurant sales.
• LTO (Limited-Time Offer): Promotional menu item available for a short duration to generate incremental traffic or test new concepts.
• COLI (Company-Owned Life Insurance) policies: Life insurance policies owned by the company on certain employees, with gains or losses impacting non-operational income.
• TSA (Transition Services Agreement): Short-term operational support arrangement following the sale of a business unit, generating transitional revenue for the seller.
• Barbell Strategy: Pricing and promotion approach balancing value-oriented offers and premium upsell items to appeal to a broad customer base and protect margins.
• AUV (Average Unit Volume): The average annual sales per restaurant location.

Full Conference Call Transcript

Rachel Webb: Material risk factors, as well as information relating to company operations, are detailed in our most recent 10-K, 10-Q, and other public documents filed with the SEC and are available on our Investor Relations website. Additionally, on 01/21/2026, the company filed a definitive proxy statement and related materials with the SEC in connection with the 2026 Annual Meeting of Stockholders. Our directors and certain officers are participants in the solicitation of proxies in connection with the annual meeting. Stockholders are encouraged to read the proxy statement and related materials, as they contain important information, including the identity of the participants and their direct or indirect interests, by security holdings or otherwise.

While we understand that there may be interest in our ongoing proxy contest, please note the purpose of today’s call is to discuss Jack in the Box Inc.’s first quarter earnings results, and we ask that you keep your questions focused on our financial performance. I will now turn the call over to our Chief Executive Officer, Lance Tucker. Thanks, Rachel, and I appreciate everyone joining us today.

Lance Tucker: I want to begin by thanking our teams, our franchisees, and our shareholders. This past quarter has been one of hard work, dedication, and grit. It is a quarter critical to laying the foundation for 2026 and beyond. We remain focused on simplifying the business, and we have made visible progress since the last quarter. On this call, I will provide a brief update on our Jack on Track plans and how I am thinking about the remainder of 2026, and then I will turn it over to Dawn to walk through first quarter results. In December, we successfully closed on the sale of Del Taco; we then made a significant pay down on our debt.

We are doing exactly what we committed to do—simplifying the business and bringing down debt levels—and I am really pleased with the progress to date. With the transaction complete, only minimal separation activities remain; the team is fully re-centered on strengthening the Jack in the Box Inc. brand and executing the remaining elements of our Jack on Track plan. As we entered 2026, Jack in the Box Inc. proudly marked its 75th anniversary, a milestone few brands reach. The response to our anniversary activations has been positive, reinforcing what we know to be true: Jack remains beloved by our customers.

Guests are leaning into the nostalgia that defines our heritage while embracing the differentiation and innovation that continue to move the brand forward. 2026 is about laying the foundation for sustainable long-term growth, which requires doing a lot of hard work right now. We are confident that the actions we are taking will lead to a stronger, more stable platform from which to grow. We are beginning to see early results that reinforce that we are on the right path, but as a reminder, this is a multistep process, and the benefits of this work will take time to fully materialize. Turning now to first quarter results. Q1 results were choppy, but broadly in line with our expectations.

As we discussed on the last call, we got off to a tough start to the quarter, and while we did experience some bright spots throughout the quarter, the end of the calendar year did not improve to the degree we were looking for. It really was not until January that we started experiencing consistent, meaningful improvements to performance and, importantly, improvement was on both a one- and a two-year basis. January featured the launch of our 75th anniversary marketing calendar, including a throwback combo, the Chicken Supreme Munchie Meal, coupled with a new fan favorite, Jibby, a backpack charm.

Customers have been trying to collect all four Jibbies, and we have seen a great response, which drove an increase in sales of our Munchie Meals, which generate a higher average check. Customers are still careful about where they spend; we remain committed to a strategy grounded in driving value for guests while protecting profitability for ourselves and our franchisees. You will see us continue to feature price-pointed value promotions, but also drive our barbell strategy with add-ons and upsells through technology. To reiterate, Q1 was in line with our expectations, and we knew the year would get off to a slow start.

But as the reaffirmation of our guidance reflects, we expect to see steady improvement on the top line as we move through 2026. This is really a year of getting back to our roots at Jack in the Box Inc. We have been very deliberate in how we spend our time and capital, focusing on the fundamentals we believe are essential to sustainably improving the business. These efforts will take time to become visible in our results, but they are critical to improving consistency, profitability, and long-term returns. I am more convinced than ever that we are moving in the right direction.

To frame up some of the early progress we are making on Jack’s Way, which is designed to improve the guest experience, I am pleased with the progress the team has made in improving operations. Last quarter, we identified a gap in field support and restructured that team. Shannon has moved these changes decisively from design to execution, meaning we have a greatly increased presence in the restaurants to get more real-time support to our franchisees and team members as they ultimately work to delight the guest. Starting in Q1, the team aligned the training on our core Jack’s Way principles to further simplify the experience for our team members and reinforce the importance of fundamentals.

For example, aligning with our Monster Munchies promotion, the team was focused on doubling down on joyful service, and we will continue to see the fundamentals reinforced across every marketing window. In Q1, we also enhanced our restaurant audit process to reinforce critical behaviors and standards to elevate the guest experience. We have additional high-touch training coming later this year, including in-restaurant workshops, and none of this would be successful without laying the foundation of a new field team to ensure it sticks. We are also making progress on enhancing our value proposition and menu strategy.

As we continue to celebrate our 75th anniversary, you will see brand activations leaning into classic fan favorites, while we also launch new products designed to drive customer interest and trial, leveraging innovation that can only be found at Jack in the Box Inc. Just last week, we announced the return of one of our most popular products, the Hot Mess Burger. The limited-time offer is paired with another collectible, our antenna ball featuring the Meat Riot Jack head from one of our most memorable Jack commercials. We are also incorporating experiential marketing, with an anniversary tour that kicked off in Los Angeles and is landing in Austin for Jack’s actual anniversary later this month.

We have continued to simplify marketing as well. We simplified our marketing calendar to have a more balanced and consistent focus between value and innovation, and we also reduced our media messages from three to two, which allows our teams to focus on stronger execution of fewer LTOs and drive media effectiveness. The final component of Jack’s Way is modernizing our restaurants. The key takeaway here is that we are focused on a highly cost-effective refresh that substantially improves the curb appeal of our restaurants. So far, the mini refreshes we have put in market have generated a modest but meaningful uplift, and we remain encouraged by the limited investment they require.

Across roughly 20 restaurants in tests today, we are seeing low single-digit sales lift. We are now expanding these efforts in Southern California markets, which allows us to capture additional upside potential as we see higher clusters of refreshed restaurants. As you recall, last year we also modernized our technology within the restaurant, rolling out both new POS and back-of-house systems. We can now start leveraging these systems not only for cost efficiencies, but also better upsell capabilities, which we expect will improve both the top and bottom lines. Before I turn it over to Dawn, I want to reiterate just a few key points.

First, we are doing exactly what we said we were going to do with regard to both the Jack on Track initiatives to strengthen our business model and also with our Jack’s Way programs to improve operating results. Both are yielding tangible results. Second, we are seeing early positive results from simplification efforts made across ops and marketing, allowing our teams to focus on what truly matters: driving trial and frequency and executing on a great customer experience. I am confident that these changes will drive improved same-store sales as we move through the balance of the year.

And finally, I continue to be inspired by the efforts and resiliency of both our team and our franchisees and by the foundation we are building as we do the hard work to strengthen the business. These efforts are helping us to sharpen our discipline as a brand and position Jack in the Box Inc. to drive sustained profitability and long-term shareholder value as we move through 2026. I will now turn the call over to Dawn.

Dawn Hooper: Thanks, Lance, and good afternoon, everyone. I will start by reviewing the details on our performance in the first quarter as well as provide an update on Jack on Track. Before I begin, I just wanted to remind everyone that the company completed the sale of Del Taco on 12/22/2025, and the results of Del Taco are excluded from continuing operations and associated results for these purposes. The first quarter same-store sales for Jack in the Box Inc. decreased 6.7%, comprised of franchise restaurant same-store sales decrease of 7% and a company-owned same-store sales decrease of 4.7%. This resulted from a decline in transactions and sales mix, partially offset by menu price increases.

Jack’s restaurant-level margin percentage in the quarter decreased to 16.1%, down from 23.2%. Food and packaging costs as a percentage of sales were 29.7% for the quarter, increasing 380 basis points from the prior year. This was driven by commodity inflation of 7.1% in the quarter, the negative impact from rolling over a prior year beverage benefit, and a change in the mix of restaurants. Labor costs as a percentage of sales were 35.3%, increasing 200 basis points from the prior year. This increase was primarily related to a change in the mix of restaurants driven by our Chicago restaurants.

We expected Chicago to have elevated labor in the quarter, and while the market did improve throughout the quarter, there is still work to be done. Shannon and team are working with urgency to address this market. Occupancy and other costs increased 120 basis points, driven by higher costs for utilities and other operating expenses. Franchise-level margin was $84.1 million, or 38.6% of franchise revenues, compared to $97.1 million, or 40.9%, a year ago. The decrease was mainly driven by lower sales driving lower rent and royalty revenue, and a decrease in the number of restaurants. Turning to restaurant count. There were six restaurant openings and 14 restaurant closures in the quarter.

SG&A for the quarter was $37.0 million, or 10.6% of revenues, compared to $41.2 million, or 11.1%, a year ago. The decrease of $4.1 million was primarily due to the market fluctuations of our COLI policies and the current period income from our transition services agreement, partially offset by increases in information technology expenses and digital advertising costs. Excluding net COLI gains of $2.4 million as well as advertising costs, G&A was 2.5% of total systemwide sales for the quarter. Following the Del Taco sale, we are generating income associated with the transition services agreement, or TSA, and we received approximately $0.9 million in the first quarter.

We expect our TSAs to largely be completed by the end of the second quarter. For the full year, we expect the income to be nominal, no more than around $2 million. This income is included in our reported G&A figures. Other operating expenses, net, were $8.1 million for the quarter, which include proxy contest fees and professional fees for a tax refund settlement, partially offset by gains on real estate sales. The effective tax rate for continuing operations for the quarter was 32.4% compared to 30% for the same quarter a year ago. The adjusted tax rate used to calculate the non-GAAP operating earnings per share this quarter was 31.2%.

Earnings from continuing operations were $14.4 million for the quarter as compared to $31.0 million for the first quarter of the prior year. We reported GAAP diluted earnings per share from continuing operations for the first quarter of $0.75 compared to diluted net earnings per share from continuing operations of $1.61 in the same period of the prior year. Operating earnings per share, which includes adjustments for certain items, was $1.00 for the quarter versus $1.86 in the first quarter of the prior year. Consolidated adjusted EBITDA was $68.2 million, down from $88.8 million in the prior year due primarily to the impact from sales deleverage. Now for some specifics regarding Jack on Track.

As a reminder, while Lance discussed elements of Jack’s Way, which focuses on operational and sales improvements, Jack on Track is meant to bolster the long-term financial performance of the company by strengthening the balance sheet and positioning the company for sustainable growth. I have already mentioned a few points in regards to our Jack on Track plan, but to put a finer point on it: First, we simplified the company by selling Del Taco and successfully closing on the transaction in December. Second, we are focusing on franchisee economics by closing underperforming restaurants. In the first quarter, franchisees closed 12 restaurants. Based on closures so far, we have generally seen a roughly 30% sales benefit to nearby restaurants.

This element of Jack on Track is moving a little slower than we would have expected as franchisees are evaluating lease dynamics and sales transfer benefits on a case-by-case basis. Third, we are preserving our capital expenditures for technology and restaurant reimages. For the first quarter, our capital expenditures were $23.2 million, which primarily includes spending on restaurant information technology. Approximately $8 million reported in Q1 relates to prior year expenditures, primarily for our new Chicago restaurants, that were incurred in fiscal 2025 but paid in fiscal 2026. This is solely a timing impact and does not represent incremental fiscal year 2026 spend. Lastly and importantly, our focus on debt reduction.

During the quarter, we made a partial prepayment of $105 million on our August 2026 tranche. Our total debt outstanding at quarter end was $1.6 billion, and our net debt to adjusted EBITDA leverage ratio was 6.5x. Please note that this figure now excludes any historical adjusted EBITDA impact for Del Taco. We remain committed to paying down an additional $200 million in debt over the course of our Jack on Track plan. As it pertains to real estate sales, we generated $10.9 million of proceeds in the first quarter, with associated gains of approximately $6.3 million.

We expect to sell real estate with proceeds of $50 million to $60 million by the end of fiscal year 2026, with the expectation that these proceeds, along with cash on hand, would be applied to pay down debt. We are thoughtfully assessing refinancing options related to our upcoming tranches, taking into account market conditions, interest rates, and our long-term capital structure objectives. It is likely we will be in the market in the coming months. Lastly, as we mentioned in today’s release, we are reiterating our guidance from November 2025. In closing, this quarter reflects steady progress on Jack on Track as we continue to build a stronger foundation for sustainable, long-term growth.

We look forward to keeping you updated on our progress throughout this fiscal year. Thanks again for your time this afternoon. Operator, please open the line for questions.

Operator: As a reminder, if you would like to ask a question, press star followed by one on the telephone keypad. Your first question comes from the line of Alex Slagle from Jefferies. Your line is live. Hey. Thanks, and good afternoon. Guess I wanted to follow up on just some of the trends you are seeing. I mean, it sounds like the initial response to some of the 75th anniversary work has been good, and January trends were improved. And maybe you could elaborate on what you saw. I am not sure, like, how much there is weather that maybe came into an impact at all in your system in February, if that is something we should consider also.

Lance Tucker: Sure. Hi, Alex. So, kind of to your point, once we hit the beginning of ’26, we did start to see some kind of meaningful improvements. Certainly, when we got off to the new window, that helped a lot. And as we got into Q2, because bear in mind, our quarter ended kind of mid-January, we are really seeing January as we got into Q2, kind of same-store sales play out the way we thought they would. We started second quarter really a couple hundred basis points better than we were in the first quarter, and that is before the weather impact.

To your question about weather, we are actually over 400 basis points better when you factor in the winter storm, which on a full-quarter basis will have about a 60 or 70 basis point impact to the quarter. Since we are talking about, you know, roughly a month of impact, it is a couple hundred basis points just for the month. So when you factor out the weather, we are really low single digits right now, which we are pleased with. We are not quite where we want to be. But 200 negative—let me rephrase that. I think I misspoke there.

We are not quite where we want to be, but we are certainly gaining on it, and we are getting really good initial response to our 75th anniversary marketing.

Alex Slagle: Awesome. The Chicago performance and the efforts to recover from some of the labor and the inefficiencies there? What is the issue going on there? I guess, is it still a drag? I would have thought it was more about the openings and staffing up, and that would sort of be able to get out of that, you know, heading into the 2Q, I guess.

Lance Tucker: We are still working on it, as you can see from the results. I think from a top-line standpoint, we are kind of performing reasonably well, particularly given that we have not yet turned on our 24-hour operations. We have not yet turned on digital. We do not have our full menu yet. So there is still a lot of upside on the top line. We have not turned those things on yet because we do still have some issues we are working through. And I think the easiest thing I can say about it is it is a tough labor market.

We opened eight restaurants in a span of under three months, which for us and our corporate operations adds a lot. And we are just still dialing in the P&L there. So it is one of the big priorities we have right now. We are spending a lot of time up in Chicago to get that fixed. I think it will be fixed in the coming months, and then you will see us be able to turn on the sales side full steam. And I think you will see that market come around the way we expect to.

Dawn Hooper: And the only thing I would add to that, Lance, is we did expect continued margin compression of Chicago in our guidance that we provided, specifically in Q1.

Alex Slagle: Alright.

Lance Tucker: Thanks.

Operator: Your next question comes from the line of Jeffrey Bernstein from Barclays. Your line is live. Hi. Good afternoon. This is Pradek on for Jeff.

Alex Slagle: Thanks for the question. Lance, I had a question on franchisee four-wall margins, which were presumably below the company margin at 16.1%. Given the ongoing disparity in comp performance beyond Jack on Track, is there anything in the short term that you can do to help franchisees navigate this difficult environment? Maybe on the commodity side to secure better prices or maybe rent relief? And I have one follow-up.

Lance Tucker: So generally speaking, our franchisees have pretty good economics with AUVs still approaching $2 million. But you are right. We are seeing pressure on four-wall EBITDA right now between the sales conditions and then beef inflation in particular. So, at this point, no, we are not doing any kind of blanket assistance. But we are looking at what we need to do in those kind of one-off cases where we have a franchisee struggling. But generally, I mean, you can imagine right now, particularly with where beef is, the four-wall margins are not where they need to be, but we are doubling down, doing a lot on the profitability side.

We just actually restructured our team to make sure we are more focused on profitability. We are doing things like rolling out a new soft drink dispenser. We are doing a number of things within the supply chain to try to cut costs. So, we are kind of putting a full-court press on all of our profitability. And then we are also making some revamps to our digital programs, including loyalty. We are going to add some profitability back in that channel as well.

Jeffrey Bernstein: Got it. Thank you for that. And, Dawn, it was encouraging to see the company traffic trend improve modestly on a two-year basis. I believe you were at the mid-2% pricing range to close fiscal 2025, and you ended this quarter at 3%, it looks like, per the 10-Q. Just wanted to get your thoughts on how you think about the price-value equation in this environment while at the same time, you know, protecting your margin and unit economics. Thank you.

Lance Tucker: This is Lance. I will start with that one, and Dawn can come on and jump in here as she needs to. We have been able to take a little more price on the company side. It is interesting. The franchisees have taken a little more price than we had historically, so our absolute prices are still lower. But throughout the quarter, we were able to take a little more price on the company side and still leave ourselves in a spot where we feel very comfortable with the value proposition we are giving to our guests.

The other thing we did do during the quarter was take several of our bundles and made sure that we lowered prices—kind of in one of our chicken bundles, in one of our burger combos, in a combo. We also added ounces into the soft drink amounts. So we are doing a lot of things to try to make sure that we are showing that value to the customer, at the same time making sure that we are protecting profitability not only here on the corporate side, but ultimately to the franchisees as well.

Jeffrey Bernstein: Thank you very much.

Operator: Your next question comes from the line of Sarah Senatore from Bank of America. Your line is live.

Alex Slagle: Thanks for the question. Isaiah on for Sarah. Just kind of touching on what you were just discussing. Anything specific as to why there was such a large gap in comp between the company restaurants and the franchise ones? Maybe anything related to operations, anything that you have there?

Jeffrey Bernstein: Say, yeah—

Lance Tucker: A couple things. One is we think a bit of price disparity, but I think probably the bigger factor is our company restaurants are pretty much 100% religious about opting into the offers that we do on the digital side. Franchisees tend to be a little more selective as to which actual promotions they are going to opt into. And so we have seen on the company side a lot more overall effectiveness on the digital side than we have with franchisees. And I think that is probably the biggest singular driver.

Alex Slagle: Got it. Thanks. And then just kind of switching gears. Just thinking about how—if you can give us a little color on just how you guys have historically competed against larger competitors, just in periods of intense value competition. And when you are thinking about scale, do you guys think more about the importance of competing nationally, or do you view scale on a more local, you know, easier-to-compete kind of basis more?

Lance Tucker: Let me start with that, and then I will ask Ryan to jump in and supplement me a little bit too. But I think, first of all, you know, we have always been smaller than some of these really big chains like a McDonald’s or Taco Bell, Burger King, whoever it may be. I think in order for us to be successful when they are out there heavy value, we have to have our own consistent value, and then we have to lean into what really differentiates Jack, which is innovation. We have a lot of innovation both within our LTOs, but also within our core menu.

And so making sure we have our own consistent price, that price is in a reasonable spot, and that we continue to bring innovative products you cannot get somewhere else is the biggest piece. Now I will turn it over to Ryan, let him supplement that.

Ryan Ostrom: Yeah. We know to be relevant, we have to have that price-pointed value, which we have in every single window moving forward, which is something we did not have in ’25. So that really goes after our value guest, but it is about the distinctive and ownable value that we have out there. So when you think about Jack in the Box Inc., it is really about that abundance value. It is about the Munchie Meals. We saw a great response to our Jibby, so adding some gift-with-purchase on our abundant meals has done really well. On top of aggressive quick-hit value, I mean, we are an iconic brand that has tacos.

And so our ability to pulse in some aggressive, disruptive price points on tacos—celebrating our 75th like we are once a month with $0.75 tacos. We have a $0.75 Jumbo Jack coming next week, or this Saturday. These types of offers that are ownable and distinctive to us really drive a quick impact to drive traffic to our brand. But we also have to look at value differently, and where we really need to compete is how do we improve value for the guest through quality. And so it is not all just about price points. It is about improving the quality of our goods.

And we have already executed some of that in our latest window with improving our core grilled chicken. And our next step is looking across our core platform and improving across our items to make sure that value-for-the-money score that is really important to the guest matches up with the product they are getting. And so you will see a lot more quality improvements from our brand moving forward.

Operator: Your next question comes from the line of Andrew Charles from TD Cowen. Your line is live.

Jeffrey Bernstein: Great. Thanks.

Alex Slagle: Dawn, you called out the 7% commodity inflation in the quarter. Can you just remind us what you are expecting for commodity inflation for the year? And really just how much of that 7% increase was in beef, as well as the forecast for that within the ’26 guidance?

Dawn Hooper: Yeah. So, our guidance still stands. We had guided to mid single digits back in November. Beef is definitely the most impactful one—actually came in a little higher than we had anticipated. But you can look to see beef up double digits. And as the year continues, that impact will moderate. It was definitely the highest in Q1.

Operator: Your next question comes from the line of Gregory Francfort from Guggenheim. Your line is live.

Alex Slagle: Hey. Hey. Thanks for the question. My first one, just on weather—there was some maybe drag later in January, but you guys have a lot of stores on the West Coast. Are you guys able to identify if it may have helped late December and early January?

Lance Tucker: We did not see any meaningful improvements or benefits, I would say, relative to weather. Certainly, everything we saw was more related—particularly with the big Texas footprint and where we are in the Midwest—to, it was called Fern, Winter Storm Fern. It impacted us by a couple hundred basis points, actually.

Gregory Francfort: Got it. And then just maybe going back to kind of franchisee health and performance, how much is beef up now versus where it was a few years ago? And if that reverses, I guess, what could that do to franchisee cash flows? Do you expect that to happen over the next 12 to 18 months? Thanks.

Lance Tucker: I think Dawn is going to look back and see if she can give a reasonable estimate as to what it has done for the last few years. I do not have that off the top of my head. Obviously, though, beef is trading very, very high relative to where it has been, and we would expect a fairly significant benefit if it were to go down. As Dawn said, we expect it to moderate some throughout ’26. But I think at least as far as the predictions I have seen, the next 12 to 18 months, would not expect it to become a tailwind.

Gregory Francfort: Okay. Thanks for the perspective, Lance.

Operator: Your next question comes from the line of Samantha Chang from Goldman Sachs. Your line is live.

Dawn Hooper: Hi. This is Samantha on for Christine Cho. Thanks for taking my question. I wanted to ask about breakfast. I know many of your competitors have called out this daypart as an underperforming part of the day as it tends to be more economically sensitive. With some peers recently making breakfast optional for franchisees, could you share an update on how you are thinking about breakfast and how this daypart has performed at Jack relative to the rest of the day, particularly following the launch of your Much Better Deals lineup? Thanks.

Lance Tucker: Sure. So breakfast for us has actually been pretty consistent. It has always been a big part of what we do at Jack. And, of course, we have breakfast all day, which I am sure you are aware. So from our perspective, as we look at this past quarter as an example, it was pretty consistent with all our other dayparts, with the exception of late night, which is where we really had some gains. So overall, we have not seen much change. We are aware that other competitors are giving some optionality to their franchisees as to whether or not they do breakfast, but we will have to wait and see if that impacts us.

Ryan Ostrom: Yeah. With us, all-day breakfast is the core of our brand that has been around since this brand has been around. So it is something that we take really seriously in making sure that we continue to drive breakfast as an all-day solution to our guests.

Operator: Your next question comes from the line of Karen Holthouse from Citi. Your line is live.

Dawn Hooper: Hi. This is Karen, on for Jon Tower. Just going back to the remodel program, I do not know if you have shared or are willing to share your guardrails around what you are thinking in terms of your cost per unit. What are, like, the key elements you think are really, you know, driving that curbside appeal or change in curbside appeal? And how do franchisees plan on funding this? Do they think they can do it through existing cash flows? Is there appetite for financing it? Anything on that would be great.

Lance Tucker: Sure, Karen. You know, as I know I have said a couple times here over the last few of these calls, our ultimate goal is to get a full-scale reimage program established and going kind of towards the end of the year. Really, what we are doing right now, though, is much more of what we are considering kind of a mini refresh, and the intent, honestly, is just to improve the curb appeal until we get to such point as we can do the full reimage program because, as you know, even if we kick that off within the next 12 months or so, it takes usually a number of years for those things to play out.

So this is really more cosmetic is what I would tell you. It is paint. It is restriping and sealing the parking lot. It is cleaning up the landscaping. It is making sure the drive path looks good. And that can be done for a very, very low cost. You know, I am talking under $20,000, and franchisees tend to have a way of doing it more cheaply than we do. So for them, it is probably under $10,000.

So this is the kind of thing that really is intended just to give us a better curb appeal, get us through to the point when we are ready to get the full-scale reimage program going, and do so at a tremendously economical price.

Karen Holthouse: And then just a follow-up. When, you know, we get there, you know, end of this year, hopefully talking about, like, logging into a broader remodel program, is your expectation that, you know, there would be some incentives tied to doing that or any sort of financial support for franchisees?

Lance Tucker: 100%. We—let me rephrase that. 100%, there will be assistance from corporate. Corporate will not pay for it 100%. I figured I better clean that up. But, anyway, yes, we would expect to make a meaningful contribution to whatever reimage program we would eventually roll out. The most recent one we did was in the 35% neighborhood, if I am not mistaken. And so I would think a little bit either side of that as we would be talking about.

Karen Holthouse: Okay. Great. I will pass it on. Thank you.

Operator: Your next question comes from the line of Jim Sanderson from Northcoast Research. Your line is live.

Jim Sanderson: Hey. Thanks for the question. I wanted to find out a little bit more about Hispanic consumer demand. I think you had called that out in the past as something that was unusually difficult for Jack in the Box Inc. Has that improved over the past year and most recently? And is it improving at a much richer pace?

Lance Tucker: What we have seen, let us say, over the last quarter, is not a whole lot of movement, frankly. We have seen, you know, both in the low-income consumer and the Hispanic consumer segments, we have seen maybe the slightest amount of change—meaning improvement—but not anything significant at this point.

Jim Sanderson: Okay. So that is more or less trending with the sequential improvements you have observed across the board. Is that the right way to look at that?

Jim Sanderson: Nothing then—

Lance Tucker: It is kind of in that ballpark. Certainly, we are not seeing anything meaningful as far as improvement there yet.

Jim Sanderson: Alright. And if I could follow up with a question on—you had mentioned some technology you were leveraging in store, and I was wondering, is that related to the new point-of-sale system, to the kiosks? Anything there to call out that might be beneficial, especially in the back half, to drive traffic or transactions?

Lance Tucker: Jim, there are a couple things we have done, actually. So we completed the rollout of the POS system along—I think it was about August. And so as we continue to make retirements to that and learn it, I would expect to see some benefit there. But the other thing we did, and this is a real tribute to the ops team as well as our IT team led by Doug Cook, we did deploy new back of house, both on the labor management side and the inventory side. And that was completed in November of ’25. And so, again, it is kind of very early days. We are getting to know the systems.

We are learning how to utilize them. But our focus for the balance of the year is really going to be how do we leverage those systems, now that we have made those investments, to get more efficiencies out of them both on the top line and the bottom line?

Jim Sanderson: Alright. Thank you very much.

Operator: Your next question comes from the line of Jake Bartlett from Truist Securities. Your line is live.

Gregory Francfort: Thanks for taking the question. You know, mine was about your regional performance, and as we compare Jack in the Box Inc. to the larger peers, it might be, you know, unfair just given your exposure to certain markets. So I am wondering whether, you know, markets like California are particularly weighing the system down and maybe how you think you might compare to your peers within a big market like California.

Lance Tucker: Sure. I will start with that, and then I will ask Ryan to jump in if there is anything he wants to add, or Rachel for that matter. But, you know, California has been difficult for, I believe, most brands, at least from the information that we have. So I do believe that is a little more of a headwind—not only on the sales front, but certainly on the profitability front with some of the labor pressures that you see in California. Now, as we look at first quarter in particular, I think the weather—obviously, the weather impact we have already talked about—was more of a Texas and Midwest phenomenon than it was in California.

But just generally speaking, what we have seen in my time back here is that California has been challenging. And I think when you look at our over 40% of restaurants being based in California, we certainly have a little more of a headwind looking at an overall consolidated number than some of our competitors may.

Operator: That concludes the question-and-answer session. I would now like to turn the call back over to Lance Tucker, CEO, for closing remarks.

Lance Tucker: As always, I just want to say thanks to everybody for your time, and we will look forward to seeing you this time next quarter.

Operator: That concludes today’s meeting. You may now disconnect.

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