Jack in the Box (JACK) Q2 2026 Earnings Transcript

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DATE

May 13, 2026, 5 p.m. ET

CALL PARTICIPANTS

• Interim Chief Executive Officer — Mark King
• Chief Financial Officer — Dawn E. Hooper
• Vice President of Investor Relations — Rachel Webb
• Senior Vice President of Strategic Finance — Jeremy Corzon

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TAKEAWAYS

• Same store sales -- Decreased 3.8%, with franchise restaurants down 3.9%, and company-owned units falling 2.8%, driven primarily by transaction declines and partially offset by menu price increases.
• Restaurant level margin -- Fell to 16.4% from 19.6%, reflecting 110 basis points of food and packaging inflation (driven by 5% commodity cost increase), 180 basis points higher labor costs, and occupancy deleverage.
• Franchise level margin -- $60.5 million, or 37.9% of franchise revenues, down from $68.3 million, or 40%, due to decreased sales, restaurant count, and lease termination fees.
• SG&A expense -- $26.4 million (10.4% of revenues), an improvement of $1.8 million versus the prior year, attributed to COLI market changes and lower legal costs, partially offset by higher stock compensation.
• GAAP diluted EPS from continuing operations -- $0.65 versus $1.09 in the prior year period.
• Operating EPS (Non-GAAP) -- $0.76 compared to $1.25 last year, reflecting the decline in underlying profitability.
• Adjusted EBITDA -- $51.3 million versus $61.5 million in the prior year, primarily due to lower sales and restaurant closures.
• Total debt and pro forma leverage -- Debt at quarter end was $1.6 billion, with a net debt to adjusted EBITDA leverage ratio of 6.9x; prepayment of $99 million expected to lower pro forma leverage to 6.2x.
• Real estate proceeds -- Year-to-date generated $14.7 million, with $35-$45 million in additional proceeds targeted by fiscal year-end to support debt paydown.
• Capital expenditures -- $34.5 million year-to-date, including $5 million related to timing of Chicago restaurant openings.
• Updated fiscal 2026 guidance -- Now expecting full-year same store sales to decline by low single digits, with sequential quarterly improvement anticipated; restaurant margin projected at approximately 17%, franchise margin of $265-$275 million, SG&A between $115 million and $125 million, and adjusted EBITDA of $225-$235 million.
• Transaction trends -- Improved quarter over quarter, supported by the barbell strategy with Munch Better Deals and premium sliders, as well as digital channel offer optimization.
• Mini refresh program -- Restaurant refreshes more than doubled year-to-date, producing measurable sales improvements with limited capital deployment.
• Closing activity -- Store closures are below pace but expected to accelerate in the second half; franchisees now showing increased interest in early closures, with average sales transfer benefit cited at 30%.
• COLI funding and G&A impact -- Up to $71 million in excess COLI funding to be withdrawn to help repay debt, with G&A expected to be approximately 2.3% of systemwide sales going forward.

RISKS

• Margin pressure -- CFO Dawn E. Hooper reported, "restaurant level margin percentage in the second quarter decreased to 16.4% down from 19.6%," citing commodity inflation, labor costs, and sales deleverage as contributing factors.
• Franchise profitability -- Franchise margin deteriorated, with Dawn E. Hooper noting a decrease from 40% to 37.9%, caused by lower sales, reduced restaurant counts, and fewer lease termination fees.
• Same store sales declines -- Interim CEO Mark King stated an "urgency to improve operating results," highlighting continued negative sales and transaction trends necessitating turnaround action.
• Debt and refinancing headwinds -- CFO Dawn E. Hooper described, "there is a headwind on the cost side" in connection with active refinancing efforts for tranches maturing August 2026 and February 2027.

SUMMARY

Jack in the Box (NASDAQ:JACK) reported declines in top- and bottom-line metrics, with significant margin contraction attributed to cost inflation and softer sales, and management reaffirmed commitment to its Jack on Track plan while acknowledging further urgent actions are still required for stabilization. The quarter demonstrated sequential sales transaction improvements from revised pricing and promotional strategies, but full-year guidance now anticipates low single-digit sales declines and persistent commodity headwinds. Accelerated store closures, real estate monetization, and upcoming marketing campaigns are expected to shape performance for the remainder of the year, as the company works to reduce high leverage ahead of key debt maturities. Management described efforts to enhance operations, pricing science, franchisee support, and digital offer efficiency as central to returning to sales growth and margin improvement.

• Management cited "mini refresh" programs delivering low single-digit same store sales gains post-completion, offering near-term lift with modest capital requirements.
• The Chicago market was identified as having previously pressured margins, but recent operational improvements and sales momentum have begun to reverse negative trends.
• Barbell strategy outcomes showed that Munch Better Deals drove traffic, while premium sliders lifted check averages, with digital channel offer recalibration improving profitability.
• Franchisees are participating in a newly formed operations committee focused on menu simplification and rapid process changes to unlock profitability, as reported by Mark King.
• Hispanic consumer trends outperformed system averages in recent periods, providing a tailwind as the company laps challenging prior-year comparisons.
• Guidance confirms expectation for the strongest quarterly performance in Q4, bolstered by new premium product launches and high-profile marketing collaborations.

INDUSTRY GLOSSARY

• COLI: Corporate-Owned Life Insurance policies; investment vehicles used for employee benefit funding and included in financial reporting as non-operating gains or losses.
• Barbell strategy: Promotional approach combining premium product innovation with entry-level value offerings to attract a broad customer base and balance transaction and check growth.
• Mini refresh program: Jack in the Box's low-cost asset update initiative focusing on aesthetics (painting, landscaping, light repairs) for immediate sales impact without full remodel expense.
• Sales transfer benefit: Expected recapture percentage of sales in nearby locations following the closure of an underperforming restaurant, cited as 30% on average.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Jack in the Box Second Quarter 26 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star, then the 1 on your telephone keypad. And if you would like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Rachel Webb, Vice President of Investor Relations.

Rachel, please go ahead.

Rachel Webb: Thanks, operator, and good afternoon, everyone. We appreciate you joining today's conference call highlighting results from our 2026. With me today are interim chief executive officer, Mark King, chief financial officer, Dawn E. Hooper, and senior vice president of strategic finance Jeremy Corzon. Following their prepared remarks, we will be happy to take questions from our covering sell side analysts. Note that during both our discussion and Q&A, we may refer to non GAAP items. Please refer to the non GAAP reconciliations provided in the earnings release which is available on our Investor Relations website at jackinthebox.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 risks. We, therefore, consider the safe harbor statement in the earnings release and the cautionary statements in our most recent Form 10 k to be part of our discussion. Material risk factors as well as information relating to company operations are detailed in our most recent form 10 k 10 q, and other public documents filed with the SEC and are available on our investor relations website. And with that, I would like to turn the call over to our interim chief executive officer, Mark King.

Mark King: Thanks, Rachel, and good afternoon, everyone. I really appreciate you joining us. And I am really excited to be here today as interim CEO. Before I dive in, I want to start by wishing Lance Tucker well. On behalf of the board and everyone at Jack in the Box, I wanna say thank you for all Lance Tucker has done in the past year in laying a strong foundation and a clear strategic path to the Jack on Track plan by simplifying this business. So first, why am I here? Jack is an iconic brand with deeply engaged stakeholders and a business model that generates meaningful cash flow.

Lance and I joined the board of directors, my excitement for this brand has only grown. This brand has tremendous potential, and we are only scratching the surface of the opportunities we have ahead of us. The board and I firmly believe that we are on the right path we have the right strategy in place. And as interim CEO, my focus will be on accelerating the Jack on Track initiatives already underway. In addition to accelerating Jack on Track, 1 of the first things I have tasked the leadership team with is to operate with a renewed sense of urgency. An urgency to improve operating results and enhance shareholder value. The leadership team here at Jack is strong.

And I am excited to work alongside them to get Jack back to positive same store sales and transaction growth. By empowering our team members, employees and franchisees, to obsess over our guests, in a best in class guest experience I am confident we can capture incremental sales even in the current pressured consumer environment. We have already made significant progress. Year to date, we have streamlined our marketing calendar which has helped our operational execution in the restaurants. We have also better balanced our value and premium messaging which improved our sales trends throughout the second quarter and into the third quarter. Improving the guest experience is central to everything we do.

Alongside the operational improvements, Shannon McKinney, our COO, has already made, we are sharpening our focus on the quality of food and the appearance of our restaurants. Many refreshes are proving to be a high ROI lever. Delivering measurable sales improvements with limited capital outlay. We have more than doubled our pace year to date and are accelerating the rate for both company and franchise restaurants that are benefiting from this mini refresh program. I am confident that we can increase the pace of our progress by further simplifying and executing our strategic initiatives with discipline. We also know our success is not possible without the success of our franchisees.

We will continue to put franchisees at the front and center of every decision we make driving stronger margins and profitability for our franchisees and for Jack in the Box. Helping to ensure franchisees thrive is not just 1 single initiative, but rather our core focus across all operations, every day. While we certainly have more work ahead of us, Jack in the Box is positioned to create sustainable value for our shareholders. I look forward to working closely with the Jack in the Box team and franchisees and engaging with our shareholders while board members conduct a search for the company's next CEO.

Dawn E. Hooper: I will now turn it over to Dawn to walk through the details of our second quarter results. Dawn. Thanks, Mark, and good afternoon, everyone. I will start by reviewing the details on our performance in the second quarter as well as provide more detail relating to our Jack on Track plan. The second quarter same store sales for Jack in the Box decreased 3.8% comprised of a franchise restaurant same store sales decrease of 3.9% and a company owned same store sales decrease of 2.8%. This resulted primarily from a decline in transactions partially offset by many price increases. As Mark mentioned, second quarter results reflect a better balancing of premium and value promotions.

We improved transactions quarter over quarter with our value offering of Munch Better Deals. This was balanced with check growth from our premium innovation in Smashed Jack sliders. Sliders are available as a 1-piece add on a 3-piece combo, a munchie meal, and a party pack allowing guests to purchase them across different occasions. We also improved the offer lineup on our first and third party digital channels in the quarter, drove higher, more profitable checks. This combination reinforced the barbell strategy is working and we see that momentum continuing in our third quarter. So far, quarter to date, same store sales are approaching flat.

Turning to margins, Jack's restaurant level margin percentage in the second quarter decreased to 16.4% down from 19.6%. Food and packaging costs as a percentage of sales were 28.9% for the quarter increasing 110-basis-points from the prior year. This was driven by commodity inflation of 5% in the quarter. We continue to see elevated beef costs and Expect inflation to maintain at the double digits through Q3 and moderate in Q4. We also expect deflation in other commodities such as dairy, to offset some of this pressure. Labor costs as a percentage of sales were 35.6%, increasing 180-basis-points from the prior year. This increase was primarily related to a change in the mix of restaurants.

Occupancy and other costs increased 40-basis-points driven primarily by sales deleverage and higher rent. Franchise level margin was $60.5 million or 37.9% of franchise revenues compared to $68.3 million or 40% a year ago. The decrease was mainly driven by lower sales driving lower rent revenue and royalties, a decrease in the number of restaurants, as well as lower lease termination fees. SG&A for the quarter was $26.4 million or 10.4% of revenues as compared to $28.2 million or 10.6% a year ago. The decrease of $1.8 million was primarily due to the market fluctuations of our COLI policies as well as lower legal costs, partially offset by higher stock based compensation due to prior year forfeitures.

Excluding net COLI gains, G&A was 2.3% of total system wide sales for the quarter. Our transition services agreement or TSA following the Del Taco sale concluded in the second quarter. We generated income associated with the TSA of approximately $0.6 million in the second quarter and $1.5 million year to date. This income is included in our reported G&A figures. The effective tax rate for continuing operations the 2026 was 27.7% compared to 27.6% for the same quarter a year ago. The adjusted tax rate used to calculate the non GAAP operating earnings per share in the current quarter was 31.1%.

Earnings from continuing operations was $12.5 million for the 2026 as compared to $20.7 million for the same quarter of the prior year. We reported GAAP diluted earnings per share from continuing operations for the second quarter of $0.65 compared to $1.09 in the same period of the prior year. Operating earnings per share was $0.76 for the quarter versus $1.25 in the same quarter of the prior year. Adjusted EBITDA was $51.3 million for the quarter down from $61.5 million in the prior year due primarily to lower sales performance and restaurant closures.

As we have discussed, Jack on Track is focused on bolstering the long term financial performance of the company by strengthening the balance sheet and positioning the company for sustainable growth. We continue to be focused on debt reduction, Our total debt outstanding at quarter end was $1.6 billion and our net debt to adjusted EBITDA leverage ratio was 6.9x. We are also in the process of withdrawing excess COLI funding of approximately $71 million which is expected to be used along with cash on hand to prepay approximately $99 million of the August 2026 tranche early in the third quarter. Considering this prepayment, our pro forma leverage ratio is approximately 6.2x.

As you saw in today's earnings release, we are actively pursuing the refinance of our August 2026 and February 2027 tranches and plan to give you an update later this summer once we have more details. As it pertains to real estate sales, we have generated $14.7 million of proceeds year to date We expect to sell additional real estate with proceeds approximately 35 to $45 million by the end of the fiscal year with the expectation that these proceeds along with cash on hand would be utilized to pay down debt.

We do expect closures to accelerate in the back half of the year In particular, as franchisees see the clear path to recapture sales, they have increased their desire to close earlier than their franchise agreement expiration. We are also being strategic with our capital expenditures. Year to date through the second quarter, our capital expenditures were $34.5 million which primarily included spending on rest restaurant information technology and new restaurants. As a reminder, roughly $5 million of this was due to timing of payments associated with the Chicago restaurant openings in Q4 of last year.

Given our year to date performance as well as expectations for the remainder of the year, we did update certain guidance measures as reflected in our release. For fiscal year 26, we now expect same store sales decline of low single digits As expected, Q1 was our lowest point We anticipate a steady improvement through Q3 and further into Q4. We are excited about the marketing lineup we have in the back half of this fiscal year. Our upcoming marketing campaign features a relevant collab with Hot Ones, featuring 2 new Hot Mess munchie meals.

Will also have consistent value, and you will see us round out the year with premium innovation further improving trends from a more balanced barbell strategy. Expect restaurant level margin of approximately 17% which includes mid single digit commodity inflation and low single digit wage inflation. We expect franchise level margin of $265 to $275 million This reflects our latest expectations about closures and selling real estate. As we have noted in our guidance, the timing of these elements could shift and as such have an impact on franchise level margin. With the TSA behind us, we now have better visibility into steady state G&A for the Jack in the Box standalone brand.

We expect G&A to be approximately 2.3% of system wide sales. We anticipate SG&A, which includes advertising, to be between $115 million and $125 million As a reminder, this excludes any gains or losses from COLI. And lastly, we expect adjusted EBITDA to be between $225 million to $235 million for the year. The rest of our guidance that remains unchanged is listed in today's earnings release. In closing, we continue to make steady progress on Jack on Track and 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: Thank you. We will now begin the question and answer session. We also ask that you limit yourself to 1 question and 1 follow-up. For any additional questions, please re queue. And your first question comes from Jeffrey Bernstein with Barclays. Please go ahead.

Analyst (Jeffrey Bernstein): Great. Thank you very much. My first question Mark, just curious, the skill set you think is needed to accelerate the turnaround plan Just wondering maybe what are your top priorities for that new hire? And maybe in the interim role, what do you think should be first and foremost to accelerate the turnaround? And then I had 1 follow-up.

Mark King: Yeah. Well, thanks for the question, Jeffrey. First of all, I just want to say Jack on Track is progressing nicely. When I was hired initially to be on the board, brought on the board, it was something that was a big part of the discussion. So, certainly, I am a big fan of Jack on Track. I think short term, we really need to address transactions and same store sales. I do have quite a bit of experience in the category and with driving sales and transactions. So for me, it is a holistic look at our innovation value and core products. How do we construct the windows, and as importantly, how do we drive marketing around those?

Think we have so much variety. It would be nice to really focus on a few key items that can move the needle a little bit. So those are my first thoughts. You know? And I have been on the job now for 72 hours. So, but yeah, those are my comments.

Analyst (Jeffrey Bernstein): Understood. 72 hours seems like plenty of time. Thanks, Jeffrey. My yeah. My follow-up question is just on the franchisee health. Obviously, you have not been on the board that long, but I know you have had lots of experience working with franchisees in the past. And I think we discussed this last quarter, but figured I would get your opinion It would seem like the franchisee 4-wall margins and profits are under pressure.

So beyond the jack on track, I am wondering if there is anything in the short term you can do or conversations you are having with franchisees to help them navigate the difficult environment whether it is financial support or otherwise, it seems like you are asking them to maybe do some more refreshes or some more bigger picture remodels, but just seems tough in this environment. So just wondering if there is any conversations around how corporate can potentially help franchisees in any way. Thank you.

Mark King: Yeah. Thanks for the question, Jeffrey. Well, I do know that our COO, Shannon McKinney, has constructed a committee with made up of both franchisees and people from corporate to look at the challenge. I believe that a lot of the profitability will be in simplifying the menu, the back of house, And I think we have to move really fast. that is 1 of the areas I think that we have not moved fast enough on, and I do believe that will unlock profitability, labor, some of the things that we can control short term. When there is price increases on commodities, there is not a lot we can do about that.

So I think it is it is really around menu. it is around key items, and it is around back of house. Those are short term things that we will address. Thank you.

Operator: Your next question comes from the line of Brian Bittner with Oppenheimer. Please go ahead.

Analyst (Brian Bittner): Hi. Thanks. This is Mike Tamas on for Brian. You know, you called up improving same store sales in the third quarter, and you said they are approaching flat. So you help us just unpack for us what you believe drove that improvement and maybe how that compares to the industry? And then I have a follow-up after that. Thank you.

Dawn E. Hooper: Yeah. I will take that question. So yeah. Excited about the we are seeing. We are we think the back half is going to be--when we think Q4 is going to be the strongest. And I think really, what got started to see some momentum in Q2 was a more balanced barbell strategy. We have our Munch Better Deals that really hit and drove transactions, and then we balance that with our sliders, which are broadly appealing and support different dining occasions. It can be used as an add on, a 3-piece combo, munchie meal, and party pack.

So I think there was a lot going on there and cons continuing with our barbell strategy, This quarter, what we have seen just really in reinforces that is the right thing to continue the momentum. Additionally, I would just say operationally with Shannon and his team, and their operations excellence, we are starting to see a lot of green shoots, I will say, there from internal, what we are seeing in internal measures on customer satisfaction. As well as externally on just improving accuracy, friendliness, etcetera. Like, with those bright spots, those are lead indicators. That Things are getting better, and when you have good operations in your restaurants, that is gonna help drive sales.

Analyst (Brian Bittner): Thanks. And then, you know, you did mention improving trends into the fourth quarter, thinking it would be the strongest. So I think the back half of the year implies sort of flat to above 4% comps and to get to low single digits for the full year. So what do you think are the catalysts and differences that would keep you at sort of like flattish in the back half, which is where you are now? Versus maybe achieving the top end of that implied outlook? Thanks.

Dawn E. Hooper: Yeah. So I think if you look at the back half of the year, there is a lot of exciting things ahead. We know value is important. We continue to focus on value. We have had a value window. Continue with our Munch Better Deals with the $5 price point. We also have an exciting World Cup FIFA event that we think is gonna boost our sales in Q3. We are also leaning into nonfood items. Jibbi's were a hit. We are gonna bring back Jibbi's. We realized that is something that customers want. And others have been successful at. So we are gonna continue more with that. Collabs, we believe are important as well.

We have our Hot Ones promotion mentioned in our script, and that is coming in our next window. But just a lot of exciting things going on. And like I said, I think you are going to begin to see more in the back half of the year. The benefits from all the ops improvements that we have made. Thank you.

Operator: Your next question comes from the line of Brian Harbour with Morgan Stanley. Please go ahead.

Analyst (Brian Harbor): Yes. Thanks. Good afternoon. Just on your comments about the store closures, has there been any change to number targeted there or how you might think about that, or is this just sort of a timing shift at this point?

Dawn E. Hooper: Yeah. No. The number is still the same. I will I will tell you that the closures have been slower than we had initially anticipated. We do think closures are gonna accelerate in the back half of the year. Mentioned that franchisees are starting to show more interest in closing restaurants sooner. We are seeing a very attractive sales transfer benefit of about 30% on average. Also, we are gonna be dedicating more resources engaging with landlords on exiting the leases because we believe that is the biggest hurdle. that is keeping franchisees from closing more underperforming restaurants.

Analyst (Brian Harbor): Okay. Understood. Thanks. Just as you have these refinancing conversations, I mean, what is you know, what do you anticipate might be needed there? Or you know, is this somewhat just about the cost of refinancing? Could you, you know, say anything more about how those conversations have proceeded or what steps you are taking to you know, to get there faster to the extent that you could talk about it.

Dawn E. Hooper: Yeah. Like I mentioned, we will have more details to share later this summer, but we are actively working with our advisers and are regularly at evaluating the market conditions. Obviously, there is a headwind on the cost side, but we are--we are evaluating all available structures, and we will optimize our solution. Based on market conditions. Thank you.

Operator: Your next question comes from the line of Sarah Senatore with Bank of America. Please go ahead.

Analyst (Sarah Senatore): Hey, Isaiah Austin on for Sarah. Thanks for the question. Just thinking about the revised co op margin guide, it implies a sequential step up in the second half versus the first. Just squaring that with the unchanged commodity and wage inflation outlook and just how Q3 and Q4 are typically your weakest margin quarters. What could you kind of help me bridge getting to getting from current margins to around 18% in the back half?

Dawn E. Hooper: Yeah. So I will say just from a commodity standpoint, obviously, beef is the most fit impactful and the leading reason why we are guiding to mid-single digits. Beef is up double digits Q1, 2, and 3. We do expect it to moderate into Q4. To low single digits. So we do expect to get some relief on that front. Also, if you think about, Chicago, the Chicago market, we talked about that in Q1, was a new market for us, 8 restaurants, company operated. We did have, some I would say, difficulties entering that market that caused our margins to be lower.

The good news is that in Q2, we are seeing starting to see some upside in Chicago from a top line perspective and also a bottom line. And there is more momentum because as we get operations to where we need to be, there is a little more work to do there. We will add an additional sales layer by expanding operating hours.

Analyst (Sarah Senatore): Alright. Thanks. And then also just thinking about the revised comp guidance, where do you all feel like you fell short of expectations? Like, was it value, innovation? Maybe a specific daypart? And I guess what was the current plan to address your weaknesses?

Dawn E. Hooper: Yeah. I think we started the quarter with a niche premium item. And so as you look to kind of where we saw the back half of the quarter land, the premium item I already mentioned was our sliders, and it had a more broad appeal to it. So I think that is where we started to see the trends turn, but that kind of niche premium item that we started out the quarter with, it was not as successful as we had anticipated.

Rachel Webb: Yeah. Just to be specific, that was our Hot Mess Burger. Which sold a little bit less as you think about that compared to, like, a slider, for example. And so as we move into the back half of the year, you will see more broadly appealing options on the higher end of the barbell.

Operator: Thank you. Your next question comes from the line of Christine Cho with Goldman Sachs. Please go ahead.

Analyst (Christine Cho): Yes. Thank you so much. Dawn, I think you noted the improvements to the offer lineup across both first and third party digital channels in the quarter. That drove higher and more profitable checks. Could you elaborate a little bit more and give us a little bit of an update on progression of digital sales dynamics between transaction versus check growth? And how these factors have contributed to enhance profitability in the channel? Thank you.

Rachel Webb: Yeah. So 1 of the key things we have been digging into this is Rachel, by the way. Digging into is looking at each channel's profitability compared to the others. And 1 thing that, you know, as we opt into potential promotions or franchisees opt into promotions, it is really important that we get that balance between discounting to drive transactions with the higher check benefit right. And so we have taken over the past, I would call it, 6 or so months to really dig in with our franchisees and understand all of the costs associated with these channels. And the top line benefits from these channels, to really find a better mix.

And so we had some changes on our first party plat to still have great offers for our guests but not as such aggressive discounting percentage. That it impacts profitability. And so obviously, there is a balance there. We have been working hand in hand with franchisees to make sure that the offer mechanics makes sense. Think that answered part of your question. If I did not answer it all, please chime in.

Analyst (Christine Cho): No. that is great. Thank you. And just another 1. I know you launched the new matcha drinks in February. Any early responses from guests and whether that signals a broader move towards more diverse beverage and snack categories?

Rachel Webb: Generally speaking, the beverage category has been a bright spot for the and Jack can come to market in very unique ways We lean into different flavors and different offers for our guests. And so you have probably seen matcha. You have seen a couple others. That are very unique to drive some trial. And so we have seen some good success with those, and you will see us pulse those throughout the remainder of the year. Thank you.

Operator: Your next question comes from the line of Chris O'Cull with Stifel. Please go ahead.

Analyst: Thanks guys. Good afternoon. This is Patrick on for Chris. Mark, I had a follow-up on marketing. Do you believe that could be a need for the company to support marketing with maybe company funded investments in the second half, while you work to bend the curve on sales?

Mark King: Or do you feel like there is adequate resources at this point to do what you need to do for a market So, Patrick, I would say at this point, I am probably not qualified to say that because I have not really dove in that much. But I do not I do not think the issue is that we do not have enough money funded by the marketing fund. I think it is how we use it and how we can be more efficient with it. And how we are more integrated in telling the stories and having fewer items that carry more impact.

Analyst: And I think that is how we find efficiencies. So I think we are fine on the marketing side. Marketing fund side. Got it. that is helpful. And then I know the company reduced prices fairly recently on some of its core bundles in the core menu. I was curious if there is signs that decision is resonating with guests on the value front. And you know, just as you guys think about the core menu, is there more work to do there, or do you feel like the pricing is where it needs to be from that perspective?

Rachel Webb: Yeah. So I will start this is Rachel. I will start, and then I will hand it over to Mark. So in general, we, had a few combos on our menu, like you mentioned, that we had sort of captured pricing at $9.99 to be more affordable for our guests. And generally speaking, we have seen improvements in value scores, affordability scores. there is a handful of metrics that we monitor. On a day to day basis. But as it pertains to the overall menu structure or value equation, do not know if it is too soon, Mark, for you to chime in on that, but if you have some thoughts, feel free to share.

Mark King: Yeah. Patrick, I would say that 1 of the most important things in driving same store sales is the pricing structure. So I think we have to look at how do we really become a relevant value brand so that we can compete with some of the other category or some of the other competitors out there. Our core is really important, and, obviously, LTOs to drive interest on the different windows. So there is a real science to building a pricing structure that, you know, I think Caitlin, who came to us from Yum! Brands, our new CMO, will help a lot there because she comes with a lot of experience.

So that is 1 of the first things we are gonna look at really is how do we price in these 3 different areas Hopefully to drive trans but also then to drive profitability for the franchisees. Great.

Analyst: Helpful. Thanks, guys.

Operator: Your next question comes from the line of Lauren Silberman with Deutsche Bank. Please go ahead.

Analyst (Lauren Silberman): Thank you very much. I wanted to ask on quarter to date comps, nice to hear about the improvement. How much do you attribute it to company specific initiatives versus easing compares? Just more broadly, a lot going on in the industry. Macro headwinds, gas prices. Are you seeing any impact on the consumer Any changes in how the consumer is using the brand or any differences you are seeing across regions? Thank you. Yeah.

Dawn E. Hooper: Hi, Lauren. So I will say, we do think it is it is not just easy compare. Just like I said, do feel like we had a strong balanced barbell strategy in the second half of the quarter. And from an ops perspective, when you look at our internal and external scores, they are scoring higher. So that would lead you to believe that some of the sales is coming from our ops excellence Sorry.

Analyst (Lauren Silberman): I forgot your second question. Is it okay. Anything on, like, related to gas prices and whether you are seeing any impact from the rising gas prices and whether that is coming out in terms of just regional differences in comps across markets.

Rachel Webb: I would say last year, we saw the largest headwinds from a consumer perspective. And so as we start to lap some of those, we do not expect a significant impact. From the macro trends. And as Dawn mentioned, 1 of our misses early last year was the lack of value, and we have got that consistently this year. So we expect it to be a little bit more normalized of a trend as opposed to, what we experienced in the back half of last year.

Analyst (Lauren Silberman): You seeing any differences across markets or pretty consistent across the system?

Dawn E. Hooper: Yeah. it is been pretty consistent. Yeah. Pretty consistent.

Mark King: Hey, Lauren. I this is Mark, obviously, since I am here with 2 women. I just like to say something about all these macros. I mean, if you look in the last week or so, some of our competitors actually, quite a few of our competitors have had good comps. Year on year, and so there is no reason we cannot. And, yes, there is headwinds, but there is always some type of headwind. Our challenge, really, is how do we combat that? How do we construct the menu, the pricing, the marketing to be relevant in today's marketplace? And there is no reason we cannot. Great. Thank you very much.

Operator: Your next question comes from the line of Logan Rich with RBC Capital Markets. Please go ahead.

Analyst (Logan Wright): Hey, good afternoon. Thanks for taking my questions. Wanted to follow-up on the quarter to date commentary in the full year same store sales guidance. Should we think or I guess just thinking about the comps for Q3, you talked about flattish quarter to date, but you also talked about World Cup being an opportunity and, you know, some other initiatives. I guess just how should we think about Q3 comps in regards to that? And then anything specific you guys have planned for the World Cup and as it relates to marketing or menu innovation?

Dawn E. Hooper: Yeah. So, I mean, I will say we do expect to see continuing momentum on the same store sales side as we exit Q3 and go into Q4. We do expect to be positive. Again, Q4 is expected to be our strongest quarter of the year. We do have a really exciting collaboration coming towards the end of the year that we cannot speak to, but super excited about it. And I think it is gonna drive a lot of excitement with our customers, as well.

Analyst (Logan Wright): Great. Thanks. And then my follow-up is just on the ops Any, like, low hanging fruit or where do you see the biggest opportunity from an operations perspective, in the business over the next few quarters?

Mark King: Yeah. Logan, I would say this. I think, Shannon, our COO, is fantastic, and I think he is made a real effort to spend time in the marketplace. We are hiring people who will now work with franchisees out there on running their restaurants, finding profitability, training, I think the ops effort is really off to a great start. And that is 1 area that we probably need to double down on in terms of supporting and resources because that is what is gonna ultimately drive franchisees and better operating standards and have standards that we can hold franchisees to which in the long run helps them. Got it. Thank you very much.

Operator: Your next question comes from the line of Jim Sanderson with Northcoast Research. Please go ahead.

Analyst (James Sanderson): Hey, thanks for the question. I just wanted to follow-up to the quarter to date concerns. In the past, you have talked about your exposure to Hispanic consumers and low income. How are those groups trending relative to your system averages that those cohorts?

Rachel Webb: Yeah. So far, we have seen that the Hispanic consumers have--the trends have improved stronger Than the rest, which makes sense given what we are starting to roll over now. The other thing I would just say is within the quarter, we are rolling over so far quarter to date. The strongest hurdle from the prior year, and so that will also give us a little bit of tailwind as we exit Q3. In addition to all of the initiatives that Dawn outlined for the lineup of the remainder of the year.

Analyst (James Sanderson): Okay. So it sounds to me as if you are getting a little bit better traction from those cohorts. Per that is okay? Yep. that is correct. Okay. Thank you. And then another quick follow-up on the closures. I think you had guided 50 to 100. Given that we are past the halfway mark pretty much, where do we think that will land for the year?

Dawn E. Hooper: I am assuming 40 to 60. Is that pretty reasonable for the second half? Yeah. I would say probably higher. We are definitely gonna be in the range As I mentioned, I think in the prepared remarks, we do expect closures to accelerate in the back half.

Analyst (James Sanderson): Alright. I will pass it on. Thank you very much.

Operator: Thank you. If you would like to ask a question, please Your next question comes from Gregory Francfort Please go ahead.

Analyst (Gregory Francfort): Hey, thanks for the question. Mark, I guess I am curious your perspective on how much you think, Jack's challenges have been you know, an asset based problem, a marketing problem, or an ops problem. And maybe within the asset based problem, how much of that capital improvement and dollars that need to get spent do you think are jacked responsibilities versus maybe the franchisees' responsibilities going forward? How do you encourage them to kind of come up with the dollars to do that? Thanks.

Mark King: Well, those are a couple questions there, Gregory. But, I mean, you know, by definition, the capital investments need to come from franchisees. I mean, it is it is how the system is actually constructed. I know right now the system is challenged from a profitability standpoint. So we are trying to be very aware of that. So but from a capital investment, I think that is the franchisee's response. I think where has Jack struggled? I think it is across the board. I do not think there is 1 area. I think we can shore up ops, and I think Shannon's off to a good start.

I think bringing in a really talented CMO in Katelyn Zborowski is going to help a lot. We do not have a food problem. We have all kinds of innovation that we can figure out how to position. So I think going forward, it is what does the menu look like How do we construct the menu and pricing to be able to drive people into our restaurants. And then the customer experience just needs to be better. And that comes from brand standards, franchisee execution, and our helping on training and education. So I think it is all of that and I think that is what will be my focus for the coming months. that is helpful. Thanks.

Dawn E. Hooper: 1 thing to add to that is you know, we have had a reimage program in place with our franchisees. Now is not obviously the time to do an extensive reimage but we do have what we are calling our mini refreshes, which is a paint, shopping at the parking lot,. Landscaping, given the majority of our business is through the restaurant, there is a lot of excitement. The cost is low. We are seeing, same store sales benefits of low single digits after they are done. So a lot of excitement and something we can do in the short term to help boost our image and bring in customers.

Operator: And that concludes our question and answer session. I would now like to turn the conference back over to Mark King for closing comments.

Mark King: Thank you, and thank you, everyone, for tuning in today. And for listening. And I look forward to meeting all of you in seeing you in the coming months, and we will be back in touch, within a few months. Thank you.

Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.

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