Jack in the Box (JACK)

Fast-food chain Jack in the Box (NASDAQ:JACK) reported Q3 CY2025 results topping the market’s revenue expectations, but sales fell by 6.6% year on year to $326.2 million. Its non-GAAP profit of $0.30 per share was 37.4% below analysts’ consensus estimates.

Company Overview

Delighting customers since its inception in 1951, Jack in the Box (NASDAQ:JACK) is a distinctive fast-food chain known for its bold flavors, innovative menu items, and quirky marketing.

Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.

Fast-food competitors include Burger King and Popeyes (owned by Restaurant Brands, NYSE:QSR), McDonald’s (NYSE:MCD), Wendy’s (NASDAQ:WEN), and Taco Bell and KFC (owned by Yum! Brands, NYSE:YUM).

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $1.47 billion in revenue over the past 12 months, Jack in the Box is a mid-sized restaurant chain, which sometimes brings disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, Jack in the Box’s sales grew at a decent 7.5% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) despite not opening many new restaurants.

This quarter, Jack in the Box’s revenue fell by 6.6% year on year to $326.2 million but beat Wall Street’s estimates by 2.5%.

Looking ahead, sell-side analysts expect revenue to decline by 5.7% over the next 12 months, a deceleration versus the last six years. This projection is underwhelming and indicates its menu offerings will face some demand challenges.

Number of Restaurants

A restaurant chain’s total number of dining locations often determines how much revenue it can generate.

Jack in the Box listed 2,136 locations in the latest quarter and has kept its restaurant count flat over the last two years while other restaurant businesses have opted for growth.

When a chain doesn’t open many new restaurants, it usually means there’s stable demand for its meals and it’s focused on improving operational efficiency to increase profitability.

Same-Store Sales

A company's restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at restaurants open for at least a year.

Jack in the Box’s demand has been shrinking over the last two years as its same-store sales have averaged 3.1% annual declines. This performance isn’t ideal, and we’d be concerned if Jack in the Box starts opening new restaurants to artificially boost revenue growth.

In the latest quarter, Jack in the Box’s same-store sales fell by 7.4% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.

Gross profit margins tell us how much money a restaurant gets to keep after paying for the direct costs of the meals it sells, like ingredients, and indicate its level of pricing power.

Jack in the Box’s unit economics are higher than the typical restaurant company, giving it the flexibility to invest in areas such as marketing and talent to reach more consumers. As you can see below, it averaged a decent 29.2% gross margin over the last two years. That means for every $100 in revenue, roughly $29.23 was left to spend on selling, marketing, and general administrative overhead.

Jack in the Box’s gross profit margin came in at 26.9% this quarter, down 1.2 percentage points year on year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as ingredients and transportation expenses) have been stable and it isn’t under pressure to lower prices.

Jack in the Box was profitable over the last two years but held back by its large cost base. Its average operating margin of 2.1% was weak for a restaurant business.

Looking at the trend in its profitability, Jack in the Box’s operating margin decreased by 6.5 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Jack in the Box’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Jack in the Box generated an operating margin profit margin of 7.4%, down 7.3 percentage points year on year. Since Jack in the Box’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, and administrative overhead increased.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Jack in the Box’s flat EPS over the last six years was below its 7.5% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

In Q3, Jack in the Box reported adjusted EPS of $0.30, down from $1.16 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Jack in the Box’s full-year EPS of $4.44 to grow 5.9%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Jack in the Box broke even from a free cash flow perspective over the last two years, giving the company limited opportunities to return capital to shareholders.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Jack in the Box historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 7.3%, somewhat low compared to the best restaurant companies that consistently pump out 15%+.

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Jack in the Box’s $3.12 billion of debt exceeds the $81.81 million of cash on its balance sheet. Furthermore, its 11× net-debt-to-EBITDA ratio (based on its EBITDA of $270.9 million over the last 12 months) shows the company is overleveraged.

At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. Jack in the Box could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.

We hope Jack in the Box can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.

We enjoyed seeing Jack in the Box beat analysts’ revenue expectations this quarter. On the other hand, its full-year EBITDA guidance missed and its EPS fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 5.2% to $13.62 immediately after reporting.

Updated: December 3, 2025 at 9:47 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Jack in the Box, you should also grasp the company’s longer-term business quality and valuation.

We cheer for all companies serving everyday consumers, but in the case of Jack in the Box, we’ll be cheering from the sidelines. Although its revenue growth was decent over the last six years, it’s expected to deteriorate over the next 12 months and its projected EPS for the next year is lacking. And while the company’s gross margins indicate a healthy starting point for the overall profitability of the business, the downside is its shrinking same-store sales tell us it will need to change its strategy to succeed.

Jack in the Box’s P/E ratio based on the next 12 months is 5.1x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $19.89 on the company (compared to the current share price of $19.88).