Fast-food chain Jack in the Box (NASDAQ: JACK) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 7.8% year on year to $336.7 million. Its non-GAAP EPS of $1.20 per share was 4.2% above analysts’ consensus estimates.
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Jack in the Box (JACK) Q1 CY2025 Highlights:
- Revenue: $336.7 million (7.8% year-on-year decline)
- Adjusted EPS: $1.20 vs analyst estimates of $1.15 (4.2% beat)
- Adjusted Operating Income: $24.53 million vs analyst estimates of $49.19 million (7.3% margin, 50.1% miss)
- Adjusted EBITDA Margin: 19.7%
- Locations: 2,183 at quarter end, down from 2,195 in the same quarter last year
- Same-Store Sales fell 4.3% year on year (-2.3% in the same quarter last year)
- Market Capitalization: $365.5 million
StockStory’s Take
Jack in the Box’s first-quarter results were shaped by a challenging consumer environment and company-specific headwinds. CEO Lance Tucker attributed the revenue decline to persistent negative traffic trends, particularly among lower-income consumers, and acknowledged that technology system upgrades caused temporary disruptions in restaurant operations. Management emphasized the importance of its barbell strategy—offering both value and premium menu items—to drive same-store sales, and highlighted continued digital growth, with digital sales reaching 18% of the system. Interim CFO Dawn Hooper noted that increased labor costs, especially wage inflation in California, as well as higher utilities and operating expenses, further pressured margins during the quarter.
Looking ahead, management is focused on executing its Jack on Track plan, which includes simplifying operations, modernizing technology, and closing underperforming locations to strengthen the business for long-term growth. Lance Tucker stated, “Driving same-store sales is, and always will be, our top priority,” and emphasized ongoing investments in digital channels and the rollout of new point-of-sale systems. The company also plans to accelerate cash flow to pay down debt while maintaining technology and re-imaging investments. As Jack in the Box navigates a cautious consumer environment and cost inflation, management sees digital and menu innovation, along with a return to consistent net unit growth, as key levers for future performance.
Key Insights from Management’s Remarks
Management pointed to consumer traffic declines, technology upgrades, and cost inflation as key factors that affected the quarter, while outlining steps to reposition the business for improved performance.
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Consumer traffic declines: The company saw continued negative traffic, particularly among value-conscious and lower-income consumers, which led to weaker same-store sales. Management noted that these pressures are widespread across the quick-service restaurant industry, but Jack in the Box may be feeling the impact more acutely due to its customer demographics.
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Technology system upgrades: The rollout of a new point-of-sale (POS) system and flip kiosks in nearly 1,500 restaurants caused temporary operational disruptions, negatively affecting sales. CEO Lance Tucker stated that while these technology challenges are being resolved, ongoing integration of legacy systems remains a focus area.
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Digital and loyalty growth: Digital sales reached 18% of systemwide sales, with management highlighting increased activity in first-party digital channels and loyalty program engagement. The company aims to achieve 20% digital sales ahead of schedule as part of its ongoing modernization efforts.
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Margin pressures from wage and commodity inflation: Labor costs rose significantly due to wage inflation, particularly in California following minimum wage increases. Food and packaging costs also rose, though partially offset by increased beverage funding from a new contract. These factors contributed to a decline in restaurant-level margins.
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Asset-light strategy and restaurant closures: Management reiterated its commitment to an asset-light model, emphasizing that the upcoming closure of underperforming restaurants is intended to enhance unit economics and support future franchise-led expansion. The Jack on Track plan also includes strengthening the balance sheet and prioritizing technology investment.
Drivers of Future Performance
Management expects ongoing macroeconomic headwinds, digital initiatives, and operational streamlining to drive performance in the coming quarters.
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Digital and menu innovation: The company will continue investing in digital ordering, loyalty programs, and new menu items—such as flavored curly fries and expanded munchie meal options—to attract both value-oriented and premium-seeking customers. Management believes these initiatives can help drive higher average checks and improve traffic trends over time.
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Cost control and operational efficiency: Jack in the Box plans to close underperforming restaurants and further modernize its technology infrastructure, aiming to improve profitability and cash flow. The company also intends to prioritize franchise-led growth in new markets while reducing its involvement in direct ownership.
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Industry and consumer challenges: Management remains cautious about the near-term outlook, citing persistent inflationary pressures on labor and commodities, as well as a cautious consumer environment. CEO Lance Tucker acknowledged that traffic trends remain soft and that the company will need to balance value offerings with margin protection.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will closely monitor (1) the impact of digital and menu innovation on reversing negative traffic trends, (2) the execution and financial effects of the planned restaurant closures and technology modernization, and (3) progress on franchise-led expansion into new markets. Updates on the Del Taco strategic review and any developments in cost management will also be key indicators of future momentum.
Jack in the Box currently trades at a forward P/E ratio of 3.7×. In the wake of earnings, is it a buy or sell? See for yourself in our full research report (it’s free).
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