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Item 7. Management’s Discussion and Analysis

2025-11-19 compared with 2024-11-21 · 104 added, 113 removed, 239 unchanged (48% of the section changed)

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For an understanding of the significant factors that influenced our performance during the fiscal year, we believe our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the consolidated financial statements and related notes included in this annual report as indexed on page F-1.

Comparisons under this heading refer to the 52-week periods ended September 29, 2024 and October 1, 2023, respectively.

Comparisons under this heading refer to the 52-week periods ended September 28, 2025 and September 29, 2024, respectively.

Our MD&A consists of the following sections:

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• New accounting pronouncements — a discussion of new accounting pronouncements, dates of implementation and the impact on our consolidated financial position or results of operations, if any.

• Cautionary statements regarding forward-looking statements — a discussion of the risks and uncertainties that may cause our actual results to differ materially from any forward-looking statements made by management.

We have included in our MD&A certain performance metrics that management uses to assess company performance and which we believe will be useful in analyzing and understanding our results of operations.

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A comparison of our results of operations and cash flows for fiscal 2024 compared to fiscal 2023 can be found under Part II, “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended October 1, 2023.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended September 29, 2024.

Founded in 1951, Jack in the Box Inc.

(the “Company”) operates and franchises Jack in the Box ® quick-service restaurants.

As of September 29, 2024, we operated and franchised 2,191 Jack in the Box quick-service restaurants, primarily in the western and southern United States, including two in Mexico and two in Guam.

On March 8, 2022, we completed the acquisition of Del Taco Restaurants, Inc.

(“Del Taco”).

Founded in 1964, Del Taco offers a unique variety of both Mexican and American favorites such as burritos and fries.

Del Taco is the nation’s second largest Mexican quick service restaurant chain by number of restaurants and as of September 29, 2024 has 594 restaurants across 17 states.

(the “Company”) operates and franchises Jack in the Box ® and Del Taco ® quick-service restaurants.

As of September 28, 2025, we operated and franchised 2,136 Jack in the Box restaurants, primarily in the western and southern United States, including three in Mexico and two in Guam.

As of September 28, 2025 we operated and franchised 576 Del Taco restaurants across 18 states.

We derive revenue from retail sales at company-operated restaurants and rental revenue, royalties (based upon a percent of sales), franchise fees and contributions for advertising and other services from franchisees.

Refranchising of Del Taco

In fiscal year 2024, we continued on our refranchising strategy with three main intentions.

First, to create a company-wide asset-light model that will benefit from mitigating exposure to macroeconomic pressures;

second, to generate incremental development agreements throughout the refranchising process that provide a more robust unit growth pipeline than otherwise achievable;

and third, to provide a more efficient capital structure.

Our objective is to be asset-light as we navigate market forces.

We refranchised 47 Del Taco restaurants in fiscal year 2024, and added 42 new development commitments as a result of the refranchising effort.

On April 23, 2025, the Company announced a multi-faceted plan, which included exploring strategic alternatives for the Del Taco brand and the possible divestiture of that business.

On October 15, 2025, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Yadav Enterprises, Inc., a California corporation (“Buyer”) and Anil Yadav (“Buyer Guarantor”) to sell to Buyer all of the issued and outstanding equity interests of Del Taco Holdings Inc., a Delaware corporation (“Del Taco”), which owns and operates the Company’s Del Taco restaurant operations, for an aggregate purchase price of $115 million in cash, subject to certain closing cash, working capital, debt and transaction expense adjustments.

RESULTS OF OPERATIONS FOR FISCAL 2025 AND 2024

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Beginning of year 150 2,041 2,191 142 2,044 2,186

8 22 30 2 18 20

New 12 19 31 8 22 30

Refranchised (1) 1 — — — —

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% of system 23 % 77 % 100 % 22 % 78 % 100 %

________________________

(1) The restaurant count includes 6 cloud kitchens as of the end of fiscal year 2024.

The following tables summarize restaurant sales for company-operated, franchised, and systemwide sales for our two brands ( in thousands ):

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Occupancy and other $ 77,807 18.7 % $ 73,735 17.3 %

Company restaurant sales increased $13.3 million, or 3.2%, in 2024 as compared with the prior year due to an increase in the average number of restaurants, as well as an increase in average check.

Company restaurant sales decreased $10.3 million, or 2.4%, in 2025 as compared with the prior year due to a decrease in transactions partially offset by an increase in the average number of restaurants.

The following table presents the approximate impact of these items on company restaurant sales in 2025 ( in millions ):

AUV increase $ 0.9

AUV decrease $ (17.4)

Increase in the average number of restaurants 7.1

Total change in company restaurant sales $ (10.3)

Same-store sales at company-operated restaurants remained the same in 2024 compared to a year ago.

Same-store sales at company-operated restaurants decreased by 3.7% in fiscal year 2025 compared to a year ago.

The following table summarizes the changes in company-operated same-store sales:

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(1) Includes price increases of 3.5% in 2025.

Food and packaging costs, as a percentage of company restaurant sales, decreased to 29.5% in 2024 from 31.6% a year ago, primarily due to a 2.0% impact from pricing leverage and 0.2% from commodity deflation, partially offset by 0.2% unfavorable menu item mix.

Commodity costs decreased in the current fiscal year by approximately 0.7%.

The greatest impacts were seen in produce, beef, and poultry.

Payroll and employee benefit costs, as a percentage of company restaurant sales, increased to 31.5% in 2024 compared with 30.8% a year ago primarily due to a 0.7% impact from wage inflation of approximately 6.9%, and an increase in group insurance, which were partially offset by a decrease in incentive compensation.

New regulations, such as AB 1228, which went into effect April 2024, have raised labor costs, particularly given our high concentration of restaurants in California.

Occupancy and other costs, as a percentage of company restaurant sales, increased to 17.3% in 2024 from 16.7% a year ago primarily due to higher security costs, credit card fees and other operating costs, partially offset by lower maintenance and repair.

Food and packaging costs, as a percentage of company restaurant sales, decreased to 28.0% in 2025 from 29.5% a year ago, due mainly to a 1.8% benefit from a new beverage contract with funding retroactive to January 1, 2024, as well as menu price increases, partially offset by commodity inflation and unfavorable menu item mix.

Commodity costs increased in the current fiscal year by approximately 4.2%.

The greatest impacts were seen in beef, beverages, poultry, and eggs.

Payroll and employee benefit costs, as a percentage of company restaurant sales, increased to 33.8% in 2025 compared with 31.5% a year ago.

There was an approximate 2.0% increase which was primarily due to the impact from wage inflation.

Wage inflation for the year was approximately 7.6% and was primarily due to the wage increases required in California effective April 1, 2024 under AB 1228.

Occupancy and other costs, as a percentage of company restaurant sales, increased to 18.7% in 2025 from 17.3% a year ago primarily due to sales deleverage, higher costs for rent, utilities, and other operating costs including delivery fees.

Jack in the Box Franchise Operations

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Royalties as a percentage of total franchise restaurant sales 5.1 % 5.0 %

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(1) Excluding the impact of the $7.3 million termination fee in the first quarter of the prior year, royalties as a percentage of total franchised restaurant sales would be 5.0% for the fiscal year ended October 1, 2023.

Franchise rental revenues decreased $4.1 million, or 1.2%, in 2024 compared to the prior year, primarily due to a decrease in percentage rent of $8.5 million, driven by lower sales, partially offset by increases in minimum rent of $3.3 million and an increase of $2.5 million related to franchise lease terminations.

Franchise royalties and other decreased $8.9 million, or 4.2%, mainly in connection with a $7.3 million termination fee paid by a franchise operator who sold his restaurants to a new franchisee in the prior year, as well as lower royalty income driven by lower sales.

Franchise contributions for advertising and other services increased $1.8 million, or 0.8%, primarily due to increases in digital and technology fees of $3.5 million, partially offset by lower marketing contributions of $2.0 million in connection with lower franchise same store sales of 1.5%.

Franchise occupancy expenses, mainly rent, increased $1.0 million, or 0.5% in 2024, primarily due to higher operating lease costs.

Franchise support and other costs increased $2.7 million, or 26.4% in 2024, mainly related to a $2.0 million increase in bad debt expense due to a rollover of a bad debt reversal in the prior year, as well as higher operating costs in connection with digital fees and brand standard audits.

Franchise advertising and other service expenses decreased $2.4 million, or 1.1% in 2024 primarily due to lower marketing contributions resulting from a decrease in franchise sales.

Franchise rental revenues decreased $14.5 million, or 4.2%, in 2025 compared to the prior year, primarily due to a decrease in percentage rent of $16.5 million, driven by lower sales, partially offset by higher lease termination fees of $2.7 million, and higher pass through property tax revenue of $1.1 million.

Franchise royalties and other decreased $7.1 million, or 3.4%, compared to the prior year primarily due to lower royalty income driven by lower sales.

Franchise contributions for advertising and other services revenues decreased $11.6 million, or 5.3%, mainly due to lower sales driving marketing contributions lower by $8.9 million and lower digital and technology fees of $2.4 million.

Franchise occupancy expenses, mainly rent, increased $1.8 million, or 0.8%, in 2025 primarily due to higher pass through property tax expense of $1.1 million and higher operating lease costs of $0.9 million.

Franchise support and other costs decreased $0.2 million, or 1.8% in 2025.

Franchise advertising and other service expenses decreased $14.1 million, or 6.2%, in 2025 primarily due to lower sales driving lower marketing expenses, as well as lower franchise IT support costs.

Del Taco Brand

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Occupancy and other $ 51,381 24.4 % $ 65,569 23.3 %

Company restaurant sales decreased $150.6 million or 34.8%, in 2024 as compared with the prior year primarily due to the refranchising of 47 company-operated restaurants and the closing of 4 company-operated restaurants in fiscal 2024, as well as a decrease in same store sales compared to the prior year.

Company restaurant sales decreased $71.4 million or 25.3%, in 2025 as compared with the prior year primarily due to a decrease in the average number of restaurants as well as a decrease in transactions.

The following table presents the approximate impact of these items on company restaurant sales ( in millions ):

AUV decrease $ (6.1)

Decrease in the average number of restaurants $ (67.9)

AUV decrease (3.0)

Total change in company restaurant sales $ (71.4)

Same-store sales at company-operated restaurants decreased 2.4% in 2025 compared to a year ago.

The following table summarizes the increases (decreases) in company-operated same-store sales:

The following table summarizes the decreases in company-operated same-store sales:

Average check (1)

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(1) Includes price increases of approximately 5.5% in 2025.

Food and packaging costs, as a percentage of company restaurant sales, decreased to 26.0% in 2024 from 27.7% a year ago primarily due to a 1.9% benefit from pricing leverage.

Food and packaging costs, as a percentage of company restaurant sales, decreased to 25.9% in 2025 from 26.0% a year ago primarily due to menu price increases and favorable beverage funding, partially offset by commodity inflation and unfavorable menu item mix.

Commodity costs inflation was 4.1% in 2025.

The largest sources of inflation in the current year were due to dairy and beverages, and was partially offset by favorability in pork, oil, eggs and cheese.

Payroll and employee benefit costs, as a percentage of company restaurant sales, increased to 36.7% in 2024 compared with 34.0% a year ago primarily due to a 2.2% impact from labor inflation.

The largest sources of inflation in the current year were due to beef, poultry, and beverages.

Payroll and employee benefit costs, as a percentage of company restaurant sales, increased to 38.6% in 2025 compared with 36.7% a year ago primarily due to labor inflation impact of 2%.

Labor inflation was 7.1% in the current year.

Additional regulations, such as AB 1228, which went into effect April 2024, have raised labor costs, particularly given our high concentration of restaurants in California.

Occupancy and other costs, as a percentage of company restaurant sales, increased to 23.3% in 2024 from 21.7% a year ago primarily due to higher rent and operating expenses including utilities and information technology costs, partially offset by a change in the mix of restaurants due to refranchising.

Occupancy and other costs, as a percentage of company restaurant sales, increased to 24.4% in 2025 from 23.3% a year ago primarily due to sales deleverage as well as higher costs for IT, utilities, maintenance, and other operating costs including delivery fees.

Del Taco Franchise Operations

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Royalties as a percentage of total franchised restaurant sales 4.6 % 4.7 %

Franchise rental revenues increased $14.9 million, or 111.9% in 2024 compared to the prior year, primarily due to higher rental income of $11.0 million resulting from new subleases related to the 142 restaurants refranchised since the second quarter of 2023 and the 11 franchise-operated restaurants opened in fiscal 2024.

Franchise royalties and other increased $6.6 million, or 25.0% in 2024 compared to the prior year, primarily due to higher franchise restaurant sales resulting from the 142 restaurants refranchised since the second quarter of 2023 and the 11 franchise-operated restaurants opened in fiscal 2024.

Franchise contributions for advertising and other services revenues increased $6.0 million, or 24.0% in 2024 compared to the prior year, primarily due to higher marketing contributions related to higher franchise restaurant sales resulting from the 142 restaurants refranchised since the second quarter of 2023 and the 11 franchise-operated restaurants opened in fiscal 2024.

Franchise occupancy expenses, primarily rent, increased $14.8 million, or 112.5% in 2024 compared to the prior year, primarily due to higher rent related to franchise subleases for the 142 restaurants refranchised since the second quarter of 2023 and the 11 franchise-operated restaurants opened in fiscal 2024.

Franchise support and other costs increased $2.3 million, or 101.5% in 2024 compared to the prior year, primarily due to higher franchise development support costs, as well as additional overhead costs.

Franchise advertising and other service expenses increased $8.0 million, or 31.2% in 2024 compared to the prior year, primarily due to higher franchise restaurant sales resulting from the 142 restaurants refranchised since the second quarter of 2023 and the 11 franchise-operated restaurants opened in fiscal 2024.

Franchise rental revenues increased $7.7 million, or 27.3% in 2025 compared to the prior year, primarily due to higher rental income and pass through property tax revenue resulting from new subleases related to restaurants refranchised in fiscal 2025 and 2024.

Franchise royalties and other increased $1.7 million, or 5.2% in 2025 compared to the prior year, primarily due to refranchising activity.

Franchise contributions for advertising and other services revenues decreased $0.6 million, or 2.0% in 2025 compared to the prior year, primarily due to lower IT support revenue, partially offset by increased franchise marketing contributions.

Franchise occupancy expenses, primarily rent, increased $7.2 million, or 25.9% in 2025 compared to the prior year, primarily due to higher operating lease costs in the current year from refranchising.

Franchise support and other costs increased $1.9 million, or 42.6% in 2025 compared to the prior year, primarily due to higher bad debt expense.

Franchise advertising and other service expenses decreased $1.5 million, or 4.4% in 2025 compared to the prior year, primarily due to decreases in IT costs, partially offset by increases in marketing expense resulting from restaurants refranchised.

Company-Wide Results

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Depreciation and amortization decreased $1.5 million in 2025 as compared with the prior year.

The decreases in depreciation are primarily due to the refranchising of Del Taco restaurants since the prior year, as well as certain Jack in the Box franchise assets becoming fully depreciated.

These decreases were partially offset by increases for new technology assets and new company restaurant openings.

The decrease is primarily due to the refranchising of Del Taco restaurants, as well as certain Jack in the Box franchise assets becoming fully depreciated.

These decreases were partially offset by increases for new technology assets placed in service and new company restaurant openings.

Selling, General and Administrative (“SG&A”) Expenses

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Cash surrender value of COLI policies, net (6,882) (14,390)

Litigation matters 1,811 7,001

Insurance 8,385 4,272

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Advertising costs represent company contributions to our marketing funds and are generally determined as a percentage of company-operated restaurant sales.

Advertising costs decreased $3.8 million compared to the prior year primarily due to a decrease in company-operated restaurant sales in the current year which was primarily driven by Del Taco refranchising.

Share-based compensation in 2024 increased by $2.3 million compared to the prior year primarily due to a higher number of executive stock awards outstanding compared to the prior year.

Advertising costs increased $4.3 million compared to the prior year primarily due an incremental contribution to Jack in the Box brand advertising, partially offset by a decrease in company-operated restaurant sales at both brands in the current year.

Share-based compensation in 2025 decreased by $5.2 million compared to the prior year primarily due to forfeitures as well as lower achievement levels for the Company’s performance share awards.

Incentive compensation in 2025 decreased by $3.9 million compared to the prior year primarily due to lower achievement levels compared to the prior year for the Company’s annual incentive plan.

The cash surrender value of our Company-owned life insurance (“COLI”) policies, net of changes in our non-qualified deferred compensation obligation supported by these policies, are subject to market fluctuations.

The changes in market values had a favorable impact of $8.4 million as compared to the prior year.

Litigation matters in 2024 decreased by $5.2 million as compared to the prior year due to the timing of litigation developments in each fiscal year.

In fiscal 2023, we recorded litigation charges of $8.3 million for Gessele vs.

Jack in the Box Inc., partially offset by a $1.6 million reversal in connection with the J&D Restaurant Group legal matter based on the Court’s final ruling.

Refer to Note 16, Commitments and Contingencies , of the notes to the consolidated financial statements for additional information.

Insurance costs in 2024 decreased $2.8 million as compared to the prior year primarily due to positive development factors related to workers compensation and general liability claims.

The changes in market values had an unfavorable impact of $7.5 million as compared to the prior year.

Insurance costs in 2025 increased $4.1 million as compared to the prior year primarily due to a favorable adjustment in 2024 in connection with positive development factors related to workers compensation and general liability claims.

Pre-Opening Costs

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Pre-opening costs associated with the opening of a restaurant that was closed upon acquisition consist of labor costs, maintenance and repair costs, and property rent.

Goodwill Impairment

Pre-opening expenses increased $4.2 million in 2025 as compared to the prior year due to new restaurant openings in certain markets.

Impairment of Goodwill and Intangible Assets

During the third quarter of 2024, the Company identified triggering events that indicated the goodwill allocated to the Del Taco reporting unit might be impaired.

The triggering events related to i) a recent negative trend in Del Taco same store sales, ii) lower margins due in part to lower sales and wage increases required in California effective April 1, 2024 under AB 1228 and iii) unfavorable changes in the economic environment specifically impacting our industry, including inflation and interest rates.

The triggering events related to i) a recent negative trend in Del Taco same store sales, ii) lower margins due in part to lower sales and higher wages required in California effective April 1, 2024 under AB 1228 and iii) unfavorable changes in the economic environment specifically impacting our industry, including inflation and interest rates.

As a result, the Company performed a quantitative test over the Del Taco reporting unit, noting that the fair value of the reporting unit was less than the carrying value, which resulted in an impairment of goodwill of $162.6 million.

During the second quarter of 2025, the Company identified additional triggering events that indicated the goodwill allocated to the Del Taco reporting unit might be further impaired, including i) continued negative trend in Del Taco same store sales, ii) unfavorable changes in the economic environment specifically impacting our industry, including inflation and interest rates, iii) the potential for a divestment of Del Taco, and iv) a sustained lower share price.

Refer to Note 5, Goodwill and Intangible Assets, of the notes to the consolidated financial statements for additional information on the valuation methodologies and assumptions used.

As a result of the franchisee acquisition during the third quarter of 2025, the Company recognized additional goodwill of $6.3 million.

This additional goodwill was fully impaired based on the results of the quantitative impairment analysis performed in the second quarter of 2025.

The goodwill for the Del Taco reporting unit is fully impaired as of the end of 2025.

In connection with the goodwill analysis during the second quarter of 2025, the Company also performed a quantitative analysis over its indefinite-lived intangible trademark asset and as a result, the Company recorded impairment of $177.9 million on the Del Taco trademark asset.

During the third and fourth quarters of 2025, the Company performed a qualitative analysis over its indefinite-lived intangible trademark asset, noting no further impairment was deemed necessary.

Refer to Note 5, Goodwill and Intangible Assets, of the notes to the consolidated financial statements for additional information on the valuation methodologies and assumptions used.

Other Operating Expense, Net

Other operating expense, net is comprised of the following ( in thousands ):

Integration and strategic initiatives $ 15,631 $ 9,112

Restructuring, integration and strategic initiatives $ 7,298 $ 15,631

Costs of closed restaurants and other 8,467 2,975

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Gains on acquisition of restaurants (6) (2,702)

Losses (gains) on disposition of property and equipment, net 185 (8,171)

Losses on disposition of property and equipment, net 2,161 185

Other operating expense, net

$ 22,403 $ 24,796

Other operating expense, net increased $14.0 million in 2024 versus the prior year primarily due to the decrease in gains on disposition of property and equipment of $8.4 million due to gains recognized in the prior year from a sale of Jack in the Box restaurant properties to franchisees who were leasing the properties from us prior to the sale.

The change was also impacted by the increase in integration and strategic initiatives of $6.5 million in the current year, as well as an increase in restaurant impairment charges of $3.4 million relating to under-performing Jack in the Box and Del Taco restaurants.

Refer also to Note 9, Other Operating Expense, Net, of the notes to the consolidated financial statements for additional information.

Other operating expense, net decreased $2.4 million in 2025 as compared to the prior year.

This decrease was primarily due to the decrease in restructuring, integration and strategic initiatives of $8.3 million and a decrease in restaurant impairment charges of $3.6 million relating to under-performing Jack in the Box and Del Taco restaurants.

These decreases were partially offset by increased costs of closed restaurants of $5.5 million, a reduction in gain on acquisition of restaurants of $2.7 million, as well as higher net loss on disposition of property and equipment of $2.0 million due to lower proceeds in connection with disposals.

Refer also to Note 9, Other Operating Expense, Net, in the notes to the consolidated financial statements for additional information.

Gains on the Sale of Company-Operated Restaurants

In 2024, gains on the sale of company-operated restaurants totaled $3.3 million and were related to the refranchising of 47 Del Taco restaurants.

In the prior year, gains on the sale of company-operated restaurants totaled $18.0 million and were related to the refranchising of 111 Del Taco restaurants and five Jack in the Box restaurants.

In 2025, gains on the sale of company-operated restaurants totaled $3.2 million and were mainly related to the refranchising of 13 Del Taco restaurants.

In the prior year, gains on the sale of company-operated restaurants totaled $3.3 million and were mainly related to the refranchising of 47 Del Taco restaurants.

Refer to Note 4, Summary of Refranchisings and Franchise Acquisitions, of the notes to the consolidated financial statements for additional information.

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Our policy is to fund our pension plans at or above the minimum required by law.

As of the date of our last actuarial funding valuation, there was no minimum requirement.

As of the date of our last actuarial funding valuation, there was $1.6 million minimum requirement.

We do not anticipate making any contributions to our Qualified Plan in fiscal 2026.

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Interest expense, net, decreased $1.1 million in 2025.

The interest expense portion decreased by $2.5 million primarily due to lower average borrowings, as well as lower average interest rates.

For fiscal year 2024, the Company recorded income tax provisions of $32.4 million resulting in effective tax rate of negative 748.9%.

The effective tax rate for such period differed from the U.S.

statutory tax rate primarily due to the impairment of non-deductible goodwill partially offset by the reversal of state deferred tax liabilities on basis difference of investments in subsidiaries and non-taxable gains from the market performance of insurance products used to fund certain non-qualified retirement plans.

For fiscal year 2023, the Company recorded income tax provisions of $58.5 million resulting in an effective tax rate of 30.9%.

Interest expense decreased by $1.5 million primarily due to lower average borrowings.

For fiscal year 2025, the Company recorded an income tax benefit of $22.1 million resulting in an effective tax rate of 21.5%.

The effective tax rate for such period was driven primarily by the impairment of non-deductible goodwill and non-deductible excess tax deficiency from share-based compensation arrangements, partially offset by non-taxable gains from the market performance of insurance products used to fund certain non-qualified retirement plans.

For fiscal year 2024, the Company recorded income tax expense of $32.4 million resulting in an effective tax rate of (748.9)%.

The effective tax rate for such period differed from the U.S.

statutory tax rate primarily due to the impact of non-deductible goodwill related to the sale of company-operated restaurants partially offset by non-taxable gains from the market performance of insurance products used to fund certain non-qualified retirement plans.

statutory tax rate primarily due to the impact of non-deductible goodwill partially offset by the reversal of state deferred tax liabilities on basis difference of investments in subsidiaries and non-taxable gains from the market performance of insurance products used to fund certain non-qualified retirement plans.

On July 4, 2025, H.R.1 (the “One Big Beautiful Bill Act”) was enacted into law.

The Company is continuing to evaluate the potential implications of the legislation.

Based on its assessment for fiscal year 2025, the Company did not identify any material impacts to its provision for income taxes in the year of enactment.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of short-term and long-term liquidity and capital resources are cash flows from operations and borrowings available under our credit facilities.

Our cash requirements consist principally of working capital, general corporate needs, capital expenditures, income tax payments, debt service requirements, franchise tenant improvement allowance and incentive distributions, dividend payments, and obligations related to our benefit plans.

We generally use available cash flows from operations to invest in our business, service our debt obligations, pay dividends and repurchase shares of our common stock.

As of September 29, 2024, the Company had $54.2 million of cash and restricted cash on its consolidated balance sheet and available borrowings of $169.5 million under our $150.0 million Variable Funding Notes and our $75.0 million revolving credit facility.

We generally use available cash flows from operations to invest in our business and service our debt obligations.

As of September 28, 2025, the Company had $81.8 million of cash and restricted cash on its consolidated balance sheet and available borrowings of $96.8 million under our $150.0 million Variable Funding Notes.

The Company continually assesses the optimal sources and uses of cash for our business.

We review our balance sheet for any undervalued assets and pursue opportunities for capital sources, including the sale of our owned Jack in the Box properties and refranchising, primarily for Del Taco in the near term.

We review our balance sheet for any undervalued assets and pursue opportunities for capital sources, including the sale of our owned properties and potential for refranchising.

Based upon current levels of operations and anticipated growth, we expect that cash flows from operations, combined with our securitized financing facility and revolving credit facility, will be sufficient to meet our capital expenditure, working capital and debt service requirements for at least the next twelve months and the foreseeable future.

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Operating Activities .

Operating cash flows decreased $146.2 million compared with a year ago.

This decrease is primarily due to an unfavorable change in working capital of $156.1 million, partially offset by higher net income, when adjusted for non-cash items, of $9.9 million.

The change in working capital is primarily a result of the payment of income taxes liabilities of $111.9 million (of which $50.3 million was a payment deferred from 2023 in connection with the Southern California winter storm disaster area declaration), an increase in bonus payout, an increase in deferred rent accrual and an increase in the advertising accruals.

Pension and Postretirement Contributions — Our policy is to fund our pension plans at or above the minimum required by law.

As of the date of our last actuarial funding valuation for our qualified pension plan, there was no minimum contribution funding requirement.

In 2024 and 2023, we contributed $5.9 million and $6.2 million, respectively, to our pension and postretirement plans.

We do not anticipate making any contributions to our qualified defined benefit pension plan in fiscal 2025.

For additional information, refer to Note 12, Retirement Plans , of the notes to the consolidated financial statements.

Operating cash flows increased $93.5 million compared with a year ago.

This increase is primarily due to favorable changes in working capital of $134.4 million, partially offset by lower net income, when adjusted for non-cash items, of $40.9 million.

The change in working capital is primarily a result of $50.3 million paid in 2024 for fiscal 2023 income tax payment deferred in connection with the Southern California winter storm disaster area declaration, $35.0 million received in the current year in connection with a new supply chain contract, and $25.5 million paid in 2024 in connection with the Torrez settlement.

Investing Activities .

Cash flows used in investing activities increased $111.6 million from 2024 compared to 2023.

This increase was primarily due to $65.8 million of additional cash received in 2023 from the sale of Del Taco company-owned restaurants to franchisees, and an increase of $40.5 million for amounts used for the purchase of property and equipment.

Cash flows used in investing activities increased $5.3 million compared with a year ago.

This increase was primarily due to a reduction in proceeds from the sale of company operated restaurants of $13.0 million and the acquisition of franchise operated restaurants of for $7.2 million, partially offset by a decrease in the purchase of assets intended for sale or leaseback of $15.5 million.

Capital Expenditures — The composition of capital expenditures in each fiscal year is summarized in the table below ( in thousands ):

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Restaurant facility expenditures 14,218 18,972

Purchases of assets intended for sale and leaseback 26,455 14,960

Restaurant information technology 38,651 28,019

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Total capital expenditures $ 88,223 $ 91,177

In 2024, capital expenditures increased by $40.5 million compared to a year ago, primarily due to an increase in information technology for both restaurant and corporate of $16.2 million, new restaurant openings of $14.4 million, and an increase in the purchases of Jack in the Box restaurant properties intended for sale and leaseback of $11.5 million.

In 2025, capital expenditures decreased by $3.0 million compared to a year ago, primarily due to a decrease in corporate technology spending of $5.9 million due to the completion of our new enterprise resource planning software implementation last year.

Restaurant facility costs decreased $4.8 million related to lower volume of repair and improvement work versus prior year.

Remodel project costs also decreased $2.2 million due to timing of ongoing remodel projects.

These decreases were partially offset by an increase in restaurant information technology costs of $10.6 million related to the rollout of a new POS system for Jack in the Box company restaurants as well as investments in digital and other restaurant technology enhancements

Sale and Sale-leaseback Transactions — To optimize our balance sheet and capital structure, we use sales and leaseback financing and provide our franchisees the opportunity to purchase the property that we currently lease to them.

In 2024, we completed one sales-leaseback transaction involving a restaurant property with proceeds of $1.7 million and completed the sale of properties to franchisees and other third parties during the year with proceeds of $25.0 million.

There was a decrease in the purchases of Jack in the Box restaurant properties intended for sale or leaseback of $15.5 million in the current year.

The Company generated proceeds of $19.9 million related to the sale of property and equipment.

There were no sales-leaseback transactions in 2025.

Sale of Company-Operated Restaurants — The Company recorded proceeds of $6.4 million for the sale of company-operated restaurants to franchisees compared to proceeds of $19.4 million in 2024 due to fewer refranchising transactions in the current year.

For further information, see Note 4, Summary of Refranchising and Franchise Acquisition , in the notes to the condensed consolidated financial statements.

Financing Activities .

Cash flows used in financing activities decreased by $76.2 million compared with a year ago, primarily as a result of a decrease in net borrowings of $56.2 million and a $20.0 million decrease in share repurchases compared with a year ago.

Cash flows used in financing activities decreased by $71.2 million compared with a year ago, primarily as a result of a $65.0 million decrease in share repurchases, a decrease in dividends paid of $17.4 million, partially offset by the change year-over-year in net borrowings on the revolving credit facilities of $12.0 million.

Repurchases of Common Stock — In fiscal 2025, the Company repurchased 0.1 million shares of its common stock for an aggregate cost of $5.0 million, including applicable excise tax.

As of September 29, 2024, there was $180.0 million remaining under share repurchase programs authorized by the Board of Directors which do not expire.

Dividends — In fiscal 2024, the Board of Directors declared four quarterly cash dividends of $0.44 per share, totaling $34.2 million.

Future dividends are subject to approval by our Board of Directors.

Securitized Refinancing Transaction — On February 11, 2022, the Company completed the sale of $550.0 million of its Series 2022-1 3.445% Fixed Rate Senior Secured Notes, Class A-2-I (the “Class A-2-I Notes”) and $550.0 million of its Series 2022-1 4.136% Fixed Rate Senior Secured Notes, Class A-2-II (the “Class A-2-II” and, together with the Class A-2-I Notes, the “2022 Notes”).

Interest payments on the 2022 Notes are payable on a quarterly basis.

The anticipated repayment dates of the Class A-2-I Notes and the Class A-2-II Notes will be February 2027 and February 2032, respectively, unless earlier prepaid to the extent permitted.

Dividends — In fiscal 2025, the Board of Directors declared two quarterly cash dividends of $0.44 per share, totaling $16.7 million compared to total dividends of $34.2 million in 2024.

As previously announced, the Company has discontinued its dividend.

Securitized Financing Facility — Jack in the Box Funding, LLC (the “Master Issuer”), a limited-purpose, bankruptcy-remote, wholly owned indirect subsidiary of the Company is the master issuer of outstanding senior secured notes under a securitized financing facility that was entered into in July 2019.

In February 2022, the Master Issuer completed a refinancing transaction and issued $550.0 million of its Series 2022-1 3.445% Fixed Rate Senior Secured Notes, Class A-2-I (the “Class A-2-I Notes”) and $550.0 million of its Series 2022-1 4.136% Fixed Rate Senior Secured Notes, Class A-2-II (the “Class A-2-II” and, together with the Class A-2-I Notes, the “2022 Notes”).

The Anticipated Repayment Dates of the Class A-2-I Notes and the Class A-2-II Notes are February 2027 and February 2032, respectively, and the Anticipated Repayment Dates of the 2019-1 Class A-2-II Notes and the Class A-2-III Notes are August 2026 and August 2029, respectively.

The legal final maturity date of the 2019 Notes and 2022 Notes is August 2049 and February 2052, respectively, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the Notes will be repaid by the Anticipated Repayment Dates.

If the Master Issuer has not repaid or refinanced the Notes prior to the respective Anticipated Repayment Dates, additional interest will accrue pursuant to the Indenture.

In 2022, the Company also entered into a revolving financing facility of Series 2022-1 Variable Funding Senior Secured Notes (the “Variable Funding Notes”), which permits borrowings up to a maximum of $150.0 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit.

As of September 29, 2024, we had $6.0 million of outstanding borrowings and had available borrowing capacity of $94.5 million under our 2022 Variable Funding Notes, net of letters of credits issued of $49.5 million.

The net proceeds from the sale of the 2022 Notes were used to repay in full $570.7 million in aggregate outstanding principal amount of the Company’s Series 2019-1 Class A-2-I Notes, together with the applicable make-whole premium and unpaid interest, and was used to fund a portion of the Company’s acquisition of Del Taco Restaurants, Inc.

The 2022 Notes were issued in a privately placed securitization transaction pursuant to which certain of the Company’s revenue-generating assets, consisting principally of franchise-related agreements, real estate assets, and intellectual property and license agreements for the use of intellectual property, are held by the Master Issuer and certain other limited-purpose, bankruptcy remote, wholly owned indirect subsidiaries of the Company that act as Guarantors of the Notes and that have pledged substantially all of their assets, excluding certain real estate assets and subject to certain limitations, to secure the Notes.

The 2022 Notes are subject to the same covenants and restrictions as the Series 2019-1 Notes.

As of September 28, 2025, we had no amounts outstanding and had available borrowing capacity of $96.8 million under our 2022 Variable Funding Notes, net of letters of credits issued of $53.2 million.

The quarterly principal payment on the Class A-2 Notes may be suspended when the specified leverage ratio, which is a measure of outstanding debt to earnings before interest, taxes, depreciation, and amortization, adjusted for certain items (as defined in the Indenture), is less than or equal to 5.0x.

Exceeding the leverage ratio of 5.0x does not violate any covenant related to the Class A-2 Notes.

Subsequent to closing the issuance of the 2022 Notes, the Company has had a leverage ratio of greater than 5.0x and, accordingly, the Company resumed making the scheduled amortization payments on its 2022 Notes and Series 2019-1 Notes.

Restricted Cash — In accordance with the terms of the Indenture, certain cash accounts have been established with the Indenture trustee for the benefit of the note holders and are restricted in their use.

As of September 28, 2025, the Master Issuer had restricted cash of $30.3 million, which primarily represented cash collections and cash reserves held by the trustee to be used for payments of interest and commitment fees required for the Class A-2 Notes and Variable Funding Notes.

As of September 28, 2025, we also had restricted cash of $2.0 million relating to an agreement for a financing structure with a technology partner to allow them to limit their exposure to risk, while they service the franchise-owned locations.

Covenants and Restrictions — The Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the Class A-2 Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the assets pledged as collateral for the Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters.

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Operating and Finance Leases — Refer to Note 8, Leases, of the notes to the consolidated financial statements for further information of our obligations and the timing of expected payments.

Purchase Commitments — Purchase obligations includes non-cancelable purchase commitments related to information technology agreements and volume commitments for beverage products.

Purchase Commitments — Purchase obligations includes non-cancelable purchase commitments related to information technology agreements , food agreements and volume commitments for beverage products.

Refer to Note 16, Commitments and Contingencies , for further detail of our obligations and the timing of expected future payments.

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If the qualitative factors indicate that it is more likely than not that the fair value is less than the carrying value, we perform a quantitative impairment test.

In performing a quantitative test for impairment of goodwill, we primarily use the income approach method of valuation that includes the discounted cash flow method and the market approach that includes the guideline public company method to determine the fair value of the reporting unit.

In performing a quantitative test for impairment of goodwill, we use the income approach method of valuation that includes the discounted cash flow method and the market approach that includes the guideline public company method to determine the fair value of the reporting unit.

Significant assumptions made by management to estimate fair value under the discounted cash flow method include future cash flow assumptions, which may differ from actual cash flows due to, among other things, economic conditions, or changes in operating performance.

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Significant assumptions used to determine fair value under the guideline public company method include the selection of guideline companies and the valuation multiples applied.

In the process of a quantitative test, if necessary, of the Del Taco trademark intangible asset, we primarily use the relief from royalty method under the income approach method of valuation.

In the process of a quantitative test, if necessary, of the Del Taco trademark intangible asset, we use the relief from royalty method under the income approach method of valuation.

Significant assumptions used to determine fair value under the relief from royalty method include future trends in sales, a royalty rate, an estimated income tax rate, and a discount rate to be applied to the forecast revenue stream.

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Should a greater number of claims occur compared to what was estimated, or should medical costs increase beyond what was expected, accruals might not be sufficient, and additional expense may be recorded.

Legal Accruals — The Company is subject to claims and lawsuits in the ordinary course of its business.

A determination of the amount accrued, if any, for these contingencies is made after analysis of each matter.

We continually evaluate such accruals and may increase or decrease accrued amounts as we deem appropriate.

Because lawsuits are inherently unpredictable, and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgment about future events.

As a result, the amount of ultimate loss may differ from those estimates.

NEW ACCOUNTING PRONOUNCEMENTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis