JACK IN THE BOX INC (JACK)

CIK: 0000807882. SIC: 5812 Retail-Eating Places. Latest 10-K as of: 2025-11-19.

SIC breadcrumb: Retail Trade > Eating And Drinking Places > SIC 5812 Retail-Eating Places

SEC company page: https://www.sec.gov/edgar/browse/?CIK=807882. Latest filing source: 0000807882-25-000072.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-11-19. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000807882.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2025-11-19. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000807882.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0000807882-26-000067.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-13. Report date: 2026-04-12.

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company’s fiscal year is 52 or 53 weeks ending the Sunday closest to September 30. Fiscal years 2026 and 2025 each include 52 weeks. Our first quarter includes 16 weeks and all other quarters include 12 weeks. All comparisons between 2026 and 2025 refer to the 12 weeks (“quarter”) and 28 weeks (“year-to-date”) ended April 12, 2026 and April 13, 2025, respectively, unless otherwise indicated.

For an understanding of the significant factors that influenced our performance during 2026 and 2025, our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the condensed consolidated financial statements and related notes included in this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended September 28, 2025.

Our MD&A consists of the following sections:

•Overview — a general description of our business.

•Results of operations — an analysis of our condensed consolidated statements of earnings (loss) for the periods presented in our condensed consolidated financial statements.

•Liquidity and capital resources — an analysis of our cash flows, including capital expenditures, share repurchase activity, dividends, and known trends that may impact liquidity.

•Discussion of critical accounting estimates — a discussion of accounting policies that require critical judgments and estimates.

•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. These metrics include:

•Changes in sales at restaurants open more than 18 months (“same-store sales”), systemwide sales, franchised restaurant sales, and average unit volumes (“AUVs”). Same-store sales, restaurant sales, and AUVs are presented for franchised restaurants and on a system-wide basis, which includes company and franchise restaurants. Franchise sales represent sales at franchise restaurants and are revenues of our franchisees. We do not record franchise sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchise sales. We believe franchise and system same-store sales, franchised and system restaurant sales, and AUV information are useful to investors as they have a direct effect on the Company’s profitability.

Same-store sales, systemwide sales, franchised restaurant sales, and AUVs are not measurements determined in accordance with GAAP and should not be considered in isolation, or as an alternative to earnings from operations, or other similarly titled measures of other companies.

OVERVIEW

Our Business

Founded in 1951, Jack in the Box Inc. (the “Company”) operates and franchises Jack in the Box® quick-service restaurants. As of April 12, 2026, we operated and franchised 2,128 restaurants, primarily in the western and southern United States, including restaurants in Guam and in Mexico.

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

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 $115.0 million in cash, subject to certain closing cash, working capital, debt and transaction expense adjustments. The Del Taco sale closed on December 22, 2025.

21

RESULTS OF OPERATIONS

The following tables summarize changes in same-store sales for Jack in the Box company-operated, franchised, and system restaurants:

Quarter

Year-to-date

April 12,

2026

April 13,

2025

April 12,

2026

April 13,

2025

Company

(2.8 

%)

(4.0 

%)

(3.9 

%)

(1.9 

%)

Franchise

(3.9 

%)

(4.5 

%)

(5.7 

%)

(1.6 

%)

System

(3.8 

%)

(4.4 

%)

(5.5 

%)

(1.7 

%)

The following tables summarize year-to-date changes in the number and mix of Jack in the Box company and franchise restaurants:

2026

2025

Company

Franchise

Total

Company

Franchise

Total

Beginning of year

150 

1,986 

2,136 

150 

2,041 

2,191 

New

1 

14 

15 

2 

8 

10 

Closed

(2)

(21)

(23)

(6)

(12)

(18)

End of period

149 

1,979 

2,128 

146 

2,037 

2,183 

% of system

7 

%

93 

%

100 

%

7 

%

93 

%

100 

%

The following tables summarize restaurant sales for Jack in the Box company-operated, franchised, and systemwide sales (in thousands):

Quarter

Year-to-date

April 12,

2026

April 13,

2025

April 12,

2026

April 13,

2025

Company-operated restaurant sales

$

94,696 

$

95,095 

$

226,603 

$

228,850 

Franchised restaurant sales (1)

829,948 

865,609 

1,966,590 

2,097,956 

Systemwide sales (1)

$

924,644 

$

960,704 

$

2,193,193 

$

2,326,806 

____________________________

(1)Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. System sales include company and franchised restaurant sales. We do not record franchised sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchised sales. We believe franchised and system restaurant sales information is useful to investors as they have a direct effect on the Company's profitability.

Company Restaurant Operations

The following table presents company restaurant sales and costs as a percentage of the related sales (dollars in thousands):

Quarter

Year-to-date

April 12, 2026

April 13, 2025

April 12, 2026

April 13, 2025

Company restaurant sales

$

94,696 

$

95,095 

$

226,603 

$

228,850 

Company restaurant costs:

Food and packaging

$

27,388 

28.9 

%

$

26,437 

27.8 

%

$

66,620 

29.4 

%

$

61,127 

26.7 

%

Payroll and employee benefits

$

33,683 

35.6 

%

$

32,178 

33.8 

%

$

80,260 

35.4 

%

$

76,706 

33.5 

%

Occupancy and other

$

18,105 

19.1 

%

$

17,804 

18.7 

%

$

42,906 

18.9 

%

$

41,344 

18.1 

%

22

Company restaurant sales decreased $0.4 million, or 0.4% in the quarter and $2.2 million, or 1.0% year-to-date compared to the prior year. The following table presents the approximate impact of changes in AUVs and the number of restaurants on company restaurant sales (in millions):

Quarter

Year-to-date

April 12,

2026

April 12,

2026

AUV decrease

$

(1.2)

$

(6.7)

Change in the average number of restaurants

0.5 

3.3 

Other

0.3 

1.2 

Total change in company restaurant sales

$

(0.4)

$

(2.2)

Same-store sales at company-operated restaurants decreased 2.8% in the quarter and 3.9% year-to-date compared to a year ago. The following table summarizes the change versus a year ago:

Quarter

Year-to-date

April 12,

2026

April 12,

2026

Average check (1)

1.5 

%

1.8 

%

Transactions

(4.3 

%)

(5.7 

%)

Change in same-store sales

(2.8 

%)

(3.9 

%)

____________________________

(1)Includes price increases of approximately 2.6% in the quarter and 2.8% year-to-date.

Food and packaging costs, as a percentage of company restaurant sales, increased 1.1% in the quarter and 2.7% year-to-date compared to the prior year, due mainly to commodity inflation, and unfavorable menu item mix, offset by menu price increases. The year-to-date increase was also due to a non-recurring benefit from a new supply chain contract in the prior year. Commodity inflation was 5.0% in the quarter and 6.3% year-to-date, with the greatest impacts in beef, tacos, produce and beverages.

Payroll and employee benefit costs, as a percentage of company restaurant sales, increased 1.8% in the quarter and 1.9% year-to-date compared to the prior year, primarily due to a change in the mix of restaurants. Labor inflation was approximately 1.5% in the quarter and 0.7% year-to-date for the current year.

Occupancy and other costs, as a percentage of company restaurant sales, increased 0.4% in the quarter and 0.8% year-to-date compared to the prior year. For the quarter and year-to-date periods, these increases were primarily due to sales deleverage and higher rent.

23

Franchise Operations

The following table presents franchise revenues and costs in each period and other information we believe is useful in analyzing the change in franchise operating results (dollars in thousands):

Quarter

Year-to-date

April 12,

2026

April 13,

2025

April 12,

2026

April 13,

2025

Franchise rental revenues

$

72,122

$

77,935

$

169,509

$

183,716

Royalties

41,482

43,305

98,635

105,130

Franchise fees and other

1,557

2,449

3,280

4,239

Franchise royalties and other

43,039

45,754

101,915

109,369

Franchise contributions for advertising and other services

44,407

46,947

105,754

114,860

Total franchise revenues

$

159,568

$

170,636

$

377,178

$

407,945

Franchise occupancy expenses

$

50,048

$

51,153

$

116,349

$

119,069

Franchise support and other costs

3,421

3,198

7,181

6,499

Franchise advertising and other services expenses

45,621

48,029

109,093

117,021

Total franchise costs

$

99,090

$

102,380

$

232,623

$

242,589

Franchise costs as a percentage of total franchise revenues

62.1%

60.0%

61.7%

59.5%

Average number of franchise restaurants

1,974

2,026

1,974

2,029

% decrease

(2.6)%

(2.7)%

Franchised restaurant sales

$

829,948

$

865,609

$

1,966,590

$

2,097,956

Franchised restaurant AUVs

$

420

$

427

$

996

$

1,034

Royalties as a percentage of total franchised restaurant sales

5.0%

5.0%

5.0%

5.0%

Franchise rental revenues decreased $5.8 million, or 7.5% in the quarter and $14.2 million, or 7.7% year-to-date, compared to the prior year primarily due to lower percentage rent of $2.4 million and $8.4 million, respectively, driven by lower franchise restaurant sales, and a decrease in rent revenue of $1.7 million and $3.9 million, respectively, due to fewer franchise restaurants. Lower lease termination fees of $2.9 million in the quarter and year-to-date also contributed to the decrease.

Franchise royalties and other decreased $2.7 million, or 5.9% in the quarter and $7.5 million, or 6.8% year-to-date compared to the prior year primarily due to lower royalty income of $0.7 million and $4.2 million, respectively, driven by lower sales, and a decrease in royalties of $0.8 million and $1.8 million, respectively, due to a decrease in the number of franchise restaurants.

Franchise contributions for advertising and other services revenues decreased $2.5 million, or 5.4% in the quarter and $9.1 million, or 7.9% year-to-date compared to the prior year mainly due to lower sales and a decrease in the number of restaurants, driving marketing contributions lower by $1.0 million and $0.8 million, respectively, for the quarter, and $4.7 million and $2.0 million, respectively, year-to-date.

Franchise occupancy expenses, primarily rent, decreased $1.1 million, or 2.2% in the quarter and $2.7 million, or 2.3% year-to-date compared to the prior year. The decrease was primarily driven by lower operating lease costs of $1.3 million in the quarter and $3.1 million year-to-date

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high. Filing date: 2025-11-19. Report date: 2025-09-28.

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

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 28, 2025 and September 29, 2024, respectively. Our MD&A consists of the following sections:

•Overview — a general description of our business.

•Results of Operations — an analysis of our consolidated statements of earnings for fiscal 2025 compared to fiscal 2024.

•Liquidity and Capital Resources — an analysis of our cash flows, including capital expenditures, share repurchase activity, dividends, and known trends that may impact liquidity.

•Critical Accounting Estimates — a discussion of accounting policies that require critical judgments and estimates.

•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.

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. These metrics include:

•Changes in sales at restaurants open more than one year (“same-store sales”), system restaurant sales, franchised restaurant sales, and average unit volumes (“AUVs”). Same-store sales, restaurant sales, and AUVs are presented for franchised restaurants. Franchise sales represent sales at franchise restaurants and are revenues of our franchisees. We do not record franchise sales as revenues; however, our royalty revenues and percentage rent revenues are calculated based on a percentage of franchise sales. We believe franchise and system same-store sales, franchised and system-wide sales, and AUV information are useful to investors as they have a direct effect on the Company’s profitability.

Same-store sales, system restaurant sales, franchised restaurant sales and AUVs are not measurements determined in accordance with GAAP and should not be considered in isolation, or as an alternative to earnings from operations, or other similarly titled measures of other companies.

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 September 29, 2024.

OVERVIEW

Our Business

Founded in 1951, Jack in the Box Inc. (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.

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.

27

RESULTS OF OPERATIONS FOR FISCAL 2025 AND 2024

The following tables summarize changes in same-store sales for Jack in the Box and Del Taco company-operated, franchised, and system restaurants:

Jack in the Box:

2025

2024

Company

(3.7)

%

0.0 

%

Franchise

(4.3)

%

(1.5)

%

System

(4.2)

%

(1.3)

%

Del Taco:

2025

2024

Company

(2.4)

%

(1.3)

%

Franchise

(4.1)

%

(1.6)

%

System

(3.7)

%

(1.5)

%

The following tables summarize changes in the number and mix of company and franchise restaurants for our two brands:

2025

2024

Jack in the Box:

Company

Franchise

Total

Company

Franchise

Total

Beginning of year

150 

2,041 

2,191 

142 

2,044 

2,186 

New

12 

19 

31 

8 

22 

30 

Refranchised

(1)

1 

— 

— 

— 

— 

Closed

(11)

(75)

(86)

— 

(25)

(25)

End of year

150 

1,986 

2,136 

150 

2,041 

2,191 

% of system

7 

%

93 

%

100 

%

7 

%

93 

%

100 

%

2025

2024

Del Taco:

Company

Franchise

Total

Company

Franchise

Total

Beginning of year

133 

461 

594 

171 

421 

592 

New

1 

13 

14 

3 

11 

14 

Acquired from franchisees

18 

(18)

— 

10 

(10)

— 

Refranchised

(13)

13 

— 

(47)

47 

— 

Closed

(7)

(25)

(32)

(4)

(8)

(12)

End of year

132 

444 

576 

133 

461 

594 

% of system

23 

%

77 

%

100 

%

22 

%

78 

%

100 

%

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

Jack in the Box:

2025

2024

Company-operated restaurant sales

$

416,715 

$

427,057 

Franchised restaurant sales (1)

3,792,222 

3,969,200 

Systemwide sales (1)

$

4,208,937 

$

4,396,257 

Del Taco:

2025

2024

Company-operated restaurant sales

$

210,628 

$

281,978 

Franchised restaurant sales (1)

708,208 

674,804 

Systemwide sales (1)

$

918,836 

$

956,782 

________________________

(1)Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. Systemwide sales include company and franchised restaurant sales. We do not record franchised sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchised sales. We believe franchised and systemwide sales information is useful to investors as they have a direct effect on the Company's profitability.

28

Jack in the Box Brand

Company Restaurant Operations

The following table presents company restaurant sales and costs as a percentage of the related sales (dollars in thousands):

2025

2024

Company restaurant sales

$

416,715 

$

427,057 

Company restaurant costs:

Food and packaging

$

116,472 

28.0 

%

$

126,063 

29.5 

%

Payroll and employee benefits

$

140,789 

33.8 

%

$

134,678 

31.5 

%

Occupancy and other

$

77,807 

18.7 

%

$

73,735 

17.3 

%

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):

2025 vs. 2024

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 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: 

2025 vs. 2024

Transactions

(5.7)

%

Average check (1)

2.0 

%

Change in same-store sales

(3.7)

%

________________________

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

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.

29

Jack in the Box Franchise Operations

The following table presents franchise revenues and costs in each fiscal year and other information we believe is useful in analyzing the change in franchise operating results (dollars in thousands):

2025

2024

Franchise rental revenues

$

332,735

$

347,227

Royalties

189,646

198,377

Franchise fees and other

8,670

7,002

Franchise royalties and other

198,316

205,379

Franchise contributions for advertising and other services

206,200

217,757

Total franchise revenues

$

737,251

$

770,363

Franchise occupancy expenses

$

219,212

$

217,430

Franchise support and other costs

12,506

12,731

Franchise advertising and other services expenses

211,408

225,465

Total franchise costs

$

443,126

$

455,626

Franchise costs as a percentage of total franchise revenues

60.1 

%

59.1 

%

Average number of franchise restaurants

2,023

2,037

Franchised restaurant sales

$

3,792,222

$

3,969,200

Franchise restaurant AUV

$

1,874

$

1,949

Royalties as a percentage of total franchise restaurant sales

5.1 

%

5.0 

%

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

Company Restaurant Operations

The following table presents company restaurant sales and costs as a percentage of the related sales (dollars in thousands):

2025

2024

Company restaurant sales

$

210,628 

$

281,978 

Company restaurant costs:

Food and packaging

$

54,605 

25.9 

%

$

73,207 

26.0 

%

Payroll and employee benefits

$

81,366 

38.6 

%

$

103,369 

36.7 

%

Occupancy and other

$

51,381 

24.4 

%

$

65,569 

23.3 

%

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.

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

2025 vs. 2024

Decrease in the average number of restaurants

$

(67.9)

AUV decrease

(3.0)

Other

(0.5)

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 decreases in company-operated same-store sales:

2025 vs. 2024

Average check (1)

4.5 

%

Transactions

(6.9)

%

Change in same-store sales

(2.4)

%

________________________

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

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 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.

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.

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Del Taco Franchise Operations

The following table presents franchise revenues and costs in each period and other information we believe is useful in analyzing the change in franchise operating results (dollars in thousands):

2025

2024

Franchise rental revenues

$

35,908

$

28,201

Royalties

32,372

31,714

Franchise fees and other

2,132

1,077

Franchise royalties and other

34,504

32,791

Franchise contributions for advertising and other services

30,307

30,915

Total franchise revenues

$

100,719

$

91,907

Franchise occupancy expenses

$

35,175

$

27,948

Franchise support and other costs

6,491

4,551

Franchise advertising and other services expenses

32,172

33,667

Total franchise costs

$

73,838

$

66,166

Franchise costs as a percentage of total franchise revenues

73.3 

%

72.0 

%

Average number of franchise restaurants

457

429

Franchised restaurant sales

$

708,208

$

674,804

Franchised restaurant AUVs

$

1,549

$

1,573

Royalties as a percentage of total franchised restaurant sales

4.6 

%

4.7 

%

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

Depreciation and Amortization

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

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

The following table presents the amounts for SG&A expenses in each fiscal year (in thousands):

2025

2024

Advertising

$

39,244 

$

34,992 

Share-based compensation

8,240 

13,471 

Incentive compensation

6,013 

9,911 

Cash surrender value of COLI policies, net

(6,882)

(14,390)

Insurance

8,385 

4,272 

Other

94,635 

94,977 

$

149,635 

$

143,233 

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

Pre-opening costs associated with the opening of a new restaurant or the remodeling of an existing restaurant consist primarily of property rent and employee training costs. 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. 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 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. 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 $25.3 million for the second quarter of 2025. 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.

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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):

2025

2024

Restructuring, integration and strategic initiatives

$

7,298 

$

15,631 

Costs of closed restaurants and other

8,467 

2,975 

Restaurant impairment charges

4,384 

8,008 

Accelerated depreciation

99 

699 

Gains on acquisition of restaurants

(6)

(2,702)

Losses on disposition of property and equipment, net

2,161 

185 

Other operating expense, net

$

22,403 

$

24,796 

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 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.

Other Pension and Post-Retirement Expenses, Net

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 $1.6 million minimum requirement. We do not anticipate making any contributions to our Qualified Plan in fiscal 2026. For additional information, refer to Note 12, Retirement Plans, of the notes to the consolidated financial statements.

Interest Expense, Net

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

2025

2024

Interest expense

$

80,606 

$

82,134 

Interest income

(1,665)

(2,118)

Interest expense, net

$

78,941 

$

80,016 

Interest expense, net, decreased $1.1 million in 2025. Interest expense decreased by $1.5 million primarily due to lower average borrowings.

Income Taxes

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.

34

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 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

General

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 and obligations related to our benefit plans. 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 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.

Cash Flows

The table below summarizes our cash flows for each of the last two fiscal years (in thousands):

2025

2024

Total cash provided by (used in):

Operating activities

$

162,358 

$

68,816 

Investing activities

(74,686)

(69,371)

Financing activities

(60,026)

(131,185)

Net cash flows

$

27,646 

$

(131,740)

Operating Activities. 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 $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.

35

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

2025

2024

Restaurants:

Remodel / refresh programs

$

8,856 

$

11,027 

New restaurants

23,996 

24,721 

Restaurant facility expenditures

14,218 

18,972 

Restaurant information technology

38,651 

28,019 

85,721 

82,739 

Corporate Services:

Information technology

2,109 

7,976 

Corporate facilities

393 

462 

2,502 

8,438 

Total capital expenditures

$

88,223 

$

91,177 

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. 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 $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.

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.

36

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 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. The Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, the sum of gross sales for specified restaurants being below certain levels on certain measurement dates, certain manager termination events, an event of default, and the failure to repay or refinance the Class A-2 Notes on the applicable scheduled maturity date. The Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal, or other amounts due on or with respect to the Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments. As of September 28, 2025, we were in compliance with all of our debt covenant requirements and were not subject to any rapid amortization events.

Contractual Obligations

Our cash requirements greater than twelve months from contractual obligations and commitments include:

Debt Obligations and Interest Payments — Refer to Note 7, Indebtedness, of the notes to the consolidated financial statements for further information of our obligations and the timing of expected payments.

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 , 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.

Benefit Obligations — Refer to Note 12, Retirement Plans, of the notes to the consolidated financial statements for further information regarding our obligations and the timing of expected payments under our non-qualified defined benefit plan and postretirement healthcare plans.

DISCUSSION OF CRITICAL ACCOUNTING ESTIMATES

We have identified the following as our most critical accounting estimates, which are those that are most important to the portrayal of the Company’s financial condition and results, and that require management’s most subjective and complex judgments. Information regarding our other significant accounting estimates and policies are disclosed in Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the notes to the consolidated financial statements.

37

Long-Lived Assets — We review our long-lived assets, such as property and equipment and operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Long-lived assets are grouped for recognition and measurement of impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. The impairment test for long-lived assets requires us to assess the recoverability of long-lived asset groups by comparing their net carrying value to the sum of undiscounted estimated future cash flows expected to be generated through leases and/or subleases or by our individual company-operated restaurants. If the carrying amount of a long-lived asset group exceeds the sum of related undiscounted future cash flows, we recognize an impairment loss by the amount that the carrying value of the assets exceeds fair value. Our estimates of cash flows used to assess impairment are subject to a high degree of judgment and may differ from actual cash flows due to, among other things, changes in our business plans, operating performance, and economic conditions.

Goodwill and Indefinite-Lived Intangible Assets — We evaluate goodwill and indefinite-lived intangibles for impairment in the third quarter of each year, or more frequently, if indicators of impairment are present. Goodwill is evaluated for impairment by determining whether the fair value of our reporting units exceed their carrying values. Our reporting units are our two restaurant brands, Jack in the Box and Del Taco.

Our impairment analyses first include a qualitative assessment to determine whether events or circumstances indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying value. Significant factors considered in this assessment include, but are not limited to, macro-economic conditions, market and industry conditions, cost considerations, the competitive environment, share price fluctuations, overall financial performance, and results of past impairment tests. 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 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. The discount rate is our estimate of the required rate of return that a third-party buyer would expect to receive when purchasing a business from us that constitutes a reporting unit. We believe the discount rate is commensurate with the risk and uncertainty inherent in the forecasted cash flows. 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 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.

Self-Insurance — We are self-insured for a portion of our losses related to workers’ compensation, general liability and other legal claims, and health benefits. In estimating our self-insurance accruals, we utilize independent actuarial estimates of expected losses and assumptions related to the loss development factors, which are based on statistical analysis of historical data. These assumptions are closely monitored and adjusted when warranted by changing circumstances. 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.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the notes to the consolidated financial statements for a discussion of the impact of new accounting pronouncements on our consolidated financial statements.