JACK IN THE BOX INC

JACK IN THE BOX INC Annual Report - Cleaned Up for Investors

Hey there! Let’s break down how Jack in the Box did this past year in plain terms. No jargon, just the key details you need to know.

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1. What does this company do?

Jack in the Box is a fast-food chain famous for burgers, tacos, and late-night snacks. They make money by running their own stores and franchising (letting others own locations in exchange for fees). This year, they sold 13 company-owned stores to franchisees and closed 5 underperforming locations to focus on a "less risk, more stability" model.

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2. Financial performance: Growth vs. profit

• Revenue: $1.7 billion (up 4% from last year).
• Profit: $130 million (down slightly due to a $2.2 million loss from restructuring Del Taco locations).
• Growth: Opened 45 new stores (mostly franchises) and saw same-store sales rise 2%.

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3. Wins and challenges

Wins:

• Made $3.2 million by extending franchise/lease agreements.
• Digital sales jumped 15% thanks to app deals.

Challenges:

• Lost $2.2 million refranchising Del Taco stores.
• Spent $393,000 breaking leases on closed locations.

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4. Financial health check

• Debt: Still high at $3 billion.
• Cash flow: Generated $18 million by selling company stores to franchisees.
• Shareholders: Returned $50 million via stock buybacks.

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5. Risks to watch

• Refranchising: Short-term losses like Del Taco could repeat.
• Leases: 8,500+ locations tied to rental agreements – breaking these costs cash.

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6. Competitive edge

Their "asset-light" model (fewer company-owned stores) makes them flexible. However, bigger rivals like McDonald’s invest more in tech and innovation.

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7. Big strategy moves

Pushing to be 95% franchise-owned by 2025 (up from ~90% now). Sold 13 company stores this year – expect more sales to franchisees.

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8. What’s next?

• More refranchising deals (aiming to avoid losses like Del Taco).
• Expect $1.5 million/year from extended franchise agreements.

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9. Industry trends

• Franchise flipping: Popular but risky if new owners can’t profit.
• Real estate costs: Breaking leases offers quick exits but burns cash.

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Key Takeaways for Investors

The Good:

• Revenue growing steadily (+4%).
• Franchise model reduces operational risk.
• Digital sales rising fast (15% growth).

The Concerns:

• Debt remains heavy ($3 billion).
• Refranchising isn’t always smooth (see: Del Taco loss).
• Lease obligations could lead to more dead-money costs.

Verdict:
Jack in the Box is betting big on becoming a "franchise landlord" – collecting fees while others handle day-to-day operations. The strategy works for now (revenue up, stores expanding), but high debt and reliance on franchisees add risk. If you’re comfortable with moderate growth and watching for refranchising stumbles, this could fit a balanced portfolio. If you prefer bulletproof stability, the debt load and lease risks might be too spicy.

Always do your own research – this isn’t financial advice, just a friendly breakdown! 🍔📊