Jack in the Box Inc delivered a solid Q1’24 with a revenue of $487.5 million and continued margin expansion, aided by commodity deflation and effective cost-management. Consolidated EBITDA reached $96.8 million (EBITDA margin ~19.8%), while GAAP net income was $38.7 million and diluted EPS stood at $1.93. Management cited weather-related weakness in January and a strong back-half plan anchored by the Smashed Jack launch, digital sales acceleration, and menu/value initiatives as key catalysts for the year. Jack in the Box’s restaurant-level margin expanded 330 basis points year-over-year to 23.1%, underscoring the benefit of margin initiatives and leverage, while Del Taco’s performance improved on traffic and value-driven strategies, though its franchise margin declined due to refranchising dynamics and higher franchise support costs. The company reiterated its longer-term 2027 targets, including 2%-3% annual same-store sales growth, 20% digital sales, and robust net unit growth, while signaling a disciplined approach to refranchising and market expansion (including Mexico).
The quarter also highlighted a challenging cash flow dynamic: net cash from operating activities was negative by $22.7 million, driven by working capital timing (notably receivables and taxes) and a $25 million Torrez settlement payment. Free cash flow was negative by $61.5 million, and total indebtedness remained a material consideration, with a leverage profile around 5x on an adjusted basis per management commentary. The combination of high leverage and negative near-term cash flow emphasizes the importance of execution in 2024–2025, particularly around Smashed Jack commercialization, Del Taco refranchising progress, and AB 1228 pricing actions. Investors should monitor: (1) Smashed Jack’s traction and impact on AUVs and margins, (2) progression of refranchising and Mexico market entries, (3) franchise economics and CAPEX intensity, and (4) the path to deleveraging through higher-margin growth and continued cost discipline.