Jack in the Box's (JACK) same-store sales improved in Q4 as the company moved into price-pointed promotions but missed estimates as management indicated that momentum slowed down due to the US government shutdown, RBC Capital Markets said in a Thursday note.

Although same-store sales are declining, the company is observing a sequential traffic improvement as consumers respond positively to value offerings and marketing campaigns, analysts wrote.

The launch of restaurants in Chicago was a drag on profits in Q4 due to labor and preopening costs, but they are tracking average unit volumes of above $2.5 million despite limited operating hours and menu, according to the note.

Franchisee profitability will likely remain under pressure next year, RBC said, believing that franchisee profitability could decline by over 10.7% in fiscal 2026 based on the SSS and company-owned restaurant profit guidance.

The brokerage reiterated its outperform rating on the stock and lowered its price target to $16 from $22.

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