Key Points:
- Cracker Barrel shares dropped after the company issued a weaker-than-expected forecast.
- The outlook underscores ongoing brand and sales challenges.
- Investors are concerned about the chain’s ability to regain growth momentum.
Cracker Barrel Old Country Store Inc. saw its stock decline sharply after releasing sales guidance that fell short of Wall Street expectations, underscoring ongoing challenges tied to its rebranding setback and weaker customer traffic.
The company projected fiscal 2026 revenue of $3.35 billion to $3.45 billion, compared with analyst estimates averaging $3.52 billion. The outlook points to flat performance relative to the past two years, with management expecting foot traffic at existing restaurants to decline between 4% and 7% over the year.
Shares dropped 8.9% in late trading following the announcement, extending a 6.2% decline for the year through Wednesday’s close.
Revenue and Profitability Outlook
Cracker Barrel’s financial guidance suggests limited growth opportunities ahead. Adjusted EBITDA, a key measure of profitability excluding items such as taxes and depreciation, is expected to fall between $150 million and $190 million. This range trails the consensus estimate of $233 million, reflecting margin pressure from weaker guest counts and higher costs.
The company also announced capital expenditures of up to $150 million, lower than Wall Street’s expected $183 million. Spending will primarily focus on maintenance, with no investment planned for restaurant remodels in the coming year. This marks a shift away from its rebranding initiative, which required $20 million in remodel expenses last year.
The brand recently faced operational challenges following customer backlash to a new streamlined logo that removed a familiar character. Foot traffic to restaurants has declined about 8% since the August 19 introduction, Chief Financial Officer Craig Pommells said on a call with analysts. The company expects a further decline of 7% to 8% in the fiscal first quarter if trends continue.
In response, Cracker Barrel halted its remodeling program and plans to return restaurants to their traditional design. Chief Executive Officer Julie Masino said the company will prioritize operational improvements, including enhancements to its kitchen, over branding changes.
Pricing Strategy and Sales Mix
Revenue growth in the latest quarter came largely from pricing rather than increased traffic. The company raised menu prices by 5.4%, offsetting weaker guest visits. Cracker Barrel introduced both value-oriented items and higher-cost dishes to balance customer demand across segments.
Looking forward, management expects an additional 4% to 5% increase in menu prices during fiscal 2026. Masino emphasized that the company aims to be “thoughtful” in implementing pricing changes to maintain affordability while supporting profitability.
The board authorized a share repurchase program of up to $100 million, marking the first authorization since 2023. No buybacks have been executed since then, but the move signals management’s intent to return capital to shareholders over time.
The company also maintained its quarterly dividend at 25 cents per share, reflecting stability in its payout strategy despite near-term earnings pressures.
Looking Ahead
Cracker Barrel’s near-term performance will depend on its ability to restore customer traffic while managing costs. With remodel investments paused and spending redirected toward operational improvements, the company is taking a more conservative approach to capital deployment.
While menu price increases provide a buffer, declining foot traffic remains a concern for revenue growth. Investors will be watching whether Cracker Barrel can regain momentum in fiscal 2026 by focusing on its core dining experience and balancing value with profitability.
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Source: https://www.cnbc.com/2025/09/17/cracker-barrel-q4-2025-earnings.html
