Core Insights - Cracker Barrel is undergoing a brand refresh to strengthen its connection with both loyal and new guests, guided by extensive guest research and data-driven insights [1][2] - The brand refresh includes visual elements, reimagined restaurant spaces, and innovative food and retail offerings while maintaining the brand's authentic charm [2][3] - The strategic transformation launched in May 2024 focuses on five key areas: brand identity, menu optimization, store execution, digital capabilities, and employee experience [3] Brand Refresh Details - The brand refresh is a collaborative effort involving industry-leading agencies to define Cracker Barrel's evolved identity [2][6] - Prophet is partnering with Cracker Barrel to shape a new brand vision that enhances market share while preserving the company's heritage [6] - Viral Nation will support social media transformation, focusing on engagement and ROI through advanced strategies and AI technology [6] - Blue Engine will enhance storytelling and public relations, ensuring consistent messaging and elevating the brand's narrative [6] Company Overview - Cracker Barrel Old Country Store, Inc. operates approximately 660 locations across 43 states and owns the fast-casual Maple Street Biscuit Company [4]

Core Viewpoint - Cracker Barrel Old Country Store, Inc. will hold a second quarter earnings conference call on March 6, 2025, to discuss financial results for the fiscal second quarter ended January 31, 2025 [1][2]. Company Overview - Cracker Barrel was established in 1969 in Lebanon, Tennessee, and operates approximately 660 locations [3]. - The company also owns the fast-casual Maple Street Biscuit Company [3]. Event Details - The live webcast of the earnings conference call will begin at 11:00 a.m. Eastern Time on March 6, 2025, and will be available online [2]. - An online replay of the conference call will be accessible starting at 2:00 p.m. Eastern Time on the same day and will continue through March 20, 2025 [2].

Group 1 - The company specializes in analyzing restaurant stocks in the U.S. market, covering various segments such as QSR, fast casual, casual dining, fine dining, and family dining [1] - Advanced analytical models and specialized valuation techniques are employed to provide detailed insights and actionable strategies for investors [1] - The founder actively engages in academic and journalistic initiatives, contributing to institutions that promote individual and economic freedom [1] Group 2 - The company has a solid foundation in Business Administration and Accounting, complemented by an MBA in Forensic Accounting and Controllership [1] - Previous experience includes being a columnist discussing topics like monetary policy, financial education, and financial modeling [1]

Group 1 - The article discusses different trading strategies, emphasizing short-term momentum trading and long-term contrarian and deep value plays [1] - It highlights the importance of using mathematical equations and technical analysis for making trading decisions [1] - The author advises traders to act quickly on opportunities, cut losses rapidly, and maintain a low-risk profile [1] Group 2 - The article mentions that the author has a beneficial long position in CBRL shares, indicating a personal investment interest [2] - It clarifies that the opinions expressed are solely those of the author and not influenced by any compensation or business relationships [2] - The disclosure emphasizes that the author's investment position may change at any time for any reason [2]

Core Insights - Cracker Barrel is launching a new spring menu featuring a variety of pancake dishes and other flavorful items to attract customers [1][2][4] Pancake Offerings - The new menu includes OREO® Stuffed Cheesecake Pancakes and Strawberry Cheesecake Pancakes, both served with eggs and a choice of bacon or sausage [1] - Signature Pancake Platters are introduced with six flavor options: Blueberry, Pecan, Chocolate Chip, Fresh Strawberry, Cinnamon Spiced Apples, and Country Peach, also served with eggs and a choice of bacon or sausage [2] Additional Menu Items - New dishes include the Louisiana-Style Shrimp Skillet with grilled shrimp and seasoned rice, and Shrimp n' Grits featuring shrimp in a creole sauce served over creamy grits [3][4] - Other new items include Onion Petals with Country Comeback Sauce, Strawberry Icebox Pie, Pancake Latte, and Strawberry Peach Lemonade [8] Company Overview - Cracker Barrel Old Country Store, Inc. operates approximately 660 locations across 43 states and also owns the Maple Street Biscuit Company [6]

Company Overview - Cracker Barrel Old Country Store (CBRL) shares increased by 13.4% to close at $62.05, supported by higher trading volume compared to normal sessions [1] - The stock has gained 5.6% over the past four weeks [1] Strategic Initiatives - The rise in shares is attributed to various strategic initiatives including menu innovations, sales-building efforts, loyalty programs, and unit expansion, which have positively influenced investor sentiment [2] Earnings Expectations - Cracker Barrel is expected to report quarterly earnings of $1 per share, reflecting a year-over-year decline of 27% [3] - Revenue is anticipated to be $941.1 million, representing a 0.6% increase from the same quarter last year [3] Earnings Estimate Trends - The consensus EPS estimate for Cracker Barrel has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] - The stock currently holds a Zacks Rank of 3 (Hold) [4] Industry Comparison - Cracker Barrel is part of the Zacks Retail - Restaurants industry, where another competitor, Cheesecake Factory (CAKE), saw a 6.2% increase in shares, closing at $51.79 [4] - Cheesecake Factory's consensus EPS estimate has increased by 0.6% over the past month to $0.91, marking a 13.8% rise from the previous year [5]

Core Insights - The company is well-positioned for sustained growth through market share expansion, enhanced guest experiences, and improved profitability, despite concerns from softness in the retail segment and elevated cost pressures [1] Growth Initiatives - Cracker Barrel is implementing a back-of-house optimization initiative to enhance menu offerings, improve profitability, and increase employee job satisfaction, with the first phase focusing on process improvements and a just-in-time approach [2] - The company has seen a 29.9% increase in shares over the past six months, outperforming the industry average of 8.6%, driven by menu innovation, digital initiatives, and strategic remodels [3] - Investments in technology are aimed at enhancing the digital store experience and revamping the app to streamline ordering and provide a personalized experience [4] Financial Performance - In the first quarter of fiscal 2025, the adjusted operating margin contracted by 60 basis points year over year to 0.8%, primarily due to rising labor and operating expenses, with commodity inflation at approximately 1.9% [5] - The company anticipates commodity inflation to be between 2% and 3% and hourly restaurant wage inflation to be around 3% to 4% for fiscal 2025 [5] Menu and Brand Strategy - Enhanced menu offerings have led to strong average check growth and increased customer traffic, supported by a barbell pricing strategy that balances value and premium options [10] - The company is redefining its brand through in-store design improvements, with 19 stores updated and 12 refreshed, aiming for 25-30 remodels and refreshes each year [11] Retail Segment Challenges - The retail segment is facing challenges, with comparable store retail sales declining by 1.6% year over year due to decreased guest traffic, influenced by macroeconomic factors such as inflation and higher interest rates [12] Conclusion - While the company shows potential for growth through various initiatives, challenges such as declining retail sales and cost pressures necessitate a cautious approach [13]

Core Insights - Cracker Barrel Old Country Store, Inc. (CBRL) reported first-quarter fiscal 2025 results with earnings and revenues exceeding the Zacks Consensus Estimate, showing growth compared to the prior-year quarter [1][3][4] Financial Performance - Adjusted earnings per share (EPS) for the first quarter were 45 cents, surpassing the Zacks Consensus Estimate of 40 cents and up from 40 cents in the prior-year quarter [3] - Quarterly revenues reached $845.1 million, exceeding the consensus mark of $824 million, and increased by 2.6% year over year [4] - Comparable-store restaurant sales rose by 2.9% year over year, while comparable-store retail sales declined by 1.6% [5] Cost and Expenses - The cost of goods sold (excluding depreciation and rent) was $258.9 million, down 1% year over year, and represented 30.6% of total revenues, a decrease of 40 basis points from the previous year [6] - General and administrative expenses totaled $59.6 million, reflecting a 22% increase year over year [6] Net Income and Balance Sheet - Adjusted net income for the quarter was $10.2 million, compared to $8.8 million in the year-ago quarter [7] - As of November 1, 2024, cash and cash equivalents were $11.5 million, down from $13.9 million as of October 27, 2023, while inventory decreased to $201.9 million from $207.7 million [8] Debt and Dividends - Long-term debt increased to $527 million from $475.3 million as of October 27, 2023 [9] - CBRL declared a cash dividend of 25 cents per share, payable on February 12, 2025, to shareholders on record as of January 17 [9] Future Guidance - For fiscal 2025, CBRL expects revenues between $3.4 billion and $3.5 billion, with adjusted EBITDA anticipated to be between $200 million and $215 million [10] - Management projects commodity inflation of 2% to 3% and hourly wage inflation of 3% to 4% year over year [10] - The company plans to open three to four new Maple Street Biscuit company units, with capital expenditures projected between $160 million and $180 million [11]

Financial Data and Key Metrics - Total revenue for Q1 2025 was $845.1 million, up 2.6% YoY [34] - Restaurant revenues increased 3.4% to $683.3 million, while retail revenues decreased 0.8% to $161.8 million [34] - Comparable store restaurant sales increased 2.9% YoY, with pricing contributing approximately 4.7% [35] - Adjusted EBITDA was $45.8 million, or 5.4% of total revenue, compared to $43.9 million, or 5.3% of total revenue in the prior year quarter [47] - Hourly turnover improved by 17 percentage points [13] Business Line Performance - Off-premise sales accounted for 18.4% of restaurant sales [36] - Comparable store retail sales decreased 1.6% YoY, with declines in decor and toys categories partially offset by increases in kitchen food and bed and bath categories [37] - Retail cost of goods sold decreased by 70 basis points to 49.7% of retail sales, driven by higher vendor allowances and initial margin [39] Market Performance - The company outperformed the Black Box Casual Dining Industry by 290 basis points in comparable store sales [11] - Dinner traffic improved by over 600 basis points compared to the prior year quarter and 200 basis points compared to Q4 [20] - The Northeast and Midwest regions showed stronger performance, while Texas was relatively softer [141] Strategic Direction and Industry Competition - The company's transformation plan focuses on five pillars: refining the brand, enhancing the menu, evolving the store and guest experience, winning in digital and off-premise, and elevating the employee experience [15] - Menu innovation, including new items like Hashbrown Casserole Shepherd's Pie and Pot Roast, has driven traffic growth, particularly at dinner [17][20] - The company is testing and learning with remodels, with 25 to 30 remodels and 25 to 30 refreshes expected in FY 2025 [29] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about the progress of the transformation plan, with initiatives gaining traction and momentum [32] - The company expects total revenue of $3.4 billion to $3.5 billion for FY 2025, with pricing contributing approximately 5% [51] - Adjusted EBITDA for FY 2025 is expected to be between $200 million and $250 million, excluding consulting fees and proxy contest expenses [53] Other Important Information - The company declared a quarterly dividend of $0.25 per share, payable on February 12, 2025 [49] - Capital expenditures for FY 2025 are expected to be between $160 million and $180 million [55] Q&A Session Summary Question: Thanksgiving Week Performance and Q2 Momentum [57] - Thanksgiving week results were in line with expectations, with a focus on improving the guest and employee experience [58][59] - The company is pleased with Q2 performance so far, with a focus on dine-in occasions [60] Question: Loyalty Program Performance [62] - The loyalty program has over 6 million members, with members visiting more frequently and spending more than non-members [63] - The program has shown success in driving incremental retail sales through targeted offers [64] Question: Efficiency Efforts and Back-of-House Optimization [67] - Initial efficiency efforts are focused on labor productivity and job satisfaction, with potential benefits in waste reduction and employee experience [69] - The company expects $50 million to $60 million in structural cost savings over three years [69] Question: Retail Business Outlook and Gross Margins [71] - The retail business faces industry headwinds but remains a key differentiator for the brand [72] - Retail margins were strong in Q1 but are expected to be slightly unfavorable for the full year due to industry challenges [77] Question: Gift Card Breakage and Atypical Items [80] - The $6 million gift card breakage benefit is a timing impact and will largely be offset in Q2 [83] - Atypical items, including reserve increases and legal settlements, resulted in a net drag of $3.3 million to EBITDA [86] Question: Remodel Program and Performance [93] - The company is testing different remodel tiers and refreshes, with 25 to 30 remodels and 25 to 30 refreshes planned for FY 2025 [96] - The company is focused on understanding the economics and efficacy of the remodel spend before making final decisions on the program's scope [97] Question: Menu Innovation and Marketing [103] - Menu innovation is driven by guest feedback and culinary team efforts, with new items like Pot Roast and Hashbrown Casserole Shepherd's Pie resonating strongly [104][108] - Marketing efforts are being refined under a new CMO, with a focus on targeted communication and loyalty program integration [114][115] Question: Average Check Growth and Value Perception [121] - Average check growth was 5.8% in Q1, with 4.7% from pricing and 1.1% from favorable mix [123] - The company's value proposition is supported by menu abundance and loyalty program benefits, with value scores improving [131][134] Question: Regional Performance and Remodel Initiatives [140] - Regional performance was steady, with stronger results in the Northeast and Midwest [141] - The company is in the early stages of its transformation plan, with some initiatives moving from "transform" to "run" status, such as pricing and loyalty [145][146]

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for Q1 FY2025 show slight asset growth, decreased operating income, and net cash usage from operations [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased slightly to $2.19 billion, driven by inventories, while long-term debt rose and equity remained stable Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Nov 01, 2024 | Aug 02, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$2,192,996** | **$2,161,494** | | Inventories | $201,915 | $180,958 | | Property and equipment – net | $966,557 | $959,821 | | **Total Liabilities** | **$1,752,296** | **$1,721,345** | | Long-term debt | $527,023 | $476,581 | | **Total Shareholders' Equity** | **$440,700** | **$440,149** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 FY2025 saw revenue increase by 2.6% to $845.1 million, but operating and net income declined due to higher expenses Quarterly Income Statement Summary (in thousands, except per share data) | Metric | Q1 FY2025 (ended Nov 01, 2024) | Q1 FY2024 (ended Oct 27, 2023) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $845,089 | $823,839 | +2.6% | | Operating Income | $7,071 | $11,413 | -38.0% | | Net Income | $4,844 | $5,456 | -11.2% | | Diluted EPS | $0.22 | $0.25 | -12.0% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash usage improved to $4.4 million, but increased investing activities led to a net cash decrease of $0.5 million Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Nov 01, 2024 | Three Months Ended Oct 27, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,395) | $(15,797) | | Net cash used in investing activities | $(38,753) | $(24,598) | | Net cash provided by financing activities | $42,647 | $29,162 | | **Net decrease in cash** | **$(501)** | **$(11,233)** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, debt structure, revenue recognition, and operating lease disclosures for the financial statements - The company operates a single reportable segment, Cracker Barrel Old Country Store, with all operations located within the United States[55](index=55&type=chunk) Revenue Disaggregation (in thousands) | Revenue Source | Q1 FY2025 (ended Nov 01, 2024) | Q1 FY2024 (ended Oct 27, 2023) | | :--- | :--- | :--- | | Restaurant | $683,271 | $660,793 | | Retail | $161,818 | $163,046 | | **Total Revenue** | **$845,089** | **$823,839** | - Gift card breakage revenue recognized in Q1 2025 was **$9.2 million**, a substantial increase from **$3.2 million** in the prior-year quarter[65](index=65&type=chunk) - As of November 1, 2024, the company had **$230 million** in outstanding borrowings under its **$700 million** revolving credit facility and **$297 million** (net carrying amount) of **0.625%** convertible senior notes due in 2026[36](index=36&type=chunk)[48](index=48&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=20&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY2025 financial performance, strategic transformation, and liquidity, noting revenue growth and declining operating income [Overview and Strategy](index=22&type=section&id=Overview%20and%20Strategy) The company's long-term strategy focuses on relevancy, food, and profitability, with a five-pillar transformation plan including store remodels - The company's strategic transformation plan is built on five key pillars: - Refining the brand - Enhancing the menu - Evolving the store and guest experience - Winning in digital and off-premise - Elevating the employee experience[95](index=95&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 FY2025 revenue rose 2.6% due to higher prices, but guest traffic declined, leading to a drop in operating income percentage Q1 2025 Key Performance Indicators vs. Q1 2024 | Metric | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | Comparable Restaurant Sales | +2.9% | -0.5% | | Comparable Retail Sales | -1.6% | -8.1% | | Comparable Restaurant Guest Traffic | -2.9% | -7.1% | | Average Check Increase | +5.8% | +6.6% | - The decrease in guest traffic is attributed to lower consumer demand from macroeconomic factors like inflation, higher interest rates, and lower savings rates[112](index=112&type=chunk) - General and administrative expenses increased to **7.1%** of revenue from **5.9%**, driven by costs related to a wage arbitration settlement (~**$3.3M**), a proxy contest (~**$3.0M**), and the strategic transformation plan (~**$3.3M**)[128](index=128&type=chunk) - An impairment charge of **$0.7 million** was recorded for two underperforming Maple Street Biscuit Company (MSBC) locations[129](index=129&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by operations and a $700 million credit facility, with significant capital expenditure increases planned for strategic transformation - The company plans to increase capital expenditures to approximately **$600 million** to **$700 million** over the three-year period from 2025 to 2027[139](index=139&type=chunk) - At the end of the quarter, the company had **$230 million** outstanding on its revolving credit facility and was in compliance with all financial covenants[141](index=141&type=chunk)[142](index=142&type=chunk) - The company paid a regular dividend of **$0.25** per share during the quarter[146](index=146&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its variable-rate debt, with a $2.3 million impact for a 1% rate change - The company is exposed to interest rate risk on its **$230 million** of outstanding borrowings under its revolving credit facility[160](index=160&type=chunk) - A one-percentage point increase or decrease in interest rates on the outstanding variable-rate debt would result in an approximate **$2.3 million** impact on pre-tax annualized earnings[161](index=161&type=chunk) [Controls and Procedures](index=36&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Management concluded that as of November 1, 2024, the company's disclosure controls and procedures were effective[163](index=163&type=chunk) - No material changes were made to the internal control over financial reporting during the quarter[164](index=164&type=chunk) PART II. OTHER INFORMATION [Risk Factors](index=36&type=page&id=ITEM%201A.%20Risk%20Factors) No material changes occurred in the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There have been no material changes in the risk factors from those disclosed in the 2024 Form 10-K[165](index=165&type=chunk) [Other Information](index=36&type=section&id=ITEM%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[166](index=166&type=chunk) [Exhibits](index=37&type=section&id=ITEM%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The report includes CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act as exhibits[170](index=170&type=chunk) Signatures