Cracker Barrel's Q4 2025 Earnings Call: Contradictions in Marketing, G&A Expenses, Pricing, and Logo Impact

Date of Call: September 17, 2025

Financials Results

• Revenue: $868.0M total revenue for Q4; excluding a $62.8M benefit from the 53rd week in the prior year, total revenue increased 4.4% year-over-year (restaurant $718.2M; retail $149.8M).
• EPS: GAAP diluted EPS $0.30; adjusted diluted EPS $0.74 (no YOY EPS change provided).
• Gross Margin: Total cost of goods sold 30.5% of revenue versus 30.4% prior year; restaurant COGS 26.3% of restaurant sales versus 26.0% prior year; retail COGS 51.0% versus 50.1% prior year.
• Operating Margin: Adjusted EBITDA $55.7M, or 6.4% of total revenue; excluding a $5.8M impact from the 53rd week in the prior year, adjusted EBITDA increased 8%.

Guidance:

• Full-year revenue expected $3.35B to $3.45B, assuming annual traffic down 4% to 7%.
• FY26 pricing up 4% to 5%; commodity inflation 2.5% to 3.5%; wage inflation 3% to 4%.
• Plan for 2 new store openings and closure of 14 Maple Street units.
• Full-year adjusted EBITDA expected ~$150M to $190M; Q1 EBITDA expected significantly below prior year due to lower traffic and ~$16M incremental costs.
• CapEx planned $135M to $150M (≈60% maintenance, 35% technology/strategic, 5% new units).

Business Commentary:

• Traffic Decline and Recovery Strategy:
• Cracker Barrel reported a traffic decline of approximately 8% since August 19, the date of the logo change.

• The decline was attributed to the change in logo and remodel tests, which sparked a strong backlash from guests. The company is now focused on regaining traffic by reverting to its old-timer logo and adjusting investment plans for restaurants.

• Menu Pricing and Cost Management:

• The company plans to implement menu pricing increases of 4% to 5% for fiscal 2026.

• This strategy is based on successful pricing initiatives and commodity inflation management, with pricing for Q4 being 5.4%.

• Back-of-House Optimization and Cost Savings:

• Cracker Barrel is prioritizing back-of-house optimization, with plans to achieve $55 million to $60 million in cost savings over multiple years.

• This initiative aims to improve food quality, simplify processes, and increase efficiency, contributing to overall cost management efforts.

• Loyalty Program Growth and Engagement:

• The Cracker Barrel Rewards program has seen membership increase by 3 million people in the last year, reaching 9 million members.
• The program's success is attributed to offering value to guests and is expected to contribute to future growth through direct feedback initiatives.
  

  Sentiment Analysis:

  Overall Tone: Neutral

  • Management acknowledged a material short-term traffic decline (~8% since 8/19 and Q1 traffic expected down ~7%–8%) but reiterated confidence in a multiyear plan and plans to invest in marketing, menu improvements and loyalty to restore traffic; guidance reflects uncertainty and a wide EBITDA range.

Q&A:

• Question from Brian Mullan (Piper Sandler & Co., Research Division): Thank you for sharing the traffic performance this quarter. Just given what you saw following the logo change, just had a question about the marketing plan this year. Do you still spend the same amount of dollars and maybe just change the message in order to drive that sequential traffic recovery you're expecting? Or maybe do you pull back on spending regroup a bit? Just how are you thinking about that as you sit here today? And is there any way to perhaps actually take advantage of all this recent attention over time?
  Response: Marketing will be a bit higher as a percent of sales in FY26 (Q1 elevated); the company will continue to invest in marketing to drive traffic recovery.

• Question from Brian Mullan (Piper Sandler & Co., Research Division): And then just a follow-up on some of the back of the house issues. I think Phase 2 this year was always going to be focused on improving some of the processes. But separate from that in the prepared remarks, you've talked about improving some of the food quality of some of the items. Just trying to understand, like was this always the plan on the food quality side? Or is some of this maybe due to broader feedback you've done since the logo change, so just really any color on the plans, both processes as well as food on the menu that you're working on?
  Response: Food quality has been a central, pre-existing priority; back-of-house Phase 1 rolled out in Q3 and Phase 2 was piloted in Q4—ongoing testing and adjustments continue based on learnings and guest feedback.

• Question from Dennis Geiger (UBS Investment Bank, Research Division): I appreciate the quarter-to-date or year-to-date color. Wondering if you could share anything more sort of on how things have trended just given the sensitivity and the magnitude of some of the pressure. Anything to share have gone by? Have you've seen any kind of improvement within that trajectory? I understand you gave the 1Q guide. But just if anything more on the cadence -- weekly cadence so far?
  Response: Pre-8/19 traffic was down ~1%; since 8/19 traffic fell ~8%; the guidance reflects an anticipated sequential quarterly recovery with materially stronger improvement in the second half of the year, but uncertainty remains.

• Question from Dennis Geiger (UBS Investment Bank, Research Division): Very helpful, guys. And the last one, I guess sort of 2 parts. If anything additional on the weakness and the challenges, whether it's regional anything by cohort or frequency of guests if you've got anything more or maybe it's just broad-based. And the more important second part of the question is kind of Julie, what you just touched on. From here plans, in particular, to address kind of the near-term challenge, it sounds like the front porch feedback initiative is going to help to dictate some of the plans in the reaction here? Just wanted to see if I have that correct or if anything else to share on kind of near to medium-term stuff to recover that traffic?
  Response: Declines are broad-based but larger in the Southeast (excluding Florida); the over-65 cohort has held up best; near-term recovery actions include menu innovations, targeted marketing (e.g., college football campaigns) and the Front Porch Feedback loyalty initiative to guide actions.

• Question from Jake Bartlett (Truist Securities, Inc., Research Division): My first was on the margin guidance. The implied margin guidance for '26. Maybe if you could kind of dig into the moving pieces before we had talked about $55 million to $60 million in cost savings from the back of the house sounds like that plan has changed a little bit, but it seems to be on track. Maybe just to describe maybe how much savings you expect there. What you're looking at from G&A.? I think obviously, 2025 is an investment year, as you described it. The situation has changed. Wondering whether G&A might -- there's opportunity to bring that down?
  Response: Q1 impact driven by softer traffic and ~$16M incremental costs (marketing, GM conference, training); full-year EBITDA is primarily driven by traffic (flow-through ~30%–45%); $50M–$60M cost‑savings target remains achievable but timing and mix of initiatives (back-of-house one part) are still being evaluated.

• Question from Jake Bartlett (Truist Securities, Inc., Research Division): Got it. Should we think about the $55 million to $60 million, and I'd love to hear what the other big buckets there are. But as something that is still would be expected within the '26 and '27 or is it the prior plan? Or has that changed materially?
  Response: The $50M–$60M savings target is still considered achievable over multiple years, but management will provide timing updates as they progress; back-of-house is one of several contributors.

• Question from Jake Bartlett (Truist Securities, Inc., Research Division): Great. And then my another question was on the balance sheet and the return of cash to shareholders. You have the authorization now, the $100 million. I guess the question is what your approach is to the balance sheet. It looks like your EBITDA guidance is about your equal to your CapEx guidance. So if you look at where your EBITDA guidance is, you're going to get a little bit higher leverage there anyway from that. So is it feasible to return cash to shareholders this year given in the framework of your guidance? Or is that just kind of a tool maybe for upside? Or how do we think about your approach to the balance sheet, returning cash to shareholders in the context of your guidance?
  Response: The Board takes a balanced, opportunistic approach—invest in the business, maintain a conservative balance sheet and return cash to shareholders; the $100M repurchase authorization and dividend were approved but future deployment will be monitored against evolving conditions.

• Question from Jeffrey Farmer (Gordon Haskett Research Advisors): Several of your casual dining and family dining peers have been looks like increasingly aggressive in pursuing low price point offers or just value promotions at a certain price point. So again, sort of as the logo dynamic has played out over the last 5 to 6 weeks, even in that narrow time frame, the segment has gotten increasingly competitive. So in lieu of what a lot of your peers are doing, how does that impact your own top line strategy?
  Response: Maintain a barbell pricing/value strategy while preserving low entry price points; leverage loyalty and targeted promotions (e.g., Sunrise Special, BOGO Old Timers) to drive traffic—company believes it still delivers strong everyday value.

• Question from Jeffrey Farmer (Gordon Haskett Research Advisors): Okay. And then I think I heard you guys say 4% to 5% menu pricing in 2026, is that accurate?
  Response: Yes—menu pricing of 4%–5% in FY26 was confirmed.

• Question from Jeffrey Farmer (Gordon Haskett Research Advisors): So that's quite a bit of how do your commodity and wage inflation, roughly 100 to 200 basis points. And it would be one of the highest menu pricing levels in this sector. So 2 questions. So why do you guys feel the need to sort of push that pricing? Is this just, again, sort of going back to the -- or rejiggering the pricing structure? And do you expect your consumers to sort of accept this pricing without too much pushback?
  Response: Pricing capability has been refined and shown good flow-through; 4%–5% is modest on a ~$15 check, entry points are preserved and loyalty provides incremental offsets—value scores have continued to improve.

• Question from Sara Senatore (BofA Securities, Research Division): I guess one quick clarification. I think you said, Craig, that most of the age cohorts or you didn't see a lot of variation outside of the geographic kind of split, but that the older cohort was perhaps less affected than younger. So I just wanted to clarify that, and then I do have a question.
  Response: Confirmed: impacts are across cohorts but the over‑65 cohort has held up best relative to others.

• Question from Sara Senatore (BofA Securities, Research Division): Okay. And I guess in that context, and maybe, Julie, similar to what you said was that Cracker Barrel hadn't evolved with the guests from prior to many -- for many years, which I think certainly makes sense. I guess, if remodeling and rebranding isn't the way to sort of evolve or bring the brand forward. Maybe to talk a little bit more about what is as you think about maybe shift -- either shifting your customer base to perhaps maybe easing a little bit more useful? Or how you think about evolving the brand in the context of your comments earlier?
  Response: Remodels/logo were only small parts of the five‑pillar plan; the evolution focus remains on food, guest experience, loyalty, pricing and operations—management is doubling down on food and experience improvements.

• Question from Sara Senatore (BofA Securities, Research Division): Okay. That's very helpful. And just then sorry, second quick modeling question, Craig. Can you just talk a little bit -- I'm sorry, if I missed it, G&A was a good guy again this quarter. I think last quarter, you had said that there might be some timing shifts. So could you just maybe explain maybe what happened?
  Response: G&A was managed down as part of broader cost‑savings efforts; management continues to deploy and time spend to maximize effectiveness which produced quarter‑to‑quarter variability.

• Question from Jon Tower (Citigroup Inc., Research Division): Jumping around on mix, if you don't mind. You had mentioned quarter-to-date, you're seeing good, not good, but you're seeing traffic declines. But at the same time you're seeing an uptick in loyalty sign-ups, I believe you talked about, I think in the recent weeks, 300,000 loyalty members sign up. So can you speak to what's happening there? Are you doing anything internally at the stores to get people to jump into the program more so than what you were doing previously?
  Response: Loyalty sign-ups accelerated (≈400K QTD; ≈300K since 8/19) without changes in store activity; Front Porch Feedback launching to capture transaction‑linked guest input.

• Question from Jon Tower (Citigroup Inc., Research Division): And then, I guess jumping around a little bit. Maybe, Craig, you had mentioned 60% of the CapEx this year is going to be roughly maintenance. Is that a good that $80 million to $90 million maintenance CapEx, a good way to think about it longer term over the next several years, $80 million, $90 million for baseline maintenance?
  Response: Longer-term baseline maintenance (inflation‑adjusted) is about $125M per year; 2025–26 include incremental catch-up on deferred maintenance plus additional tech spend.

• Question from Jon Tower (Citigroup Inc., Research Division): And then just in terms of your comments around the tariff remediation measures, can you speak to what exactly is going on there? Are you guys just sourcing from countries with better lower rates of tariffs? Or are you effectively pricing to offset the higher tariff rates, like what's going on with these measures?
  Response: Expect ~$25M incremental tariffs in FY26 mitigated largely via vendor negotiations, assortment/pricing adjustments, country‑of‑origin sourcing changes, and a ~10% SKU reduction in retail.

Contradiction Point 1

Marketing Strategy and Investment

It highlights a shift in the company's approach to marketing expenditure, which directly impacts customer engagement and revenue growth.

After the traffic decline following the logo change, how will you adjust marketing spending and strategy? - Brian Mullan(Piper Sandler & Co., Research Division)

2025Q4: Marketing as a percentage of sales will be slightly higher in 2026 than in 2025, particularly in Q1. - Julie Masino(CEO)

Can you discuss Q3 pricing dynamics and tariffs' impact on Q4 pricing? - Todd Morrison Brooks(The Benchmark Company)

2025Q3: On G&A, I would say we are finding opportunities for efficiencies and where we can invest in the business. So we've been taking expense out of the business as we go through the transformation, but at the same time, we're investing in the strategic areas that we think will drive a better long-term result. - Craig A. Pommells(CFO)

Contradiction Point 2

G&A Expense Management

It involves changes in the company's approach to G&A expense management, which directly impacts operational efficiency and profitability.

How does your balance sheet strategy align with shareholder returns? - Jake Bartlett(Truist Securities, Inc., Research Division)

2025Q4: The G&A level in Q4 will be closer to Q1 and Q2 levels, adjusted for project shifts. - Craig A. Pommells(CFO)

What does a strong Q4 start mean given Q3's 1% same-store sales growth? - Jeffrey Daniel Farmer(Gordon Haskett)

2025Q3: We are managing the G&A today much closer to the same level we had in Q1 and Q2, recognizing that as we get into our transformation and we bring some of the nonrecurring costs into the business, we will have some higher G&A costs in Q3. - Craig A. Pommells(CFO)

Contradiction Point 3

Menu Pricing Strategy

It highlights the company's approach to menu pricing, which directly impacts customer perception of value and potential revenue growth.

Why is the company raising menu prices in a competitive market, and will consumers accept them? - Jeffrey Farmer(Gordon Haskett Research Advisors)

2025Q4: Our average check increased 5.7% in Q4, with pricing contributing 5.0% and menu mix contributing 0.7%. This is the second consecutive quarter of pricing above 5%. - Craig Pommells(CFO)

How did pricing dynamics affect Q3, and what impact will tariffs have on Q4 pricing? - Todd Morrison Brooks(The Benchmark Company)

2025Q3: The average check increased by 6.6%, with pricing contributing 4.9% and mix contributing 1.7%. - Craig A. Pommells(CFO)

Contradiction Point 4

Traffic and Logo Change Impact

It highlights the company's differing perspectives on the impact of the logo change on traffic and customer engagement, which is crucial for evaluating strategic marketing decisions.

What are the key impacts of the logo change, and how will your near-term plan address them? - Dennis Geiger(UBS Investment Bank)

2025Q4: Traffic was down about 1% before and after the logo change. - Craig Pommells(CFO)

Can you provide an update on 2Q-to-date momentum, including Thanksgiving week results? - Dennis Geiger(UBS)

2025Q1: We've clearly highlighted the traffic challenges that were exasperated by the rebranding. - Julie Masino(CEO)

Contradiction Point 5

Marketing Strategy and Investments

It shows a shift in the company's stance on marketing strategy and investments, which directly impacts their financial outlook and customer engagement initiatives.

After the traffic decline following the logo change, how are you planning to adjust marketing spending and strategy? - Brian Mullan(Piper Sandler & Co.)

2025Q4: Marketing as a percentage of sales will be slightly higher in 2026 than in 2025, particularly in Q1. - Julie Masino(CEO)

Can you discuss the first-quarter strength in relation to strategic plans, especially the loyalty program? - Dennis Geiger(UBS)

2025Q1: We are not planning to change our marketing spend or our marketing strategy for this coming year. - Julie Masino(CEO)