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    CBRL
    Earnings call· May 2026(Q3 FY26)

    CRACKER BARREL OLD COUNTRY STORE Q3 FY26 earnings call CBRL

    Jun 9, 2026 Source

    Executive summary

    Cracker Barrel Q3 FY26 — Cost discipline and check growth drive EBITDA beat despite negative traffic

    A turnaround-in-progress quarter: traffic is still negative but the underlying trend is gradually improving while sharp cost control, better discounting and add-on-driven check gains delivered an EBITDA beat and a raised full-year guide. Management is deliberately re-anchoring on core/loyalty guests and value positioning, having paused the remodel program and trimmed marketing, betting improving guest-experience scores eventually convert to traffic against a harder Q4 comp.

    Highlights

    5

    • Total revenue of $797.4M and adjusted EBITDA of $40.3M (5.1% of revenue) both exceeded expectations, driven by cost management and improved check

    • Retail comps (-1.8%) outperformed restaurant comps (-2.6%) for the first time in over 4 years, with average unit retail and units per transaction both up

    • Guest metrics improved for the third consecutive quarter: Google star rating +4% (highest since 2018), food taste/service scores +5%, food temperature +7%, value scores +5%

    • Cracker Barrel Rewards grew to nearly 12M members with member-tracked sales above 40% and YoY growth in loyalty member visits

    • Raised full-year FY26 adjusted EBITDA guidance to $120M-$125M; restructuring expected to deliver $20M-$25M in annualized G&A savings

    Concerns

    5

    • Comparable restaurant sales fell 2.6%, including a 6.7% traffic decline

    • Adjusted EBITDA declined YoY from $48.1M (5.9% margin) to $40.3M (5.1% margin)

    • Retail cost of goods sold rose 90bps to 49.8% of retail sales, driven by higher tariffs

    • Labor rose 80bps to 37.9% of revenue on sales deleverage; G&A rose 60bps to 6.2% on ~$6.8M of incentive comp, legal and separation costs

    • Continued pressure on the lower-income consumer plus elevated gas prices as a Q4 discretionary-spend headwind, against a tougher Q4 prior-year comparison

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year FY26 total revenue
    $3.27B to $3.3B
    high materiality
    High
    Full-year FY26 adjusted EBITDA
    $120M to $125M
    high materiality
    High
    Full-year FY26 menu pricing
    low 4% range
    medium materiality
    Medium
    Full-year FY26 commodity inflation
    low 2% range
    medium materiality
    Medium
    Full-year FY26 hourly wage inflation
    low 2% range
    medium materiality
    Medium
    Full-year FY26 capital expenditures
    $105M to $115M
    medium materiality
    High
    Q4 FY26 tariff refund reinvestment
    reinvest nearly all of ~$5M received
    low materiality
    High
    Q4 FY26 advertising expense vs prior year
    down roughly $7M
    low materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Restaurant
    Traffic remained negative but the underlying trend is gradually improving; check growth and menu-mix/add-on changes supported sales. Off-premise growth driven by catering and third-party delivery.
    Comparable store restaurant sales: -2.6%Traffic: -6.7%Average check: +4.3%Pricing: +4.4%Menu mix: slightly negative (improved from H1)Off-premise sales: 19.6% of restaurant sales (+~50bps YoY)
    		$658.4M——Restaurant COGS 26.1% of restaurant sales (vs 26.2% prior year)
    Retail
    Retail comps outperformed restaurant comps for the first time in over 4 years, driven by SKU rationalization, optimized markdowns, improved merchandising and resonant product (toys, collectible salt & pepper shakers, American Heritage 250th assortment); comp decline was traffic-driven, offset by AUR and UPT gains.
    Comparable store retail sales: -1.8%Average unit retail: up YoYUnits per transaction: up YoYQuarter-end inventories: $179.9M (vs $168.7M prior year)
    		$139M——Retail COGS 49.8% of retail sales (vs 48.9% prior year; +90bps from higher tariffs, partially offset by pricing)

    Operational metrics

    16
    Adjusted EBITDA
    $40.3Mvs $48.1M prior year; margin 5.1% vs 5.9%
    Q3 FY26

    Exceeded expectations despite YoY decline, driven by cost management and check improvement.

    Adjusted diluted EPS
    $0.29GAAP diluted EPS was $1.90
    Q3 FY26

    Non-GAAP adjusted EPS excludes the one-time interchange settlement.

    Average check (absolute)
    $15.85vs over $27 in casual dining and over $19 in family dining
    Q3 FY26

    Cited to underscore Cracker Barrel's lower absolute price point and value proposition.

    Off-premise sales mix
    19.6% of restaurant sales+~50bps YoY
    Q3 FY26

    Website upgrade intended to further drive off-premise business.

    Interchange fee litigation settlement
    $47.4Mone-time; excluded from adjusted EBITDA
    Q3 FY26

    Bolstered the balance sheet; drove the gap between GAAP EPS $1.90 and adjusted EPS $0.29.

    Total debt leverage ratio
    2.4xsenior debt to adjusted EBITDA ratio was 0
    as of Q3 FY26 quarter-end

    Debt was ~$3M below prior year; net interest expense $3.7M vs $5M on lower revolver balance and higher convertible balance.

    Available liquidity capacity
    $541.3M
    as of Q3 FY26 quarter-end

    Balance sheet further bolstered by the $47.4M litigation settlement.

    G&A cost savings program
    $20M-$25M annualized
    annualized (program completed Q2 FY26)

    A significant driver of Q3 adjusted EBITDA; management to continue managing expenses.

    Advertising expense reduction
    ~$7M lower per quartervs prior year
    Q3 FY26 and expected Q4 FY26

    Part of second-half cost actions; efficiency reallocated toward loyalty and Speedway/CB400 activations.

    Tariff impact and mitigation
    ~$17M impact / claim filed~$5M received to date (all in Q4)
    FY26

    Retail team mitigated a portion of the tariff impact; guidance excludes any additional refunds.

    Loyalty member visits
    increased YoYup year-over-year; strong retention among most valuable loyalty guests consistent with historical norms
    Q3 FY26

    Loyalty program (~12M members) used increasingly as a lower-cost, direct marketing channel.

    Google star rating
    +4% YoYhighest quarterly score since 2018
    Q3 FY26

    Third consecutive quarter of improvement across guest metrics.

    Guest experience quality scores
    food taste/service +5%, food temperature +7%, value +5%YoY
    Q3 FY26

    Management views improving guest metrics as leading indicators for future traffic recovery.

    Managerial turnover
    improved 6%YoY; outperforming the industry
    Q3 FY26

    Cited as a leading indicator alongside guest metrics.

    Wage inflation
    ~2%
    Q3 FY26

    Labor rose 80bps to 37.9% of revenue primarily on sales deleverage rather than wage pressure.

    Quarter-end retail inventories
    $179.9Mvs $168.7M prior year
    as of Q3 FY26 quarter-end

    Higher tariffs and merchandising initiatives; inventory quality described as clean.

    Industry KPIs

    4
    MetricValueDetails
    Comparable sales compsRestaurant comp -2.6%; Retail comp -1.8%%
    Input cost inflation hedgingcommodity inflation ~2.5%%
    Value affordability positioningbarbell pricing with sharp entree price points; value scores +5%
    Loyalty program members tier mixnearly 12 million membersmembers

    Product announcements

    6
    ProductTypeDetails
    Spring menu: Sugar Cured and Country Ham dinners (core return), Carrot Cake (LTO), Garden & Farm House Scrambles, Smoky Southern Salmonlaunch
    Summer Campfire promotion, incl. new Campfire Breakfast Skilletlaunch
    Fuel Your Summer Road Trip sweepstakes (loyalty)launch
    New website / digital ordering platformlaunch
    American Heritage retail assortment (250th anniversary) and early Halloween setlaunch
    Enterprise AI tools (ML traffic forecasting, guest-relations ticket resolution, internal guest-feedback insights agent)update

    Deals & partnerships

    2
    Speedway Motorsportsmarketing partnership / title sponsorship (Cracker Barrel 400)multi-year (building on last year's partnership); 2026 season

    Cracker Barrel served as title sponsor of the sold-out Cracker Barrel 400 on May 31, 2026 (won by Denny Hamlin, 31 lead changes among 15 drivers); activations expanded across the season.

    Undisclosed interchange fee litigation counterpartylitigation settlement$47.4M cash proceeds

    Cash proceeds received during Q3 from a settlement agreement resolving interchange fee litigation.

    Risks & headwinds

    8
    Negative restaurant trafficQ3 FY26, ongoing

    traffic -6.7%; comparable restaurant sales -2.6%

    Mitigation: check growth (+4.3%), menu/add-on changes, improving guest-experience scores viewed as leading indicators of future traffic recovery

    Lower-income consumer pressure / discretionary spending softnessongoing, into Q4

    not quantified; performance pressured at lower income, more resilient/growing at higher income, linear down the income scale

    Mitigation: value proposition ($15.85 check vs $27 casual / $19 family), barbell pricing, sharp entree price points, loyalty engagement/sweepstakes

    Elevated gas/fuel pricesQ4 FY26

    not quantified; impacts discretionary income and distribution costs on restaurant and retail sides

    Mitigation: included in guidance; value positioning and Fuel Your Summer sweepstakes to offset consumer impact

    Tariff cost pressure on retailFY26

    ~$17M FY26 impact; drove retail COGS +90bps to 49.8% of retail sales

    Mitigation: mitigation actions and pricing; ~$5M of refund received (reinvested); remaining refund uncertain and excluded from guidance

    Commodity inflationQ3 FY26; full-year guide low 2%

    ~2.5% in Q3 (higher beef, pork, produce, seafood; partially offset by lower egg and dairy)

    Mitigation: menu pricing (+4.4%) offsetting inflation; restaurant COGS still improved 10bps YoY

    Tougher Q4 year-over-year comparisonQ4 FY26

    not quantified; Q4 prior year was one of the strongest fourth quarters in a while

    Mitigation: underlying traffic trend continues to gradually improve; over a month into the quarter

    Labor cost deleverageQ3 FY26

    labor +80bps to 37.9% of revenue, primarily sales deleverage; wage inflation ~2%

    Mitigation: improved scheduling and labor deployment via ML traffic forecasting; operational efficiency in waste and supplies

    G&A cost increasesQ3 FY26

    +60bps to 6.2% of revenue; ~$6.8M of items ($2.9M incentive comp true-up, $2.8M legal/professional fees, $1.1M separation)

    Mitigation: $20M-$25M annualized restructuring savings; incentive comp true-up reflects higher full-year expectations

    Q&A highlights

    9

    What underpins the constructive Q4 guide given tougher comparisons, higher gas prices and reliance on summer car travel?

    Craig cited gradual improvement in the underlying traffic trend (now over a month into Q4), acknowledged Q4 laps a strong prior-year quarter and that gas prices pressure discretionary income and the lower-income consumer, but pointed to strong execution and the value proposition ($15.85 check vs $27 casual/$19 family) plus barbell pricing as support.

    “underpinning Q4, it is a tougher comparison. But again, we do have that gradual improvement trend that's supporting it as well.”

    asked by Todd Brooks · answered by Craig Pommells

    3 min read6 chapters

    Detailed Narrative

    01

    Q3 results and margin bridge

    Total revenue was $797.4M (restaurant $658.4M, retail $139M), with adjusted EBITDA of $40.3M (5.1% of revenue) down from $48.1M (5.9%) a year ago but ahead of internal expectations. Restaurant COGS improved 10bps to 26.1% on pricing net of ~2.5% commodity inflation, and other operating expenses fell 40bps to 24.9% on lower advertising and supplies. Offsetting these, labor rose 80bps to 37.9% on sales deleverage and G&A rose 60bps to 6.2%. GAAP EPS was $1.90 (inflated by a one-time📎 settlement) versus adjusted EPS of $0.29.

    02

    Traffic, check and the value proposition

    Comparable restaurant sales declined 2.6% with traffic down 6.7%, partly offset by a 4.3% higher average check (pricing +4.4%, menu mix slightly negative but improved from the first half). Management stressed absolute value: average check of $15.85 versus over $27 in casual dining and over $19 in family dining, reinforced by a barbell pricing strategy (Sunrise Pancake special $7.99, Early Dinner Deals from $8.99) and margin-accretive add-ons such as shareable duos/trios and side/protein upgrades. Value scores rose 5% YoY.

    03

    Retail turnaround

    Retail comps of -1.8% outperformed restaurant comps for the first time in over 4 years, with gains in average unit retail and units per transaction offsetting lower traffic. New SVP of Retail Heather Hager's initiatives — SKU rationalization, optimized markdowns, and improved merchandising (lower sight lines, wider aisles) — plus resonant product (toys/fidget/sensory play, collectible salt & pepper shakers, and a fast-selling American Heritage 250th-anniversary assortment that forced Halloween product onto the floor early) drove the improvement. Retail also absorbed ~$17M of tariff impact🌐 through mitigation.

    04

    Loyalty and marketing efficiency

    Cracker Barrel Rewards reached nearly 12M members with member-tracked sales above 40% and YoY growth in member visits and strong high-value retention. The company is leaning on the loyalty channel as a lower-cost marketing lever and launched a Fuel Your Summer Road Trip sweepstakes (entree purchase entry; 25 weekly winners of a $500 Cracker Barrel gift card and $500 gas card; $250,000 total prizes). Marketing spend was cut ~$7M in each of Q3 and Q4 versus prior year while the Speedway Motorsports/Cracker Barrel 400 partnership was expanded with Fan Zones at every race.

    05

    Cost actions, technology and capital allocation

    A Q2 corporate restructuring is expected to deliver $20M-$25M in annualized G&A savings, complemented by reduced second-half advertising and operational wins in food waste, labor and supplies. The company is deploying enterprise AI tools (ML traffic forecasting for labor deployment, guest-relations ticket resolution, an internal guest-feedback insights agent) and upgrading its website to drive off-premise (~20% of restaurant sales). A $47.4M interchange-litigation settlement bolstered the balance sheet; the quarter ended with $486.6M of debt (all convertible notes, revolver undrawn), a total leverage ratio of 2.4x, senior-debt-to-EBITDA of 0, and $541.3M of available capacity.

    06

    Consumer backdrop and Q4 setup

    Management flagged lower-income consumer pressure🌐 and elevated gas prices as discretionary headwinds, with higher-income guests more resilient and performance fairly linear down the income scale; age cohorts were consistent. Q4 laps one of the strongest prior-year fourth quarters, making YoY comps harder, but management said the underlying traffic trend continues to gradually improve over a month into the quarter. No measurable GLP-1 impact has been seen to date.

    AI-generated summary of the company’s earnings call. Not investment advice.