Cracker Barrel (CBRL) Q4 FY2026 earnings: EBITDA beats outlook, debt cut to $337M

Cracker Barrel's fiscal 2026 fourth-quarter results beat the company's full-year profit outlook and cut debt sharply, but store-level margins have not yet recovered. The company reported the quarter ended July 31, 2026 in its earnings release and on its earnings call on September 23, 2026 [1][2].

Four questions framed this quarter: whether guests were returning after the brand backlash, whether store costs could hold while traffic was lower, whether the gift shop's improvement came from assortment or markdowns, and whether the sale-leaseback would actually reduce debt. Comparable restaurant traffic fell 6.1% year over year, only slightly better than the prior quarter's 6.7% decline, and comparable sales relied mainly on menu pricing. Comparable retail sales rose 0.7%, but excluding one-time tariff refunds, retail margin slipped because of markdowns [2]. Profit and debt changed materially: fiscal 2026 adjusted EBITDA was $147.7 million, and total debt fell to $337.2 million [1]. Taken together, debt is no longer the main risk. The profit beat came mostly from better-than-expected revenue and one-time gains, and fiscal 2027 growth will have to come from traffic, menu mix and efficiency.

Cracker Barrel operates company-owned stores that combine a country-style restaurant and a gift shop in one building, about 83% of them along interstate highways [3]. In fiscal 2025, restaurants generated 81.3% of revenue and the gift shop 18.7%. The two product lines share the same guests, and labor plus store operating costs exceed 60% of revenue [3].

Adjusted EBITDA beat guidance, but tariff refunds drove Q4 growth

Full-year profit came in well above the range the company gave in June. At that time Cracker Barrel expected fiscal 2026 adjusted EBITDA of $120 million to $125 million [4]; the actual figure was $147.7 million [1]. Fourth-quarter adjusted EBITDA was $62.1 million, up 11.4% year over year, including a benefit of about $9.1 million from tariff refunds, net of investments [1]. Excluding that benefit, full-year adjusted EBITDA was still about $13.6 million above the top of the guidance range, but fourth-quarter adjusted EBITDA was about $53 million, roughly 5% below the prior-year quarter.

Store cost ratios did not improve this quarter, and labor was the main pressure. Labor and related expenses were 37.5% of fourth-quarter revenue, compared with 36.5% a year earlier [1]. Management attributed the increase to sales deleverage, the reversal of the prior year's kitchen labor initiative and higher store bonuses [2]. Restaurant cost of goods sold fell from 26.3% to 26.0% of restaurant sales. After excluding a $10 million legal settlement benefit and an equal $10 million legal expense, other store operating expenses and general and administrative expenses were both roughly flat as a share of revenue [2].

The large improvement in reported gift-shop margin also came from tariff refunds. Retail cost of goods sold was 41.6% of retail sales, including about $15 million of refunds. Excluding the refunds, it was 51.6%, up 60 basis points year over year, which management attributed to higher markdowns [2].

The fiscal 2027 outlook requires real operating improvement. The company expects adjusted EBITDA of $180 million to $200 million, comparable store restaurant sales growth of 3% to 5%, commodity inflation of about 3.0% and hourly wage inflation of 2.5% to 3.0% [1]. Management expects pricing of about 3% and is investing in upgraded dinner items. It said the profit increase will come from traffic, menu mix and efficiency initiatives, but it did not quantify each contribution [2].

Debt fell about $73 million more than the sale-leaseback alone implied

Year-end debt fell further than an estimate based on the sale-leaseback would suggest. Total debt was $486.6 million at the end of the third quarter [5], and the company planned to use roughly $77 million of net proceeds from the sale-leaseback of 26 stores to repay debt [6]. On that basis, year-end debt would have been about $410 million. Actual year-end total debt was $337.2 million, consisting only of the convertible notes due 2030, with no borrowings on the credit facility [1].

The additional reduction came from peak-season cash flow in the fourth quarter. Fiscal 2026 operating cash flow was $206.2 million, which implies about $113.7 million in the fourth quarter, compared with about $102.2 million a year earlier [1]. Full-year capital expenditures were $115.3 million and dividends were $23.1 million. Even excluding about $47.4 million of litigation settlement cash, operating cash flow covered both [1].

The debt reduction also has a cost. After the 26 stores moved to leases, annual rent rises by about $5.7 million, with scheduled increases over time [6]. Management said free cash flow will go first to stores and food, and that dividend and share repurchase decisions will be discussed with the board [2].

Conclusion

The results show that Cracker Barrel's cash position and balance sheet have stabilized, while growth and profit conversion are still recovering. Fiscal 2026 revenue of $3.319 billion exceeded the top of the company's range [1], but fourth-quarter profit declined year over year once one-time items are excluded, and the labor ratio is still rising. Fiscal 2027 will not have litigation settlement cash or asset sales, and it will carry the new rent.

The next evidence comes in the first quarter of fiscal 2027. That quarter compares against a 7.3% traffic decline a year earlier [7], so a single positive quarter would mostly reflect the easier comparison. Whether traffic returns to roughly flat, whether the labor ratio stops rising and whether the credit facility stays undrawn will determine whether the fiscal 2027 outlook is achievable.

Sources

[1] CBRL FY2026 Q4 earnings release 8-K 2026-09-23, 2026-09-23, 8-K earnings release (Exhibit 99.1), https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001067294&type=8-K [2] CBRL fiscal 2026 fourth quarter earnings call 2026-09-23, 2026-09-23, Earnings call, https://investor.crackerbarrel.com/news-events/events [3] CBRL FY2025 10-K filed 2025-09-26, 2025-09-26, Form 10-K, https://www.sec.gov/Archives/edgar/data/1067294/000110465925093663/cbrl-20250801x10k.htm [4] CBRL fiscal 2026 third quarter release outlook, 2026-06-09, 8-K third-quarter release, https://www.sec.gov/Archives/edgar/data/1067294/000110465926071853/tm2617153d1_ex99-1.htm [5] CBRL fiscal 2026 third quarter release balance sheet and capital allocation, 2026-06-09, 8-K third-quarter release, https://www.sec.gov/Archives/edgar/data/1067294/000110465926071853/tm2617153d1_ex99-1.htm [6] CBRL 8-K sale-leaseback transaction 2026-07-20, 2026-07-20, 8-K sale-leaseback filing, https://www.sec.gov/Archives/edgar/data/1067294/000110465926085071/tm2620848d1_8k.htm [7] CBRL FY2026 Q1 10-Q comparable sales and traffic table, 2025-12-09, Form 10-Q first-quarter report, https://www.sec.gov/Archives/edgar/data/1067294/000110465925119676/0001104659-25-119676-index.htm