Cracker Barrel Old Country Store, Inc. Q1 FY2026 earnings call

• Operations: Focus on optimizing back-of-house, training, and leadership changes. Phase 1 of back-of-house initiative had challenges with consistent execution, so prior processes were reinstated, and Phase 2 is being evolved. Managers, kitchen staff, and grill cooks were retrained. Key operational leadership changes were made, with Doug Hisel promoted to Senior Vice President, Store Operations, and positive guest metric trends seen.
• Guests: Multi-pronged plan including menu adjustments (bringing back favorites like Campfire Meals, Uncle Herschel's breakfast), marketing with a focus on food, value, heritage, and shared values, and loyalty program growth (over 10 million members, 40% of tracked sales). Promotions like BOGO Sunrise Pancake Special, Kids Eat Free, etc., were launched, and a military discount was introduced.
• Cost savings: Corporate restructuring to get G&A closer to historical levels as a percentage of sales, with a $20M - $25M annualized G&A savings target from restructuring actions.

For the first quarter, total revenue was $797.2 million, down 5.7% from the prior year. Restaurant revenue decreased 4.8% to $650.6 million, with comparable store restaurant sales down 4.7% (traffic decline of 7.3%, pricing 4.1%, menu mix -1.2%). Off-premise sales were 18.1% of restaurant sales. Retail revenue decreased 9.4% to $146.6 million, with comparable store retail sales down 8.5% (driven by traffic decline, lower retail attachment rates, and unfavorable retail mix).

• Fiscal 2026 total revenue expected to be $3.2 billion to $3.3 billion (slower recovery than prior expectation).
• Pricing expected to be 3.5% to 4.5% vs prior 4% to 5%.
• Adjusted EBITDA expected to be $70 million to $110 million. Low end reflects lower traffic, elevated discounts, and lower retail attachment; high end reflects gradually improving traffic in the second half and more moderate discount levels.
• Capital expenditures planned to be $110 million to $125 million, focusing on maintenance and strategic initiatives like replacing the point-of-sale system.

• Brand reputation issues and trust rebuilding needed. Challenges with operational phase rollout affecting food consistency. Macroeconomic uncertainties including softer consumer sentiment, labor numbers, and industry traffic trends.

Q: Todd Brooks asked about the cut in advertising spend and seasonal plans.

A: Julie Masino said Q1 marketing spend was elevated but Q2-Q4 ad spend will be $12M - $16M lower than prior year. Craig Pommells added loyalty program allows direct communication with guests cost-effectively.

Q: Jeff Farmer asked about traffic guidance and macro backdrop.

A: Craig Pommells said traffic guidance is negative 8% to negative 10% for fiscal 2026, with higher end assuming traffic recovery in back half and less discounting. Macroeconomic backdrop includes softer consumer sentiment and labor numbers.

Q: Jake Bartlett asked about disaggregating macro vs rebranding impacts and menu innovation.

A: Craig Pommells said traffic deceleration is due to gradual drop-off and short-term promotions not sustainable. Julie Masino discussed menu innovation like bring back of favorites and new items like Breakfast Burger, with more coming in spring.

Q: Brian Mullan asked about retail business and G&A.

A: Julie Masino talked about retail assortment and execution, while Craig Pommells mentioned retail margins impacted by tariffs and mix shift. On G&A, $20M - $25M annualized savings expected by end of Q2.

Q: Isiah Austin asked about Google star rating and corporate restructuring risks.

A: Craig Pommells said Google star rating is correlated with traffic and has a longer tail. Craig Pommells noted corporate restructuring is to drive focus on food and guest experience, with resources to regain momentum.

Q: Jon Tower asked about debt due later this year.

A: Craig Pommells said plans are to pay the convertible debt maturing in June 2026 by drawing down on the revolver.