Cracker Barrel Old Country Store, Inc. Q2 FY2026 earnings call

Julie mentioned Q2 total sales and adjusted EBITDA. Team is executing plan to improve operations, connect with guests via menu, marketing, value, and deliver cost savings. Google Star rating was 4.28 in Q2, highest since Q2 20. Food taste, service, value scores increased 4%-5% Q2 vs prior year. Turnover improved, management turnover 10% better Y/Y. Menu strategy includes bringing back favorites, new offerings, enhancing quality, leaning into value. Reintroduced country fried turkey, hamburger steak and eggs, sugar cured and country ham dinners, carrot cake. Introduced breakfast burger, garden and farmhouse scrambles, smoky southern salmon. Launched Meals for Two starting at $19.99, free toy with kid's meal promotion. Cracker Barrel Rewards has over 11 million members, 40% of tracked sales. Marketing strategy centered on food, value, heritage. Retail results pressured but encouraged by seasonal holiday assortment and flat retail attachment. Corporate office restructuring continued, aiming to return G&A to historical levels as % of sales.

Q2 total sales were 874.8 million, adjusted EBITDA was 38.2 million. Restaurant revenue decreased 7.5% to $694.3 million, comparable store restaurant sales decreased by 7.1% with traffic decline of 10.1%. Retail revenue decreased 9.3% to $180.5 million, comparable store retail sales decreased by 9.2%. Restaurant cost of goods sold was 27.4% of restaurant sales vs 27.1% prior year, driven by higher waste, discounts, and commodity inflation. Retail cost of goods sold was 56.8% of retail sales vs 53.4% prior year, driven by higher tariffs and discounts. Labor and related expenses were 36.1% of revenue vs 34.4% prior year. Other operating expenses were 24.8% of revenue vs 23.2% prior year. Adjusted G&A expenses were 4.9% of revenue. GAAP earnings per diluted share were 6 cents, adjusted earnings per diluted share were 25 cents. Adjusted EBITDA was 4.4% of total revenue vs 7.9% prior year.

Fiscal 2026 total revenue expected $3.24 - $3.27 billion. Pricing ~4%, lower menu mix due to higher discounts. Commodity inflation 2%-2.5%, hourly inflation 2.5%-3%. Corporate restructuring expected annualized G&E savings $20-25 million. Aggregate advertising spend in back half $13-17 million lower Y/Y. Full-year adjusted EBITDA ~$85-100 million. Capital expenditures $105-115 million. Q3 expected net cash benefit ~$46 million from litigation settlement, excluded from adjusted EBITDA. Traffic recovery rate and investment level key drivers of EBITDA performance. Q3 easier comp vs prior year Q3 due to traffic decline, Q4 more challenging comp vs prior year Q4 due to traffic recovery in Q4 prior year.

Q: Dennis Geiger with UBS asked about quarter to date commentary and traffic trends.

A: Craig said underlying trend gradually improving, Jan better than Nov-Dec, Feb start better.

Q: John Tower with Citi asked about marketing tools with lower ad spend.

A: Julie said targeted marketing, using loyalty program to refine messaging, test offers.

Q: John Tower asked about tariff outlook.

A: Craig said tariff environment dynamic, smaller impact this year but lag in supply chain.

Q: Jake Bartlett with Truist Securities asked about traffic guidance.

A: Craig said Q3 easier comp, Q4 more challenging, full-year traffic expected -8.5% to -9.5%.

Q: Jake Bartlett asked about brand sentiment and customer cohorts.

A: Julie said seeing improvements, segmenting loyalty audiences, traffic from loyalty program holding up.

Q: Sarah Sinatori with Bank of America asked about gas prices and income exposure.

A: Julie said gas prices related to traffic pre-COVID, now more on disposable income; income exposure close to average.

Q: Todd Brooks with Benchmark StoneX asked about traffic lift source.

A: Julie said retaining high-value loyalty guests and getting back lapsed guests, using front porch feedback.