Restaurant company Cracker Barrel (NASDAQ:CBRL) met Wall Streets revenue expectations in Q3 CY2025, but sales fell by 5.7% year on year to $797.2 million. On the other hand, the company’s full-year revenue guidance of $3.25 billion at the midpoint came in 3.7% below analysts’ estimates. Its non-GAAP loss of $0.74 per share was 1.8% below analysts’ consensus estimates.
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Cracker Barrel (CBRL) Q3 CY2025 Highlights:
- Revenue: $797.2 million vs analyst estimates of $798.9 million (5.7% year-on-year decline, in line)
- Adjusted EPS: -$0.74 vs analyst expectations of -$0.73 (1.8% miss)
- Adjusted EBITDA: $7.19 million vs analyst estimates of $19.81 million (0.9% margin, 63.7% miss)
- The company dropped its revenue guidance for the full year to $3.25 billion at the midpoint from $3.4 billion, a 4.4% decrease
- EBITDA guidance for the full year is $90 million at the midpoint, below analyst estimates of $171.5 million
- Operating Margin: -4.1%, down from 0.8% in the same quarter last year
- Locations: 710 at quarter end, down from 727 in the same quarter last year
- Same-Store Sales fell 4.7% year on year (2.9% in the same quarter last year)
- Market Capitalization: $602.9 million
StockStory’s Take
Cracker Barrel’s third quarter results reflected continued challenges as same-store traffic declined and market reaction was negative following the earnings release. Management described the quarter as particularly difficult, citing operational missteps in rolling out a new back-of-house initiative that affected food consistency and guest experience. CEO Julie Masino acknowledged, “the new processes at scale made consistent execution more challenging for our operators and impacted the consistency of our food.” Leadership responded by reverting to previous kitchen procedures, retraining staff, and accelerating cost reduction efforts.
Looking ahead, management’s updated guidance is shaped by efforts to recover guest traffic through a combination of menu improvements, targeted promotions, and a sharper focus on value. The company is expanding its loyalty program and introducing menu items requested by guests, while also restructuring corporate support functions to maintain profitability. CFO Craig Pommells warned that the pace of recovery remains uncertain, noting, “the low end of the [guidance] range reflects lower traffic that is more consistent with recent performance.”
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to operational challenges, traffic declines, and increased costs, while emphasizing new leadership and efforts to reconnect with guests through menu changes and targeted marketing.
- Operational initiative setback: The initial rollout of a back-of-house program designed to improve food quality and reduce costs had to be reversed after it created execution challenges and inconsistent food experiences. Management responded by reinstating prior processes and retraining staff.
- Leadership changes: Cracker Barrel promoted Doug Hisel to Senior Vice President of Store Operations, removing a management layer to drive accountability and closer guest focus. Early signs indicated improvements in guest metrics, including higher Google star ratings and guest satisfaction scores.
- Menu adjustments and guest feedback: The company brought back several popular menu items such as Campfire Meals and Uncle Herschel’s breakfast, responding to direct guest requests through its feedback channels. Additional menu improvements and return of favorites are planned for upcoming months.
- Marketing strategy shift: Advertising spend was reduced for the remainder of the year, with a heavier reliance on the loyalty program, local marketing, and culturally resonant promotions like the $5 toy offer with kids’ meals during the holidays. These efforts are designed to drive traffic without heavy discounting.
- Retail and value focus: Cracker Barrel’s retail assortment was curated to emphasize value and exclusive items, while the company launched a new ongoing 10% military discount through its loyalty program, aiming to strengthen its connection with core customer groups.
Drivers of Future Performance
Cracker Barrel’s guidance is driven by initiatives to recover guest traffic, cost restructuring, and value-focused marketing, but faces continued macro and industry headwinds.
- Traffic recovery initiatives: Management is focused on rebuilding traffic through menu “bring backs,” new value-oriented meal bundles, and promotions that resonate with core guests. The effectiveness of these efforts will determine whether traffic improves in the second half of the year.
- Cost savings and restructuring: The company is accelerating corporate restructuring, targeting annualized general and administrative (G&A) savings of $20–$25 million and reducing advertising spend by $12–$16 million for the remainder of the year. These actions are meant to protect margins amid ongoing sales declines.
- External pressures and retail trends: Higher input costs, especially commodity inflation and tariffs, are expected to persist. Retail margins are pressured by a mix shift toward discounted items and lower attachment rates, while macroeconomic uncertainty could further impact guest spending and visit frequency.
Catalysts in Upcoming Quarters
Over the next few quarters, the StockStory team will look for (1) stabilization or improvement in guest traffic and repeat visit trends, (2) measurable results from menu “bring backs” and value-focused offerings, and (3) successful execution of cost savings and restructuring to protect operating margins. Progress in retail attachment rates and continued loyalty program growth will also be important indicators of a potential turnaround.
Cracker Barrel currently trades at $27.01, in line with $26.94 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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