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.
Is now the time to buy CBRL? Find out in our full research report (it’s free for active Edge members).
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: $594.4 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Cracker Barrel’s Q3 Earnings Call
- Todd Brooks (The Benchmark Company) asked about the rationale for cutting advertising spend and whether loyalty program engagement could offset reduced media exposure. CEO Julie Masino explained that spend was aligned to current traffic and that direct communication with loyalty members offers more cost-effective engagement.
- Jeffrey Farmer (Gordon Haskett) sought clarity on updated traffic guidance and the impact of macroeconomic conditions. CFO Craig Pommells detailed that the guidance range reflected varying levels of traffic recovery, with lower-end assumptions based on persistent declines.
- Jake Bartlett (Truist Securities) pressed for details on how much of the sales decline was due to macro factors versus brand challenges, and questioned the sustainability of recent promotional strategies. Management acknowledged both industry headwinds and the need to rebuild brand trust with returning guests.
- Brian Mullan (Piper Sandler) inquired about the retail business’s holiday strategy and margin outlook. Masino and Pommells cited a refreshed assortment and responsive pricing but cautioned that tariffs and mix shifts would continue to pressure margins.
- Isiah Austin (Bank of America) asked about the correlation between Google star ratings and traffic, and whether corporate restructuring could impact long-term performance. Management asserted that improved guest metrics should translate to better traffic over time and described the restructuring as focused on maintaining operational excellence.
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 $26.50, down from $26.94 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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