Sign in

    CRACKER BARREL OLD COUNTRY STORE (CBRL)

    Q1 2025 Earnings Summary

    Reported on Apr 9, 2025
    Pre-Earnings Price$55.71Last close (Dec 3, 2024)
    Post-Earnings Price$51.06Last close (Dec 5, 2024)
    Price Change
    $-4.65(-8.35%)
    • Menu Innovation and Strong Product Reception: The company’s ability to innovate its menu—with standout items like the Pot Roast and Hashbrown Casserole Shepherd’s Pie becoming so popular that they’re now considered for daily inclusion—demonstrates a unique value proposition and consumer appeal that can drive sustained traffic and revenue growth.
    • Robust Loyalty Program Momentum: With over 6 million members engaging with the loyalty program—which is driving higher visit frequency, increased spending, and incremental sales, especially in retail—there’s a strong foundation for recurring revenue and improved customer lifetime value.
    • Effective Pricing and Operational Execution: The reported 5.8% increase in average check, driven by both pricing initiatives (4.7% contribution) and favorable mix (1.1%), underscores the company’s pricing power and ability to enhance margins. This operational performance provides confidence in the company’s transformation strategy and future profitability.
    • Reversal of Gift Card Breakage Benefit: Q&A discussions highlighted that the $6 million benefit from gift card breakage recognized in Q1 is expected to reverse in Q2 without any offsetting benefits, potentially dragging EBITDA further by approximately $3 million net when combined with other atypical costs.
    • Ambiguity in Remodel Investment Strategy: The discussion on the remodel program revealed uncertainty regarding the optimal mix between high-, medium-, low-tier remodels and refreshes. The "test-and-learn" approach with 25–30 stores in each category indicates that returns are not yet clearly defined, increasing capital allocation risks.
    • Operational and Cost Headwinds Affecting EBITDA: Executives acknowledged atypical costs, with restaurant-level expenses totaling $9.3 million (offset partially by the gift card benefit) and other cost increases in G&A. This net negative impact suggests potential margin pressures if such expenses persist.
    1. EBITDA Headwind
      Q: Did atypical items hurt EBITDA?
      A: Management explained that atypical items resulted in a net drag of about $3 million on EBITDA—driven by $9.3 million in operating costs partially offset by a $6 million timing benefit (which will reverse next quarter).

    2. Check Growth
      Q: How much did check average grow?
      A: The overall check increased by 5.8%, with about 4.7% coming from pricing and the remaining 1.1% attributed to a favorable mix (indicating improved customer spend).

    3. Retail Outlook
      Q: What is the retail performance forecast?
      A: Management is upbeat about the holiday season despite headwinds; they are managing inventory well, though full‐year retail margins are expected to be slightly unfavorable amid tough market conditions.

    4. Efficiency Improvements
      Q: What cost-saving initiatives are underway?
      A: They are implementing back-of-house process enhancements aimed at boosting labor productivity and reducing waste, targeting structural cost savings of $50–60 million over the next three years.

    5. Gift Card Impact
      Q: How does gift card breakage factor in?
      A: The $6 million gift card breakage favorability is recorded at the corporate level and does not affect same‐store sales; it is a timing effect that is expected to reverse in Q2.

    6. Remodel Program
      Q: How are remodels and refreshes differentiated?
      A: This fiscal year is a test-and-learn period with plans for about 25–30 traditional remodels (across high, medium, and low tiers) and an additional 25–30 refreshes, with performance data actively being evaluated.

    7. Value Scores
      Q: Are value scores improving?
      A: While management noted improvements in value scores (measured in Google ratings and internally), they have not yet disclosed the precise figures externally.

    8. Regional Trends
      Q: Were there regional performance differences?
      A: The results were relatively steady overall, with slightly stronger performance in the Northeast and Midwest and a bit softer in Texas.

    9. Loyalty Program
      Q: How is the loyalty program performing?
      A: The loyalty program now exceeds 6 million members and is driving higher visit frequency and spend, with incremental lifts in both restaurant and retail sales.

    10. Menu Innovation
      Q: How are new menu items performing?
      A: New items such as the Pot Roast and Hashbrown Casserole Shepherd’s Pie have resonated well with guests, with strong demand leading to expanded availability and consistent repeat business.

    11. Value Mix
      Q: What’s the customer mix on value offers?
      A: Management indicated that while they monitor various pricing tiers like the $7.99 Sunrise and $8.99 Early Dine specials, most of the menu consistently delivers value, making specific mix percentages less meaningful.

    Research analysts covering CRACKER BARREL OLD COUNTRY STORE.