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CB

CRACKER BARREL OLD COUNTRY STORE, INC (CBRL)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $949.4M (+1.5% YoY); GAAP diluted EPS $0.99; adjusted EPS $1.38; adjusted EBITDA $74.6M (+19.6% YoY) driven by actions to improve profitability in Heat n’ Serve and catering channels and prioritization of more profitable dine-in and to‑go orders .
  • The company raised FY2025 guidance: revenue to $3.45–$3.50B (from $3.4–$3.5B) and adjusted EBITDA to $210–$220M (from $200–$215M); hourly wage inflation trimmed to ~3% (from 3–4%) .
  • Traffic softness early in Q3 (weather, macro uncertainty) noted; back‑of‑house optimization expected to yield minimal labor savings in Q3, ramping in Q4; incremental egg costs of ~$4M due to vendor capacity loss amid avian influenza .
  • Catalysts: guidance raise, Q2 EBITDA outperformance from off‑premise optimization, summer dinner menu pipeline, loyalty program strength; watch retail tariffs exposure (~1/3 sourced from China) and convertible refinancing at higher coupon .

What Went Well and What Went Wrong

  • What Went Well

    • “Outstanding execution…improve the profitability of our off‑premise channels during the high‑volume holiday season” drove EBITDA above expectations and a guidance raise .
    • Dinner daypart trends improved for the fifth consecutive quarter; value, food taste, and menu choice scores rose 7%, 7%, and 8%, respectively .
    • Restaurant COGS as % of restaurant sales fell 110 bps YoY (27.1% vs. 28.2%) on pricing and productivity; adjusted EBITDA margin expanded to 7.9% .

  • What Went Wrong

    • GAAP net income and diluted EPS declined YoY due to higher G&A and impairment/store closing costs; GAAP diluted EPS down 16.8% YoY to $0.99 .
    • Retail comps only +0.2% and retail COGS rose 20 bps on higher markdowns; overall traffic down 2.7% despite +6.0% pricing and +1.4% mix .
    • Early Q3 traffic softness tied to weather and macro uncertainty; ~$4M incremental egg costs expected in 2H due to avian influenza vendor disruption .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$894.4 $845.1 $949.4
GAAP Diluted EPS ($USD)$0.81 $0.22 $0.99
Adjusted Diluted EPS ($USD)$0.98 $0.45 $1.38
Net Income Margin (%)2.0% 0.6% 2.3%
Adjusted EBITDA ($USD Millions)$57.4 $45.8 $74.6
Adjusted EBITDA Margin (%)6.4% 5.4% 7.9%

Segment mix and comps

MetricQ4 2024Q1 2025Q2 2025
Restaurant Revenue Mix (%)81.8% 80.9% 79.0%
Retail Revenue Mix (%)18.2% 19.1% 21.0%
Restaurant Comps YoY (%)+0.4% +2.9% +4.7%
Retail Comps YoY (%)−4.2% −1.6% +0.2%
Menu Pricing YoY (%)4.2% 4.7% 6.0%

KPIs and operating metrics

MetricQ4 2024Q1 2025Q2 2025
Off‑Premise as % of Restaurant Salesn/an/a23.2%
Restaurant AUV ($000)$1,083.6 $1,012.8 $1,116.2
Retail AUV ($000)$247.3 $245.6 $302.5
Operating Weeks (Cracker Barrel stores)9,212 8,554 8,541
Units End of Period – Cracker Barrel658 658 657
Units End of Period – Maple Street66 69 69

Notes:

  • Restaurant COGS was 27.1% of restaurant sales in Q2 (vs. 28.2% in prior year), commodity inflation ~1.3% (dairy, beverages, pork, beef higher; poultry/oil/produce lower) .
  • Traffic and mix: price +6.0%, mix +1.4%, traffic −2.7%, reflecting throttled holiday channels and prioritized dine-in profitability .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance (Q2)Change
Total Revenue ($USD Billions)FY 2025$3.4–$3.5 $3.45–$3.50 Raised
Adjusted EBITDA ($USD Millions)FY 2025$200–$215 $210–$220 Raised
Commodity Inflation (%)FY 20252–3 2–3 Maintained
Hourly Wage Inflation (%)FY 20253–4 ~3 Lowered
Capital Expenditures ($USD Millions)FY 2025$160–$180 $160–$180 Maintained
New Cracker Barrel Stores (units)FY 20252 1–2 Lowered
New Maple Street Units (units)FY 20253–4 4 Raised
Dividend per Share ($)Quarterly$0.25 (declared Q1) $0.25 (declared Q2; payable May 14, 2025) Maintained
Adjusted Effective Tax Rate (%)FY 2025n/a−2% to −8% New detail
Interest Rate OutlookFY 2025n/aRefinance $300M convertible at meaningfully higher coupon vs 0.625% New detail

Subsequent update (Q3): FY2025 adjusted EBITDA further raised to $215–$225M; capex narrowed to $160–$170M; wage inflation mid‑2% .

Earnings Call Themes & Trends

TopicQ4 2024 (Prior−2)Q1 2025 (Prior−1)Q2 2025 (Current)Trend
Pricing and ValueInitial strategic pricing execution; menu pricing +4.2% YoY Menu pricing +4.7% YoY; comps +2.9% Pricing ~6%; check vs casual/family highlights value; loyalty promotions reinforce value Increasing pricing power while preserving value
Dinner DaypartFocus area in transformation plan Continued dinner improvement Fifth consecutive quarter of dinner traffic trend improvement; new steak/shrimp items Improving dinner momentum
Off‑Premise OptimizationIdentified holiday channel opportunities n/aThrottled low‑margin Heat n’ Serve/catering; prioritized dine‑in; streamlined offerings; improved capacity rules; price increases Structural margin lift in Q2 holiday window
Back‑of‑House OptimizationEarly planning One initiative live in Q1 Phase 1 rolled system‑wide; minimal Q3 labor savings, ramping Q4 Labor productivity to improve into Q4
Macro/Weathern/aStrong start to FY Early Q3 traffic softness (weather, macro uncertainty); recent improvement Near‑term caution
Commodities/Eggsn/an/aCommodity inflation ~1.3% in Q2; ~$4M incremental egg costs expected (avian influenza vendor capacity loss) Manageable headwind
Retail Tariffsn/an/a~1/3 of retail purchases from China; mitigation via vendor negotiation, alternate sourcing, pricing Ongoing risk management
Remodel ProgramTest‑and‑learn approach n/a25–30 full remodels + 25–30 refreshes in FY25; deeper update planned in Q4 call Execution phase

Management Commentary

  • “Outstanding execution by our teams…delivered strong second quarter results that exceeded our expectations…make us confident in raising our financial outlook” — Julie Masino .
  • “We meaningfully grew the profitability of our seasonal Heat n’ Serve and catering channels…we saw notable year‑over‑year improvements in key operational and guest metrics” — Julie Masino .
  • “We prioritized the more profitable dine‑in and individual to‑go channels and deprioritized…Heat n’ Serve and catering…streamlined offerings…refined capacity rules…increased pricing” — Julie Masino .
  • “It takes a little longer…for team members to master these new [back‑of‑house] processes…but once they gain proficiency, they love them…labor‑savings benefit…minimal in Q3 before ramping in Q4” — Julie Masino .
  • “Adjusted EBITDA was $74.6M or 7.9% of revenue…Restaurant COGS decreased 110 bps primarily driven by menu pricing” — Craig Pommells .

Q&A Highlights

  • Back half sales/traffic: Management expects Q3 pressured (weather/macro), with Q4 improvement on innovation pipeline and summer travel; full‑year guidance incorporates this view .
  • Consumer cohorts: Gains with 55+ cohort; under $60k and over $60k income cohorts performing similarly; loyalty program driving frequency .
  • Margin drivers: Q2 EBITDA margin expansion largely from holiday channel optimization; continued gains expected from labor productivity, with Q3 training costs and Q4 full benefit of back‑of‑house initiative .
  • Adjustments: Strategic transformation and proxy contest costs are complete for adjusted EBITDA add‑backs; implementation costs in Q3 not added back .
  • Tariffs/retail sourcing: ~1/3 of retail purchases from China; mitigation via vendor negotiations, alternate sourcing, pricing; restaurant purchases largely domestic .
  • Eggs inflation: Low single‑digit egg mix; single‑digit teens of volume bought on spot market at higher prices; strong contract coverage through FY2026 with supply risk caveats .
  • Pricing power: Company believes room remains to price prudently while maintaining strong value relative to casual and family dining; item‑ and store‑level pricing capabilities expanded .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2025 EPS and revenue was unavailable at time of query due to an SPGI access limit. As a result, we cannot provide beat/miss vs estimates for this quarter; we will update when SPGI access is restored.

Key Takeaways for Investors

  • Q2 quality: Adjusted EBITDA up 19.6% YoY and margin +120 bps to 7.9% on targeted holiday channel optimization and pricing; this appears repeatable in future Q2s .
  • FY25 guide up: Revenue and adjusted EBITDA ranges raised; wage inflation expectations reduced; execution credibility improved despite near‑term traffic softness .
  • Near‑term caution: Early Q3 traffic softness (weather/macro) and ~$4M egg cost headwind temper Q3; labor savings from back‑of‑house expected to ramp in Q4 .
  • Pricing/value balance: Strategic pricing capability and strong relative value (avg check ~$15 vs casual ~$28, family ~$18) supports margin trajectory without undermining traffic .
  • Dinner focus and innovation: Dinner remains a growth lever (e.g., pot roast top‑5 item; steak & shrimp performing well); summer promotions are a potential Q4 catalyst .
  • Retail/tariffs risk: ~1/3 China sourcing in retail; mitigation underway; monitor tariff developments and markdowns impact on retail gross margin .
  • Capital and balance sheet: Capex maintained at $160–$180M (FY25); convertible refinancing expected at higher coupon—watch interest expense trajectory and leverage .