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CB

CRACKER BARREL OLD COUNTRY STORE, INC (CBRL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 delivered modest top-line growth and solid profitability: revenue $0.821B (+0.5% YoY), GAAP EPS $0.56, adjusted EPS $0.58, and adjusted EBITDA $48.1M (5.9% margin) .
  • Results beat on EPS versus S&P consensus and were fractionally below on revenue; guidance was raised for full-year adjusted EBITDA to $215–$225M from $210–$220M, while revenue guidance was maintained ; estimates context below*.
  • Management highlighted momentum from pricing and mix, labor productivity gains (back-of-house optimization), and an early strong start to Q4 from Campfire promotion; Q4 EBITDA faces an estimated ~$5M tariff headwind tied to China-sourced retail goods .
  • Capital flexibility improved post-quarter via an upsized $300M 1.75% 2030 converts (refinancing of 2026 converts underway), supporting transformation investments and potential deleveraging pathways .

What Went Well and What Went Wrong

What Went Well

  • Four consecutive quarters of positive comparable restaurant sales; Q3 comps +1.0% with pricing ~4.9% and favorable mix from top-of-barbell items (steak & shrimp, pot roast, shepherd’s pie) .
  • Labor productivity improved with phase one back-of-house optimization systemwide; hourly turnover improved ~14 percentage points and internal net sentiment rose 2.3 points YoY .
  • Loyalty and digital engagement: Cracker Barrel Rewards surpassed 8M members; AI-driven personalization lifted average revenue per member mid-single digits versus control; traffic forecasting and guest relations triage also benefitting from AI .

What Went Wrong

  • Retail softness persists: comparable store retail sales -3.8% YoY; macro uncertainty and weather weighed on February traffic before recovery into March/April .
  • Higher other operating expenses (+80 bps YoY) driven by advertising and depreciation; restaurant COGS up 30 bps (commodity inflation ~2.9% and mix) despite price offsets .
  • Tariffs on China-sourced retail goods expected to reduce Q4 EBITDA by ~$5M; mitigation underway via vendor negotiations, alternate sourcing, SKU rationalization, and pricing actions where appropriate .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Total Revenue ($USD Billions)$0.845 $0.949 $0.821
GAAP EPS ($)$0.22 $0.99 $0.56
Adjusted EPS ($)$0.45 $1.38 $0.58
Operating Income Margin (%)0.8% 3.1% 1.8%
Adjusted EBITDA ($USD Millions)$45.8 $74.6 $48.1
Adjusted EBITDA Margin (%)5.4% 7.9% 5.9%
Year-over-Year Comps & MixQ3 2025
Comparable Restaurant Sales YoY (%)+1.0%
Comparable Retail Sales YoY (%)-3.8%
Pricing (%)~4.9%
Average Check Change (%)+6.6% (4.9% price, 1.7% mix)
Segment Mix (%)Q1 2025Q2 2025Q3 2025
Restaurant % of Revenue80.9% 79.0% 82.7%
Retail % of Revenue19.1% 21.0% 17.3%
Q3 2025 Segment Revenue ($USD Millions)Amount
Restaurant Revenue$679.3
Retail Revenue$141.8
KPIsQ3 2025
Off-Premise as % Restaurant Sales19.1% (vs 18.9% prior year)
Inventories ($USD Millions)$168.7
Units End of Quarter658 Cracker Barrel; 70 Maple Street
Hourly Turnover Improvement~14 percentage points YoY
Net Sentiment Score Change+2.3 points YoY
Dividend Declared$0.25 per share (payable Aug 13; record Jul 18)
Actual vs S&P Global ConsensusQ3 2025
Revenue ($USD)$821.1M actual vs $822.4M estimate*
Primary EPS ($)$0.58 actual vs $0.212 estimate*
# of EstimatesEPS: 8; Revenue: 8*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Billions)FY2025$3.45–$3.50 $3.45–$3.50 Maintained
Adjusted EBITDA ($USD Millions)FY2025$210–$220 $215–$225 Raised
Commodity InflationFY20252%–3% Mid-2% Refined lower
Hourly Wage InflationFY2025~3% Mid-2% Lower
Capital Expenditures ($USD Millions)FY2025$160–$180 $160–$170 Lower
New Cracker Barrel StoresFY20251–2 (incl. 1 opened YTD) 1 opened (already) Clarified
New Maple Street Biscuit UnitsFY20254 (incl. 3 YTD) 4 opened (already) Maintained
GAAP Effective Tax Rate (%)FY2025Not provided-17% to -11% New detail
Adjusted Effective Tax Rate (%)FY2025Not provided-6% to 0% New detail
DividendNext Payment$0.25 declared in prior quarters $0.25 declared for Aug 13, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2)Current Period (Q3)Trend
AI/Technology InitiativesNot detailed in Q1; focus on operations/dinner improvement AI personalization lifted member revenue mid-single digits; ML in traffic forecasting; AI triage and cybersecurity Expanding deployment and measurable monetization
Supply Chain/CommodityQ2 holiday off-premise profitability improvements; commodity inflation guided 2%–3% Egg vendor capacity loss (avian flu) drove spot purchases; commodity inflation ~2.9% (beef, egg, pork up; produce, poultry down) Transitory egg issue moderating; mixed commodity backdrop
Tariffs/MacroMacro uncertainties cited; no tariff specifics China-sourced retail goods create ~$5M Q4 EBITDA headwind; mitigation via vendors, alternate sourcing, SKU/time rationalization, pricing New headwind; active mitigation; more detail expected in Sept
Product PerformanceQ2: off-premise channel profitability; strong holiday execution Campfire meals relaunch driving Q4 start; Q3 shrimp dishes/pancake platform expansion; barbell menu mix positive Product/marketing resonating; positive mix
Labor/OperationsQ1: dinner daypart improvement; transformation pillars Back-of-house phase one rolled out systemwide; productivity gains lowering labor %; G&A tightened in Q3 Structural savings building; more benefit in Q4/FY26
Remodeling/Brand RefinementQ1/Q2 transformation in progress; test-and-learn Brand refinement launching August; remodels/refreshes progressing (20/20 complete); new remodel approach under test Under evaluation; broader rollout detail in Sept
Capital StructureNot highlighted in Q1; Q2 normal revolver Revolver updated + DDTL to $800M capacity; $300M 2030 converts upsized; partial repurchase of 2026 converts Flexibility improved; refinancing plan in motion

Management Commentary

  • “Our third quarter performance exceeded our expectations and represents the fourth consecutive quarter of positive comparable store restaurant sales growth. We remain focused on executing our transformation plan…” — CEO Julie Masino .
  • “Pricing flow-through and positive mix continue to demonstrate that the pricing strategy works… we’re achieving savings targets from back-of-house optimization.” — CFO Craig Pommells .
  • “We recently achieved our fiscal 2025-year target of acquiring 8 million [Rewards] members… AI-driven learning model has driven a mid-single-digit lift in average revenue per member.” — CEO .
  • “We anticipate the net tariff impact to Q4 EBITDA will be approximately $5 million… teams have done an excellent job working to mitigate.” — CFO .

Q&A Highlights

  • Trajectory: February traffic softness (weather/macro) improved into March/April and further into Q4; campfire promotion resonating though no specific comp disclosed .
  • Expense discipline: G&A tightened in Q3 with discretionary deferrals; Q4 G&A to resemble Q1/Q2 as projects shift .
  • Pricing/mix: Average check +6.6% (4.9% price, 1.7% mix); barbell strategy and premium items drove mix; Q4 mix contribution to moderate due to prior-year comps .
  • Margin drivers: Labor leverage from back-of-house and turnover improvements plus easing egg cost offset some tariff headwinds; guidance raised on margin confidence .
  • Tariffs: ~$5M Q4 EBITDA impact; mitigation via vendor negotiations, alternate sourcing, SKU/theme/time rationalization, cautious pricing; 2026 impact update in September .
  • Back-of-house roadmap: Phase one process changes live; phase two (pre-prepped ingredients) and phase three (equipment) to follow; part of $50–$60M structural saves .
  • Remodeling: 20 remodels and 20 refreshes completed; new remodel approach under test; broader plan to be presented in September .

Estimates Context

  • Q3 FY2025 actual EPS of $0.58 vs S&P Global consensus $0.212 — significant beat*.
  • Q3 FY2025 revenue of $821.1M vs S&P Global consensus $822.4M — fractionally below*.
  • EPS and revenue had 8 published estimates each, indicating robust coverage*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • EPS beat and raised FY2025 EBITDA guidance despite tariff headwinds suggest margin momentum from pricing, mix, and structural labor savings; near-term narrative favorable .
  • Q4 setup strong with Campfire relaunch and brand refinement marketing; expect mix normalization but continued operational gains; monitor ~$5M tariff impact in Q4 .
  • Retail pressure and tariffs remain watch points; mitigation actions should temper impact into FY2026; September guide will be key catalyst .
  • Balance sheet/capital: improved liquidity and refinancing pathway via new revolver/DDTL and upsized 2030 converts with partial take-out of 2026 converts; supports transformation without undue equity dilution at current terms .
  • Dividend maintained at $0.25 supports income investors while transformation proceeds; tax rate guidance (-17% to -11% GAAP) provides EPS support in FY2025 .
  • Focus for trading: EPS surprise, guidance raise, and Q4 momentum are near-term positive catalysts; watch September update for FY2026 tariff trajectory and remodel rollout plan .