Business Context and Reporting Period
Company: Cracker Barrel Old Country Store, Inc. (CBRL)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended January 30, 2026 (Fiscal 2026 Q2)
Operations: Operates 656 Cracker Barrel stores and 54 Maple Street Biscuit Company (MSBC) locations as of period end. The company operates as a single reportable segment.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | 6 Months 2026 | 6 Months 2025 |
|---|---|---|---|---|
| Total Revenue | $874.8M | $949.4M | $1,672.0M | $1,794.5M |
| Operating Income (Loss) | $0.5M | $29.1M | $(32.3M) | $36.2M |
| Net Income (Loss) | $1.3M | $22.2M | $(23.3M) | $27.1M |
| Diluted EPS | $0.06 | $0.99 | $(1.05) | $1.21 |
| Cash & Equivalents | $8.6M | $39.6M (Prior YTD) | $8.6M | $10.3M (Prior YTD) |
| Operating Cash Flow (6mo) | $(2.2M) vs $93.7M (Prior YTD) | |||
| Debt (Current + Long-Term) | $531.5M (Current: $149.6M; Long-Term: $381.8M) | |||
| Working Capital | $(297.3M) Negative |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 7.9% in Q2 and 6.8% for the six months ended Jan 30, 2026, compared to the prior year. This was driven by a 10.1% decrease in comparable restaurant guest traffic.
- Profitability Shift: The company reported a net loss of $23.3M for the first six months of 2026, a significant reversal from the $27.1M net income in the same period of 2025. Operating margin turned negative (-1.9%) for the six-month period.
- Cost Pressures:
- COGS: Restaurant COGS increased as a percentage of revenue (27.4% vs 27.1%) due to commodity inflation (1.3% in Q2) and higher food waste. Retail COGS increased (56.8% vs 53.4%) due to tariffs, higher markdowns, and inventory shrinkage.
- Labor: Labor expenses rose to 36.1% of revenue in Q2 (from 34.4%) due to lower productivity and revenue deleverage.
- Store Count: Closed one Cracker Barrel store and 14 MSBC locations in the first six months of 2026 due to poor performance. No new stores were opened in the period.
Guidance, Outlook, and Risks
- Brand Challenges: Management cited negative publicity regarding a new logo and modern test store remodels as a primary driver of traffic declines. The company has reverted to the former logo and discontinued the modern remodels.
- Capital Expenditures: Expected to be between $105M and $115M for fiscal 2026, funded by operations and credit facility borrowings.
- Liquidity: Cash on hand ($8.6M) plus borrowing availability ($495.8M under the 2025 Revolving Credit Facility) is deemed sufficient for the next 12 months. The company is in compliance with all debt covenants.
- Dividends: Paid $0.50 per share in the first six months. A dividend of $0.25 per share was declared for payment in February 2026, and another $0.25 per share was approved for May 2026.
- Share Repurchases: A $100M authorization was approved in Q1 2026, but no shares were repurchased in the first six months of 2026.
- Upcoming Cash Inflow: The company expects to receive approximately $47.4M (net of legal fees) in Q3 2026 from a settlement of interchange fee litigation.
- Risks: Key risks include inflationary pressures on commodities and labor, consumer debt levels, geopolitical uncertainty, and the impact of negative social media attention on brand perception.
Investor Verification Checklist
- Traffic Recovery: Verify if the reversion to the original logo and discontinuation of modern remodels stabilizes comparable store guest traffic in upcoming quarters.
- Margin Compression: Monitor the impact of tariffs and commodity inflation on retail and restaurant gross margins, specifically regarding inventory shrinkage and markdowns.
- Debt Maturity: Confirm the refinancing or repayment plan for the $150M principal of the 2026 Convertible Notes maturing in June 2026.
- MSBC Performance: Assess the financial impact of closing 14 MSBC locations and the strategy for the remaining 54 units.
- Litigation Settlement: Confirm the timing and accounting treatment of the expected $47.4M interchange fee litigation settlement in Q3 2026.