Cracker Barrel celebrated its 55th anniversary Thursday with a free cake promotion. The company also provided highlights from its transformation plan – put into place in May – during its fourth quarter earnings call Thursday morning.
During the call, chief executive officer and president Julie Masino said, “Our multiyear transformation journey is off to a great start. There is a lot to be excited about.”
Namely, new menu items, like the hashbrown casserole Shepherd’s Pie and Sunrise Pancake Special, are resonating with guests, she said. The chain brought on industry veteran Sarah Moore as its new chief marketing officer in July to help promote those new offerings and evolve the brand. Additionally, just a year after launch, Cracker Barrel’s loyalty program has 6 million users, who have helped drive incremental sales and traffic.
“Those members are valuable, they visit us 50% more often, their average check is 10% higher than non-members, and they have a strong proclivity for retail with an average spend that is about 40% higher than non-members,” Masino said.
Perhaps the biggest movement at the chain thus far, however, has come from its optimized pricing initiative. Cracker Barrel is leaning into a barbell strategy that highlights early dinner deals at a stronger value, while also introducing items at the higher end of the pricing strategy, like upgraded steaks. This work, Masino said, has generated stronger flowthrough and higher value perception scores.
“It allows us to message our compelling price points, which is especially important given the high level of promotions and discounting [right now],” she said, adding that the strategy allows for higher prices at some stores and lower prices at others, depending on market.
“We’re much more sophisticated with price, so each store hits the sweet spot of customers’ willingness to pay, competition, and operating costs,” she said. “In some, we’re increasing prices and in some we’re lowering.”
In Q1,150 stores moved to higher prices, while 70 moved to lower prices. The strategy has yielded an improvement in value scores, Masino said, and presents a broader opportunity to improve profitability.
Further, Cracker Barrel is focused on driving efficiencies through the reduction of fixed labor in the back of house and has engaged an industrial engineering firm to “rethink” production and reduce waste. Masino said this work is now moving into a test phase at 20 stores with a systemwide launch in Q3, and it is expected to yield cost savings in fiscal year 2025.
Store remodels expected to move the needle
As Cracker Barrel aims to win back customers after several quarters of traffic declines, the company is largely focused on store remodels featuring a different color palette, more comfortable seating, new flooring, exterior work, and more.
“Store design and atmosphere are critical to the guest experience and we’re investing in more maintenance capital to meet our high standards,” Masino said. “The incremental investments are focused on areas we think are most impactful – exterior paint, parking lots, flooring, restrooms.”
In Q4 and Q1 to-date, Cracker Barrel has updated approximately 35 parking lots, 30 back-of-house and front-of-house floors, and repainted 30 restaurants. In 2025, the company will test four remodeling packages – high, medium, low, and refresh – to understand what resonates most with guests and what drives the strongest returns. The fourth package, "refresh," is new and was introduced to be less costly.
“The refresh came out of the work we did in fiscal 24. We realized as we went through the work, there was an opportunity for something at a lower cost that included paint and décor. That seemed to accomplish a lot. As we move from the refresh to low, it … lays on furniture and lighting. From low to medium, we start to do some flooring work and extensive work on interior and exterior. For high, it’s more flooring in the restaurant and retail portions,” chief financial officer Craig Pommells said.
Masino said the remodel pilot has generated a strong return, including traffic and sales growth and positive feedback from customers and staff. Cracker Barrel will apply learnings from four pilot stores to its first market test in Indianapolis. The 12-store test will include remodel elements, service enhancements, and new menu offerings.
By the numbers
- The company reported total revenue of $894.4 million for Q4 2024, representing an increase of 6.9% compared to the prior year quarter total revenue of $836.7 million.
- Same-store sales increased 0.4% over the prior year quarter while comparable store retail sales decreased 4.2%.
- Adjusted net income for Q4 was $22 million, or 2.5% of total revenue, as compared to prior year quarter of $37.5 million, or 4.5% of total revenue.
- Adjusted EBITDA was $57.4 million, or 6.4% of total revenue, as compared to prior year quarter adjusted EBITDA of $70.4 million, or 8.4% of total revenue.
- Traffic was -4%, according to Pommells.
- For fiscal 2024, Cracker Barrel’s total revenues were $3.47 billion, representing an increase of 0.8% compared to fiscal 2023 total revenue of $3.44 billion. Cracker Barrel’s same-store sales decreased 0.1%, including total menu pricing increases of 4.9%.
Contact Alicia Kelso at [email protected]
