Cracker Barrel’s Recovery Still Needs More Guests

Cracker Barrel’s turnaround is showing up in better guest scores and a less severe traffic trend. It has yet to show up in more visits or a clear improvement in recurring earnings. That is the tension behind the company’s fiscal 2027 outlook: management expects a sizable profit recovery, while the strongest evidence so far is operational.

Fourth-quarter comparable restaurant sales fell 2.1% as traffic declined 6.1%. Average check rose 4.2%, including 4.4% pricing, while menu mix was slightly negative. Management says the underlying traffic trend has improved, but higher checks still did the work of containing the sales decline. Reported revenue of $849 million also includes Maple Street Biscuit Company through its July 20 divestiture, making consolidated growth a less useful measure of demand at Cracker Barrel stores.

Better service has yet to bring back the visits

There is operating progress beneath the negative sales figure. On the earnings call, management said food taste and service scores improved nearly 400 basis points from a year earlier, food temperature scores rose 500 basis points, and employee turnover declined. Those measures do not establish that better service caused the traffic trend to improve. They do show that execution inside the stores is improving while visits remain down.

New CEO David Deno is concentrating on food, experience and people, with dinner the clearest food opportunity. He plans to upgrade chicken, hamburger and steak offerings, with the investment included in fiscal 2027 guidance. Breakfast is already Cracker Barrel’s stronger daypart on both food scores and traffic trends. The test at dinner is whether better food brings guests back often enough to cover its cost without relying on heavier discounting.

Cracker Barrel Rewards gives the company a way to reach those guests. Its more than 12.5 million members account for over 40% of tracked sales, management said on the call. That scale could help the company test whether dinner changes improve visit frequency. It is not, by itself, evidence that frequency is rising.

The quarter’s profit gain came from a refund

Adjusted EBITDA rose to $62.1 million from $55.7 million. The latest quarter, however, included a $15 million tariff refund, of which $5.9 million was reinvested, leaving a $9.1 million net benefit. Removing that benefit puts adjusted EBITDA at roughly $53 million, below last year’s result. Two $10 million legal settlements affected different expense lines and offset each other in adjusted EBITDA. The adjusted figure already excludes the sale-leaseback gain and charges associated with the Maple Street divestiture and CEO transition.

The expense detail supports a cautious reading. Restaurant cost of goods sold improved 30 basis points as pricing more than offset commodity inflation. Labor rose 100 basis points, reflecting lower sales, the reversal of a prior kitchen labor initiative and higher store bonuses.

Retail comparable sales grew 0.7%, helped in part by an earlier Halloween assortment; excluding tariff refunds, retail cost of goods sold rose 60 basis points, primarily because of markdowns. The reported EBITDA increase therefore overstates the improvement in the underlying quarter.

Fiscal 2027 requires traffic and mix to do more

Management forecasts $180 million to $200 million of adjusted EBITDA in fiscal 2027, up from $147.7 million in fiscal 2026. That is an increase of roughly $32 million to $52 million on reported figures, or $41 million to $61 million if the fourth-quarter net tariff benefit is removed from the 2026 base. The latter is a simple sensitivity, not company guidance; it does not adjust for every nonrecurring cost or the full-year effect of selling Maple Street.

The sales plan calls for 3% to 5% comparable restaurant growth, about 3% pricing across the year, and no new stores. Pricing is expected to taper after the first quarter. Management sees opportunities to improve check and margin through appetizers, extra sides, desserts and a better dinner mix, alongside cost efficiencies away from the guest experience. Those moves could raise profit per visit. They still leave the company needing to recover visits while absorbing roughly 3% commodity inflation and 2.5% to 3% hourly wage inflation.

Deno has been CEO for only six weeks and declined to set a longer-term growth or margin target. The near-term test is clear enough. As pricing tapers through fiscal 2027, traffic and restaurant sales will show whether better execution is bringing customers back often enough to support the projected EBITDA recovery.