Q4 2026 Cracker Barrel Old Country Store Inc Earnings Call

September 23, 2026

Operator: Good day, and welcome to the Cracker Barrel fiscal 2026 Q4 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Adam Hanan, Director of Investor Relations. Please go ahead.

Operator: Good day, and welcome to the Cracker Barrel Fiscal 2026 Q4 Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Adam Hanan, Director of Investor Relations. Please go ahead.

Speaker #1: Good day, and welcome to the Cracker Barrel Fiscal 2026 fourth quarter conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1, on a touch-tone phone.

Speaker #1: To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Adam Hannon, Director of Investor Relations. Please go ahead.

Speaker #2: Thank you. Welcome to Cracker Barrel's fourth quarter fiscal 2026 conference call and webcast. Earlier today, we issued a press release announcing our fourth quarter results.

Adam Hanan: Thank you. Welcome to Cracker Barrel's Q4 fiscal 2026 conference call and webcast. Earlier today, we issued a press release announcing our Q4 results. In this press release and on this call, we will refer to non-GAAP financial measures such as adjusted EBITDA for the Q4 ended 31 July 2026. Please refer to the footnotes in our press release for further details about these metrics. The company believes these measures provide investors with an enhanced understanding of the company's financial performance. This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP. The last pages of the press release include reconciliations from the non-GAAP information to the GAAP financials. On the call with me are Cracker Barrel's President and CEO, David Deno, and Senior Vice President and CFO, Craig Pommells.

Adam Hanan: Thank you. Welcome to Cracker Barrel's Q4 Fiscal 2026 Conference Call and Webcast. Earlier today, we issued a press release announcing our Q4 results. In this press release and on this call, we will refer to non-GAAP financial measures such as adjusted EBITDA for the Q4 ended 31 July 2026. Please refer to the footnotes in our press release for further details about these metrics. The company believes these measures provide investors with an enhanced understanding of the company's financial performance. This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP. The last pages of the press release include reconciliations from the non-GAAP information to the GAAP financials. On the call with me are Cracker Barrel's President and CEO, Dave Deno, and Senior Vice President and CFO, Craig Pommells.

Speaker #2: In this press release, and on this call, we will refer to non-GAAP financial measures such as adjusted EBITDA for the fourth quarter ended July 31, 2026.

Speaker #2: Please refer to the footnotes in our press release for further details about these metrics. The company believes these measures provide investors with an enhanced understanding of the company's financial performance.

Speaker #2: This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP.

Speaker #2: The last pages of the press release include reconciliations from the non-GAAP information to the GAAP financials. On the call with me are Cracker Barrel's President and CEO, Dave Dino, and Senior Vice President and CFO, Craig Plamels.

Speaker #2: Dave and Craig will provide a review of the business, financials, and outlook. We will then open up the call for questions. On this call, statements may be made by management regarding their beliefs and expectations about the company's future operating results or expected future events.

Adam Hanan: Dave and Craig will provide a review of the business, financials, and outlook. We will then open up the call for questions. On this call, statements may be made by management of their beliefs and expectations regarding the company's future operating results or expected future events. These are known as forward-looking statements, which involve risks and uncertainties that in many cases are beyond management's control and may cause actual results to differ materially from expectations. We caution our listeners and readers in considering forward-looking statements and information. Many of the factors that could affect results are summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnish to the SEC.

Speaker #2: These are known as forward-looking statements, which involve risks and uncertainties that, in many cases, are beyond management's control and may cause actual results to differ materially from expectations.

Speaker #2: We caution our listeners and readers in considering forward-looking statements and information. Many of the factors that could affect results are summarized in the cautionary description of risks and uncertainties found at the end of the press release, and are described in detail in our reports that we file with or furnish to the SEC.

Adam Hanan: Many of the factors that could affect results are summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnish to the SEC.

Speaker #2: Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it except as may be required under applicable law.

Adam Hanan: Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it except as may be required under applicable law. I'll now turn the call over to Cracker Barrel's President and CEO, Dave Deno. Dave?

Speaker #2: I'll now turn the call over to Cracker Barrel's President and CEO, Dave Dino. Dave?

Speaker #3: Good morning, everyone, and thank you for joining us. As many of you know, I stepped into the CEO role about six weeks ago. Having spent several decades working in the industry, I have long admired this iconic brand and been excited about the opportunity ahead of us.

Dave Deno: Good morning, everyone, and thank you for joining us. As many of you know, I stepped into the CEO role about six weeks ago. Having spent several decades working in the industry, I have long admired this iconic brand and been excited about the opportunity ahead of us. Given my brief tenure at the company, today's remarks will focus on early observations and priorities. Over the past few weeks, I have spent the vast majority of my time meeting with team members, visiting stores, and speaking with our guests. I have also tried to get a deeper understanding of the brand, our current strategy, and recent performance. A few things are already very clear to me. First, Cracker Barrel is on the right track. Second, we are a highly differentiated brand with tremendous potential. Third, we have a passionate guest base among the most passionate I have seen.

Speaker #3: Given my brief tenure at the company, today's remarks will focus on early observations and priorities. Over the past few weeks, I have spent the vast majority of my time meeting with team members, visiting stores, and speaking with our guests.

Speaker #3: I've also tried to get a deeper understanding of the brand, our current strategy, and recent performance. A few things are already very clear to me.

Speaker #3: First, Cracker Barrel is on the right track. Second, we are a highly differentiated brand with tremendous potential. Third, we have a passionate guest base—among the most passionate I've seen.

Speaker #3: Fourth, our people are critical to our success. They are the foundation for our hospitality and the connection that guests feel to our brand. We have 75,000 talented and dedicated employees who are committed to delivering exceptional guest experiences.

Dave Deno: Fourth, our people are critical to our success. They are the foundation for our hospitality and the connection that guests feel to our brand. We have 75,000 talented and dedicated employees who are committed to delivering exceptional guest experiences. They are energized by our momentum and are invested in the long-term success of Cracker Barrel. Next, broadly speaking, the company is already focused on the right areas and has a strong plan, as demonstrated by the continued improvements in performance over the last several quarters. We are working to refine and further strengthen our plan, particularly as it relates to our focus on food and guests. Finally, this company has been through a difficult stretch and has come out stronger. The team made hard calls, listened to guests, and got the business back on offense. The results of the past couple of quarters speak for themselves.

Speaker #3: They are energized by our momentum and are invested in the long-term success of Cracker Barrel. Next, broadly speaking, the company is already focused on the right areas and has a strong plan, as demonstrated by the continued improvements in performance over the last several quarters.

Speaker #3: We are working to refine and further strengthen our plan, particularly as it relates to our focus on food and guests. Finally, this company has been through a difficult stretch and has come out stronger.

Speaker #3: The team made hard calls, listened to guests, and got the business back on offense. The results of the past couple of quarters speak for themselves.

Speaker #3: A big part of my management philosophy is doing fewer things better and concentrating on opportunities that can have the greatest impact. For restaurants, the formula is pretty straightforward.

Dave Deno: A big part of my management philosophy is doing fewer things better and concentrating on opportunities that can have the greatest impact. For restaurants, the formula is pretty straightforward. You must offer great food, provide a great guest experience, and hire and retain excellent employees who deliver both. These are the priorities that we will be focused on, food, experience, and people. I will now speak briefly about each area. Our first priority is food, more specifically, enhancing our quality while making it more craveable. We are making investments to improve food quality. Dinner is our biggest opportunity, and we plan to upgrade our chicken, hamburger, and steak offerings. We also want to ensure our great food meets guests' expectations for taste, temperature, and quality on every visit.

Speaker #3: You must offer great food, provide a great guest experience, and hire and retain excellent employees who deliver both. So these are the priorities that we will be focused on: food, experience, and people.

Speaker #3: I'll now speak briefly about each area. Our first priority is food—more specifically, enhancing our quality while making it more craveable. We are making investments to improve food quality.

Speaker #3: Dinner is our biggest opportunity, and we plan to upgrade our chicken, hamburger, and steak offerings. We also want to ensure our great food meets guest expectations for taste, temperature, and quality on every visit.

Speaker #3: These changes are all about increasing guest satisfaction and not about taking out costs. And the associated investments are embedded in our guidance. Although enhancing our dinner offerings is the priority from a daypart perspective, breakfast remains our strongest area in both food scores and traffic trends.

Dave Deno: These changes are all about increasing guest satisfaction and not about taking out costs, and the associated investments are embedded in our guidance. Although enhancing our dinner offerings is the priority from a day part perspective, breakfast remains our strongest area in both food scores and traffic trends. Our menu work and marketing will capitalize on this strength even as we work to improve dinner. Guest experience is our second priority. Operationally, the company has made impressive gains across the key metrics in recent quarters. This is thanks to the dedicated efforts of our teams in the stores, as well as our store support center. in Q4, our Google star rating increased 2% year over year and remained near an all-time high. Food taste and service scores increased nearly 400 basis points, and food temperature scores improved 500 basis points compared to Q4 last year.

Speaker #3: Our menu work and marketing will capitalize on this strength, even as we work to improve dinner. Guest experience is our second priority. Operationally, the company has made impressive gains across the key metrics in recent quarters.

Speaker #3: This is thanks to the dedicated efforts of our teams, the stores, and our Store Support Center. In Q4, our Google star rating increased 2% year over year and remained near an all-time high.

Speaker #3: Food taste and service scores increased nearly 400 basis points, and food temperature scores improved 500 basis points compared to Q4 last year. These results are very encouraging, and we are confident in our ability to improve hospitality even further.

Dave Deno: These results are very encouraging, and we are confident in our ability to improve hospitality even further. The retail shop is critically important to the Cracker Barrel brand. This has been one of the biggest and most pleasant surprises for me since I joined the company. The business is a real competitive advantage because we are the only full-service restaurant brand offering guests a true retail experience alongside their meal. We will make the retail experience even better for our guests. From a product standpoint, we will continue to offer unique quality assortments at a strong value. From a merchandising standpoint, we are introducing targeted enhancements to improve the shopping experience. This includes simplifying our product layouts, widening aisles, and improving sight lines. Another key part of the guest experience is our loyalty program, Cracker Barrel Rewards. The strength of the program is remarkable.

Speaker #3: The retail shop is critically important to the Cracker Barrel brand. This has been one of the biggest and most pleasant surprises for me since I joined the company.

Speaker #3: The business is a real competitive advantage because we are the only full-service restaurant brand offering guests a true retail experience alongside their meal. We will make the retail experience even better for our guests, from a product standpoint.

Speaker #3: We'll continue to offer unique, quality assortments and a strong value. From a merchandising standpoint, we're introducing targeted enhancements to improve the shopping experience. This includes simplifying our product layouts, widening aisles, and improving sightlines.

Speaker #3: Another key part of the guest experience is our loyalty program, Cracker Barrel Rewards. The strength of the program is remarkable. We have over 12.5 million members that account for over 40% of tracked sales.

Dave Deno: We have over 12.5 million members that account for over 40% of tracked sales. This is a differentiator that we will continue to leverage. The team has continued to improve our personalization capabilities, and we recently launched a new website and app to make the experience easier and more seamless for our guests. Turning to our final priority, our people. Cracker Barrel has a special culture, and our team members are our greatest asset. Employee engagement and retention are critical to our plan. We continue to see favorable turnover trends. In Q4, hourly turnover improved 450 basis points, and manager turnover improved 85 basis points compared to the prior year. To sustain these gains and support strong execution, we will ensure our team members are equipped with the skills and training to be successful and highly effective. Additionally, we will be enhancing our training and development programs and tools.

Speaker #3: This is the differentiator that we will continue to leverage. The team is continuing to improve our personalization capabilities, and we recently launched a new website and app to make the experience easier and more seamless for our guests.

Speaker #3: Turning to our final priority, our people. Cracker Barrel has a special culture, and our team members are our greatest asset. Employee engagement and retention are critical to our plan.

Speaker #3: We continue to see favorable turnover trends. In Q4, hourly turnover improved 450 basis points, and manager turnover improved 85 basis points compared to the prior year.

Speaker #3: To sustain these gains and support strong execution, we will ensure our team members are equipped with the skills and training to be successful and highly effective.

Speaker #3: Additionally, we'll be enhancing our training and development programs and tools. In closing, we have a strong and focused plan. We will accomplish our objectives by relentlessly executing against the priorities we have identified and by doing fewer things much better.

Dave Deno: In closing, we have a strong and focused plan. We will accomplish our objectives by relentlessly executing against the priorities we have identified and doing fewer things much better. Most importantly, the entire organization is aligned against our objectives, investing in and improving our food, continuing to provide outstanding service and hospitality, and creating a great work experience for our people. As a result of the strong execution of these priorities, we will meaningfully improve profitability and cash flow in fiscal 2027 and set the business up for long-term success. I will now turn it over to Craig to review Q4 financials and the fiscal 2027 outlook.

Speaker #3: Most importantly, the entire organization is aligned with our objectives: investing in and improving our food, continuing to provide outstanding service and hospitality, and creating a great work experience for our people.

Speaker #3: As a result of the strong execution of these priorities, we will meaningfully improve profitability and cash flow in fiscal '27 and set the business up for long-term success.

Speaker #3: I'll now turn it over to Craig to review Q4 financials and the fiscal '27 outlook.

Speaker #2: Thank you, Dave, and good morning, everyone. Before reviewing our results, I want to build on Dave's remarks and thank our teams. The business continues to gain traction, as reflected in the improvement in our underlying traffic trends, key guest metrics, and overall financial results.

Craig Pommells: Thank you, Dave, and good morning, everyone. Before reviewing our results, I want to build on Dave's remarks and thank our teams. The business continues to gain traction, as reflected in the improvement in our underlying traffic trend, key guest metrics, and overall financial results. I am proud of our team's work and excited about the opportunity ahead. Now, turning to the Q4 results. Total revenue was $849.3 million. Restaurant revenue was $698.5 million. Comparable store restaurant sales decreased 2.1%, which included a traffic decline of 6.1%. As a reminder, in Q4, we were lacking a stronger quarter in the prior year, and there was significant variability in the prior year comparisons for Q3 and Q4. Controlling for this variability, we were pleased with the continued gradual improvement in the traffic trend, and these top-line results exceeded our expectations. The restaurant average check increased 4.2%, including pricing of 4.4%.

Speaker #2: I'm proud of our team's work and excited about the opportunity ahead. Now, turning to the fourth quarter results. Total revenue was $849.3 million. Restaurant revenue was $698.5 million.

Speaker #2: Comparable store and restaurant sales decreased 2.1%, which included a traffic decline of 6.1%. As a reminder, in Q4, we were lapping a stronger quarter in the prior year.

Speaker #2: And there was significant variability in the prior year comparisons for Q3 and Q4. Controlling for this variability, we were pleased with the continued gradual improvement in the traffic trend, and these top-line results exceeded our expectations.

Speaker #2: The restaurant average check increased 4.2%, including pricing of 4.4%. Menu mix was slightly negative, but we continue to benefit from menu initiatives, such as the option to upgrade to three sides.

Craig Pommells: Menu mix was slightly negative, but we continue to benefit from menu initiatives such as the option to upgrade to three sides. Off-premise sales were 19% of restaurant sales, an increase of approximately 100 basis points compared to the prior year, driven by growth in third-party delivery. Retail revenue was $150.8 million. Comparable store retail sales increased 0.7%, driven by increases in the average unit selling price and units per transaction. This was partially offset by lower traffic. We were pleased with the performance of our retail business, with this quarter representing the strongest retail comp sales growth since the second quarter of fiscal '23. We saw strength in the toys and housewares categories, and we also benefited from pulling forward our Halloween assortment. Moving to profitability, we reported adjusted EBITDA of $62.1 million, which was up 11.4% versus the prior year.

Speaker #2: Off-premise sales were 19% of restaurant sales, an increase of approximately 100 basis points compared to the prior year, driven by growth in third-party delivery.

Speaker #2: Retail revenue was $150.8 million. Comparable store retail sales increased 0.7%, driven by increases in the average unit selling price and units per transaction. This was partially offset by lower traffic.

Speaker #2: We were pleased with the performance of our retail business, with this quarter representing the strongest retail comp sales growth since the second quarter of fiscal '23.

Speaker #2: We saw strength in the toys and houseware categories, and we also benefited from pulling forward our Halloween assortment. Moving to profitability, we reported adjusted EBITDA of $62.1 million, which was up 11.4% versus the prior year.

Speaker #2: The current year adjusted EBITDA results include a $15 million tariff refund benefit, $5.9 million of which was reinvested in the business, for a net tariff refund benefit of $9.1 million.

Craig Pommells: The current year adjusted EBITDA results include a $15 million tariff refund benefit, $5.9 million of which was reinvested in the business for a net tariff refund benefit of $9.1 million. Additionally, the adjusted EBITDA results include two offsetting $10 million legal settlements, one of which favorably impacts other operating expenses and another that unfavorably impacts G&A. As noted in the press release, our adjusted EBITDA results exclude CEO transition costs, expenses related to the Maple Street divestiture, and a gain from the sale-leaseback transaction. Please review the non-GAAP reconciliation tables in the press release for additional details. Now, moving on to our Q4 expenses. Total cost of goods sold was 28.8% of total revenue versus 30.5% in the prior year. Restaurant cost of goods sold was 26% of restaurant sales versus 26.3% in the prior year.

Speaker #2: Additionally, the adjusted EBITDA results include two offsetting $10 million legal settlements—one of which favorably impacts other operating expenses, and another that unfavorably impacts G&A.

Speaker #2: As noted in the press release, our adjusted EBITDA results exclude CEO transition costs, expenses related to the Maple Street divestiture, and a gain from the sale-leaseback transaction.

Speaker #2: Please review the non-GAAP reconciliation tables in the press release for additional details. Now, moving on to our fourth quarter expenses. Total cost of goods sold was 28.8% of total revenue, versus 30.5% in the prior year.

Speaker #2: Restaurant cost of goods sold was 26% of restaurant sales, versus 26.3% in the prior year. This 30 basis point decrease was primarily driven by menu pricing, partially offset by commodity inflation.

Craig Pommells: This 30 basis point decrease was primarily driven by menu pricing, partially offset by commodity inflation. Commodity inflation was 3.1%, driven principally by higher beef, produce, and seafood prices, partially offset by lower egg and poultry prices. Retail cost of goods sold was 41.6% of retail sales and includes a benefit of approximately $15 million from tariff refunds. Excluding the tariff refund impact, retail COGS were 51.6% of retail sales and increased 60 basis points compared to the prior year, primarily due to higher markdowns. Quarter end inventories were $163.9 million, compared to $180.6 million in the prior year. This decrease was primarily driven by timing and retail clearance events to reduce aged inventory. Labor and related expenses were 37.5% of revenue, compared to 36.5% in the prior year. This 100 basis point increase was primarily driven by the following. First, sales deleverage.

Speaker #2: Commodity inflation was 3.1%, driven principally by higher beef, produce, and seafood prices, partially offset by lower egg and poultry prices. Retail cost of goods sold was 41.6% of retail sales and includes a benefit of approximately $15 million from tariff refunds.

Speaker #2: Excluding the tariff refund impact, retail COGS were 51.6% of retail sales, and increased 60 basis points compared to the prior year, primarily due to higher markdowns.

Speaker #2: Quarter-end inventories were $163.9 million, compared to $180.6 million in the prior year. This decrease was primarily driven by timing and retail clearance events to reduce aged inventory.

Speaker #2: Labor and related expenses were 37.5% of revenue, compared to 36.5% in the prior year. This 100 basis point increase was primarily driven by the following: First, sales deleverage.

Speaker #2: Second, the reversal of the prior year's kitchen labor initiative, and third, higher store bonuses. Wage inflation was approximately 2%. Other operating expenses were 23.7% of revenue and include a $10 million benefit from a legal settlement related to antitrust litigation.

Craig Pommells: Second, the reversal of the prior year's kitchen labor initiative. Third, higher store bonuses. Wage inflation was approximately 2%. Other operating expenses were 23.7% of revenue and include a $10 million benefit from a legal settlement related to antitrust litigation. Excluding this benefit, other operating expenses were 24.9% of revenue and approximately flat to the prior year as lower advertising expenses offset higher maintenance expenses. Adjusted general and administrative expenses were 6.9% of revenue. This excludes approximately $6.7 million in CEO transition expenses, which includes an unfavorable $10 million legal expense. Backing off the legal expense, G&A was 5.7% of revenue and approximately flat to the prior year. Additionally, our GAAP financial results include the following items, which are excluded from adjusted EBITDA. First, a $47.4 million net gain on sale of assets related to the sale-leaseback transaction.

Speaker #2: Excluding this benefit, other operating expenses were 24.9% of revenue and were approximately flat compared to the prior year, as lower advertising expenses offset higher maintenance expenses.

Speaker #2: Adjusted general and administrative expenses were 6.9% of revenue. This excludes approximately $6.7 million in CEO transition expenses, but includes an unfavorable $10 million legal expense.

Speaker #2: Backing off the legal expense, G&A was 5.7% of revenue and approximately flat to the prior year. Additionally, our GAAP financial results include the following items, which are excluded from adjusted EBITDA.

Speaker #2: First, a $47.4 million net gain on sale of assets related to the sale-leaseback transaction. Second, a $27 million non-cash loss on sale related to the Maple Street divestiture. Third, a non-cash impairment charge of $8.5 million related to the Maple Street divestiture, and a non-cash impairment charge of $13 million related to low-performing Cracker Barrel stores.

Craig Pommells: Second, a $27 million non-cash loss on sale related to the Maple Street divestiture. And third, a non-cash impairment charge of $8.5 million related to the Maple Street divestiture and a non-cash impairment charge of $13 million related to low performing Cracker Barrel stores, three of which closed during the quarter. Taking all of the above into account, adjusted EBITDA was $62.1 million, or 7.3% of total revenue, and increased 11.4% compared to the prior year's $55.7 million. These results exceeded our expectations and demonstrate our continued momentum. Net interest expense was $3 million compared to $4.7 million in the prior year. This decrease was primarily the result of a lower debt balance. GAAP income taxes were a $2 million credit, and adjusted income taxes were $1.1 million. GAAP earnings per diluted share were $0.54, and adjusted earnings per diluted share were $0.99.

Speaker #2: Three of which closed during the quarter. Taking all of the above into account, adjusted EBITDA was $62.1 million, or 7.3% of total revenue, and increased 11.4% compared to the prior year's $55.7 million.

Speaker #2: These results exceeded our expectations and demonstrate our continued momentum. Net interest expense was $3 million, compared to $4.7 million in the prior year. This decrease was primarily the result of a lower debt balance.

Speaker #2: GAAP income taxes were a $2 million credit, and adjusted income taxes were $1.1 million. GAAP earnings per diluted share were $0.54, and adjusted earnings per diluted share were $0.99.

Speaker #2: Now, turning to capital allocation and the balance sheet. We continue to diligently manage the company's capital resources and are pleased with the progress we have made to further strengthen the balance sheet.

Craig Pommells: Now, turning to capital allocation and the balance sheet. We continue to diligently manage the company's capital resources and are pleased with the progress we have made to further strengthen the balance sheet. The sale-leaseback transaction generated $77 million in net proceeds, which were used to pay down debt and partially offset the $150 million debt related to the 0.625% Convertible Senior Notes that matured and was repaid in June. The quarter ended with total debt of $337.2 million, which was $147.4 million below the prior year. The current debt is comprised entirely of the 1.75% Convertible Senior Notes due in 2030, with the revolver balance undrawn at quarter end. We continue to have ample access to liquidity, ending the quarter with $541.3 million in available capacity. Capital expenditures in the fourth quarter were $27.4 million. Turning to the outlook, we expect the following for fiscal 2027.

Speaker #2: The sale-leaseback transaction generated $77 million in net proceeds, which were used to pay down debt and partially offset the $150 million debt related to the 0.625% convertible senior notes that matured and were repaid in June.

Speaker #2: The quarter ended with total debt of $337.2 million, which was $147.4 million below the prior year. The current debt is comprised entirely of the 1.75% convertible senior notes due in 2030.

Speaker #2: With the revolver balance undrawn at quarter end, we continue to have ample access to liquidity, ending the quarter with $541.3 million in available capacity.

Speaker #2: Capital expenditures in the fourth quarter were $27.4 million. Turning to the outlook, we expect the following for fiscal ’27: total revenue of $3.325 billion to $3.4 billion.

Craig Pommells: Total revenue of $3.325 billion to $3.4 billion. This assumes comparable store restaurant sales growth of approximately 3% to 5% with no new stores. Total pricing of approximately 3%, with pricing highest in Q1 and dropping sequentially each quarter. Commodity inflation of approximately 3%, and hourly wage inflation of approximately 2.5% to 3%. Taking all of the above into account, we anticipate full year adjusted EBITDA between $180 million and $200 million. When thinking about the quarterly cadence in fiscal 2027, please keep in mind that the quarterly EBITDA distribution for fiscal 2026 was unusual. The first half of fiscal 2026 was meaningfully below the prior year, while the second half significantly improved and was largely in line with prior year.

Speaker #2: This assumes comparable-store restaurant sales growth of approximately 3% to 5%, with no new stores. Total pricing of approximately 3%, with pricing highest in Q1 and dropping sequentially each quarter.

Speaker #2: Commodity inflation of approximately 3%, and hourly wage inflation of approximately 2.5% to 3%. Taking all of the above into account, we anticipate full-year adjusted EBITDA between $180 million and $200 million.

Speaker #2: When thinking about the quarterly cadence in fiscal '27, please keep in mind that the quarterly EBITDA distribution for fiscal '26 was unusual. The first half of fiscal '26 was meaningfully below the prior year, while the second half significantly improved and was largely in line with the prior year.

Speaker #2: Regarding taxes, on an adjusted basis, we anticipate a full-year tax credit of $4 million to $8 million, which reflects routine employer tax credits, such as the FICA tip credit.

Craig Pommells: Regarding taxes, on an adjusted basis, we anticipate a full year tax credit of $4 million to $8 million, which reflects routine employer tax credits such as the FICA tip credit. Finally, we expect capital expenditures to be between $110 million and $125 million, comprised of approximately 65% maintenance and 35% technology and other strategic initiatives. We are not opening any new units this year. With that, I'll now turn the call over to the operator for Q&A.

Speaker #2: Finally, we expect capital expenditures to be between $110 million and $125 million, comprised of approximately 65% maintenance and 35% technology and other strategic initiatives.

Speaker #2: We are not opening any new units this year. With that, I'll now turn the call over to the operator for Q&A.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Anthony Traina with Wells Fargo. Please go ahead.

Speaker #1: If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

Speaker #1: The first question today comes from Anthony Trainer with Wells Fargo. Please go ahead.

Speaker #3: Hi, thank you very much. So, my first question for you, Dave, is: you've spent several weeks kind of in the business. What still needs to be fixed today?

Anthony Traina: Hi. Thank you very much. My first question for you, Dave, is you've spent several weeks in the business. What still needs to be fixed today? As investors are comparing, looking at what's changing in the strategy today, what more can you elaborate on where it's moving?

Anthony Trainor: Hi. Thank you very much. My first question for you, Dave, is you've spent several weeks in the business. What still needs to be fixed today? As investors are comparing, looking at what's changing in the strategy today, what more can you elaborate on where it's moving?

Speaker #3: And as investors are comparing and looking at what's changing in the strategy today, can you elaborate a bit more on where it's moving?

Speaker #2: Yeah. Well, as I mentioned in my remarks, I mean, this is really a well-positioned, iconic brand. And I think the company is very well-positioned to move forward.

Craig Pommells: Yeah.

Dave Deno: Yeah. Well, as I mentioned in my remarks, this is really a well-positioned, iconic brand. I think that the company is very well positioned to move forward. Let me spend a minute or two talking about what we can build on and some of those things I already mentioned. We have great strengths at breakfast, a very strong value equation, a passionate guest base, and talented employees. I think one of our biggest opportunities is food, especially at dinner. I talked in my prepared remarks about the steps we're doing to address it. We're going to be investing in food quality, and that's embedded in our guidance for the year. We're going to absolutely remain a relentless focus on consistent execution, and we've made progress in hospitality over the past year. We want to make even more faster.

Dave Deno: Well, as I mentioned in my remarks, this is really a well-positioned, iconic brand. I think that the company is very well positioned to move forward. Let me spend a minute or two talking about what we can build on and some of those things I already mentioned. We have great strengths at breakfast, a very strong value equation, a passionate guest base, and talented employees. I think one of our biggest opportunities is food, especially at dinner. I talked in my prepared remarks about the steps we're doing to address it. We're going to be investing in food quality, and that's embedded in our guidance for the year. We're going to absolutely remain a relentless focus on consistent execution, and we've made progress in hospitality over the past year. We want to make even more faster.

Speaker #2: So let me spend a minute or two just talking about what we can build on. Some of those things I already mentioned. We have great strengths at breakfast, a very strong value equation, a passionate guest base, and talented employees.

Speaker #2: And I think one of our biggest opportunities is food, especially at dinner. And I talked in my prepared remarks about the steps we're taking to address it.

Speaker #2: We're going to be investing in food quality, and that's embedded in our guidance for the year. We're going to absolutely remain relentless in our focus on consistent execution.

Speaker #2: And we've made progress in hospitality over the past year. We want to make even more, faster. And we want to ensure that our stores and our people are trained to give the hospitality that people expect from Cracker Barrel.

Dave Deno: We want to ensure that our stores and our people are trained to give the hospitality that people expect from Cracker Barrel. That's what I've been trying to do since I've been here for the last six weeks or so. When you look at the restaurant industry overall, that's what great restaurant companies do.

Speaker #2: So that's what I've been trying to do since I've been here for the last six weeks or so. And when you look at the restaurant industry overall, that's what great restaurant companies do.

Speaker #3: Thank you. And then my second question, Craig: the FY '27 EBIT outlook implies a $30 to $50 million step up in EBITDA.

Anthony Traina: Thank you. My second question, Craig. The fiscal 2027 EBITDA outlook implies $30 million to $50 million step-up in EBITDA. Can you bucket us out what's actually driving the increase? With the restaurant comp guide of 3% to 5%, I see that price was going to be +3%. Maybe that's kind of the lower end towards the historical range that we were expecting. How should we think about the price component of the outlook over the next several years?

Anthony Trainor: Thank you. My second question, Craig. The fiscal 2027 EBITDA outlook implies $30 million to $50 million step-up in EBITDA. Can you bucket us out what's actually driving the increase? With the restaurant comp guide of 3% to 5%, I see that price was going to be +3%. Maybe that's kind of the lower end towards the historical range that we were expecting. How should we think about the price component of the outlook over the next several years?

Speaker #3: Can you break out for us what's actually driving the bridges, what's actually driving the increase? And then with the restaurant comp guide of three to five, I see that price is going to be plus three.

Speaker #3: Maybe that's at the lower end of the historical range that we were expecting. How should we think about the price component of the outlook over the next several years?

Speaker #2: Absolutely. Hi, Anthony. Good question. It is a robust increase in EBITDA year over year. There are a couple of things driving that. One is the underlying improving traffic trend.

Craig Pommells: Absolutely. Hi, Anthony. Good question. It is a robust increase in EBITDA year over year. There are a couple of things driving that. One is the underlying improvement in traffic trend. Building on that are a number of our initiatives. One of those is menu mix and initiatives that support that. That will drive increased menu margin outside of pricing. We also have a number of cost savings and efficiency initiatives that are initiatives that they're not takeaways in any way, shape, or form from the guest. That menu margin work is particularly important. As it relates to pricing, we're essentially pricing on a percent basis to offset inflation. We've done a lot of work over the last couple of years on the strategic pricing initiative. That's a pretty sophisticated data-driven approach at a store level. That initiative has worked well. It is largely successfully completed.

Speaker #2: Building on that are a number of our initiatives. One of those is menu mix, and the initiatives that support that will drive increased menu margin, outside of pricing.

Speaker #2: We also have a number of cost savings and efficiency initiatives that are initiatives that do not—they're not takeaways in any way, shape, or form from the guests.

Speaker #2: So, that menu margin work is particularly important. As it relates to pricing, we're essentially pricing on a percent basis to offset inflation. We've done a lot of work over the last couple of years on the strategic pricing initiative.

Speaker #2: That's a pretty sophisticated, data-driven approach at a store level. That initiative has worked well; it is largely successfully completed. There is always more work to do with pricing as you optimize.

Craig Pommells: There is always more work to do with pricing as you optimize. The big chunk of that was done, and it was well received. As we go forward, there's always a little bit of pluses and minuses on strategic pricing, but the big chunk of that's behind us. We do think as we look to the future and we think about dinner and so on, there is opportunity in the menu mix component of the business that is a win-win for our customers, and then obviously improving our margins as well.

Speaker #2: But the big chunk of that was done, and it was well received. So, as we go forward, there's always a little bit of pluses and minuses on strategic pricing.

Speaker #2: But the big chunk of that's behind us. We do think, as we look to the future and we think about dinner and so on, there's opportunity in the menu mix component of the business that is a win-win for our customers and then, obviously, improving our margins as well.

Speaker #1: The next question comes from Dennis Geiger with UBS. Please go ahead.

Operator: The next question comes from Dennis Geiger with UBS. Please go ahead.

Speaker #3: Good morning, guys. Thank you. I wanted to ask a little bit more about the same-store sales comp, same-store sales guides for the full year.

Dennis Geiger: Morning, guys. Thank you. I wanted to ask a little bit more about the same-store sales comp, same-store sales guides for the full year. Helpful on the pricing dynamic, Craig. Thank you. Anything on cadence through the year, how you have started the year and how you are thinking about cadence of same-store sales through the year? And just anything more on some of the biggest sales drivers and traffic drivers this year.

Speaker #3: Helpful on the pricing dynamic, Craig. Thank you. Anything on cadence through the year—sort of how you've started the year and how you're thinking about cadence of same-store sales through the year?

Speaker #3: And just anything more on some of the biggest sales drivers and traffic drivers this year?

Speaker #2: Yeah, hi Dennis. That's a great question. In terms of cadence, our pricing is going to be at the highest level, 3% across the full year.

Craig Pommells: Yeah. Hi, Dennis. It is a great question. In terms of cadence, our pricing is going to be at the highest level, 3% across the full year. It is at its highest early in the year, in Q1, and then it will kind of taper down as the year goes on. So sequentially, quarter by quarter, that number will tick down a bit. Then in terms of drivers, what we have found in terms of menu mix, in particular, is that there are a lot of things that we have been adding, for example, in shareables or appetizers, where the take rate on those is really good. So we have been pleased with the work there. We have made some changes with sides as well, and the option to use three sides instead of two sides, and that has gone over very well also.

Speaker #2: It's at its highest early in the year, in the first quarter, and then it will kind of taper down as the year goes on.

Speaker #2: So sequentially, quarter by quarter, that number will tick down, will tick down a bit. Then in terms of drivers, what we have found in terms of menu mix, in particular, is that there are a lot of things that we've been adding, for example, in shareables or appetizers, where the take rate on those is really good.

Speaker #2: So we've been pleased with the work there. We've made some changes with sides as well, and the option to use three sides instead of two sides.

Speaker #2: And that's gone over very well also. Some of those initiatives are supporting that three-to-five. And then, obviously, there is the underlying traffic trend improvement.

Craig Pommells: Some of those initiatives are supporting that 3% to 5%, and then obviously there is the underlying traffic trend improvement. That traffic trend improvement is multifaceted. There are a lot of operational components to that, and the team has done an an outstanding job. When we look at our operating metrics, they keep getting better, and Dave mentioned those as well. As we think about the cadence in terms of EBITDA growth year over year for fiscal 2027 versus fiscal 2026, I would just keep in mind that the first half of fiscal 2026 was particularly challenged in relation to fiscal 2025, and the second half of fiscal 2026 was much closer to fiscal 2025. So I would just take that into consideration as you do your modeling.

Speaker #2: Now, that traffic trend improvement is multifaceted. There are a lot of operational components to that, and the team has done an outstanding job when we look at our operating metrics.

Speaker #2: They keep getting better, and they've mentioned those as well. Now, as we think about the cadence in terms of EBITDA growth year over year, for 2027 versus 2026, I would just keep in mind that the first half of 2026 was particularly challenged in relation to 2025.

Speaker #2: And the second half of '26 was much closer to '25. So I would just take that into consideration as you do your modeling.

Speaker #4: Yeah. If I could add—thanks, Craig—if I could add a couple of things on the traffic drivers. First of all, I've been in the restaurant business for a long time.

Dave Deno: Yeah. Thanks, Craig. If I could add a couple of things on the traffic drivers. First of all, I have been in the restaurant business for a long time. We have 12.5 million loyalty members. That is amazing. That allows us to speak to our guests, market them a certain way, and clearly it is a traffic-driving opportunity. Craig talked about the attach rates. Certainly we will get over time with our improvements in hospitality and food, we will see traffic from that. Lastly, we have a very strong, this has probably been the biggest surprise for me, a very strong and successful retail business. The opportunity to merchandise between retail and our restaurants is very strong. You look at their trends in the past quarter, it has been very good. There is an opportunity there to also drive traffic for the whole box.

Speaker #4: We've got 12.5 million loyalty members—that's amazing. That allows us to speak to our guests, market to them in a certain way, and clearly, it's a traffic-driving opportunity.

Speaker #4: Craig talked about the attach rates. And certainly, over time, with our improvements in hospitality and food, we'll see traffic from that. Then, lastly, we have a very strong—and this has probably been the biggest surprise for me—a very strong and successful retail business.

Dave Deno: Lastly, we have a very strong, this has probably been the biggest surprise for me, a very strong and successful retail business. The opportunity to merchandise between retail and our restaurants is very strong. You look at their trends in the past quarter, it has been very good. There is an opportunity there to also drive traffic for the whole box. So those are the four or five different levers we have to drive traffic this year.

Speaker #4: And the opportunity to merchandise between retail and our restaurants is very strong. And we want to, and you look at their trends, the past quarter—it's been very good.

Speaker #4: And so, there's an opportunity there to also drive traffic for the whole box. So, those are the four or five different levers we have to drive traffic this year.

Dave Deno: So those are the four or five different levers we have to drive traffic this year.

Speaker #3: Very helpful, thanks, guys. And if I could ask one more—just a question about how you think about the opportunity for margins. Obviously, as we look to this year, but even longer term—and maybe, Dave, it's a little bit early—but given your track record of finding efficiencies on the margin side of things, and the margin opportunity presumably that exists here to get back to levels that the business was previously at.

Dennis Geiger: Very helpful. Thanks, guys. If I could ask one more, just a question about how you think about the opportunity for margins. Obviously, as we look to this year, but even longer term, and maybe Dave, it is a little bit early, but given your track record of finding efficiencies on the margin side of things and the margin opportunity presumably that exists here to get back to levels that the business was previously had. Any commentary right now on both the shorter medium term, but also the longer term at a high level as far as margin opportunity goes? Thank you.

Speaker #3: Do you have any commentary right now on both the kind of shorter- and medium-term, but also the longer-term, at a high level, as far as margin opportunity goes?

Speaker #3: Thank you.

Speaker #2: Yeah, yeah, sure. Being a former CFO and CEO in the business, what I learned over the years is you pursue margin opportunities and the stuff that guests do not see.

Dave Deno: Yeah. Sure. Being a former CFO and CEO in the business, what I learned over the years is you pursue margin opportunities in the stuff that guests does not see. In other words, margin is not about taking cost of food out. It is not about taking labor out, et cetera. It is about our store support centers being stronger and stronger and investing in technology. I have to say, I have been pleasantly surprised by the level of our technology and expertise we have here and the progress we have made in technology. That is a big help to us as we go forward. On the overall box, it is all about traffic and improving our menu mix as we think about our menu and merchandising. So we have great food. We want to invest in it more and make it even more craveable. We have seen opportunities in mix.

Speaker #2: So, in other words, margin is not about taking the cost of food out. It's not about taking labor out, etc. It's about our store support centers being stronger and stronger and investing in technology.

Speaker #2: And I have to say, I've been pleasantly surprised by the level of our technology and expertise we have here, and the progress we've made in technology.

Speaker #2: That's a big help to us as we go forward. On the overall box, it's all about traffic and improving our menu mix, as we think about our menu and merchandising.

Speaker #2: So, we have great food. We want to invest in it more and make it even more craveable. We've seen opportunities in mix. People are attaching sides to a greater level than we thought.

Dave Deno: People are attaching sides to a greater level than we thought. We just did a strong dessert promotion that has worked really well. It is obvious our customers and our guests crave our desserts. So there is attachment opportunity, there is menu mix opportunity, and there is traffic opportunity, and that is how we are going to build margin in the box, and then look at costs outside the restaurant for productivity.

Speaker #2: We just did a strong dessert promotion that has worked really well. It's obvious our customers and our guests crave our desserts, so there's attachment opportunity.

Speaker #2: There's menu mix opportunity, and there's traffic opportunity. That's how we're going to build margin in the box. Then, we'll look at costs outside the restaurant for productivity.

Speaker #3: Very helpful. Thanks, guys.

Dennis Geiger: Very helpful. Thanks, guys.

Speaker #1: The next question comes from Sarah Senator with Bank of America. Please go ahead.

Operator: The next question comes from Sara Senatore with Bank of America. Please go ahead.

Speaker #5: Hi, good morning. This is Ashling on for Sarah. Congrats on the results. My question is just on free cash flow priorities—after CAPEX and any remaining transition or Maple Street cash costs, how are you thinking about 2027 free cash flows, specifically shareholder returns?

[Analyst] (Bank of America): Hi. Good morning. This is Aisling on for Sara. Congrats on the results. My question is just on free cash flow priorities. After CapEx and any remaining transition or Maple Street cash costs, how are you thinking about fiscal 2027 free cash flows, specifically shareholder returns? Is debt reduction the priority, or is kind of the lower leverage position changed the relative attractiveness of buybacks?

Aisling Grueninger: Hi. Good morning. This is Aisling on for Sara. Congrats on the results. My question is just on free cash flow priorities. After CapEx and any remaining transition or Maple Street cash costs, how are you thinking about fiscal 2027 free cash flows, specifically shareholder returns? Is debt reduction the priority, or is kind of the lower leverage position changed the relative attractiveness of buybacks?

Speaker #5: Is debt reduction the priority, or does the lower leverage position change the relative attractiveness of buybacks?

Speaker #2: Yeah, no, thank you for the compliment about results, by the way. I appreciate it. First and foremost, the balance sheet that the company has is in great shape.

Dave Deno: Yeah. Thank you for the compliment of our results, by the way. Appreciate it. First and foremost, the balance sheet that the company has is in great shape. As I said, I can speak to that as a former CFO as well. We are very fortunate to be in this position. The team has done a great job strengthening over the past year, given some of the headwinds. For us, this puts us in an opportunity to allocate capital in a very broad way, and it is something we discuss regularly. We are going to pursue a balanced capital allocation strategy. We are going to continue to prioritize organic growth.

Speaker #2: And like I said, I can speak to that as a former CFO as well. We're very fortunate to be in this position. The team has done a great job strengthening over the past year, given some of the headwinds.

Speaker #2: And for us, this puts opportunity to allocate capital in a very broad way, and it's something we discuss regularly. We're going to pursue a balanced capital allocation strategy.

Speaker #2: We're going to continue to prioritize organic growth. So, as opportunities come up, if we have more of a chance to invest in some of our stores, if we have a chance to push a little harder on food, etc., we're going to be using some of the free cash flow for that, because it's going to grow sales and grow traffic.

Dave Deno: Opportunities come up, if we have more of a chance to invest in some of our stores, if we have a chance to push a little harder on food, et cetera, we are going to be using some of the free cash flow for that because it is going to grow sales and grow traffic. But past that, we are going to retain a conservative balance sheet. We are going to look at, as we work with our board, we are going to discuss our dividend policy and future repurchases. This is something we talk about regularly with our board. As you noticed today, we announced our regular quarterly dividend. The good news is, with these results and this forecast, there is ample free cash flow to go forward with this business. It is a very, very big step in the right direction.

Speaker #2: But past that, we're going to retain a conservative balance sheet. So we're going to look at as we work with our board, we're going to discuss our dividend policy and future repurchases.

Speaker #2: This is something we talk about regularly with our board. And as you noticed today, we announced our regular quarterly dividend. So the good news is, with these results and this forecast, there's ample free cash flow to go forward with this business.

Speaker #2: And it's a very, very big step in the right direction.

Speaker #5: Great, thank you for that color. My other question is just on marketing in 2027. How are you thinking about marketing expense following the slight step-down in the second half of this year?

[Analyst] (Bank of America): Great. Thank you for that color. My other question is just on marketing in 2027. How are you thinking about marketing expense following the slight step down in the second half of this year? Does your outlook assume spending remains near the recent run rate, or is there any kind of reinvestment around traffic?

Aisling Grueninger: Great. Thank you for that color. My other question is just on marketing in 2027. How are you thinking about marketing expense following the slight step down in the second half of this year? Does your outlook assume spending remains near the recent run rate, or is there any kind of reinvestment around traffic?

Speaker #5: Does your outlook assume spending remains near the recent run rate, or is there any kind of reinvestment around traffic?

Speaker #2: Yeah, a couple of things. And I'll throw over to Craig in a second to talk about some of the financials. But what's really progressed in the industry is the chance to do marketing in so many different ways and so many different channels.

Dave Deno: Yeah. A couple things. I will turn it over to Craig in a second to talk about some of the financials. What has really progressed in the industry is the chance to do marketing in so many different ways and so many different channels. Our team is all over that, especially through social media and through other technology opportunities and things like that. That is, for us, a mechanism that we have to really think through how we are going to spend our money, and I am very pleased with what I have seen so far. For the financial side of it, I will turn it over to Craig.

Speaker #2: And our team is all over that, especially through social media and other technology opportunities and things like that. That is, for us, a mechanism that we have to really think through—how we're going to spend our money.

Speaker #2: And I'm very pleased with what I've seen so far. For the financial side of it, I'll turn it over to Craig.

Speaker #6: It's for a little bit of context in terms of our marketing spend. Our longer-term marketing spend was in that upward 2% range.

Craig Pommells: Yes. For a little bit of context in terms of our marketing spend. Our longer term marketing spend was in that kind of upward 2% range. In fiscal '25 and the H1 of '26, we increased that a bit. In the H2 of '26, we reduced our marketing spend, our advertising spend down to about 3% of sales. That is actually closer to our long-term run rate. As we think about '27, our initial point of view on this is we will be in that roughly 3% range. Now keep in mind, that 3% is in addition to all of this capability that we have

Speaker #6: In fiscal '25 and the first half of '26, we increased that a bit. Then, in the second half of '26, we reduced our marketing spend—our advertising spend—down to about 3% of sales.

Speaker #6: So, that is actually closer to our long-term run rate. As we think about ’27, our initial point of view on this is we’ll be in that roughly 3% range.

Speaker #6: Now, keep in mind that 3% is in addition to all of this capability that we have with our loyalty program, and that now represents over 40% of sales.

Craig Pommells: with our loyalty program, and that now represents over 40% of sales. Beyond all of that, we are continuing to test and learn, and if we find an approach that requires more spending and we can drive profitable guest growth with that approach, we will happily do it. It is not a philosophical issue in terms of our marketing spend. We are just trying to have the optimal level. We feel comfortable at 3%, but we are willing to do more, and we also have the benefit of the loyalty program as well.

Speaker #6: But beyond all of that, we're continuing to test and learn, and if we find an approach that requires more spending and we can drive profitable guest growth with that approach, we'll happily do it.

Speaker #6: It's not a philosophical issue. In terms of our marketing spend, we're just trying to have the optimal level. We feel comfortable at 3%, but we're willing to do more.

Speaker #6: And we also have the benefit of the loyalty program as well.

Speaker #5: Great, thanks for all the color. I'll pass it back.

[Analyst] (Bank of America): Great. Thanks for all the color. I will pass it back.

Aisling Grueninger: Great. Thanks for all the color. I will pass it back.

Speaker #1: The next question comes from Jeff Farmer with Gordon Haskett. Please go ahead.

Operator: The next question comes from Jeff Farmer with Gordon Haskett. Please go ahead.

Speaker #7: Thank you, and definitely welcome back, Dave. Good to have you back in the fold. A couple of questions for you guys. So really, the high-level assumptions about the consumer backdrop that are captured in your guidance—how are you guys thinking about what's going on out there in terms of sort of a bigger backdrop, knowing that both the lower-income consumer and some of the younger age demo consumers are sort of not spending as much?

Jeff Farmer: Thank you, and welcome back, Dave. Good to have you back in the fold. Couple of questions for you guys. Really, the high level assumptions about the consumer backdrop that are captured in your guidance, how are you guys thinking about what is going on out there in terms of a bigger backdrop, knowing that both the lower income consumer and some of the younger age demo consumers are not spending as much? I am just curious how you guys are thinking about the broader consumer backdrop in casual dining.

Speaker #7: So I'm just curious how you guys are thinking about the broader consumer backdrop and casual dining.

Speaker #2: Hey, Jeff. First, thank you for the welcome—I really appreciate it. And I admire your work over the years, so it's good to be back.

Dave Deno: Hey, Jeff. First, thank you for the welcome. I really appreciate it, and I admired your work over the years, so it is good to be back. The state of the consumer. As we all know, the macroeconomic environment remains mixed. But having said that, if you look at the industry, casual dining sales have held up pretty well, and I think there are people in this industry doing really well, and we want to be one of them. I think our trends, as you saw, are getting stronger and stronger. When it comes to us specifically, yes, we do see some pressure with our low-income guests, but our trends, as I have said, have gotten better, and our current trends that we are seeing is embedded in Craig's guidance for the year.

Speaker #2: So, the state of the consumer, as we all know, is influenced by a macroeconomic environment that remains mixed. But having said that, if you look at the industry, casual dining sales have held up pretty well.

Speaker #2: And I think there are people in this industry doing really well, and we want to be one of them. And I think our trends, as you saw, are getting stronger and stronger.

Speaker #2: When it comes to us specifically, yes, we do see some pressure with our low-income guests. But our trends, as I said, have gotten better.

Speaker #2: And our current trends that we're seeing are embedded in Craig's guidance for the year. We don't give quarter-to-date updates and things, but I think our current trends are embedded in what Craig is talking about.

Dave Deno: We do not give quarter date updates and things, but I think our current trends are embedded in what Craig is talking about. Finally, to make sure that we continue to keep our trends going and improve our trends, our priorities are going to be on food, experience, and people in what matter most in regards to the backdrop. That is how a restaurant competes, wins.

Speaker #2: And finally, to make sure that we continue to keep our trends going and improve our trends, our priorities are going to be on food experience and people in what matter most, and regardless of the backdrop.

Speaker #2: That's how restaurant companies live.

Speaker #6: And related to the second part of your question, Jeff, in terms of the cohorts of guests, we are continuing to see some softness with the lower-income cohorts.

Craig Pommells: Related to the second part of your question, Jeff, in terms of the cohorts of guests, we are continuing to see some softness with the lower income cohort, and we are seeing relative strength at the higher income. I think a lot of folks have reported that, and that is the relationship that we see. Then in terms of how we maneuver in that environment, I think we believe that Cracker Barrel value equation is really outstanding. We have got a check average that is in the $16 range, and that compares to casual dining that is $27 versus our $16, and family dining that is $20, again, versus our $16. I think even if you break that apart and you look at dinner, our dinner check average is still in the low $16. I think that positions us well in that regard.

Speaker #6: And we're seeing relative strength at the higher income levels. So I think a lot of folks have reported that, and that's the relationship that we see.

Speaker #6: And then, in terms of how we maneuver in that environment, I believe—we believe—that the Cracker Barrel value equation is really outstanding.

Speaker #6: We've got a check average that's in the $16 range, and that compares to casual dining that's $27 versus our $16, and family dining that's $20 again versus our $16.

Speaker #6: And I think even if you break that apart and you look at dinner, our dinner check average is still in the low $16s. So I think that positions us well in that regard.

Speaker #6: Then beyond that, we have some special pricing constructs with really sharp starting price points. For example, we have our Sunrise Pancake Special that's every day at $7.99.

Craig Pommells: Beyond that, we have some special pricing constructs with really sharp pricing points. For example, we have our Sunrise Pancake Special that is every day at $7.99. It is a great deal. We have Early Dinner Deals Monday through Friday that starts at $8.99. We also have the loyalty program, and we have lunch specials. There are a lot of ways that if you are feeling pressured from a discretionary income perspective, there are a lot of ways you can still have a great experience at Cracker Barrel.

Speaker #6: It's a great deal. We have Early Dine Monday through Friday that starts at $8.99. And then we also have, again, the loyalty program. And we have lunch specials.

Speaker #6: So there are a lot of ways that if you're feeling pressured from an income perspective or discretionary income perspective, there are a lot of ways you can still have a great experience at Cracker Barrel.

Speaker #7: Okay. And then just as a follow-up, really for both of you, a lot of moving pieces. But as sort of the business continues to sort of get set and you're get reset, I should say, and as you move forward into '27 and '28, how are you thinking about a potential framework for let's just call it a longer-term algorithm?

Jeff Farmer: Okay. Just as a follow-up, really for both of you, a lot of moving pieces, but as the business continues to get reset, I should say, as you move forward into fiscal '27 and fiscal '28, how are you thinking about a potential framework for, let us just call it a longer term algorithm? The same store sales, unit growth, cash return to shareholders. Do you envision the business returning to low single digit unit growth? Cash return to shareholders obviously has come down as you guys have cleaned up the balance sheet, but that could theoretically go back up if free cash flow holds on. I am just curious, your early thoughts from both of you guys on a longer term algorithm as you move forward.

Speaker #7: So, the same for sales, unit growth, and cash return to shareholders. Do you envision this sort of returning the business to low single-digit unit growth?

Speaker #7: Cash return to shareholders, obviously, has come down as you guys have cleaned up the balance sheet. But that could theoretically go back up if free cash flow holds on.

Speaker #7: So I am just curious—your early thoughts from both of you guys on a longer-term algorithm as you move forward.

Speaker #2: Yeah, Jeff. First of all, not to dodge the question, but I've been here six weeks, so maybe give me a little more time to get my arms around that.

Dave Deno: Yeah, Jeff. First of all, not to dodge the question, but I have been here six weeks, so maybe give me a little more time to get my arms around that.

Speaker #7: Fair. Fair.

Jeff Farmer: Fair.

Dave Deno: You know the business well. You know what we can do. We should be able to have strong maintained sales growth, earnings growth, cash flow, return cash to shareholders, run a strong balance sheet. All that is certainly possible here, and we would like to return to unit growth and invest in our stores. That is all part of the equation here, Jeff. It is a little early for me to say this much in sales, this much in pricing, this much in margin, et cetera. Know top of mind for us is to improve those key metrics. Same store sales, revenue growth, cash flow, margin, traffic, capital allocation, return cash to shareholders. That is all certainly part of the equation. More to follow, though.

Speaker #2: You know the business well. You know what we can do. We should be able to have strong, maintained sales growth, earnings growth, cash flow, return cash to shareholders, and run a strong balance sheet.

Speaker #2: All that is certainly possible here, and we would like to return to unit growth, and invest in our stores. That's all part of the equation here, Jeff.

Speaker #2: But it's a little early for me to say this much in sales, this much in pricing, this much in margin, etc. But top-of-mind for us is to improve those key metrics.

Speaker #2: Same-store sales, revenue growth, cash flow, margin, traffic, capital allocation, and returning cash to shareholders—all of that is certainly part of the equation. More to follow, though.

Speaker #7: All right. I appreciate it, guys. Thank you.

Jeff Farmer: All right. Appreciate it, guys. Thank you.

Speaker #1: As a reminder, if you would like to ask a question, please press star, then one, to enter the question queue. The next question comes from John Tower with City.

Operator: As a reminder, if you would like to ask a question, please press star and one to enter the question queue. The next question comes from Jon Tower with Citi. Please go ahead.

Speaker #1: Please go ahead.

Speaker #5: Hi, thanks for taking the question. This is Karen Holthaus on for John. I wanted to ask about freight prices on the retail side of the business, and what you are starting to see or expecting to see in terms of fuel surcharges, and how you're thinking about absorbing that versus passing it on.

Karen Holthouse: Hi. Thanks for taking the question. This is Karen Holthouse on for Jon. I wanted to ask about freight prices on the retail side of the business and what are you starting to see or expecting to see in terms of fuel surcharges and how you are thinking about absorbing that versus passing it on?

[Company Representative] (Cracker Barrel): Yeah. Hi, Karen. It is Greg. Yeah, we are seeing fuel surcharges and so on related to freight, both from the perspective of retail, but to a lesser degree on the restaurant side. All of that is built into our projection with the best information that we have today. So it just goes into the overall pricing algorithm and overall margin structure that we have got planned.

Craig Pommells: Yeah. Hi, Karen. It is Craig. Yeah, we are seeing fuel surcharges and so on related to freight, both from the perspective of retail, but to a lesser degree on the restaurant side. All of that is built into our projection with the best information that we have today. So it just goes into the overall pricing algorithm and overall margin structure that we have got planned.

Speaker #7: Hi, Karen. It's Craig. Yeah, we are seeing fuel surcharges and so on related to freight, both from the perspective of retail, and to a lesser degree on the restaurant side.

Speaker #7: All of that's built into our projection with the best information that we have today, so it just goes into the overall pricing algorithm and overall margin structure that we've got planned.

Speaker #5: Great. Thank you.

Karen Holthouse: Great. Thank you.

Speaker #1: This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

Speaker #2: Yeah. Thank you, everybody, for your interest today. As I mentioned before, I'm very pleased to be part of this company and to have the opportunity.

Dave Deno: Yeah. Thank you, everybody, for your interest today. As I mentioned before, I am very pleased to be part of this company and have the opportunity. We have a terrific brand, well-positioned, and I think we are going to be very strong going forward. The reason why is we have got a good foundation. This is a very differentiated brand I mentioned, and it is engaged and has committed employees and passionate guests. We are working on the right areas, and it is demonstrated by the continued improvement in our performance. In closing, our results wouldn't be possible without the hard work of our employees. I want to thank them for the passion, dedication, and commitment, which gives me high confidence in the time ahead. Going forward, our priorities will be to lean even more into food, experience, and people.

Speaker #2: We have a terrific brand, well-positioned, and I think we're going to be very strong going forward. We've got a good reason why—we've got a good foundation.

Speaker #2: This is a very, very, very differentiated brand, as I mentioned, and it's engaged and has committed employees and passionate guests. We're working on the right areas.

Speaker #2: And it's demonstrated by the continued improvement in our performance. In closing, our results wouldn't be possible if the hard work of our employees. I want to thank them for the passion, dedication, and commitment, which gives each of them me high which gives me high confidence in the path ahead, in the time ahead.

Speaker #2: Going forward, our priorities will be to lean even more into food experience and people. We're very optimistic about the future of Cracker Barrel, and we look forward to sharing more in the coming months.

Dave Deno: We are very optimistic about the future of Cracker Barrel and look forward to talking about more in the coming months. Thank you.

Speaker #2: Thank you.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.