Cracker Barrel (NASDAQ:CBRL) Beats Q2 Sales Targets, Full-Year Sales Guidance Is Optimistic

Petr Huřťák /
2024/02/27 8:15 am EST

Restaurant company Cracker Barrel (NASDAQ:CBRL) reported Q2 FY2024 results beating Wall Street analysts' expectations, with revenue flat year on year at $935.4 million. The company's full-year revenue guidance of $3.55 billion at the midpoint also came in 2.3% above analysts' estimates. It made a non-GAAP profit of $1.37 per share, down from its profit of $1.48 per share in the same quarter last year.

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Cracker Barrel (CBRL) Q2 FY2024 Highlights:

  • Revenue: $935.4 million vs analyst estimates of $917.8 million (1.9% beat)
  • EPS (non-GAAP): $1.37 vs analyst expectations of $1.41 (3.1% miss)
  • The company lifted its revenue guidance for the full year from $3.45 billion to $3.55 billion at the midpoint, a 2.9% increase (above current expectations)
  • Free Cash Flow of $51.23 million is up from -$40.43 million in the previous quarter
  • Gross Margin (GAAP): 31.8%, up from 31.4% in the same quarter last year
  • Same-Store Sales were up 1.2% year on year (beat vs. expectations of a slight decline)
  • Store Locations: 725 at quarter end, increasing by 4 over the last 12 months
  • Market Capitalization: $1.60 billion

Commenting on the second quarter results, Cracker Barrel President and Chief Executive Officer Julie Masino said, "While margins remain pressured, we were encouraged by the improvement in our traffic trend during the quarter, which we believe was supported by our investments in labor and advertising and our focus on the guest experience. Additionally, we continued to make progress on the development of our strategic transformation, and our teams are engaged in our efforts to improve our relevancy, deliver food and an experience that our guests love, and grow profitability."

Known for its country-themed food and merchandise, Cracker Barrel (NASDAQ:CBRL) is a beloved American restaurant and retail chain that celebrates the warmth and charm of Southern hospitality.

Sit-Down Dining

Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.

Sales Growth

Cracker Barrel is one of the larger restaurant chains in the industry and benefits from a strong brand, giving it customer mindshare and influence over purchasing decisions.

As you can see below, the company's annualized revenue growth rate of 2.4% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was weak , but to its credit, it opened new restaurants and grew sales at existing, established dining locations.

Cracker Barrel Total Revenue

This quarter, Cracker Barrel reported decent year-on-year revenue growth of 0.2%, and its $935.4 million in revenue topped Wall Street's estimates by 1.9%. Looking ahead, Wall Street expects sales to grow 2.2% over the next 12 months, an acceleration from this quarter.

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Same-Store Sales

Cracker Barrel's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 5.4% year on year. With positive same-store sales growth amid an increasing number of restaurants, Cracker Barrel is reaching more diners and growing sales.

Cracker Barrel Year On Year Same Store Sales Growth

In the latest quarter, Cracker Barrel's same-store sales rose 1.2% year on year. By the company's standards, this growth was a meaningful deceleration from the 8.4% year-on-year increase it posted 12 months ago. We'll be watching Cracker Barrel closely to see if it can reaccelerate growth.

Key Takeaways from Cracker Barrel's Q2 Results

We liked how revenue outperformed Wall Street's estimates. Additionally, full year revenue guidance was raised and came in above expectations. On the other hand, its EPS missed. Zooming out, we think this was still a solid quarter that shareholders will appreciate. The stock is up 1.3% after reporting and currently trades at $73.3 per share.

Cracker Barrel may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.