Restaurant company Cracker Barrel (NASDAQ:CBRL) met Wall Street’s revenue expectations in Q2 CY2024 with sales up 6.9% year on year to $894.4 million. The company’s outlook for the full year was also close to analysts’ estimates with revenue guided to $3.45 billion at the midpoint. Its non-GAAP profit of $0.98 per share was 11% below analysts’ consensus estimates.
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Cracker Barrel (CBRL) Q2 CY2024 Highlights:
- Revenue: $894.4 million vs analyst estimates of $897.2 million (in line)
- EPS (non-GAAP): $0.98 vs analyst expectations of $1.10 (11% miss)
- Management’s revenue guidance for the upcoming financial year 2025 is $3.45 billion at the midpoint, in line with analyst expectations and implying -0.6% growth (vs 0.8% in FY2024)
- EBITDA guidance for the upcoming financial year 2025 is $207.5 million at the midpoint, below analyst estimates of $210.5 million
- Gross Margin (GAAP): 32.1%, in line with the same quarter last year
- EBITDA Margin: 6.4%, down from 8.4% in the same quarter last year
- Free Cash Flow Margin: 2.5%, down from 7.3% in the same quarter last year
- Locations: 724 at quarter end, up from 719 in the same quarter last year
- Same-Store Sales were flat year on year (2.4% in the same quarter last year)
- Market Capitalization: $922.7 million
Commenting on the fourth quarter and full year results, Cracker Barrel President and Chief Executive Officer Julie Masino said, "Our teams are highly engaged and intently focused on executing our strategic transformation and our day-to-day business at a high level. We are already making great progress and are encouraged by the initial results of key initiatives such as operational excellence and the guest experience, optimized pricing, and our remodel program. Although there is much work to be done, I am both excited and confident in our future. "
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 2.5% over the last five years was weak, but to its credit, it opened new restaurants and grew sales at existing, established dining locations.
This quarter, Cracker Barrel’s revenue grew 6.9% year on year to $894.4 million, missing Wall Street’s expectations. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months, a deceleration from this quarter.
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Same-Store Sales
A company’s same-store sales growth shows the year-on-year change in sales for its restaurants that have been open for at least a year, give or take. This is a key performance indicator because it measures organic growth and demand.
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 3.1% year on year. With positive same-store sales growth amid an increasing number of restaurants, Cracker Barrel is reaching more diners and growing sales.
In the latest quarter, Cracker Barrel’s year on year same-store sales were flat. By the company’s standards, this growth was a meaningful deceleration from the 2.4% 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 struggled to find many strong positives in these results. Its revenue and EPS missed analysts’ expectations, and its full-year EBITDA guidance fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 1.4% to $41 immediately after reporting.
Cracker Barrel underperformed this quarter, but does that create an opportunity to invest right now?What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock.We cover that in our actionable full research report which you can read here, it’s free.