Cracker Barrel (CBRL)

Restaurant company Cracker Barrel (NASDAQ:CBRL) beat Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 2.9% year on year to $868 million. On the other hand, the company’s full-year revenue guidance of $3.4 billion at the midpoint came in 3.4% below analysts’ estimates. Its non-GAAP profit of $3.16 per share was significantly above analysts’ consensus estimates.

Company Overview

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 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.

Full-service restaurant competitors include Bloomin’ Brands (NASDAQ:BLMN), Darden Restaurants (NYSE:DRI), Dine Brands (NYSE:DIN), and Texas Roadhouse (NASDAQ:TXRH).

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $3.48 billion in revenue over the past 12 months, Cracker Barrel is one of the larger restaurant chains in the industry and benefits from a well-known brand that influences consumer purchasing decisions. However, its scale is a double-edged sword because there are only a finite of number places to build restaurants, making it harder to find incremental growth. For Cracker Barrel to boost its sales, it likely needs to adjust its prices, launch new chains, or lean into foreign markets.

As you can see below, Cracker Barrel’s 2.1% annualized revenue growth over the last six years (we compare to 2019 to normalize for COVID-19 impacts) was weak as its restaurant footprint remained unchanged and it barely increased sales at existing, established dining locations.

This quarter, Cracker Barrel’s revenue fell by 2.9% year on year to $868 million but beat Wall Street’s estimates by 1.5%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection is underwhelming and indicates its menu offerings will see some demand headwinds.

Number of Restaurants

A restaurant chain’s total number of dining locations often determines how much revenue it can generate.

Cracker Barrel operated 725 locations in the latest quarter, and over the last two years, has kept its restaurant count flat while other restaurant businesses have opted for growth.

When a chain doesn’t open many new restaurants, it usually means there’s stable demand for its meals and it’s focused on improving operational efficiency to increase profitability.

Same-Store Sales

The change in a company's restaurant base only tells one side of the story. The other is the performance of its existing locations, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales gives us insight into this topic because it measures organic growth at restaurants open for at least a year.

Cracker Barrel’s demand within its existing dining locations has been relatively stable over the last two years but was below most restaurant chains. On average, the company’s same-store sales have grown by 1.7% per year. Given its flat restaurant base over the same period, this performance stems from a mixture of higher prices and increased foot traffic at existing locations.

In the latest quarter, Cracker Barrel’s same-store sales rose 5.4% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.

Cracker Barrel has good unit economics for a restaurant company, giving it the opportunity to invest in areas such as marketing and talent to stay competitive. As you can see below, it averaged an impressive 32.5% gross margin over the last two years. That means for every $100 in revenue, roughly $32.49 was left to spend on selling, marketing, and general administrative overhead.

This quarter, Cracker Barrel’s gross profit margin was 33%, in line with the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as ingredients and transportation expenses) have been stable and it isn’t under pressure to lower prices.

Cracker Barrel’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 1.4% over the last two years. This profitability was inadequate for a restaurant business and caused by its suboptimal cost structure.

Looking at the trend in its profitability, Cracker Barrel’s operating margin might fluctuated slightly but has generally stayed the same over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q2, Cracker Barrel’s breakeven margin was down 2 percentage points year on year. Since Cracker Barrel’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, and administrative overhead increased.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Cracker Barrel’s full-year EPS grew at a solid 24.9% compounded annual growth rate over the last five years, better than the broader restaurant sector.

In Q2, Cracker Barrel reported adjusted EPS of $3.16, up from $0.98 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Cracker Barrel’s full-year EPS of $5.57 to shrink by 38.5%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Cracker Barrel has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 1.5%, lousy for a restaurant business.

Cracker Barrel’s free cash flow clocked in at $56.79 million in Q2, equivalent to a 6.5% margin. This result was good as its margin was 4.1 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Cracker Barrel’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 8.8%, slightly better than typical restaurant business.

Cracker Barrel reported $39.64 million of cash and $1.13 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $224.3 million of EBITDA over the last 12 months, we view Cracker Barrel’s 4.9× net-debt-to-EBITDA ratio as safe. We also see its $11.08 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Cracker Barrel beat analysts’ same-store sales and EPS expectations this quarter. On the other hand, its full-year revenue guidance missed and its full-year EBITDA guidance fell short of Wall Street’s estimates. The outlook is weighing on shares and overshadowing the decent quarter. The stock traded down 8% to $45.60 immediately following the results.

Updated: December 4, 2025 at 9:46 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Cracker Barrel, you should also grasp the company’s longer-term business quality and valuation.

Cracker Barrel doesn’t pass our quality test. First off, its revenue growth was weak over the last six years, and analysts expect its demand to deteriorate over the next 12 months. And while its favorable reputation gives it meaningful influence over consumers’ dining decisions, the downside is its declining EPS over the last six years makes it a less attractive asset to the public markets. On top of that, its projected EPS for the next year is lacking.

Cracker Barrel’s P/E ratio based on the next 12 months is 37.8x. At this valuation, there’s a lot of good news priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $40.88 on the company (compared to the current share price of $28.29).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.