Shares of Cracker Barrel Old Country Store, Inc. CBRL have gained 29.9% in the past six months compared with the industry’s 8.6% rise. The company has kicked off fiscal 2025 with a strong performance highlighting benefits from menu innovation, digital initiatives and strategic remodels.
With a focus on driving market share, enhancing guest experiences and improving profitability, the company is well-positioned for sustained growth. However, softness in the retail segment and elevated cost pressures pose concerns.
CBRL’s Growth Catalysts
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Cracker Barrel’s enhanced menu offerings have resonated with guests, contributing to strong average check growth and higher traffic. The barbell pricing strategy, which balances value options like the Sunrise Pancake Special with premium offerings such as the New York Strip, has bolstered the company’s value perception among customers. Additionally, seasonal favorites like Country Fried Turkey and Cinnamon Roll French Toast Breakfast highlight the brand's ability to blend tradition with innovation. Menu optimization efforts have resulted in better pricing strategies and higher flow through while maintaining a strong value proposition.
CBRL is enhancing its menu through a back-of-house optimization initiative aimed at driving efficiencies that boost profitability while simplifying and improving job satisfaction for employees. This multiyear initiative is being implemented in several phases. The first phase focuses on process improvement, including the adoption of a just-in-time approach for specific items to optimize labor usage, minimize waste and enhance product quality. Initial tests in approximately 20 stores during the fiscal first quarter yielded positive results, prompting an expansion to a full region in the coming weeks. The company plans to roll out the first phase system-wide in the third quarter of fiscal 2025.
Cracker Barrel focuses on technological enhancements to drive growth. It continues to invest in technology initiatives to enhance its digital store and revamp its app to streamline the ordering process, provide a personalized experience and reduce friction on mobile devices.
The company is also redefining its brand through improvements in in-store design and atmosphere. It is currently testing prototypes for store remodels, which include both full remodels and store refreshes. So far the company has updated 19 stores and refreshed 12 locations and plans to complete 25-30 remodels and refreshes each. Early results from pilot remodels, particularly in Indianapolis, indicated increased sales and traffic. The remodeled stores also incorporated new menu items and employee dress codes, enhancing the overall guest experience.
CBRL's Concerns
Cracker Barrel’s retail segment continues to struggle. During first-quarter fiscal 2025, comparable store retail sales declined 1.6% year over year on the back of guest traffic decreases. The decline in guest traffic is primarily attributable to lower consumer demand arising from multiple macroeconomic factors, including inflationary pressures, higher interest rates, increased consumer debt levels and lower savings rates.
The company is persistently shouldering higher expenses, which have been detrimental to margins. In the first quarter of fiscal 2025, the adjusted operating margin contracted 60 basis points (bps) year over year to 0.8%. The downside was due to a rise in labor and related expenditures, other operating expenses and general and administrative costs. During the quarter, commodity inflation was approximately 1.9%, driven by higher dairy, beef and pork prices. For the fiscal 2025, the company expects the rate of commodity inflation to be between 2% and 3% and hourly restaurant wage inflation to be approximately 3% to 4%.
Conclusion: Wait and Watch
Cracker Barrel's recent performance highlights its potential for sustained growth, driven by innovative menu offerings, strategic remodels and digital enhancements. The company's ability to balance value with premium options, optimize back-of-house operations and revamp store designs demonstrates a commitment to improving guest experiences and profitability.
However, challenges persist, including declining retail sales and elevated cost pressures, which weigh on margins and overall performance. These concerns, coupled with ongoing macroeconomic uncertainties, suggest a cautious approach.
Investors are advised to retain Cracker Barrel stock for now, as the company’s transformation initiatives and growth catalysts offer long-term promise. That said, monitoring progress on strategic objectives and addressing operational headwinds will be key to unlocking its full potential.
CBRL’s Zacks Rank & Key Picks
Cracker Barrel currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.
Brinker International, Inc. EAT presently flaunts a Zacks Rank #1 (Strong Buy). EAT has a trailing four-quarter earnings surprise of 12.1%, on average. The stock has surged 84.1% in the past six months. You can see the complete list of today’s Zacks Rank #1 stocks here.
The consensus estimate for EAT’s fiscal 2025 sales and earnings per share (EPS) indicates growth of 8.8% and 44.2%, respectively, from the year-ago period’s levels.
Sprouts Farmers Market, Inc. SFM currently sports a Zacks Rank of 1. SFM has a trailing four-quarter earnings surprise of 15.3%, on average. The stock has risen 60.9% in the past six months.
The Zacks Consensus Estimate for SFM’s 2025 sales and EPS indicates a rise of 10% and 14.4%, respectively, from the year-ago period’s levels.
Deckers Outdoor Corporation DECK currently carries a Zacks Rank #2 (Buy). The stock has gained 24.9% in the past six months.
DECK has a trailing four-quarter earnings surprise of 41.1%, on average. The Zacks Consensus Estimate for DECK’s fiscal 2025 sales and EPS indicates growth of 13.6% and 13%, respectively, from the year-ago period’s levels.
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