Fewer customers are going to Cracker Barrel since its new-logo debacle last year, but those who are visiting are having a better time.
Traffic to the family-dining chain declined 10.1% year over year during the three-month period that ended Jan. 30, leading to a same-store sales decline of 7.1%. It was the second straight quarter of major traffic declines at Cracker Barrel after widespread backlash to a new logo turned many customers off of the chain.
Since then, it has gotten back to basics, focusing on improvements to its food and service, efforts that it says are gaining traction.
Despite the softer traffic last quarter, customer scores related to food, service and value were up 4% to 5%, CEO Julie Masino said during an earnings call Wednesday. Cracker Barrel’s Google star rating rose to 4.28, its highest mark since just before the pandemic.
Masino noted that the chain’s Google rating is closely correlated to traffic, and traffic improved over the course of the quarter. It was negative 10%-11% in November and December but down 9% in January, which included a negative 0.5-point impact from bad weather. It has improved further in February.
Overall, Cracker Barrel is expecting traffic to finish in the negative 8.5% to 9.5% range for the full fiscal year, which ends in July.
Asked what is behind the traffic turnaround, Masino said that the chain has focused on using its loyalty program to drive in customers. In the quarter, it served a “meaningful percentage” of lapsed members who had not visited the previous quarter.
“We're seeing movement there and that feels good to us because obviously an increasing frequency with people that know us and are already in our ecosystem is really important to us,” Masino said.
Customers are also responding well to new menu offerings, including the return of fan favorites like Country Fried Turkey, which sold out, as well as value meals like $19.99 meals for two. A holiday kids meal that included a free toy up to $5 was also popular.
“We're highly encouraged by the green shoots we're seeing, particularly the strong gains in the guest experience metrics,” Masino said.
Lebanon, Tennessee-based Cracker Barrel is also continuing to cut costs, in part through layoffs at the corporate office. The layoffs are expected to save the chain $20 million to $25 million annually. It is also reducing its advertising spend by $13 million to $17 million for the remainder of the year.
It is also expecting its annual commodity and labor inflation to be slightly lower than previously expected.
Cracker Barrel has felt an outsize impact from tariffs due to its in-restaurant gift shops, which sell knick-knacks and other goods imported from overseas. It said that pressure could ease later in the year following last month’s Supreme Court decision to strike down the Trump administration’s tariffs.
However, it’s complicated, said CFO Craig Pommells. Any savings will need to trickle down through Cracker Barrel’s supply chain, which includes receiving, warehousing, shipping and selling the products.
“There is a lag with all of that and the rate change is a bit more modest,” he said. “So more to come in the future on that one.”
With all that in mind, the chain narrowed its earnings outlook for the year: It’s now forecasting $85 million to $100 million in adjusted earnings before interest, taxes, depreciation and amortization, compared to a range of $70 million to $110 million previously.
Cracker Barrel stock spiked about 7% in after-hours trading Wednesday on the optimistic earnings report.
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