A turnaround at Cracker Barrel is showing more signs of progress.
Same-store sales at the 660-unit family-dining chain rose 4.7% in the company’s fiscal second quarter, which covered November through January. It was the chain’s third straight quarter of positive same-store sales.
The company credited menu upgrades, value and catering, which is typically a strength during the holidays.
Cracker Barrel has been particularly focused on growing its dinner business, adding new items such as a Hashbrown Casserole Shepherd’s Pie and pot roast. These seem to be working with customers, as dinner traffic improved for the fifth straight quarter. Currently on offer: a pair of shrimp skillets that are also selling well.
“We continue to really fuel that innovation pipeline because we know that that fuels preference, it fuels traffic, it fuels people coming to us for dinner,” CEO Julie Felss Masino said during an earnings call Thursday, according to a transcript from financial services site AlphaSense.
Executives noted that traffic improved during breakfast and lunch as well. But overall, traffic was still down 2.7% in the period, with the sales growth coming entirely from higher prices and mix.
Cracker Barrel has also gone after value with offerings such as an $8.99 early-dine special from 4 to 6 p.m. on weekdays and a $7.99 pancake special. It believes it has a strong everyday value proposition, too, with average check clocking in at just $15. Masino said that’s far lower than the standard for both casual dining ($28) and family dining ($18). And it’s working to boost that value further by improving execution in its restaurants.
But the company also believes it has some room to raise prices, given its gap to the competition. Cracker Barrel’s prices were 6% higher in the second quarter and will settle in at 5% higher for the full fiscal year. “We think there's opportunity there, but we're also super careful,” Masino said.
In the quarter, customer value scores rose 7%, and Cracker Barrel received similarly elevated marks on food taste, menu choice, experience and service, another sign that its efforts are working.
It’s all part of a three-year, $700 million rejuvenation plan spearheaded by Masino, who came to the chain in 2023 after more than five years as president at Taco Bell. Besides menu and operations, Cracker Barrel is also looking at its branding and the design of its restaurants. The goal is to win new and younger customers without alienating longtime fans.
Next week, Cracker Barrel is debuting TV ads and billboards that will show off a new look and feel for the brand, Masino said. And it plans to remodel up to 30 restaurants and do 30 restaurant refreshes this fiscal year.
Executives are calling this a test-and-learn year for the remodel initiative, but noted that tests in four stores have yielded a sales and traffic lift.
The chain has been studying which elements of the remodel are most effective at driving traffic and customer satisfaction. “Is it lighting, is it floors, is it paint, is it service model?” Masino said. “All of those things we're looking at.”
Cracker Barrel’s recent performance has been strong enough that the company bumped up its expectations for the year. It’s now forecasting total revenues of $3.45 billion to $3.5 billion, up from $3.4 billion to $3.5 billion previously.
However, it also signaled some softness in February, as have other chains that reported earnings recently. Executives blamed weather and economic uncertainty for the slowdown.
“There is some consumer angst out there,” said CFO Craig Pommels, adding that it seems to be impacting both lower- and higher-income customers, which is a change from recent quarters.
“We were seeing some softness with the under $60,000 versus the over, and our most recent data is showing relatively similar performance between the under $60,000 and over $60,000,” he said.
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