Cracker Barrel Old Country Store Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jeffrey Farmer - Gordon Haskett Research Advisors - Analyst : Just a couple for you guys. So you did touch on it, but you delivered that roughly 4% restaurant comp number. Through the first half of the year, you did comment on some of the consumer anxiety that's out there. But how should we be thinking about same-store sales in the back half of the year, all things considered?

Question: Jeffrey Farmer - Gordon Haskett Research Advisors - Analyst : Okay. And then just one more, a little bit of a follow-up. So as it relates to that consumer angst, how is that manifesting itself across income cohort levels or age cohort levels? Any color there would be helpful.

Question: Todd Brooks - The Benchmark Company - Analyst : Congrats on the really strong holiday quarter. Wanted to ask -- you pointed out the fact that some of this margin improvement that we saw EBITDA-wise in the January quarter was related to really extremely solid execution of Heat n' Serve and catering across the period on a year-over-year basis. If I look, we were kind of flattish year-over-year in the first quarter. We saw north of 100 basis points of improvement here in the second quarter. Without kind of detail on parsing out the contribution from Heat n' Serve and catering, we don't really know what to back the expectation for year-over-year EBITDA margin improvement down to in the second half. So can we talk to out of that 100 basis points-plus improvement, how much was the better execution of Heat n' Serve and catering?

Question: Todd Brooks - The Benchmark Company - Analyst : One quick follow-up and I'll hop back in queue. I believe you said in the commentary, Craig, that the strategic transformation costs and the proxy battle costs are done for the full year. Did I hear that right? So we're not adjusting for that in adjusted EBITDA for the next two quarters?

Question: Katherine Griffin - BofA Securities - Analyst : First, I had a question on the retail business. Are you exposed at all to imports from China? And how are you -- if so, how are you positioning the business? And kind of what are your expectations on how tariffs could impact your business overall?

Question: Katherine Griffin - BofA Securities - Analyst : Great. And then I just had a few clarifying questions on the egg inflation. So first, can you remind me what percentage of your COGS are eggs? I know in the past, you've talked about, I think it's like a low double-digit number for dairy and eggs. But if you could kind of parse out eggs within that, that would be helpful. And then maybe just to clarify, on the purchases you made on the spot market, how much of your egg purchase is that? And since you're contracted through most of the year, how are you thinking about the impact next year as those prices kind of reset? I ask that within the context of what you spoke to about the fiscal 2026 guidance. I think you said second half to ramp up, but I don't know if that still means that you expect '26 to be above '25 on adjusted EBITDA. I know there's a lot in there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 4:00PM, CBRL.OQ - Q2 2025 Cracker Barrel Old Country Store Inc Earnings Call

Question: Katherine Griffin - BofA Securities - Analyst : And if I could just ask one more follow-up. How should I be thinking about pricing in the second half of 2025?

Question: Alton Stump - Loop Capital Markets - Analyst : Obviously, it sounds like dinner has been a huge outperformer for you now for the last several quarters. I'm curious on the launch on breakfast trend, sort of if there might be a similar opportunity for you to improve those dayparts as -- given all of the success that you've had for the dinner part.

Question: Alton Stump - Loop Capital Markets - Analyst : And then I guess, just one more follow-up and I'll hop back in the queue. But just on pricing front, it's certainly a question facing the entire industry right now of how much pricing power is still left. But as I look at Cracker Barrel, you guys are, I think, a great value versus even some of your lower-priced peers. So would I be wrong in thinking that perhaps Cracker Barrel has bit more pricing power than kind of most people might realize as you kind of look out over the next 12 to 18 months?

Question: Andrew Paul Wolf - CL King & Associates, Inc. - Analyst : I also wanted to ask, very similar to what Alton was just asking about, first of all, just on the price gaps to casual is pretty big and family dining is not as big. How do you consider Cracker Barrel? I mean, is it a hybrid? Or is it one or the other when you analyze how much pricing leverage or gap you have?

Question: Andrew Paul Wolf - CL King & Associates, Inc. - Analyst : Okay. The other sort of micro E question, then I want to ask a macro question is, so that $15 average for Cracker Barrel could sort of disaggregate, I would guess, lower on the family dining type of occasion and higher on the casual dining. So the gap might be even better, gets family dining and maybe a bit closer to casual. I don't know if you can add that to --?

Question: Andrew Paul Wolf - CL King & Associates, Inc. - Analyst : All right. That sounds very robust, but I'd like to ask at a higher level, if you will. So there is a big gap, and you've got tools to do it, and you want to be prudent. But my sense of it is sort of a pay-as-you-go, if you will, kind of thing going on here as Cracker Barrel is able to improve the experience, whether it's better menu items, better service, better lighting, remodels, all that stuff, there is an opportunity -- there could be an opportunity to increase that gap -- to close the gap, which stands to reason. I just want to understand if that's part of your philosophy. Or do you want to maintain that gap or other?

Question: Jon Tower - Citigroup Inc. - Analyst : Maybe, Craig, I was wondering if you could dig into the mix and traffic in the quarter. And specifically, you had mentioned about the benefits from an EBITDA standpoint on the catering and Heat n' Serve during the second quarter. Is there a way you can quantify that for us?

Question: Jon Tower - Citigroup Inc. - Analyst : Got it. And then you also mentioned, I think, in the prepared remarks there was a calendar shift in the period. Can you quantify that as well?

Question: Jon Tower - Citigroup Inc. - Analyst : Okay. And then going back, you mentioned earlier the idea that the service model is changing and there's some elevated trading costs coming in the third quarter. Can you just speak to exactly what's happening with the service model? And maybe over the longer term, are you guys anticipating that labor hours at the store level will maybe start working lower?

Question: Jon Tower - Citigroup Inc. - Analyst : Got it. And then just the last one for me. In terms of -- I know, Julie, you had mentioned earlier in the prepared remarks not providing too much more insight on the remodels and the refreshes. But any color you can provide around the lifts that you're seeing at the store, even consumer feedback in the markets? I think Indianapolis is one of the earlier ones in terms of guest satisfaction scores or anything like that.