FinanceLooker

Excrept from filing document 2025-08-01

Unless the context otherwise requires references to Company we us and our refer to Cracker Barrel Old Country Store Inc and its direct and indirect wholly owned subsidiaries This report contains references to years that are the Company s 52 week or 53 week fiscal year which ends on the Friday nearest July 31st in the calendar year The periods presented in our financial statements are the fiscal years ended August 01 2025 2025 August 02 2024 2024 and July 28 2023 2023 respectively Each of these periods has 52 weeks except for 2024 which consisted of 53 weeks All of the discussion in this report should be read with and is qualified in its entirety by the Consolidated Financial Statements and the notes thereto All amounts other than share and certain statistical information e g number of units are in thousands unless the context clearly indicates otherwise Similarly references to a year or quarter are to our fiscal year or quarter unless expressly noted or the context clearly indicates otherwise
Except for specific historical information many of the matters discussed in this Annual Report on Form 10 K as well as other documents incorporated herein by reference may express or imply projections of items such as revenues or expenditures estimated capital expenditures compliance with debt covenants plans and objectives for future operations store economics inventory shrinkage growth or initiatives expected future economic performance or the expected outcome or impact of pending or threatened litigation These and similar statements regarding events or results that the Company expects will or may occur in the future are forward looking statements concerning matters that involve risks uncertainties and other factors which may cause our actual results and performance to differ materially from those expressed or implied by such forward looking statements All forward looking information is provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these risks uncertainties and other factors Forward looking statements generally can be identified by the use of forward looking terminology such as trends assumptions target guidance outlook opportunity future plans goals objectives expectations near term long term projection may will would could expect intend estimate anticipate believe potential regular should projects forecasts or continue or the negative or other derivatives of each of these terms or similar terminology We believe the assumptions underlying any forward looking statements are reasonable however any of the assumptions could be inaccurate and therefore actual results may differ materially from those projected in or implied by the forward looking statements In addition to the risks of ordinary business operations and those discussed or described in this report or in information incorporated by reference into this report factors and risks that may result in actual results differing from this forward looking information include but are not limited to risks and uncertainties associated with inflationary conditions with respect to the price of commodities ingredients transportation distribution and labor disruptions to our restaurant or retail supply chain effects of changes in international national regional and local economic and market conditions such as the imposition of trade barriers or other changes in trade policy on our business our ability to manage retail inventory and merchandise mix our ability to sustain or the effects of plans intended to improve operational or marketing execution and performance including the Company s multi year strategic plan the effects of increased competition at our locations on sales and on labor recruiting cost and retention consumer behavior based on negative publicity or changes in consumer health or dietary trends or safety aspects of our food or products or those of the restaurant industry in general including concerns about outbreaks of infectious disease the effects of our indebtedness and associated restrictions on our financial and operating flexibility and ability to execute or pursue our operating plans and objectives changes in interest rates increases in borrowed capital or capital market conditions affecting our financing costs and ability to refinance our indebtedness in whole or in part our reliance on a single distribution facility and certain significant vendors particularly for foreign sourced retail products information technology disruptions and data privacy and information security breaches whether as a result of infrastructure failures employee or vendor errors or actions of third parties our compliance with privacy and data protection laws changes in or implementation of additional governmental or regulatory rules regulations and interpretations affecting tax health and safety animal welfare pensions insurance or other undeterminable areas the actual results of pending future or threatened litigation or governmental investigations our ability to manage the impact of negative social media attention and the costs and effects of negative publicity the impact of activist shareholders our ability to achieve aspirations goals and projections related to our environmental social and governance initiatives our ability to enter successfully into new geographic markets that may be less familiar to us changes in land building materials and construction costs the availability and cost of suitable sites for restaurant development and our ability to identify those sites our ability to retain key personnel the ability of and cost to us to recruit train and retain qualified hourly and management employees uncertain performance of acquired businesses strategic investments and other initiatives that we may pursue from time to time the effects of business trends on the outlook for individual restaurant locations and the effect on the carrying value of those locations general or regional economic weakness business and societal conditions and the weather impact on sales and customer travel discretionary income or personal expenditure activity of our customers implementation of new or changes in interpretation of existing accounting principles generally accepted in the United States of America GAAP and those factors contained in Part I Item 1A of this report below as well as the factors described under Critical Accounting Estimates in Part II Item 7 of this report below or from time to time in our filings with the Securities and Exchange Commission SEC press releases and other communications
Readers are cautioned not to place undue reliance on forward looking statements made in this report since the statements speak only as of this report s date Except as may be required by law we have no obligation or intention to publicly update or revise any of these forward looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events Readers are advised however to consult any future public disclosures that we may make on related subjects in reports that we file with or furnish to the SEC or in our other public disclosures
You should carefully read and consider the risk factors set forth under Part I Item 1A Risk Factors as well as all other information contained in this Annual Report on Form 10 K Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect us If any of these risks occurs our business financial position results of operations cash flows or prospects could be materially and adversely affected Our business is subject to the following principal risks and uncertainties
We maintain a website at crackerbarrel com We make available free of charge through our website our periodic and other reports filed with or furnished to the SEC pursuant to the Securities Exchange Act of 1934 as amended the Exchange Act as soon as reasonably practicable after we file such material with or furnish it to the SEC Information on our website is not deemed to be incorporated by reference into this Annual Report on Form 10 K or any other filings that we make from time to time with the SEC
As of September 12 2025 we operated 657 Cracker Barrel stores in 43 states and 68 Maple Street Biscuit Company stores in 10 states The following description of our business should be read in conjunction with the information in Part II of this report under the caption Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations and Item 8 Financial Statements and Supplementary Data
In 2024 we announced our multi year strategic plan The multi year strategic plan is anchored on three overarching business imperatives driving relevancy delivering food and an experience guests love and growing profitability We have undertaken certain initiatives as part of these imperatives including modifying capital allocation to support increased investment in the business to drive organic growth
Store Format The format of our stores consists of a trademarked rustic old country store design offering a full service restaurant menu that features home style country food and a wide variety of decorative and functional items such as rocking chairs holiday and seasonal gifts toys apparel cookware and foods All stores are freestanding buildings and consist of approximately 20 of gift shop space with the remainder dedicated to our restaurant training and storage space Our stores have stone fireplaces and are decorated with antique style furnishings and other authentic and nostalgic items reminiscent of and similar to those found and sold in the past in traditional old country stores The front porch of each store features rows of the signature Cracker Barrel rocking chairs which are a popular item sold by the gift shops and which we invite guests to use while waiting for a table in our dining room or after enjoying a meal
Products Our restaurants which generated approximately 81 of our total revenue in 2025 offer home style country cooking featuring many of our own recipes that emphasize authenticity and quality Our restaurants serve breakfast lunch and dinner daily and offer dine in pick up and delivery services Menu items are moderately priced Approximately 93 of our restaurants also serve an assortment of beer and wine
Breakfast items can be ordered at any time throughout the day and include juices eggs pancakes meats grits and a variety of biscuit specialties such as gravy and biscuits and country ham and biscuits Lunch and dinner items include fried and grilled chicken chicken and dumplings meatloaf country fried steak pork chops fish country fried shrimp steak vegetable plates sandwiches and salads We also offer multi serving takeout family meal baskets Additionally from time to time we feature new items as off menu specials or on test menus at certain locations to evaluate possible ways to enhance customer interest and identify potential future additions to the menu We offer weekday lunch specials which include some of our favorite entrées in lunch sized portions Our menu also features weekday and weekend dinner specials that showcase a popular dinner entrée There is some variation in menu pricing and content in different regions of the country The average check per guest during 2025 was 15 23 which represents a 6 8 increase over the prior year We served an average of approximately 5 330 restaurant guests per week in a typical store in 2025
Our gift shops feature a variety of items inspired by our restaurant menu such as pies cornbread mix coffee syrups and pancake mix as well as a broad selection of decorative and functional items including rocking chairs seasonal gifts apparel toys cookware and various other gift items We also offer an assortment of candies preserves and other food items
At August 01 2025 our gift shops featured approximately 3 100 stock keeping units SKUs which is a decrease from historical levels primarily due to our current initiative to rationalize SKUs Certain food items are sold under the Cracker Barrel Old Country Store brand name We believe that we achieve high retail sales per square foot of retail selling space approximately 489 per square foot in 2025 as compared to traditional retail stores both by offering appealing merchandise and by having a significant source of customers who are typically our restaurant guests
Product Development and Merchandising Our product development department develops new and improved menu items either in response to shifts in customer preferences or to create customer interest We use a formal development and testing process which includes guest research and in store market tests to ensure products brought to market have a greater likelihood of meeting our goals Menu driven growth is built through three areas enhancements to our current core menu offerings the addition of new core menu offerings and limited time offer seasonal events or promotions
Our merchandising department selects and develops products for our gift shop We are focused on driving retail sales by converting those customers who come to us for a restaurant visit Our assortment includes both core and seasonal themes Our seasonal themes are designed to create interest and excitement in our stores by providing our guests with additional choices that vary throughout the year
Store Management At each store our store management typically consists of one general manager three to four associate managers and one retail manager To motivate managers to improve sales and operational performance we maintain bonus plans designed to provide managers with incentives to meet and exceed the operational targets of their store Each store is assigned to both a restaurant and a retail district manager who each report to a regional vice president
Purchasing and Distribution We negotiate directly with food vendors as to specification price and other material terms of most food purchases We have a contract with an unaffiliated distributor with custom distribution centers in Lebanon Tennessee McKinney Texas Gainesville Florida Elkton Maryland Kendallville Indiana Rock Hill South Carolina and Shafter California We purchase the majority of our food products and restaurant supplies on a cost plus basis through this unaffiliated distributor The distributor is responsible for placing food orders warehousing and delivering food products to our stores Deliveries are generally made once per week to individual stores Produce is purchased through a national program and is delivered two to three times a week through a network of approximately fifty independent produce suppliers Fluid dairy is delivered two to three times a week through approximately fifty regional dairies the majority of which are under the ownership of two separate unaffiliated companies Beer and wine are purchased and distributed through approximately 616 distributors with deliveries ranging from weekly to monthly
Each of these categories includes several individual items Bacon is the single food item within these categories that accounted for the largest share of our food purchasing expense in 2025 at approximately 5 of total food purchases Dairy fruits and vegetables are purchased through numerous vendors including local vendors Eggs are purchased through six vendors We purchase our pork through six vendors poultry through eleven vendors and beef through six vendors Should any food items from a particular vendor become unavailable we generally believe that these food items could readily be obtained or alternative products substituted in sufficient quantities from other sources at competitive prices to allow us to avoid any material adverse effects that could be caused by such unavailability
The majority of our retail items approximately 80 in 2025 are warehoused at our retail distribution center in Lebanon Tennessee The retail distribution center processes orders generated by our automated replenishment system and typically ships retail products to individual stores on a weekly basis via two dedicated third party freight lines The remaining retail items are shipped directly to our stores by our vendors
Information Technology We believe that an essential part of pleasing people is established through our ability to leverage technology We use technology to enhance the experiences of our guests and our employees and to assist management in all aspects of operating the business Examples include a digital experience that drives our loyalty program effectively enables our to go and catering business allows for mobile payments in our stores and provides guests with a digital waitlist that can be accessed remotely through our own mobile application Our in store guest experience is supported by systems that manage the dining room seating assist in facilitating customer orders of food and retail products and routes food orders to our kitchen Marketing uses digital technology to provide more relevancy in customer messaging Our store employees use a range of systems to manage inventory labor forecasting and orders for retail and restaurants In our distribution center we manage retail merchandise planning purchasing warehousing and distribution using various retail management solutions Our data solutions provide management with daily reports used to operate stores in a cost effective manner and assist in analytics and decision making Our Service Center leverages technology solutions that enable an efficient and effective way to resolve Technology Human Resources Operations Facilities and other corporate concerns We believe our technology is highly effective in supporting Cracker Barrel s daily operations and we continue to enhance this technology in line with our Company s strategic vision
Off Premise Business Approximately 20 of our restaurant sales are generated through our off premise channels which include Individual To Go Third Party Delivery and Catering and Occasion Individual To Go are orders picked up directly by our guests from our stores Third Party Delivery are orders placed through aggregators such DoorDash and Uber Eats and delivered by their drivers Catering and Occasion are offerings designed for large parties including our popular Heat n Serve meals available during select holidays In 2025 Individual To Go Third Party Delivery and Catering and Occasion accounted for approximately 50 32 and 18 of total off premise sales respectively
Guest Satisfaction We are committed to providing our guests a home style country cooked meal and a variety of retail merchandise served and sold with genuine hospitality in a comfortable environment Our commitment to offering guests a quality experience begins with our employees Our mission statement Pleasing People embraces guests and employees alike and our employees are trained on the importance of that mission in a culture of mutual respect We are also committed to staffing each store with an experienced management team to ensure attentive guest service and consistent food quality Through the regular use of guest surveys and store visits by district managers and operational vice presidents management receives valuable feedback that is used in our ongoing efforts to improve the stores and to demonstrate our continuing commitment to pleasing our guests We have a guest relations call center that takes comments and suggestions from guests and forwards them to operations or other management for information and follow up We monitor operational performance and guest satisfaction at all stores on an ongoing basis We have public notices in our menus on our website and posted in our stores informing customers and employees about how to contact us by internet with questions complaints or concerns regarding services or products We conduct training on how to gather information and investigate and resolve customer concerns This is accompanied by comprehensive training for all store employees on our public accommodations policy and commitment to Pleasing People
Marketing We employ multiple media channels to reach and engage our guests Outdoor advertising e g billboards and state department of transportation signs is one of our largest advertising vehicles we use to reach our traveling and local guests In 2025 we had over 1 300 billboards and this expenditure accounted for approximately one fourth of our total advertising spend for the year We continue to optimize our non billboard advertising mix which includes television increasingly digital digital display and video mobile social media and search marketing Our digital marketing efforts have also expanded to focus on improving brand preference guest engagement and sales We have a presence on multiple social media sites and several food delivery apps an e commerce platform that integrates individual to go and catering shopping and a customer relationship management CRM program that employs email text messages push notifications and personalization Our event activations drive awareness for the brand and build cultural relevance and affinity with our guests Our customer loyalty program Cracker Barrel Rewards provides us with an opportunity to increase consumer frequency and engagement
Store Development We opened one new Cracker Barrel store and closed two Cracker Barrel stores in 2025 Currently we plan to open two new stores during 2026 As of September 12 2025 approximately 83 of our stores are located along interstate highways Our remaining stores are located off interstate or near tourist destinations
Of the 657 stores open as of September 12 2025 we own the land and buildings for 358 while the other 299 properties are either ground leases or ground and building leases Building site improvement furniture equipment and related development costs for the store opened in 2025 was approximately 7 700 and pre opening costs averaged 985 per store in 2025
Our current store prototype is approximately 8 900 square feet including approximately 1 900 square feet of retail selling space and dining room seating for approximately 170 guests Our capital investment in new stores may differ in the future due to changes in our store prototype building design specifications site location and site characteristics
We also operate Maple Street Biscuit Company MSBC locations MSBC is a breakfast and lunch fast casual concept Like Cracker Barrel MSBC values genuine hospitality and made from scratch cooking including biscuit inspired entrées as well as freshly roasted coffee with a proprietary blend and a limited selection of beer and wine in certain locations MSBC operates in a smaller footprint than our Cracker Barrel Old Country Store concept and has operating hours limited to the breakfast and lunch day parts As of September 12 2025 68 MSBC locations were open all are currently leased properties in Alabama Florida Georgia Kentucky Ohio North Carolina South Carolina Tennessee Texas and Virginia As of September 12 2025 no MSBC locations were franchised
As of August 01 2025 we employed approximately 76 730 people of whom 364 were in advisory and supervisory capacities 3 446 were in store management positions and 45 were officers Many store personnel are employed on a part time basis Our employees are not represented by any union and management considers its employee relations to be good People are at the core of our business and an essential part of our Company
Because of the importance of our employees ability to deliver the service levels that are a vital part of the hospitality that drives our brand appeal to guests we emphasize employee development and training To ensure that individual stores operate at a high level of quality we focus significant attention on the training of store managers We believe that our training programs are key in developing our managers leadership skills and commitment to operational excellence which we believe are important to delivering a positive employee and guest experience We provide our managers and hourly employees with ongoing training through various development courses taught through a blended learning approach including a mix of hands on traditional classroom written and cloud based training Each store is equipped with dedicated training computers and cloud based proprietary eLearning instruction programs
Cracker Barrel is committed to providing comprehensive and competitive benefits to meet our employees needs We offer a robust set of benefits to help our employees and their families stay healthy and effectively manage spend related to health and financial well being These benefits include programs such as medical dental vision prescription drug and life insurance coverage as well as short and long term disability insurance coverage Additionally Cracker Barrel is pleased to offer our Employee Assistance Program to all employees and family members This confidential program is available 24 7 for personal or professional consultations In addition we provide all our employees with access to paid parental leave and adoption benefits a 401 k savings plan an employee discount policy at our Cracker Barrel stores an employee stock purchase plan and a competitive vacation policy
We are subject to various federal state and local laws affecting our business including areas of food safety minimum wage increases health care zoning requirements preparation and sale among others of food and alcoholic beverages information security and environmental matters Each of our stores must comply with licensing requirements and regulations by a number of governmental authorities and we have not been significantly affected by any delay in obtaining these licenses Federal state and local environmental laws and regulations have not historically had a significant impact on our operations however we cannot predict the effect of possible future environmental legislation or regulations on our operations
Essential restaurant supplies and raw materials are generally available from a number of sources Generally we are not dependent upon single sources of supplies or raw materials However in our stores certain branded items are single source products or product lines Our ability to maintain consistent quality throughout our store system depends in part upon our ability to acquire food products and related items from reliable sources When the supply of certain products is uncertain or prices are expected to rise significantly we may enter into purchase contracts or purchase bulk quantities for future use
Adequate alternative sources of supply as well as the ability to adjust menus if needed are believed to exist for substantially all of our restaurant products Our retail supply chain generally involves longer lead times and often more remote sources of product including the People s Republic of China and most of our retail product is distributed to our stores through a single distribution center Although disruption of our retail supply chain could be difficult to overcome we continuously evaluate the potential for disruptions and ways to mitigate such disruptions should they occur
The restaurant and retail industries are intensely competitive with respect to the type and quality of food retail merchandise price service location personnel concept attractiveness of facilities availability of carryout and home delivery internet and mobile ordering capabilities and effectiveness of advertising and marketing We compete with a significant number of national and regional restaurant and retail chains some of which have greater resources than us as well as locally owned restaurants and retail stores We also face growing competition from the supermarket industry which offers convenient meals in the form of improved entrées and side dishes from the deli section fast casual restaurants quick service restaurants and highly promotional casual and family dining restaurants In addition improving product offerings at fast casual restaurants and quick service restaurants and expansion of home delivery services together with negative economic conditions could cause consumers to choose less expensive alternatives We expect competition to continue in all of these areas The restaurant and retail businesses are also often affected by changes in consumer taste and preference national regional or local economic conditions demographic trends traffic and weather patterns the type number and location of competing restaurants and retailers and consumers discretionary purchasing power Factors such as inflation increased food labor and benefits costs and the lack of experienced management and hourly employees may adversely affect the restaurant and retail industries in general and our stores in particular We believe we compete effectively and have successfully differentiated ourselves from many of our competitors in the restaurant and retail industries through a unique brand and guest experience which offers a diversified full service menu and a large variety of nostalgic and unique retail items For further information regarding competition see Item 1A Risk Factors
Historically our revenue and profits have been lower in the first and third fiscal quarters and higher in the second and fourth fiscal quarters We attribute these variations primarily to the holiday shopping season and the summer vacation and travel season Our gift shop sales which are made substantially to our restaurant guests historically have been highest in our second quarter which includes the holiday shopping season Historically interstate tourist traffic and the propensity to dine out have been much higher during the summer months thereby generally contributing to higher profits in the Company s fourth quarter We also generally open additional new stores throughout the year Additionally the fourth quarter of 2024 consisted of 14 weeks Therefore the results of operations for any interim period cannot be considered indicative of the operating results for an entire year
In the restaurant industry substantially all payments received on sales are made by credit card debit card or cash Therefore like many restaurant companies we are able to and often do operate with negative working capital Restaurant inventories purchased through our principal food distributor are on terms of net zero days while other restaurant inventories purchased locally generally are financed through trade credit at terms of 30 days or less Because of our gift shops which have a lower product turnover than our restaurants we carry larger inventories than many other companies in the restaurant industry Retail inventories are generally financed through trade credit at terms of 60 days or less These various trade terms are aided by rapid product turnover of the restaurant inventory Employees generally are paid once every week or every two weeks except for bonuses that are paid either quarterly or annually in arrears Many other operating expenses have normal trade terms and certain expenses such as certain taxes and some benefits are deferred for longer periods of time
Investing in our securities involves a degree of risk Persons buying our securities should carefully consider the risks described below and the other information contained in this Annual Report on Form 10 K and other filings that we make from time to time with the SEC including our consolidated financial statements and accompanying notes If any of the following risks actually occurs our business financial condition results of operations or cash flows could be materially adversely affected In any such case the trading price of our securities could decline and you could lose all or part of your investment
The strength of our revenues and results of operations are dependent upon among other things the price and availability of food ingredients retail merchandise transportation distribution labor and utilities We have experienced and continue to experience inflationary pressures with respect to these costs Fluctuations in economic conditions weather supply chain disruptions freight efficiency demand and other factors also affect the availability quality and cost of the ingredients and retail merchandise that we buy Changes in global demand for corn wheat and dairy products have caused and could continue to cause volatility in the feed costs for poultry and livestock Operating margins for our restaurants are subject to changes in the price and availability of food commodities including beef pork chicken dairy and produce The effect of introduction of or changes to tariffs or exchange rates on imported retail products or food products could increase our costs and possibly affect the supply of those products Changes in demand for over the road transportation and distribution services could cause volatility increase our costs and adversely affect our operating margins
In addition the prices of our retail merchandise are similarly impacted by economic and inflationary pressures which have caused and may continue to cause higher costs and lower margins Our attempts to offset cost pressures such as through menu price increases and operational improvements may not be successful We seek to provide a moderately priced product and as a result we may not seek to or be able to pass along price increases to our customers sufficient to completely offset cost increases without adversely affecting our customers demand Consumers may be less willing to pay our menu prices and may increasingly visit lower priced competitors or may limit their restaurant or retail purchases The extent to which price increases are not sufficient to offset higher costs adequately or in a timely manner and or result in significant decreases in revenue volume may have a material adverse effect on our revenues and results of operations
Labor is a primary component in our operating costs and increases in labor costs due to increased minimum wages competition unemployment rates or health care and other benefit costs may have a material adverse effect on our results of operations We operate in many states and localities where the minimum wage is significantly higher than the federal minimum wage Our distributors and suppliers could also be affected by higher minimum wage benefit standards and compliance costs which could result in higher costs for goods and services supplied to us The market for labor in the United States is competitive which has resulted in upward pressure on wages and may continue to do so in the future
Our operating margins are also affected whether as a result of general inflation or otherwise by fluctuations in the price of utilities such as natural gas and electricity on which our locations depend for much of their energy supply Our failure to anticipate and respond effectively to one or more adverse changes in any of these factors could have a material adverse effect on our results of operations Inflationary pressures and other fluctuations impacting the cost of these items could have a negative impact on our business in 2026
The United States and other countries have experienced and may experience in the future outbreaks of viruses such as COVID 19 norovirus the bird avian flu or other diseases We cannot predict whether such infectious diseases including future variants of COVID 19 may impact sales and traffic at our stores create staffing issues increase commodity costs or result in store closures which could subsequently damage or could reduce consumer traffic and could have a material adverse effect on our results of operations In recent years there has been publicity concerning E coli bacteria hepatitis A mad cow disease foot and mouth disease salmonella African swine fever peanut and other food allergens and other public health concerns affecting the food supply including beef chicken pork dairy and eggs Food safety concerns widespread outbreaks of livestock and poultry diseases and product recalls all of which are out of our control and in many instances unpredictable could also increase our costs and possibly affect the supply of livestock and poultry products
Additionally we rely on our suppliers to comply with applicable laws and industry standards and if our suppliers are unable to comply with such laws or do not otherwise meet our quality standards we may face a disruption in our supply chain that could have a material adverse effect on our business If we are unable to respond effectively food safety concerns could have a negative impact on our business and our reputation
The sale of food and prepared food products for human consumption involves the risk of injury to our customers Such injuries may result from tampering by unauthorized third parties product contamination or spoilage including the presence of foreign objects substances chemicals other agents or residues introduced during the growing storage handling and transportation phases Additionally many of the food items on our menu contain beef and chicken The preferences of our customers toward beef and chicken could be affected by changes in consumer health or dietary trends and preferences regarding meat consumption or health concerns and publicity concerning food quality illness and injury generally Changes in consumer dietary preferences may impact our menu offerings Further consumers may change their dining in preferences such as during the COVID 19 pandemic when consumers often chose to order food to go or for delivery In addition government regulations or the likelihood of government regulation could increase the costs of obtaining or preparing food products Failure to respond and adapt to changing consumer preferences could have a material adverse effect on our results of operation and financial condition A decrease in guest traffic to our stores a change in our mix of products sold or an increase in costs as a result of these health concerns either in general or specific to our operations could result in a decrease in sales or higher costs to our stores that would materially harm our business
Multi unit businesses such as ours can be adversely affected by publicity resulting from complaints or litigation alleging poor food quality poor service guest discrimination food borne illness viruses product defects personal injury adverse health effects including obesity employee relations or other concerns stemming from one or a limited number of our stores Even when the allegations or complaints are not accurate or valid unfavorable publicity relating to our multi year strategic plan or one or more of our stores may adversely affect public perception of the entire brand before we have the opportunity to respond to and address such allegations Additionally social media can be utilized to target specific companies or brands as a result of a variety of actual or perceived actions or inactions that are disfavored by our customers employees or interest groups which can materially and immediately impact consumer behavior Social media allows users to organize collective actions and engage in other brand damaging behaviors that if targeted at us could impact our business Adverse publicity and its effect on overall consumer perceptions of food safety or customer service could have a material adverse effect on our business financial condition and results of operations
Additionally social media uses and platforms are constantly evolving and as a result we actively innovate and refine our social media and digital marketing strategies to maintain brand relevance to increase brand recognition and reach a broader audience If our social media and marketing initiatives or strategies are not successful our brand awareness may decline or we may otherwise suffer reputational harm In addition a variety of risks are associated with the use of social media including the public dissemination of proprietary or confidential information negative comments about us personally identifiable information or out of date or false information Such uses of social media by our guests or employees could increase our costs lead to litigation or result in negative publicity that could damage our reputation or the market price for our common stock
Our multi year strategic plan is in various stages of testing evaluation and implementation aimed to improve guest experience and increase profitability These initiatives of our multi year strategic plan are generally aimed at enhancing menu and retail options reducing our costs improving margins and increasing brand awareness including through expanding our footprint and investing in strategic relationships Implementation of these initiatives across our store base is inherently risky even when initiatives have been tested successfully on a more limited scale and customers may not be receptive to these changes which may negatively impact our financial condition and results of operations In the first quarter of 2026 we introduced an updated logo which received unfavorable consumer feedback and generated negative publicity Other initiatives contemplated under our multi year strategic plan may elicit similar adverse reactions which could adversely affect consumer perceptions of our brand our operational and financial performance and the market price for our common stock Successful system wide implementation across hundreds of stores and involving tens of thousands of employees relies on consistency of training stability of workforce ease of execution and the absence of offsetting factors that can adversely influence results Failure to achieve successful implementation of our initiatives may adversely affect our business financial condition and results of operations
The restaurant and retail industries are intensely competitive and we face many well established competitors We compete with national and regional restaurant and retail chains and locally owned restaurants and retailers within each market Competition from other regional or national restaurant and retail chains typically represent the more important competitive influence principally because of their significant marketing and financial resources We face competition as a result of the convergence of grocery deli retail and restaurant services particularly in the supermarket industry We also face competition from various off premise meal replacement offerings including but not limited to home meal kits delivery third party meal delivery and catering and the rapid growth of these channels by our competitors Moreover our competitors can harm our business even if they are not successful in their own operations by taking away customers or employees through aggressive and costly advertising promotions or hiring practices We compete primarily on the quality variety and perceived value of menu and retail items We also compete with other restaurant chains and other retail businesses for quality site locations management and hourly employees and other competitive pressures may affect both the availability and cost of these important resources The number and location of stores the growth of e commerce type of concept quality and efficiency of service attractiveness of facilities and effectiveness of advertising and marketing programs also are important factors We anticipate that intense competition will continue with respect to all of these factors If we are unable to continue to compete effectively our business financial condition and results of operations would be adversely affected
We rely on trademark unfair competition trade secret and copyright laws to protect our intellectual property rights We have registered certain trademarks and service marks with appropriate governmental authorities We cannot guarantee that these intellectual property rights will be maximized or that they can be successfully asserted There is a risk that we will not be able to obtain and perfect our own or where appropriate license intellectual property rights necessary to support new product introductions or other brand extensions We cannot be sure that these rights if obtained will not be invalidated circumvented or challenged in the future Additionally we cannot guarantee that third parties will not claim our trademarks or menu offerings will infringe on their intellectual property rights regardless of merit Our failure to protect or successfully assert our intellectual property rights could make us less competitive and could have an adverse effect on our business and results of operations
The performance of our business as affected by the level of our indebtedness could prevent us from meeting the obligations under our revolving credit facility or the indentures governing the 2026 Notes and the 2030 Notes or maintaining sufficient liquidity to operate our business or service our debt obligations and we cannot provide any guarantee of future cash dividend payments or that we will be able to actively repurchase our common stock pursuant to a share repurchase program
Our consolidated indebtedness and restrictions in our revolving credit facility may have the effect among other things of reducing our flexibility to respond to changing business and economic conditions and increasing borrowing costs Given the significant uncertainty relating to the macroeconomic environment there are potential scenarios under which we could fail to comply with these covenants which would result in an event of default that if not waived could have a material adverse effect on our financial condition results of operations or ability to continue to service our debt obligations A default under our credit agreement or under the indentures governing the 2026 Notes and the 2030 Notes may also significantly affect our ability to obtain additional or alternative financing For example the lenders ongoing obligation to extend credit under the revolving credit facility is dependent upon our compliance with certain covenants and restrictions as set forth in our credit agreement
Our ability to make scheduled payments or to refinance our obligations with respect to indebtedness will depend on our operating and financial performance which in turn is subject to prevailing economic conditions and to financial business and other factors beyond our control Our inability to refinance our indebtedness when necessary or to do so upon attractive terms may have a material adverse effect on our liquidity and results of operations
Depending on the impact of macroeconomic environment we may seek other sources of liquidity and other ways of preserving liquidity No assurance can be made that sources of additional liquidity will be readily available or that we will be successful in obtaining or preserving such liquidity Further no assurance can be made that sources of additional liquidity will be available on terms that are favorable to us
In 2024 as part of our multi year strategic plan we made the decision to reduce our quarterly dividends Any future determination to pay cash dividends on our common stock or to pay cash dividends in an amount comparable to historical cash dividends on our common stock will be based primarily upon our financial condition prospects results of operations and business requirements and our Board of Directors conclusion that the declaration of cash dividends is in the best interest of our shareholders and is in compliance with all laws and agreements applicable to the payment of dividends Furthermore there can be no assurance that we will be able to actively repurchase our common stock and we may discontinue plans to repurchase common stock at any time
We may be unable to raise the funds necessary to repurchase the 2026 Notes or the 2030 Notes for cash following a fundamental change or to pay the cash amounts due upon conversion and our other indebtedness may limit our ability to repurchase the 2026 Notes or the 2030 Notes or pay cash upon their conversion
Noteholders may require us to repurchase their 2026 Notes or 2030 Notes following a fundamental change at a cash repurchase price generally equal to the principal amount of the 2026 Notes or the 2030 Notes to be repurchased plus accrued and unpaid interest if any In addition all conversions of the 2026 Notes or the 2030 Notes will be settled partially or entirely in cash We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the 2026 Notes or the 2030 Notes or pay the cash amounts due upon conversion In addition applicable law regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the 2026 Notes or the 2030 Notes or pay the cash amounts due upon conversion
Our failure to repurchase the 2026 Notes or the 2030 Notes or to pay the cash amounts due upon conversion when required will constitute a default under the indentures governing the 2026 Notes or the 2030 Notes A default under the indentures governing the 2026 Notes or the 2030 Notes or the fundamental change itself could also lead to a default under agreements governing our other indebtedness including for the avoidance of doubt the indentures governing the 2026 Notes and the 2030 Notes which may result in that other indebtedness becoming immediately payable in full We may not have or be able to secure financing for sufficient funds to satisfy all amounts due under the other indebtedness and the indentures governing the 2026 Notes or the 2030 Notes
Certain provisions in the 2026 Notes and the 2030 Notes and the indentures governing the 2026 Notes and the 2030 Notes could make a third party attempt to acquire us more difficult or expensive For example if a takeover constitutes a fundamental change then noteholders will have the right to require us to repurchase their 2026 Notes or 2030 Notes for cash In addition if a takeover constitutes a make whole fundamental change then we may be required to temporarily increase the conversion rate for the 2026 Notes or the 2030 Notes In either case and in other cases our obligations under the 2026 Notes or the 2030 Notes and the indentures governing the 2026 Notes or the 2030 Notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management including in a transaction that noteholders or holders of our common stock may view as favorable
In connection with the issuance of the 2030 Notes we entered into privately negotiated capped call transactions with one or more of the initial purchasers of the 2030 Notes or their respective affiliates and or other financial institutions the option counterparties The capped call transactions initially cover subject to anti dilution adjustments substantially similar to those applicable to the 2030 Notes the number of shares of our common stock underlying the 2030 Notes The capped call transactions are expected generally to reduce or offset potential dilution to our common stock and or offset any cash payments we may be required to make in excess of the principal amount of converted 2030 Notes as the case may be upon any conversion of the 2030 Notes with such reduction and or offset subject to a cap In connection with establishing and maintaining their initial hedges of the capped call transactions we understand that the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and or purchasing or selling our common stock or other securities of ours in secondary market transactions from time to time prior to the maturity of the 2030 Notes and are likely to do so during any observation period relating to a conversion of the 2030 Notes or following any repurchase of the 2030 Notes by us if we elect to terminate or unwind the relevant portion of the capped call transactions The effect if any of these activities on the trading price of our common stock will depend on a variety of factors including market conditions and is uncertain at this time Any of these activities could however adversely affect the trading price of our common stock
In connection with the issuance of the 2026 Notes we entered into convertible note hedge transactions with one or more of the initial purchasers of the 2026 Notes or their respective affiliates and or other financial institutions the hedge counterparties The convertible note hedge transactions cover subject to customary anti dilution adjustments the number of shares of common stock that initially underlie the 2026 Notes We also entered into warrant transactions with the hedge counterparties collectively relating to the same number of shares of our common stock subject to customary anti dilution adjustments and for which we received premiums to partially offset the cost of entering into the hedge transactions
Before the maturity of the 2026 convertible notes we expect that the hedge counterparties or their affiliates will modify their hedge positions with respect to the existing convertible note hedge transactions and warrant transactions from time to time and are likely to do so during any observation period for the 2026 convertible notes by purchasing or selling shares of our common stock or other securities of ours in privately negotiated transactions or open market transactions or by entering into or unwinding various over the counter derivative transactions with respect to our common stock
The hedge counterparties and the option counterparties are financial institutions and we are subject to the risk that one or more of the hedge counterparties might default under their respective convertible note hedge transactions or that one or more of the option counterparties might default under their respective capped call transactions Our exposure to the credit risk of the hedge counterparties and the option counterparties is not secured by any collateral Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions If a hedge counterparty or an option counterparty becomes subject to insolvency proceedings we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with such hedge counterparty or option counterparty
Our exposure will depend on many factors but generally the increase in our exposure will be correlated to the increase in the market price and in the volatility of our common stock In addition upon a default by any hedge or option counterparty we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock We can provide no assurances as to the financial stability or viability of any of the hedge or option counterparties
At our election if applicable we may settle 2026 Notes or 2030 Notes tendered for conversion partly in shares of our common stock Furthermore the warrants evidenced by the warrant transactions are expected to be settled on a net share basis As a result the conversion of some or all of the 2026 Notes or the exercise of some or all of such warrants may dilute the ownership interests of existing shareholders Any sales in the public market of the shares of our common stock issuable upon such conversion of the 2026 Notes or such exercise of the warrants could adversely affect prevailing market prices of our common stock In addition the existence of the 2026 Notes may encourage short selling by market participants because the conversion of the 2026 Notes could depress the price of our common stock
Our ability to maintain consistent quality throughout our operations depends in part upon our ability to acquire specified food and retail products and supplies in sufficient quantities Partly because of our size finding qualified vendors and accessing food retail products supplies and certain outsourced services in a timely and efficient manner is a significant challenge that typically is more difficult with respect to goods or services sourced outside the United States
We use a number of products that are or may be manufactured in a number of foreign countries which subjects us to certain risks including possible long lead times to source products tariffs trade barriers sanctions import limitations and other trade restrictions by the U S government on products or components shipped from foreign sources particularly the People s Republic of China fluctuating currency exchange rates or control regulations foreign government regulations product testing regulations foreign political and economic instability and disruptions due to labor stoppages strikes or slowdowns or other disruptions involving our vendors or the transportation and handling industries In addition the political landscape in the U S contains uncertainty with respect to trade policies tariffs and regulations affecting trade between the U S and other countries Major developments in trade relations such as the imposition of tariffs on imported products or retaliatory actions by countries affected by changes in U S trade policies could have a material adverse effect on our business results of operations and financial condition
It remains unclear how trade policies tariffs or trade relations may change which could adversely affect our business results of operations and financial condition Although we continue to evaluate the impact of the effective and potential tariffs on our supply chain costs sales and profitability as well as our strategies to mitigate any negative impact including negotiating with our vendors seeking alternative sourcing options and adjusting retail and menu prices there can be no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful in whole or in part
In some cases we may have only one supplier for a product or service which subjects us to the possible risks of shortages interruptions and price fluctuations and possible litigation when we change vendors because of performance issues Global economic factors and the weak economic recovery continue to put significant pressure on suppliers with some suppliers facing financial distress and others attempting to rebuild profitability all of which tend to make the supply environment more expensive If any of these vendors are unable to fulfill its obligations or if we are unable to find replacement suppliers in the event of a supply disruption we could encounter supply shortages and or incur higher costs to secure adequate supplies either of which could materially harm our business
The long lead times required for a substantial portion of our retail merchandise and the risk of product damages or non compliance with required specifications could affect the amount of inventory we have available for sale Additionally our success depends on our ability to anticipate and respond in a timely manner to changing consumer demand and preferences for merchandise If we misjudge the market we may overstock unpopular products and be forced to take significant markdowns which could reduce our gross margin Conversely if we underestimate demand for our merchandise we may experience inventory shortages resulting in lost revenues Inventory shrinkage may also result in lost revenues Any of these factors could have an adverse effect on our results of operations cash flows from operations and our financial condition
Our risks are heightened because of our single retail distribution facility and our potential inability or failure to execute on a comprehensive business continuity plan following a major disaster at or near our corporate facility may have an adverse effect on our business results of operations and financial condition
The majority of our retail inventory is shipped into stored at and shipped out of a single warehouse located in Lebanon Tennessee All of the decorative fixtures used in our stores are shipped into stored at and shipped out of a separate warehouse that is also located in Lebanon Tennessee A natural disaster or public health crisis such as the COVID 19 pandemic affecting either of these warehouses or their personnel and operations could materially adversely affect our business Additionally our corporate systems and processes and support for our restaurant and retail operations are centralized on one campus in Tennessee We have disaster recovery procedures and business continuity plans in place to address most events back up and offsite locations for recovery of electronic and other forms of data and information However if we are unable to implement our disaster recovery and business continuity plans we may experience delays in recovery of data failure to support field operations tardiness in required reporting and compliance and the inability to perform vital corporate functions which could adversely affect our business
We rely extensively on our information technology across our operations including but not limited to point of sales processing supply chain management retail merchandise allocation and distribution labor productivity and expense management Our business depends significantly on the reliability security and capacity of our information technology systems to process these transactions summarize results manage and report on our business and our supply chain From time to time we experience unauthorized infiltration attempts and cyber attacks which have not yet but could in the future materially impact our operations Cyber attacks are increasingly common and sophisticated including through use of developing technologies such as artificial intelligence to identify and exploit weaknesses in business security systems and we cannot guarantee such attacks will not materially impact our business in the future
Our information technology systems are subject to damage or interruption from power outages computer network cable system internet and telecommunications failures computer viruses security breaches catastrophic events such as fires floods earthquakes tornadoes hurricanes acts of war or terrorism and usage errors by our employees If our information technology and telecommunication systems are damaged or cease to function properly we may have to make a significant investment to repair or replace them and we could suffer loss of critical data and interruptions or delays in our operations in the interim In addition from time to time our systems may become obsolete or require attention and could result in interruptions in our services and non compliance with certain laws or regulations Any material interruption in our information technology and telecommunication systems including due to a cyber attack or unauthorized infiltration attempt could have a material adverse effect on our business or results of operations In addition some of these essential technology based business systems are outsourced to third parties While we make efforts to ensure that our outsourced providers are observing proper standards and controls we cannot guarantee that breaches disruptions or failures caused by these providers will not occur
The protection of customer employee and company data is critical to us We are subject to laws relating to information security privacy cashless payments consumer credit and fraud Additionally an increasing number of government and industry groups have established laws and standards for the protection of personal and health information As a merchant and service provider of point of sale services we are also subject to the Payment Card Industry Data Security Standard issued by the Payment Card Industry Council The regulatory environment surrounding information security and privacy is increasingly demanding with the frequent imposition of new and constantly changing requirements Compliance with these requirements may result in cost increases due to necessary system changes and the development of new administrative processes
In addition customers and employees have a high expectation that we will adequately protect their personal information including confidential card information Third parties may have the technology or know how to breach the security of this customer information and our security measures and those of our technology vendors may not effectively prevent others from obtaining improper access to this information If we fail to comply with the laws and regulations regarding privacy and security or experience a security breach we could be exposed to risks of data loss regulatory investigations and or penalties a loss of the ability to process credit and debit card payments substantial inconvenience or harm to our guests litigation and serious disruption of our operations Additionally any resulting negative publicity could significantly harm our reputation and damage our relations with our guests
Some of our business processes are currently outsourced to third parties Such processes include distribution of food and retail products to our store locations and customers credit and debit card authorization and processing gift card tracking and authorization payroll payments payroll taxes processing employee payroll card services health care and workers compensation insurance claims processing wage and related tax credit documentation and approval guest satisfaction survey programs employee engagement surveys and externally hosted business software applications We cannot ensure that all providers of outsourced services are observing proper internal control practices such as redundant processing facilities and there are no guarantees that failures will not occur Failure of third parties to provide adequate services could have an adverse effect on our financial condition and results of operations
We maintain relationships with various third party delivery apps and services such as DoorDash and Uber Eats Our sales may be negatively affected if these platforms are damaged or interrupted through technological failures or otherwise The drivers fulfilling third party delivery orders may make errors or fail to make timely deliveries such that our food or brands are poorly represented This could cause reputational harm or adversely impact sales and customer satisfaction Our sales through these services may also depend on the availability of delivery drivers who are generally independent contractors
We use third parties to authorize and process credit and debit card payments which requires the collection and retention of customer data including sensitive financial data and other personally identifiable information Such personal information is maintained by third parties who provide payment processing services A weakness in such third party s systems or software products or in the systems or software products in the service providers of those third parties may lead to a data breach or pose cybersecurity risks If we or one of our third party service providers experience a cyber attack or security data breach our results of operations and brand may suffer Additionally we may have to make a significant investment to remedy or replace such systems
We rely on certain technology licensed from third parties and may be required to license additional technology in the future for use in managing our internet sites and providing services to our guests and employees These third party technology licenses may not continue to be available to us on acceptable terms or at all The inability to enter into and maintain these technology licenses could adversely affect our business
We are subject to a number of risks relating to federal state and local regulation of our business including the areas of health care reform and environmental matters and an insufficient or ineffective response to government regulation may have an adverse effect on our business results of operations and financial condition
The restaurant industry is subject to extensive federal state and local laws and regulations including those relating to food safety and other labor issues such as unionization health care animal health and welfare menu labeling and building and zoning requirements and those relating to the preparation and sale of food and alcoholic beverages as well as certain retail products The development and operation of our stores depend to a significant extent on the selection and acquisition of suitable sites which are subject to zoning land use environmental traffic and other regulations and requirements We are also subject to licensing and regulation by state and local authorities relating to health sanitation safety and fire standards and the sale of alcoholic beverages federal and state laws governing our relationships with employees including the Fair Labor Standards Act of 1938 the Immigration Reform and Control Act of 1986 the Patient Protection and Affordable Care Act the Health Care and Education Reconciliation Act of 2010 and applicable requirements concerning minimum wage overtime healthcare coverage family leave medical privacy tip credits working conditions safety standards and immigration status and federal and state laws which prohibit discrimination and other laws regulating the design and operation of facilities such as the Americans With Disabilities Act of 1990 In addition we are subject to a variety of federal state and local laws and regulations relating to the use storage discharge emission and disposal of hazardous materials We also face risks from new and changing laws and regulations relating to gift cards nutritional content nutritional labeling product safety and menu labeling Compliance with these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings
There also has been increasing focus by U S and foreign governmental authorities on environmental matters such as climate change the reduction of greenhouse gases and water consumption This increased focus may lead to new initiatives directed at regulating an as yet unspecified array of environmental matters Legislative regulatory or other efforts to combat climate change or other environmental concerns could result in future increases in taxes the cost of raw materials transportation and utilities which could decrease our operating profits and necessitate future investments in facilities and equipment
The impact of current laws and regulations the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future laws and regulations could increase our compliance and other costs of doing business and therefore have an adverse effect on our results of operations Failure to comply with the laws and regulatory requirements of federal state and local authorities could result in among other things revocation of required licenses administrative enforcement actions fines and civil and criminal liability Compliance with these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings Also the failure to obtain and maintain required licenses permits and approvals could have a material adverse effect on our results of operations Typically licenses must be renewed annually and may be revoked suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable regulations which could have a material adverse effect on our business and results of operations
Historically we have relied upon billboards as our principal method of advertising A number of states in which we operate restrict highway signage and billboards Because many of our stores are located on the interstate highway system our business is highly related to highway travel Thus signage or billboard restrictions or loss of existing signage or billboards could adversely affect our visibility and ability to attract customers Additionally as we continue to evolve our marketing strategy we are increasingly utilizing more traditional and higher cost methods of advertising such as national cable television radio online and digital media and our loyalty program These types of advertising their effects upon our revenues and in turn our profits are uncertain Additionally if our competitors increased their spending on advertising and promotions we could be forced to substantially increase our advertising media or marketing expenses If we did so or if our current advertising and promotion programs become less effective we could experience a material adverse effect on our results of operations
Our business is subject to the risk of litigation by employees guests suppliers shareholders governmental agencies competitors or others through private actions class actions administrative proceedings regulatory actions or other litigation These actions and proceedings may involve allegations of illegal unfair or inconsistent employment practices guest discrimination food safety issues personal injury claims violation of dram shop laws trademark and patent infringement violation of the federal securities laws or other concerns The outcome of litigation particularly class action lawsuits and regulatory actions is difficult to assess or quantify Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time The cost to defend future litigation may be significant There may also be adverse publicity associated with litigation that could decrease guest or consumer acceptance of our brand regardless of whether the allegations are valid or we ultimately are found liable Litigation could adversely impact our operations and our ability to expand our brand in other ways such as by diverting management s attention away from operations As a result litigation may adversely affect our business financial condition and results of operations
Activist shareholders have nominated candidates for election to our Board of Directors at our annual meetings of shareholders multiple times resulting in proxy contests and called publicly for special meetings of shareholders to consider other proposals relating to corporate policies of the Company including on matters such as our dividend policy capital structure and strategic alternatives The Lion Fund II L P Biglari Capital Corp First Guard Insurance Company Southern Pioneer Property and Casualty Insurance Company Biglari Holdings Inc Biglari Reinsurance Ltd and Biglari Insurance Group Inc are affiliates of Sardar Biglari Biglari and are the beneficial owners of approximately 2 9 of our outstanding common stock as of September 18 2025 We recently received notice that Biglari intends to engage in a vote no campaign against certain of our directors and proposals in connection with our 2025 annual meeting of shareholders If a proxy contest ensues or if we become engaged in a proxy contest or other public engagement with another activist shareholder in the future our business could be adversely affected because
Our charter documents contain provisions that may have the effect of making it more difficult for a third party to acquire or attempt to acquire control of the Company In addition we are subject to certain provisions of Tennessee law that limit in some cases our ability to engage in certain business combinations with significant shareholders In addition we adopted a shareholder rights agreement which provides among other things that when specified events occur our shareholders will be entitled to purchase from us shares of junior preferred stock The shareholder rights agreement will expire on February 27 2027 The preferred stock purchase rights are triggered ten days after the date of a public announcement that a person or group acting in concert has acquired or obtained the right to acquire beneficial ownership of 20 or more of our outstanding common stock The preferred stock purchase rights would cause dilution to a person or group that attempts to acquire the Company on terms that do not satisfy the requirements of a qualifying offer under the shareholder rights agreement or are otherwise not approved by our Board of Directors
These provisions either alone or in combination with each other give our current directors and executive officers a substantial ability to influence the outcome of a proposed acquisition of the Company These provisions would apply even if an acquisition or other significant corporate transaction was considered beneficial by some of our shareholders If a change in control or change in management is delayed or prevented by these provisions the market price of our securities could decline
Our performance is dependent on attracting and retaining a large number of qualified store employees Many staff members are in entry level or part time positions typically with high rates of turnover High turnover of store management and staff may cause us to incur higher direct costs associated with recruiting training and retaining replacement personnel Management turnover as well as general shortages in the labor pool can cause our stores to operate with reduced staff which negatively affects our ability to provide appropriate service levels to our customers Competition for qualified employees exerts upward pressure on wages and benefits paid to attract such personnel resulting in higher labor costs including greater recruiting and training expenses
Our ability to meet our labor needs while controlling our costs is subject to external factors such as unemployment levels minimum wage legislation health care legislation payroll taxes and changing demographics Many of our employees are hourly workers whose wages are affected by increases in the federal or state minimum wage or changes to tip credits Tip credits are the amounts an employer is permitted to assume an employee receives in tips when the employer calculates the employee s hourly wage for minimum wage compliance purposes Increases in minimum wage levels and changes to the tip credit have been made and continue to be proposed at both federal and state levels
As minimum wage rates increase we may need to increase not only the wages of our minimum wage employees but also the wages paid to employees at wage rates that are above minimum wage Our ability to respond to minimum wage increases by increasing menu prices will depend on the responses of our competitors and customers Our distributors and suppliers also may be affected by higher minimum wage and benefit standards and tracking costs which could result in higher costs for goods and services supplied to us If competitive pressures or other factors prevent us from offsetting increased labor costs by increases in prices our profitability may decline
We have assembled a senior management team which has substantial background and experience in the restaurant and retail industries Our future growth and success depend substantially on the contributions and abilities of our senior management and other key personnel and we design our compensation programs to attract and retain key personnel and facilitate our ability to develop effective succession plans If we fail to attract or retain senior management or other key personnel our succession planning and operations could be materially and adversely affected We must continue to recruit retain and motivate management and other employees sufficiently to maintain our current business and support our projected growth We have experienced and may continue to experience challenges in recruiting and retaining team members in various locations
We may from time to time evaluate and pursue other opportunities for growth including through strategic investments joint ventures other acquisitions and other initiatives These initiatives involve various inherent risks including without limitation general business risk integration and synergy risk market acceptance risk and risks associated with the potential distraction of management It may be difficult to predict the success of any endeavor and such transactions and initiatives may not ultimately create value for us or our shareholders and may harm our reputation and materially adversely affect our business financial condition and results of operations Additionally failure to maximize or successfully execute our customer loyalty program could adversely impact growth
The success of our business depends on the success of individual locations which in turn depends on stability of or improvements in operating conditions at and around those locations Our revenues and expenses can be affected significantly by the number and timing of the opening of new stores and the closing relocating and remodeling of existing stores We incur substantial pre opening expenses each time we open a new store and other expenses when we close relocate or remodel existing stores which may be higher than anticipated An increase in such expenses could have an adverse effect on our results of operations Also as demographic and economic patterns e g highway or roadway traffic patterns concentrations of general retail or hotel activity local population densities or increased competition change current locations may not continue to be attractive or profitable Possible declines in neighborhoods where our stores are located or adverse economic conditions in areas surrounding those neighborhoods could result in reduced revenues in those locations The occurrence of one or more of these events could have a material adverse effect on our revenues and results of operations as well as the carrying value of our individual locations
There has been increasing public focus by investors environmental activists the media and governmental and regulatory agencies on sustainability matters including packaging and waste animal health and welfare human rights climate change greenhouse gases and land energy and water use In response to shareholders heightened level of expectation for expanded sustainability disclosure we publish a Sustainability Report annually describing our sustainability efforts and goals Execution of the strategies and achievement of the goals outlined in the Sustainability Report are subject to risks and uncertainties including our ability to meet our goals within the currently projected costs and the expected timeframes unforeseen design operational and technological difficulties the outcome of research efforts and future technology developments and the actions of competitors and competitive pressures There is no assurance that we will be able to successfully execute our strategies and achieve our goals Failure or perceived failure to achieve these goals could damage our reputation and relationships with customers government agencies and investors Such conditions could have an adverse effect on our business results of operations and financial condition
Other federal state and local legislative and regulatory efforts to combat other sustainability concerns could also result in new or more stringent forms of oversight and mandatory reporting diligence and disclosure requirements which could increase our reporting costs Any failure or perceived failure by us to manage sustainability issues or comply with regulations could have a material adverse effect on our reputation and on our business results of operations financial condition or stock price including the sustainability of our business over time
A significant risk in executing our business strategy is locating securing and profitably operating an adequate supply of suitable new store sites Competition for suitable store sites and operating personnel in our target markets is intense and there can be no assurance that we will be able to find sufficient suitable locations or negotiate suitable purchase or lease terms for our planned expansion in any future period Economic conditions may also reduce commercial development activity and limit the availability of attractive sites for new stores New stores typically experience an adjustment period before sales levels and operating margins normalize and even sales at successful newly opened stores generally do not make a significant contribution to profitability in their initial months of operation Our ability to open and operate new stores successfully also depends on numerous other factors some of which are beyond our control including among other items discussed in other risk factors the following our ability to control construction and development costs of new stores our ability to manage the local state or other regulatory approvals and permits zoning and licensing processes in a timely manner our ability to recruit and appropriately train employees and staff the stores consumer acceptance of our stores in new markets and our ability to manage construction delays related to the opening of a new store Delays or failures in opening new stores or achieving lower than expected sales in new stores or drawing a greater than expected proportion of sales in new stores from existing stores could materially adversely affect our business strategy and could have an adverse effect on our business and results of operations
Some of our new store locations may be located in areas where we have lower market presence and as a result less or no meaningful business experience than in our traditional existing markets Those new markets may have different competitive conditions consumer tastes and discretionary spending patterns than our traditional existing markets which may cause our new store locations to be less successful than restaurants in our existing markets An additional risk of expanding into new markets is the potential for lower or lacking market awareness of our brand in those areas
Our business results depend on a number of industry specific and general economic factors many of which are beyond our control These factors include consumer income interest rates inflation consumer credit availability consumer debt levels tax rates and policy unemployment trends and other matters that influence consumer confidence and spending The full service dining sector of the restaurant industry and the retail industry are affected by changes in national regional and local economic conditions seasonal fluctuation of sales volumes consumer preferences including changes in consumer tastes and dietary habits and the level of consumer acceptance of our restaurant concept and retail merchandise and consumer spending patterns
Discretionary consumer spending which is critical to our success is influenced by general economic conditions and the availability of discretionary income General economic conditions including an inflationary environment geopolitical or other macroeconomic conditions and uncertainty about the strength of the economy may adversely affect our results of operations A protracted economic downturn a worsening economy increased energy prices and rising interest rates may reduce consumer confidence and affect consumers ability or desire to spend disposable income Current inflationary pressures and other economic conditions affecting disposable consumer income such as unemployment levels reduced home values investment losses business conditions fuel and other energy costs consumer debt levels lack of available credit consumer confidence interest rates tax rates and changes in tax laws may adversely affect our business by reducing overall consumer spending or by causing customers to reduce the frequency with which they shop and dine out or to shift their spending to our competitors or to products sold by us that are less profitable than other product choices all of which could result in lower revenues decreases in inventory turnover greater markdowns on inventory and a reduction in profitability due to lower margins We cannot guarantee that economic conditions will improve in 2026 in which case we may experience declines in revenues and profits and could face capital and liquidity constraints or other business challenges
Further the related impact on available credit may affect us and our suppliers and other business partners landlords and customers in an adverse manner including but not limited to reducing access to liquid funds or credit including through the loss of one or more financial institutions that are a part of our revolving credit facility increasing the cost of credit limiting our ability to manage interest rate risk increasing the risk of bankruptcy of our suppliers landlords or counterparties to or other financial institutions involved in our revolving credit facility and our derivative and other contracts increasing the cost of goods to us and other adverse consequences which we are unable to fully anticipate
We also cannot predict the effects of actual or threatened armed conflicts or terrorist attacks efforts to combat terrorism military action against any foreign state or group located in a foreign state or heightened security requirements on the economy or consumer confidence in the United States Any of these events could also affect consumer sentiment and confidence that in turn affect consumer spending patterns or result in increased costs for us due to security measures
Historically our highest sales and profits have occurred during the second and fourth quarters which include the holiday shopping season and the summer vacation and travel season Retail sales historically have been seasonally higher between Thanksgiving and Christmas Therefore the results of operations for any quarter or period of less than one year cannot be considered indicative of the operating results for an entire year
Additionally extreme or unseasonable weather conditions in the areas where our stores are located can adversely affect our business Frequent or unusual extreme weather conditions over a prolonged period could make it difficult for our customers to travel to our stores and can disrupt deliveries of food and supplies to our stores and thereby reduce our sales and profitability Similarly extended periods of unseasonably warm temperatures during the winter season or cool weather during the summer season could render a portion of our retail inventory incompatible with those unseasonable conditions and reduced sales from such extreme or prolonged unseasonable weather conditions could adversely affect our business
In the event we increase menu prices or adjust menu offerings to offset such increases we may experience a negative consumer response In addition natural disasters such as hurricanes tornadoes and earthquakes or a combination of these or other factors could severely damage or destroy one or more of our stores warehouses or suppliers located in the affected areas thereby disrupting our business operations for a more extended period of time These risks may be exacerbated in the future as some climatologists predict that the long term effects of climate change may result in more severe volatile weather
Our insurance coverage is structured to include deductibles self insured retentions limits of liability stop loss limits and similar provisions that we believe are prudent based on our operations However there are types of losses we may incur against which we cannot be insured or which we believe are not economically reasonable to insure such as losses due to acts of terrorism and some natural disasters including floods If we incur such losses our business could suffer In addition we self insure a significant portion of expected losses under our workers compensation general liability and group health insurance programs Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses including unexpected increases in medical and indemnity costs could result in materially different amounts of expense than expected under these programs
Our quarterly operating results and restaurant and retail sales may fluctuate as a result of any of these or other factors Accordingly results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year and restaurant and retail sales for any particular future period may decrease In the future operating results may fall below the expectations of securities analysts and investors In such event the price of our securities could fluctuate dramatically over time or could decrease generally
Our financial reporting complies with the United States generally accepted accounting principles GAAP and GAAP is subject to change over time If new rules or interpretations of existing rules require us to change our financial reporting our reported results of operations and financial condition could be affected substantially including requirements to restate historical financial reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with GAAP Because of its inherent limitations internal control over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement of our financial statements or fraud Any failure to maintain an effective system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud The identification of a material weakness could indicate a lack of controls adequate to generate accurate financial statements that in turn could cause a loss of investor confidence and decline in the market price of our common stock We cannot assure you that we will be able to timely remediate any material weaknesses that may be identified in future periods or maintain all of the controls necessary for continued compliance Likewise we cannot assure you that we will be able to retain sufficient skilled finance and accounting personnel especially in light of the increased demand for such personnel among publicly traded companies
We are committed to securing and strengthening our information systems against cybersecurity threats and protecting the privacy and security of our customer employee and company data However as outlined in Item 1A Risk Factors Risks Related to IT Systems Cybersecurity and Data Privacy of this Annual Report on Form 10 K we are acutely aware that cybersecurity threats are a persistent concern in today s digital world Despite our investments in securing our information systems we understand that cybersecurity incidents can still occur potentially causing material harm to our brand business operations and financial condition In light of this we have developed a cybersecurity risk management program to identify assess monitor and manage cybersecurity risk
Our Board of Directors oversees cybersecurity risk as part of its risk management function and has delegated oversight of cybersecurity risk to the Audit Committee The Audit Committee oversees management s implementation of our cybersecurity risk management program including reviewing risk assessments from management and outside consultants regarding our information systems and procedures and overseeing our cybersecurity risk management processes
The Audit Committee receives quarterly reports from management on our cybersecurity risks and is updated on any cybersecurity incidents as necessary The Audit Committee reports on cybersecurity matters to the full Board on a regular basis Additionally the full Board regularly receives presentations from management and third parties on cybersecurity topics as part of the Board s ongoing education on issues that affect public companies
As a critical component of our cybersecurity risk management program we have strategically integrated cybersecurity risk management into our broader enterprise risk management function to cultivate a company wide culture of cybersecurity risk management Our program has been designed and evaluated based on the National Institute of Standards and Technology Cybersecurity Framework NIST CSF We use the NIST CSF as a guide to identify assess and manage cybersecurity risks relevant to our business Additionally given that we accept credit cards as a form of payment we consider the requirements of the Payment Card Industry Data Security Standards PCI DSS as part of our cybersecurity risk management program
We place a high priority on cybersecurity within our organization This includes regular cybersecurity training for employees focusing on relevant risks to their job duties e g social engineering ransomware denial of service and other risks As part of our cybersecurity risk management program we conduct internal tests to identify potential vulnerabilities Additionally we organize annual tabletop exercises led by third party consultants to enhance our readiness for different scenarios assess our core information systems and cybersecurity practices improve decision making and prioritization and promote monitoring and reporting across business functions
As part of our overall cybersecurity risk management program the Company maintains cyber insurance coverage and we periodically meet with our insurer to discuss emerging trends in cybersecurity While we believe our cyber insurance coverage provides commercially reasonable levels of coverage such insurance may not be sufficient in type or amount to cover us against claims related to security breaches cyberattacks and other related breaches
With respect to third party service providers our cybersecurity risk management program includes conducting due diligence of relevant service providers information security programs prior to onboarding reassessing vendors using a risk based approach and performing off boarding activities as relevant We also customarily require our financially significant third party service providers and those third parties with access to sensitive data to promptly notify us of any actual or suspected breach impacting our data or operations Additionally we perform a formal System and Organization Controls SOC review process annually on our financially significant third party service providers
We continuously monitor cybersecurity risks and adjust our cybersecurity risk management program and practices as needed As part of our program we occasionally identify risks or threats to our systems including ransomware and attempts to obtain team member credentials through both phishing attacks or social engineering While these risks and threats require active and ongoing efforts to mitigate we have not identified any cybersecurity incidents that have materially affected or are reasonably likely to materially affect our operations business strategy or financial condition
Our Chief Information Officer CIO is directly responsible for the implementation of our cybersecurity risk management program and our Senior Director of Information Security reports directly to the CIO Our CIO is additionally primarily responsible for our overall information security strategy policy security engineering architecture operations and cybersecurity threat detection and the management of cybersecurity risk Our CIO has over 30 years of experience in the fields of finance technology and cybersecurity including relevant prior senior leadership positions held with Marriott International where he served as Global Chief Information Officer The CIO meets with our Chief Executive Officer CEO on a weekly basis and regularly reports to our senior management as well as directly to our Board of Directors and the Audit Committee regarding our cybersecurity risk and risk management
As a part of our cybersecurity risk management program our cybersecurity team meets regularly to monitor the prevention detection mitigation and remediation of cybersecurity threats and incidents In the event of a cybersecurity incident we have a Cyber Incident Response Plan CIRP that governs our immediate response including detection escalation assessment management and remediation As part of the CIRP response the cybersecurity team will coordinate with external advisors and other senior management as needed The cybersecurity team routinely tests the CIRP across the organization to validate the procedures for appropriately escalating potentially material cybersecurity risks and incidents
In the event of a cybersecurity incident senior management including our General Counsel CIO and Chief Financial Officer CFO are tasked with assessing the incident This assessment involves evaluating relevant quantitative and qualitative factors as well as considering SEC guidance Depending on the assessment results the cybersecurity event may be escalated to involve our CEO Board of Directors and law enforcement Additionally the Board of Directors in consultation with senior management will decide based on the assessment whether the cybersecurity incident requires disclosure in a filing with the SEC
Our home office headquarters and warehouse facilities are located on approximately 90 acres of land owned by the Company in Lebanon Tennessee We use approximately 260 000 square feet of office space for our home office headquarters and decorative fixtures warehouse We lease our retail distribution center which consists of approximately 370 000 square feet of warehouse facilities and an additional approximately 10 000 square feet of office and maintenance space We also lease an additional distribution center of approximately 52 000 square feet in Lebanon Tennessee This additional distribution center is primarily used for ecommerce fulfillment and overflow retail storage We also lease 105 000 square feet located in Mount Juliet Tennessee which is used for overflow storage for retail merchandise and supplies
We lease office space for our MSBC headquarters which consists of approximately 15 000 square feet In addition to the various corporate facilities we have two owned properties for future development a motel used for housing management trainees and for the general public and two parcels of excess real property and improvements that we intend to sell
The Company and its subsidiaries are party to various legal and regulatory proceedings and claims incidental to their business in the ordinary course In the opinion of management based upon information currently available the ultimate liability with respect to these proceedings and claims will not materially affect the Company s consolidated results of operations or financial position
Ms Masino joined us as Chief Executive Officer Elect in August 2023 and assumed her current position of President and Chief Executive Officer in November 2023 when she also became a member of our Board of Directors Prior to joining us she served as President International of Taco Bell a subsidiary of Yum Brands from January 2020 to June 2023 From January 2018 to December 2019 she served as President North America of Taco Bell Ms Masino served as the President SVP and GM Fisher Price at Mattel Inc from April 2017 to January 2018 Prior to her service at Mattel she served as the President and then the Chief Executive Officer of Sprinkles Cupcakes from 2014 to 2017 From 2002 to 2014 Ms Masino served in various leadership roles at Starbucks Corporation Ms Masino has over 20 years of experience in the restaurant industry
Ms Daily has been employed with us as Senior Vice President Retail since May 2012 Prior to May 2012 she served as Vice President for Ballard Designs an internet and catalog home furnishings retailer that is part of HSN Inc where she was in charge of all merchandising and trends for the company She has over 30 years of experience as a merchant with a number of retail organizations Ms Dailey will retire from the Company effective October 1 2025
Mr Edwards joined us in March 2024 in his current position Prior to joining us he served as Chief Strategy Officer at Canopy Growth Corporation from 2020 to 2023 Prior to his service at Canopy Growth Corporation he served in various capacities including Senior Vice President of Strategy at Constellation Brands from 2010 to 2020 Prior to Constellation Brands he served as a Principal at The Boston Consulting Group from 2001 to 2009 He has over 20 years of experience in serving as a strategy leader
Mr Hoffmeister joined us in January 2021 as Senior Vice President and Chief Information Officer Prior to joining us he worked at Marriott International for over 30 years where he served in a number of finance and technology executive positions including Senior Vice President of Lodging Finance Senior Vice President of Global Revenue Management and his most recent role as Global Chief Information Officer
Ms Moore joined us in July 2024 in her current position Prior to joining us she served in various capacities including Senior Vice President of Marketing at MGM Resorts International from 2012 to 2024 including most recently Senior Vice President of Marketing from 2021 to 2024 and Vice President Brand Marketing from 2019 to 2021 She has nearly 20 years of hospitality experience
Mr Pommells has been employed with us since December 2021 in his current capacity From October 2020 to December 2021 he served as Executive Vice President and Chief Financial Officer of Red Lobster Seafood Company Prior to serving as Chief Financial Officer of Red Lobster Seafood Company he served as Senior Vice President Finance and Strategy from January 2015 to October 2020 Prior to Red Lobster he spent more than 15 years with Darden Restaurants in various finance and business analytics roles Mr Pommells has more than 20 years of experience in the restaurant industry and three years of experience in the retail industry
Ms Roberts has been employed with us since 2012 and assumed her current position in May 2020 Prior to her current role she held other positions in the human resources and legal departments including Vice President of Human Resources from 2018 to 2020 Before joining us she practiced law for ten years most recently as a partner focused on commercial litigation and employment law
Ms Spillyards Schaefer has been employed with us since 2017 and assumed her current position in January 2022 From 2017 to 2021 she served in various capacities in both operations and home office functions including Regional Vice President of Restaurant Operations from 2021 to 2022 and Vice President of Culinary from 2017 to 2021 Ms Spillyards Schaefer has over 20 years of experience in the restaurant industry
Mr Spurgin joined us in January 2023 as Senior Vice President Chief Restaurant Supply Chain Officer Prior to January 2023 he served as the Chief Supply Chain Officer for Restaurant Growth Services from 2021 to 2023 and Senior Vice President for Restaurant Growth Services Supply Chain from 2018 to 2021 Prior to that he was with The Cheesecake Factory and Bloomin Brands where he led global procurement logistics and international supply chain teams He has over 30 years of supply chain experience
Mr Wolfson has been employed with us in his current capacity since July 2017 From January 2006 to April 2017 he served as Vice President General Counsel and Corporate Secretary at CLARCOR Inc an industrial company From 2001 to 2006 he was a partner of the InterAmerican Group an advisory services and private equity firm Mr Wolfson has over 30 years of legal experience
Mr Vaclavik joined us in October 2023 as Vice President and Controller and assumed his current position in November 2023 Prior to joining us he most recently served as Vice President Controller of Access TeleCare Inc from July 2022 until May 2023 From April 2021 until July 2022 he served as Vice President Controller and Chief Accounting Officer of Tuesday Morning Corporation and from February 2021 until April 2021 he served as a consultant for Passion 4 People Consulting LLC He served as Senior Vice President and Chief Accounting Officer of Tailored Brands Inc from June 2014 until April 2020 Mr Vaclavik has over 20 years of experience in the retail industry
See Note 4 to Consolidated Financial Statements with respect to dividend restrictions See Dividends Share Repurchases and Share Based Compensation Awards under Part II Item 7 Management s Discussion and Analysis of Financial Condition Liquidity and Capital Resources for further information regarding our dividends
The following Management s Discussion and Analysis of Financial Condition and Results of Operations MD A provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition MD A should be read in conjunction with the Consolidated Financial Statements and notes thereto Readers should also carefully review the information presented under the section entitled Risk Factors and other cautionary statements in this report All dollar amounts other than per share amounts reported or discussed in this MD A are shown in thousands References in MD A to a year or quarter are to our fiscal year or quarter unless expressly noted or the context clearly indicates otherwise
The following MD A includes a discussion of 2025 and 2024 items and year to year comparisons between the years ended August 01 2025 and August 02 2024 Discussion of 2023 items and year to year comparisons between the years ended August 02 2024 and July 28 2023 that are not included in this MD A can be found in Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations of our annual report on Form 10 K for the year ended August 02 2024 filed with the SEC on September 27 2024
Cracker Barrel Old Country Store Inc the Company our or we is a publicly traded Nasdaq CBRL company that through its operations and those of certain subsidiaries is principally engaged in the operation and development of the Cracker Barrel Old Country Store Cracker Barrel concept Each Cracker Barrel store consists of a restaurant with a gift shop The restaurants serve breakfast lunch and dinner The gift shop offers a variety of decorative and functional items specializing in rocking chairs holiday gifts toys apparel and foods As of September 12 2025 the Company operated 657 Cracker Barrel stores located in 43 states The Company also owns Maple Street Biscuit Company MSBC a breakfast and lunch fast casual concept As of September 12 2025 the Company operated 68 MSBC locations in ten states
Management believes that the Cracker Barrel brand remains one of the strongest and most differentiated brands in the restaurant industry and we plan to continue to leverage and build on that strength as a core competitive component of our business strategy Our long term strategy is anchored on three overarching business imperatives driving relevancy delivering food and experiences guests love and growing profitability
We believe there are significant challenges in the macroeconomic outlook for the coming quarters including continued volatility of inflation and interest rates higher consumer debt levels and lower savings rates as well as the potential uncertainty associated with the geopolitical environment and global trade among other factors However despite these challenges we remain focused on delivering long term growth and returns for shareholders
In the fourth quarter of 2025 we incurred approximately 2 400 related to newly imposed tariffs and recent changes in trade policy This impact was partially offset by proactive mitigation efforts including vendor negotiations alternative sourcing strategies pricing adjustments and accelerating initiatives such as stock keeping unit SKU reduction These measures have proven effective and we currently expect to nearly offset the impact of tariffs in 2026 However any further changes in tariff rates or trade policy could materially affect our operating results and financial condition and the ongoing uncertainty introduces additional volatility and risk to our operations and financial condition and may affect consumer demand in ways that are difficult to predict
We use comparable store sales metrics as indicators of sales growth to evaluate how our established stores have performed over time We use comparable restaurant guest traffic increase decrease to evaluate how established stores have performed over time excluding growth achieved through menu price and sales mix change Finally we use average check per guest to identify trends in guest preferences as well as the effectiveness of menu changes We believe these key performance indicators are useful for investors to provide a consistent comparison of sales results and trends across comparable periods within our core established store base unaffected by results of store openings closings and other transitional changes
Our stores operate in both the restaurant and retail industries in the United States The restaurant and retail industries are highly competitive with respect to quality variety and price of the food products availability of carryout and home delivery internet and mobile ordering capabilities and retail merchandise offered We compete with a significant number of national and regional restaurant and retail chains Additionally there are many segments within the restaurant industry such as family dining casual dining full service fast casual and quick service which often overlap and provide competition for widely diverse restaurant concepts Cracker Barrel primarily operates in the full service segment of the restaurant industry and our MSBC concept operates in the fast casual segment Competition also exists in securing prime real estate locations for new stores in hiring qualified employees in advertising in the attractiveness of facilities and with competitors having similar menu offerings or convenience features The restaurant and retail industries are often affected by changes in consumer taste and preference national regional or local economic conditions demographic trends traffic patterns the type number and location of competing restaurants and retailers and consumers discretionary purchasing power
Additionally economic seasonal and weather conditions affect the restaurant and retail industries Adverse economic conditions such as elevated and or volatile rates of inflation and unemployment adversely affect consumer discretionary income and dining and shopping habits Historically interstate tourist traffic and the propensity to dine out have been much higher during the summer months thereby contributing to higher profits in our fourth quarter Retail sales which are made substantially to our restaurant guests are historically strongest in the second quarter which includes the holiday shopping season
Severe weather events such as hurricanes floods tornadoes and winter storms may prevent or dissuade guests from visiting our stores impair our ability to staff our stores or force us to temporarily close affected stores adversely impacting our restaurant and retail sales Additionally severe drought conditions and associated restrictions on water use may impair restaurant operations or increase costs in locations affected by such conditions Climate change changing weather patterns or unpredictable weather patterns may increase the incidence of any of these events and otherwise also impact guest visitation patterns on a macro scale In addition to its impact on store operations severe weather may also disrupt our supply chain both in distribution to ports and central warehouses and in distribution to local stores In general we believe that the geographic dispersion of our stores and multiple sources of distribution adequately mitigate the potential impact of severe weather and changing weather patterns on our stores but the Board of Directors and management team continually monitor and reexamine these considerations in light of ongoing trends
We are currently experiencing and have in the past experienced inflationary conditions with respect to a variety of costs including the cost for food ingredients retail merchandise transportation distribution labor and utilities While we continue to partially offset the impact of these inflationary pressures with menu price increases and operational improvements there can be no assurance that such conditions will not adversely affect consumer demand or our cost structure in ways that we may be unable to manage without diminishing our profitability
Total revenue in 2025 increased 0 4 as compared to 2024 Total revenue in 2024 includes a benefit of 62 800 due to the 53rd week of 2024 Excluding the impact of the 53rd week in the prior year total revenue increased 2 2 Our comparable store restaurant sales increase in 2025 as compared to 2024 resulted primarily from the average check increase partially offset by the guest traffic decrease The average check increase included an average menu price increase of 5 3 Off premise sales represented approximately 20 of restaurant sales volumes in both 2025 and 2024
The decrease in restaurant cost of goods sold as a percentage of restaurant revenue in 2025 as compared to 2024 was primarily the result of our menu pricing partially offset by commodity inflation of 2 1 in 2025 We presently expect the rate of commodity inflation to be approximately 2 5 to 3 5 in 2026
The decreases in store hourly labor and store management compensation as a percentage of total revenue in 2025 as compared to 2024 resulted primarily from menu price increases exceeding wage inflation Additionally store hourly labor benefited from improved productivity driven by our back of house optimization initiatives We presently expect the rate of wage inflation to be approximately 3 0 to 4 0 in 2026
Other store operating expenses include all store level operating costs the major components of which are occupancy costs operating supplies advertising third party delivery fees credit card and gift card fees real and personal property taxes and general insurance Occupancy costs include maintenance utilities depreciation and rent
The increase in professional fees as a percentage of total revenue in 2025 as compared to 2024 primarily resulted from proxy contest expenses and higher legal fees The Company incurred expenses of 8 220 in 2025 related to a proxy contest in connection with the Company s 2024 annual shareholders meeting held on November 21 2024 Higher legal fees for 2025 included an approximate 3 300 charge in connection with our settlement of wage related disputes These fees were partially offset by lower costs associated with the Company s multi year strategic plan in 2025 as compared to 2024
During 2025 and 2024 we recorded impairment charges of 19 772 and 17 448 respectively as a result of the deterioration in operating performance of seven Cracker Barrel locations and twenty five MSBC locations in 2025 and six Cracker Barrel locations and thirteen MSBC locations in 2024 Additionally during 2025 and 2024 we incurred costs of 287 and 5 494 respectively in connection with the closure of two Cracker Barrel and two MSBC locations in 2025 and four Cracker Barrel and two MSBC locations in 2024 because of poor operating performance
During 2024 we recorded a goodwill impairment charge of 4 690 related to MSBC because of declining financial trends and changes in the macroeconomic environment including interest rate and inflationary pressures This amount is recorded in the goodwill impairment line on the Consolidated Statements of Income
In 2025 contemporaneously with the issuance of 345 000 aggregate principle amount of 1 75 Convertible Senior Notes due 2030 the 2030 Notes we used approximately 145 900 of the net proceeds from the 2030 Notes for the repurchase of 150 000 aggregate principal amount of 300 000 aggregate principal amount of 0 625 Convertible Senior Notes the 2026 Notes in separate and privately negotiated transactions and recorded a gain on extinguishment of debt of 3 186 This amount is recorded in the gain on extinguishment of debt line on the Consolidated Statements of Income For additional information regarding our debt see Note 4 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10 K
The year to year decrease in 2025 as compared to 2024 resulted primarily from lower weighted average debt levels and lower weighted average interest rates under the revolving credit facility partially offset by costs associated with refinancing the revolving credit facility and interest related to the 2030 Notes See Borrowing Capacity Debt Covenants and Notes section below for further information related to the 2025 Revolving Credit Facility and the 2030 Notes
H R 1 also known as the One Big Beautiful Bill Act OBBBA was enacted on July 4 2025 with effective dates in 2025 and continuing through 2027 The legislation includes provisions that impact the timing and magnitude of certain tax deductions Key provisions include the permanent extension of several business tax benefits originally introduced under the 2017 Tax Cuts and Jobs Act The provisions effective during 2025 did not materially impact our 2025 financial condition We are currently evaluating the potential impact of the OBBBA provisions effective after 2025 to our financial condition
Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under our revolving credit facility Our cash generated from our operations together with our borrowing capacity under our revolving credit facility were sufficient to finance all of our growth dividend payments working capital needs interest payments on long term debt obligations and other cash payment obligations in 2025
On May 16 2025 we entered into a five year credit facility the 2025 Credit Facility which replaced our previous revolving credit facility that we entered into in 2022 the 2022 Revolving Credit Facility The 2025 Credit Facility consists of a 550 000 revolving credit facility the 2025 Revolving Credit Facility which includes a 25 000 swingline subfacility and 75 000 letter of credit subfacility
We believe that cash at August 01 2025 along with cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility will be sufficient to finance our continuing operations our multi year strategic plan initiatives our continuing expansion plans debt service dividend payments capital expenditures and working capital needs for the next twelve months and thereafter for the foreseeable future Our ability to draw on our 2025 Revolving Credit Facility is subject to the satisfaction of the provisions of the credit facility as amended and we believe we will be able to refinance and or pay off our 2025 Revolving Credit Facility and other debt instruments prior their maturity
We enter into purchase orders for food and retail merchandise purchase orders for capital expenditures supplies other operating needs and other services and commitments under contracts for maintenance needs and other services in the normal course of business Our estimate as of August 01 2025 for these purchase obligations is 145 900 of which 104 917 is short term This estimate of our purchase obligations i includes long term agreements and certain retail purchase orders for services and operating needs that can be cancelled A with more than 60 days notice without penalty only through the term of the notice period and B only in the event of an uncured material breach or with a penalty through the entire term of the contract ii excludes contracts that do not contain minimum purchase obligations and long term agreements for services and operating needs that can be cancelled within 60 days without penalty Because of the uncertainties of seasonal demands and promotional calendar changes our estimated usage for food supplies and other operating needs and services is calculated ratably over either the termination notice period or the remaining life of the contract as applicable unless we had better information available at the time related to each contract
As of August 01 2025 the total present value of our lease expenses including variable lease costs under operating leases was 694 974 which had a weighted average remaining lease term 15 20 years of which 86 208 is short term As of August 01 2025 we have not entered into any leases that have not yet commenced For additional information regarding our operating leases see Note 8 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10 K
At August 01 2025 other long term obligations include our Non Qualified Savings Plan 22 700 with a corresponding long term asset to fund the liability see Note 11 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10 K Deferred Compensation Plan 1 143 and our long term incentive plans 2 444
At August 01 2025 the entire liability of 15 375 for uncertain tax positions including penalties and interest is classified as a long term liability At this time we are unable to make a reasonably reliable estimate of the amounts and timing of payments in individual years because of uncertainties in the timing of the effective settlement of tax positions See Note 12 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10 K for additional information on our uncertain tax positions
We currently expect capital expenditures to be approximately 135 000 to 150 000 in 2026 This estimate includes our maintenance and technology initiatives and no spending on new remodels This estimate also includes the acquisition of sites and construction costs of locations that we plan to open during 2026 We intend to fund our capital expenditures with cash generated by operations cash on hand and borrowings under our 2025 Revolving Credit Facility as necessary
On May 16 2025 the Company entered into the 2025 Credit Facility which replaced the 2022 Revolving Credit Facility The 2025 Credit Facility consisted of a 550 000 revolving credit facility the 2025 Revolving Credit Facility which includes a 25 000 swingline subfacility and a 75 000 letter of credit subfacility and a 250 000 delayed draw term loan facility the Delayed Draw Term Facility The Delayed Draw Term Facility was terminated on June 13 2025 in connection with the Company s issuance and sale of the 2030 Notes The 2025 Credit Facility also contains an option for the Company to increase the 2025 Credit Facility by 200 000 At August 01 2025 we did not have any borrowings outstanding under the 2025 Revolving Credit Facility
Our 2025 Revolving Credit Facility contains customary financial covenants which include maintenance of a maximum consolidated total leverage ratio and a minimum consolidated interest coverage ratio We were in compliance with the 2025 Revolving Credit Facility s financial covenants at August 01 2025 and we expect to be in compliance with the 2025 Revolving Credit Facility s financial covenants for the remaining term of the facility
On June 13 2025 we issued the 2030 Notes The 2030 Notes are senior unsecured obligations of the Company and bear cash interest at a rate of 1 75 per annum payable semi annually in arrears on March 15 and September 15 of each year beginning on March 15 2026 The 2030 Notes mature on September 15 2030 unless earlier converted repurchased or redeemed Net proceeds from the 2030 Notes were approximately 335 000 after deducting the initial purchasers discounts and commissions and the Company s offering fees and expenses
Additionally on June 13 2025 we used approximately 145 900 of the net proceeds from the 2030 Notes for the repurchase of 150 000 aggregate principal amount of the 2026 Notes The remaining 150 000 aggregate principal amount of the 2026 Notes matures on June 15 2026 unless earlier converted repurchased or redeemed The 2026 Notes are senior unsecured obligations of the Company and bear cash interest at an annual rate of 0 625 payable semi annually in arrears on June 15 and December 15 of each year
Our 2025 Revolving Credit Facility imposes restrictions on the amount of dividends we are permitted to pay and the amount of shares we are permitted to repurchase Under the 2025 Revolving Credit Facility provided there is no default existing and the total of our availability under the 2025 Revolving Credit Facility plus our cash and cash equivalents on hand is at least 100 000 the Cash Availability we may declare and pay cash dividends on shares of our common stock and repurchase shares of our common stock 1 in an unlimited amount if at the time the dividend or the repurchase is made our consolidated total leverage ratio is 3 50 to 1 00 or less and 2 in an aggregate amount not to exceed 100 000 in any fiscal year if at the time such dividend or repurchase is made our consolidated total leverage ratio is greater than 3 50 to 1 00 notwithstanding 1 and 2 so long as immediately after giving effect to the payment of any such dividends Cash Availability is at least 100 000 we may declare and pay cash dividends on shares of our common stock in an aggregate amount not to exceed in any fiscal year the product of the aggregate amount of dividends declared in the fourth quarter of the immediately preceding fiscal year multiplied by four
In 2025 we paid regular dividends of 1 00 per share In connection with our multi year strategic plan we modified our capital allocation policy to support increased investments in our business to drive organic growth As part of this shift to increase investment in our business in the fourth quarter of 2024 the Board of Directors reduced the quarterly dividend to 0 25 per share Additionally during the first quarter of 2026 the Board declared a dividend of 0 25 per share payable on November 12 2025 to shareholders of record as of October 17 2025
Our criteria for share repurchases are that they be accretive to expected net income per share and are within the limits imposed by our debt commitments We did not repurchase any shares of our common stock in 2025 or 2024 In the first quarter of 2026 our Board of Directors approved a share repurchase authorization to repurchase shares of the Company s outstanding common stock at management s discretion up to a total value of 100 000
In the restaurant industry substantially all payments received are made by credit card debit card or cash Like many other restaurant companies we are able to and often do operate with negative working capital Restaurant inventories purchased through our principal food distributor are on terms of net zero days while other restaurant inventories purchased locally are generally financed through trade credit at terms of 30 days or less Because of our retail gift shop which has a lower product turnover than the restaurant we carry larger inventories than many other companies in the restaurant industry Retail inventories are generally financed through trade credit at terms of 60 days or less These various trade terms are aided by rapid turnover of the restaurant inventory Employees generally are paid once every week or every two weeks except for bonuses that are paid either quarterly or annually in arrears Many other operating expenses have normal trade terms and certain expenses such as certain taxes and some benefits are deferred for longer periods of time
The change in working capital at August 01 2025 compared to August 02 2024 primarily reflected the reclassification of the 2026 Notes from long term debt to a current liability in respect of their maturity date in 2026 and the timing of payments for accounts payable partially offset by the increase in cash
See Note 1 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10 K for a discussion of recent accounting guidance adopted and not yet adopted The adoption of accounting for debt and segments did not have an impact on our consolidated financial position or results of operations We are currently evaluating the impact of adopting the accounting guidance not yet adopted
We prepare our Consolidated Financial Statements in conformity with GAAP The preparation of these financial statements requires us to make estimates and assumptions about future events and apply judgments that affect the reported amounts of assets liabilities revenue expenses and related disclosures We base our estimates and judgments on historical experience current trends outside advice from parties believed to be experts in such matters and on various other assumptions that are believed to be reasonable under the circumstances the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources However because future events and their effects cannot be determined with certainty actual results could differ from those assumptions and estimates and such differences could be material
Our significant accounting policies are discussed in Note 1 to the Consolidated Financial Statements Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions Critical accounting estimates are those that
We assess the impairment of long lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable Recoverability of assets is measured by comparing the carrying value of the asset to the undiscounted future cash flows expected to be generated by the asset If the total expected future cash flows are less than the carrying amount of the asset the carrying value is written down for an asset to be held and used to the estimated fair value or for an asset to be disposed of to the fair value net of estimated costs of disposal Any loss resulting from impairment is recognized by a charge to income Judgments and estimates that we make related to the expected useful lives of long lived assets and future cash flows are affected by factors such as changes in economic conditions and changes in operating performance The accuracy of such provisions can vary materially from original estimates and management regularly monitors the adequacy of the provisions until final disposition occurs
We have not made any material changes in our methodology for assessing impairments during the past three years and we do not believe that there is a reasonable likelihood that there will be a material change in the estimates or assumptions used by us to assess impairment of long lived assets However if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and fair values of long lived assets we may be exposed to losses that could be material During 2025 and 2024 we recorded impairment charges of 18 391 and 15 616 respectively for long lived assets due to the deterioration in operating performance of seven Cracker Barrel locations and twenty five MSBC locations in 2025 and six Cracker Barrel locations and thirteen MSBC locations in 2024 The impairment charges are included in the impairment and store closing costs line item on the Consolidated Statements of Income See the Lease Accounting section below for information related to impairment charges related to right of use assets recorded in 2025 and 2024
We self insure a significant portion of our expected workers compensation and general liability programs We purchase insurance for individual workers compensation claims that exceed 750 or 1 000 depending on the state in which the claim originated We purchase insurance for individual general liability claims that exceed 500 We record a reserve for workers compensation and general liability for all unresolved claims and for an estimate of incurred but not reported IBNR claims These reserves and estimates of IBNR claims are based upon a full scope actuarial study which is performed annually during the fourth quarter and is adjusted by the actuarially determined losses and actual claims payments made subsequent to this full scope actuarial study during the fourth quarter Additionally we perform limited scope actuarial studies on a quarterly basis to verify and or modify our reserves The reserves and losses in the actuarial study represent a range of possible outcomes within which no given estimate is more likely than any other estimate As such we record the losses in the lower half of that range and discount them to present value using a risk free interest rate based on projected timing of payments We also monitor actual claims development including incurrence or settlement of individual large claims during the interim periods between actuarial studies as another means of estimating the adequacy of our reserves
Our group health plans combine the use of self insured and fully insured programs Benefits for any individual employee or dependents in the self insured group health program are limited We record a liability for the self insured portion of our group health program for all unpaid claims based upon a loss development analysis derived from actual group health claims payment experience We also record a liability for unpaid prescription drug claims based on historical experience
Our accounting policies regarding insurance reserves include certain actuarial assumptions and management judgments regarding economic conditions the frequency and severity of claims and claim development history and settlement practices We have not made any material changes in the methodology used to establish our insurance reserves during the past three years and do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to calculate the insurance reserves However changes in these actuarial assumptions or management judgments in the future may produce materially different amounts of expense that would be reported under these insurance programs
Cost of goods sold includes the cost of retail merchandise sold at our stores utilizing the retail inventory method RIM Under RIM the valuation of our retail inventories is determined by applying a cost to retail ratio to the retail value of our inventories Inherent in the RIM calculation are certain inputs including initial markons markups markdowns and shrinkage which may significantly impact the gross margin calculation as well as the ending inventory valuation
Inventory valuation provisions are included for retail inventory obsolescence and retail inventory shrinkage Retail inventory is reviewed on a quarterly basis for obsolescence and adjusted as appropriate based on assumptions made by management and judgment regarding inventory aging and future promotional activities Retail inventory also includes an estimate of shrinkage that is adjusted upon physical inventory counts Annual physical inventory counts are conducted based upon a cyclical inventory schedule An estimate of shrinkage is recorded for the time period between physical inventory counts by using a two year average of the physical inventories results on a store by store basis
We have not made any material changes in the methodologies estimates or assumptions related to our merchandise inventories during the past three years and do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions in the future However actual obsolescence or shrinkage recorded may produce materially different amounts than we have estimated
We have ground leases for our leased stores and office space leases that are recorded as operating leases under various non cancellable operating leases Additionally we lease our retail distribution center advertising billboards vehicle fleets and certain equipment under various non cancellable operating leases
We evaluate our leases at contract inception to determine whether we have the right to control use of the identified asset for a period of time in exchange for consideration If we determine that we have the right to obtain substantially all of the economic benefit from use of the identified asset and the right to direct the use of the identified asset we recognize a right of use asset and lease liability Also at contract inception we evaluate our leases to estimate their expected term which includes renewal options that we are reasonably assured that we will exercise and the classification of the lease as either an operating lease or a finance lease Additionally as our leases do not provide an implicit rate we use our incremental borrowing rate based on the information available at the time of commencement or modification date in determining the present value of lease payments Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data We assess the impairment of the right of use asset at the asset group level whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable
Changes in these assumptions and management judgments may produce materially different amounts in the recognition of the right of use assets and lease liabilities Additionally any loss resulting from an impairment of the right of use assets is recognized by a charge to income which could be material In 2025 and 2024 we recorded impairment charges of 1 381 and 1 832 respectively each related to the right of use assets of one Cracker Barrel location These amounts are included in the impairment and store closing costs line item on the Consolidated Statement of Income
Interest Rate Risk We have interest rate risk relative to our outstanding borrowings under our revolving credit facility At August 01 2025 no borrowings were outstanding under our 2025 Revolving Credit Facility Accordingly no interest rate sensitivity analysis has been presented At August 02 2024 our outstanding borrowings totaled 180 000 under our 2022 Revolving Credit Facility with a weighted average interest rate of 7 19 See Note 4 to our Consolidated Financial Statements
In accordance with the 2025 Revolving Credit Facility outstanding borrowings bear interest at our election either at 1 the Term Secured Overnight Financing Rate SOFR or 2 a base rate equal to the greatest of i the prime rate ii a rate that is 0 5 in excess of the Federal Funds Rate and iii one month Term SOFR plus 1 0 in each case plus an applicable margin based on the Company s consolidated total leverage ratio Our policy has been to manage interest cost using a mix of fixed and variable rate debt see Note 4 to our Consolidated Financial Statements Additionally we have 2026 Notes and 2030 Notes which bear cash interest at a fixed rate of 0 625 and 1 75 respectively per annum
Credit Risk In 2021 the Company issued the 2026 Notes and entered into the Convertible Note Hedge Transactions and the Warrant Transactions with the Hedge Counterparties In 2025 the Company issued the 2030 Notes and entered into the Capped Call Transactions In connection with the issuance of the 2030 Notes the Company entered into partial unwind agreements with initial purchasers of the 2026 Notes to unwind a portion of the Convertible Note Hedge Transactions and the Warrant Transactions Subject to the movement in the Company s common stock price the Company could be exposed to credit risk arising out of the net settlement of the Capped Call Transactions the Convertible Note Hedge Transactions and the Warrant Transactions in its favor Based on the Company s review of the possible net settlements and the creditworthiness of the Hedge Counterparties and their affiliates the Company believes it does not have a material exposure to credit risk as a result of these transactions at this time
Commodity Price Risk Many of the food products that we purchase are affected by commodity pricing and are therefore subject to price volatility caused by market conditions weather production problems delivery difficulties and other factors which are outside our control and which are generally unpredictable
Other categories affected by the commodities markets such as grains and seafood may each account for as much as 8 of our food purchases While some of our food items are produced to our proprietary specifications our food items are based on generally available products and if any existing suppliers fail or are unable to deliver in quantities required by us we believe that there are sufficient other quality suppliers in the marketplace that our sources of supply can be replaced as necessary to allow us to avoid any material adverse effects that could be caused by such unavailability We also recognize however that commodity pricing is extremely volatile and can change unpredictably even over short periods of time Changes in commodity prices would affect us and our competitors generally and depending on the terms and duration of supply contracts sometimes simultaneously We enter into contracts for certain of our products in an effort to minimize volatility of supply and pricing In many cases or over the longer term we believe we will be able to pass through some or much of the increased commodity costs by adjusting our menu pricing From time to time competitive circumstances or judgments about consumer acceptance of price increases may limit menu price flexibility and in those circumstances increases in commodity prices can result in lower margins We continue to partially offset commodity pressures through menu price increases and operational improvements
We have audited the accompanying consolidated balance sheets of Cracker Barrel Old Country Store Inc and subsidiaries the Company as of August 1 2025 and August 2 2024 and the related consolidated statements of income changes in shareholders equity and cash flows for each of the three years in the period ended August 1 2025 and the related notes collectively referred to as the financial statements In our opinion the financial statements present fairly in all material respects the financial position of the Company as of August 1 2025 and August 2 2024 and the results of its operations and its cash flows for each of the three years in the period ended August 1 2025 in conformity with accounting principles generally accepted in the United States of America
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of August 1 2025 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 26 2025 expressed an unqualified opinion on the Company s internal control over financial reporting
These financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on the Company s financial statements based on our audits We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud Our audits included performing procedures to assess the risks of material misstatement of the financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements We believe that our audits provide a reasonable basis for our opinion
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the financial statements and 2 involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
The Company self insures a significant portion of its workers compensation and general liability program and records a reserve for all unresolved claims and an estimate of incurred but not reported IBNR claims These reserves and estimates of IBNR claims are based upon a full scope actuarial study performed annually by management s specialist during the fourth quarter and are adjusted by the actuarially determined losses and actual claims payments made subsequent to this full scope actuarial study during the fourth quarter The reserves and losses in the actuarial study represent a range of possible outcomes within which no given estimate is more likely than any other estimate Using this information the Company records the expected losses in the lower half of the range which is discounted to present value using a risk free interest rate The Company also monitors actual claims development as another means of estimating the adequacy of the historical reserves
We identified insurance reserves as a critical audit matter because estimating the reserve for all unresolved claims and IBNR claims involves significant estimation by management This required a high degree of auditor judgment and an increased extent of effort including the need to involve our actuarial specialists when performing audit procedures to evaluate whether insurance reserves were appropriately recorded as of August 1 2025
Developing with the assistance of our actuarial specialists an independent range of estimates of the insurance reserves utilizing paid and reported loss development factors from the Company s historical data and industry loss development factors as deemed necessary and comparing our estimated range to management s estimates
Fiscal year The Company s fiscal year ends on the Friday nearest July 31st and each quarter consists of thirteen weeks unless noted otherwise The periods presented in the Company s financial statements are the fiscal years ended August 01 2025 2025 August 02 2024 2024 and July 28 2023 2023 respectively Each of these periods has 52 weeks except for 2024 which consisted of 53 weeks Similarly references in these Notes to a year or quarter are to the Company s fiscal year or quarter unless expressly noted or the context clearly indicates otherwise
Use of estimates Management of the Company has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods to prepare these Consolidated Financial Statements in conformity with GAAP Management believes that such estimates have been based on reasonable and supportable assumptions and that the resulting estimates are reasonable for use in the preparation of the Consolidated Financial Statements Actual results however could differ from those estimates
Inventories Cost of restaurant inventory is determined by the first in first out FIFO method Retail inventories are valued using the retail inventory method RIM except at the retail distribution center which are valued using moving average cost Approximately 60 of retail inventories are valued using RIM Retail inventories valued using RIM are stated at the lower of cost or market Cost of restaurant inventory and retail inventory valued using moving average cost are stated at the lower of cost and net realizable value See Note 3 for additional information regarding the components of inventory
Valuation provisions are included for retail inventory obsolescence retail inventory shrinkage returns and amortization of certain items The estimate of retail inventory shrinkage is adjusted upon physical inventory counts Annual physical inventory counts are conducted based upon a cyclical inventory schedule An estimate of shrinkage is recorded for the time period between physical inventory counts by using a two year average of the physical inventories results on a store by store basis
Impairment of long lived assets The Company assesses the impairment of long lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable Recoverability of assets is measured by comparing the carrying value of the asset to the undiscounted future cash flows expected to be generated by the asset If the total expected future cash flows are less than the carrying value of the asset the carrying value is written down for an asset to be held and used to the estimated fair value or for an asset to be disposed of to the fair value net of estimated costs of disposal Any loss resulting from impairment is recognized by a charge to income During 2025 2024 and 2023 the Company recorded impairment charges of 18 391 15 616 and 11 692 respectively for long lived assets which are included in the impairment and store closing costs line on the Consolidated Statements of Income See Note 8 for additional information regarding impairment charges in 2025 and 2024 related to right of use assets
Other intangible assets Intangibles primarily consist of the MSBC tradename and liquor licenses The MSBC tradename was capitalized as an indefinite lived intangible asset and at both August 01 2025 and August 02 2024 was 20 960 The costs of obtaining non transferable liquor licenses that are directly issued by local government agencies for nominal fees are expensed as incurred The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite lived intangible assets Liquor licenses capitalized as intangible assets were 3 365 at both August 01 2025 and August 02 2024
Segment reporting Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance Using these criteria the Company manages its business on the basis of one operating and one reportable operating segment See Note 6 for additional information regarding segment reporting
Unredeemed gift cards and certificates Unredeemed gift cards and certificates represent a liability of the Company related to unearned income and are recorded at their expected redemption value No revenue is recognized in connection with the point of sale transaction when gift cards or gift certificates are sold Any amounts remitted to states under escheat or similar laws reduce the Company s deferred revenue liability and have no effect on revenue or expense while any amounts that the Company is permitted to retain are recorded as revenue See Revenue recognition section in this Note and Note 7 for information regarding breakage
Revenue recognition Revenue consists primarily of sales from restaurant and retail operations The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest retail customer or other customer The Company recognizes revenues from restaurant sales when payment is tendered at the point of sale as the Company s performance obligation to provide food and beverages is satisfied The Company recognizes revenues from retail sales when payment is tendered at the point of sale as the Company s performance obligation to provide merchandise is satisfied Ecommerce sales including shipping revenue are recorded upon delivery to the customer Additionally the Company provides for estimated returns based on return history and sales levels The Company s policy is to present sales in the Consolidated Statements of Income on a net presentation basis after deducting sales tax
Included in restaurant and retail revenue is gift card breakage Customer purchases of gift cards to be utilized at the Company s stores are not recognized as sales until the card is redeemed and the customer purchases food and or merchandise Gift cards do not carry an expiration date therefore customers can redeem their gift cards indefinitely A certain number of gift cards will not be fully redeemed Management estimates unredeemed balances and recognizes gift card breakage revenue for these amounts in the Company s Consolidated Statements of Income over the expected redemption period Gift card breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote and the Company determines that there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction The determination of the gift card breakage rate is based upon the Company s specific historical redemption patterns The Company recognizes gift card breakage by applying its estimate of the rate of gift card breakage over the period of estimated redemption See Note 7 for additional information regarding revenue recognition
Insurance The Company self insures a significant portion of its workers compensation and general liability programs The Company purchases insurance for individual workers compensation claims that exceed 750 or 1 000 depending on the state in which the claim originates The Company purchases insurance for individual general liability claims that exceed 500
The Company records a reserve for workers compensation and general liability for all unresolved claims and for an estimate of incurred but not reported claims IBNR These reserves and estimates of IBNR claims are based upon a full scope actuarial study which is performed annually during the Company s fourth quarter and is adjusted by the actuarially determined losses and actual claims payments made subsequent to this full scope actuarial study during the fourth quarter Additionally the Company performs limited scope actuarial studies on a quarterly basis to verify and or modify the Company s reserves The reserves and losses in the actuarial study represent a range of possible outcomes within which no given estimate is more likely than any other estimate As such the Company records the losses at the lower half of that range and discounts them to present value using a risk free interest rate based on projected timing of payments The Company also monitors actual claims development including incurrence or settlement of individual large claims during the interim periods between actuarial studies as another means of estimating the adequacy of its reserves
The Company s group health plans combine the use of self insured and fully insured programs Benefits for any individual employee or dependents in the self insured program are limited The Company records a liability for the self insured portion of its group health program for all unpaid claims based upon a loss development analysis derived from actual group health claims payment experience The Company also records a liability for unpaid prescription drug claims based on historical experience
Leases The Company s leases are classified as operating leases The Company has ground leases for its leased stores and office space leases that are recorded as operating leases under various non cancellable operating leases The Company also leases its advertising billboards vehicle fleets and certain equipment under various non cancellable operating leases To determine whether a contract is or contains a lease the Company determines at contract inception whether it contains the right to control the use of an identified asset for a period of time in exchange for consideration If the contract has the right to obtain substantially all of the economic benefit from use of the identified asset and the right to direct the use of the identified asset the Company recognizes a right of use asset and lease liability
The Company s leases all have varying terms and expire at various dates through 2060 Restaurant leases typically have base terms of ten years with four to five optional renewal periods of five years each The Company uses a lease life that generally begins on the commencement date including the rent holiday periods and generally extends through certain renewal periods that can be exercised at the Company s option During rent holiday periods which include the pre opening period during construction the Company has possession of and access to the property but is not obligated to and normally does not make rent payments The Company has included lease renewal options in the lease term for calculations of the right of use asset and liability for which at the commencement of the lease it is reasonably certain that the Company will exercise those renewal options Additionally some of the leases have contingent rent provisions and others require adjustments for inflation or index Contingent rent is determined as a percentage of gross sales in excess of specified levels The Company records a contingent rent liability and corresponding rent expense when it is probable sales have been achieved in amounts in excess of the specified levels The Company s lease agreements do not contain any material residual value guarantees or material restrictive covenants
The Company elected to not separate lease and non lease components Additionally the Company elected to apply the short term lease exemption to all asset classes and the short term lease expense for the period reasonably reflects the short term lease commitments As the Company s leases do not provide an implicit rate the Company uses the incremental borrowing rate based on the information available at the time of commencement or modification date in determining the present value of lease payments For operating leases that commenced prior to the date of adoption of the new lease accounting guidance the Company used the incremental borrowing rate as of the adoption date Assumptions used in determining the Company s incremental borrowing rate include the Company s implied credit rating and an estimate of secured borrowing rates based on comparable market data See Note 8 for additional information regarding leases
Share based compensation The Company s share based compensation consists of nonvested stock awards and units Share based compensation is recorded in general and administrative expenses in the Consolidated Statements of Income Share based compensation expense is recognized based on the grant date fair value and the achievement of performance conditions for certain awards The Company recognizes share based compensation expense on a straight line basis over the requisite service period which is generally the award s vesting period or to the date on which retirement eligibility is achieved if shorter
Certain nonvested stock awards and units contain performance conditions Compensation expense for performance based awards is recognized when it is probable that the performance criteria will be met If any performance goals are not met no compensation expense is ultimately recognized and to the extent previously recognized compensation expense is reversed
If a share based compensation award is modified after the grant date incremental compensation expense if any is recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification Incremental compensation expense for vested awards is recognized immediately For unvested awards the sum of the incremental compensation expense and the remaining unrecognized compensation expense for the original award on the modification date is recognized over the modified service period
Income taxes The Company s provision for income taxes income tax benefit includes employer tax credits for FICA taxes paid on employee tip income and other employer tax credits which are accounted for using the flow through method Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes The Company recognizes or derecognizes a tax position taken or expected to be taken in a tax return in the financial statements when it is more likely than not i e a likelihood of more than fifty percent that the position would be sustained or not sustained upon examination by tax authorities A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement The Company recognizes net of tax interest and estimated penalties related to uncertain tax positions in its provision for income taxes income tax benefit See Note 12 for additional information regarding income taxes
Net income per share Basic consolidated net income per share is computed by dividing consolidated net income available to common shareholders by the weighted average number of common shares outstanding for the reporting period Diluted consolidated net income per share reflects the potential dilution that could occur if securities options or other contracts to issue common stock were exercised or converted into common stock and is based upon the weighted average number of common and common equivalent shares outstanding during the reporting period Common equivalent shares related to stock options and nonvested stock awards and units issued by the Company are calculated using the treasury stock method The outstanding stock options and nonvested stock awards and units issued by the Company represent the only dilutive effects on diluted consolidated net income per share The 2026 Notes the 2030 Notes and the warrants related to the 2026 Notes are calculated using the net share settlement option under the if converted method Because the principal amount of the 2026 Notes and the 2030 Notes will be settled in cash with any excess conversion value settled in cash or shares of common stock the 2026 Notes and the 2030 Notes have been excluded from the computation of diluted consolidated net income per share because the average market price of the Company s common stock during the reporting period did not exceed the conversion prices of 156 34 and 72 23 respectively Warrants were excluded from the computation of diluted consolidated net income per share since the warrants strike price of 218 88 was greater than the average market price of the Company s common stock during the reporting period See Note 4 for additional information regarding the 2026 Notes and the 2030 Notes and Note 13 for additional information regarding additional information regarding net income per share
In November 2023 the Financial Accounting Standards Board FASB issued new reportable segment disclosure requirements which require incremental segment information related to measuring segment performance on an annual and interim basis These new disclosure requirements are effective for the fiscal periods beginning after December 15 2023 and interim periods within fiscal years beginning after December 15 2024 These disclosure requirements should be applied on a retrospective basis The adoption of this guidance had no impact on the Company s consolidated financial position or results of operations See Note 6 for the Company s segment disclosures
In November 2024 the FASB issued guidance which clarifies the accounting for settlements of convertible debt instruments that include inducement offers specifically when the consideration transferred includes all amounts in form and amount issuable under the original conversion terms of the instrument Under the new guidance if the inducement offer includes all consideration issuable under the original conversion privileges the transaction is accounted for as an induced conversion and only the fair value of any additional consideration is recognized as an expense No gain or loss is recognized on the conversion of the original debt If the criteria are not met the transaction is accounted for as a debt extinguishment This guidance is effective for all entities for annual reporting periods Early adoption is permitted The Company early adopted this guidance on a retrospective basis in the fourth quarter of 2025 See Note 4 for a discussion of the Company s repurchase of 150 000 aggregate principal amount of the 2026 Notes This transaction did not qualify as an induced conversion under this new guidance
In December 2023 the FASB issued new income tax disclosure requirements which require disclosure of disaggregated income taxes paid prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax related disclosures These new disclosure requirements are effective for annual periods beginning after December 15 2024 and allow for adoption on a prospective basis with a retrospective option The Company is currently evaluating the effect of adopting these new disclosure requirements on its consolidated financial statements and related disclosures in 2026
In November 2024 the FASB issued new disclosure requirements which require disaggregated information about certain income statement line items These new disclosure requirements are effective for annual periods beginning after December 15 2026 and interim periods within fiscal years beginning after December 15 2027 These disclosure requirements may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all periods presented in the financial statements The Company is currently evaluating the effect of adopting these new disclosure requirements on its consolidated financial statements and related disclosures in 2028 as well as interim disclosures beginning in the first quarter of 2029
Fair value for certain of the Company s assets and liabilities is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date In determining fair value a three level hierarchy for inputs is used These levels are
The Company did not have any liabilities measured at fair value on a recurring basis at August 01 2025 and August 02 2024 The Company s money market fund investments are measured at fair value using quoted market prices The Company s deferred compensation plan assets are measured based on net asset value per share as a practical expedient to estimate fair value The fair values of accounts receivable and accounts payable at August 01 2025 and August 02 2024 approximate their carrying amounts because of their short duration The fair value of the Company s variable rate debt based on quoted market prices which are considered Level 1 inputs approximates its carrying amounts at August 01 2025 and August 02 2024
The Company s financial instruments that are not remeasured at fair value include the 2026 Notes and the 2030 Notes See Note 4 for additional information regarding the 2026 Notes and the 2030 Notes The Company estimates the fair value of the 2026 Notes and 2030 Notes through consideration of quoted market prices of similar instruments classified as Level 2 as described above The estimated fair value of the 2026 Notes was 144 075 and 267 939 as of August 01 2025 and August 02 2024 respectively The estimated fair value of the 2030 Notes was 374 246 as of August 01 2025
In 2025 seven Cracker Barrel stores and twenty five MSBC locations were determined to be impaired because of declining operating performance In 2024 six Cracker Barrel stores and thirteen MSBC locations were determined to be impaired because of declining operating performance Fair value of these locations was determined by sales prices of comparable assets or estimates of discounted future cash flows considering their highest and best use Assumptions used in the cash flow model included projected annual revenue growth rates and projected cash flows which can be affected by economic conditions and management s expectations Additionally changes in the local and national economies and markets for real estate and other assets can impact the sales prices of the assets The Company has determined that the majority of the inputs used to value its long lived assets held and used are unobservable inputs and thus are considered Level 3 inputs Based on its analysis the Company recorded impairment charges of 19 772 and 17 448 respectively in 2025 and 2024 which is included in the impairment and store closing costs line on the Consolidated Statements of Income
In 2024 based on the Company s analysis of MSBC s goodwill the Company concluded that the goodwill was impaired based on changes in the macroeconomic environment including interest rate and inflationary pressures and declining financial trends which resulted in a calculated fair value lower than the goodwill s carrying value As part of its analysis the Company used the discounted cash flow method to estimate fair value Significant inputs for this method include projected cash flows growth rate and discount rate The Company recorded an impairment of the entire goodwill amount of 4 690 in 2024 this amount is recorded in the goodwill impairment line on the Consolidated Statements of Income
On May 16 2025 the Company entered into a five year 800 000 revolving credit facility the 2025 Credit Facility The 2025 Credit Facility replaced the five year 700 000 revolving credit facility the 2022 Revolving Credit Facility The 2025 Credit Facility consists of a 550 000 revolving credit facility which includes a 25 000 swingline subfacility and a 75 000 letter of credit subfacility The 2025 Credit Facility also provides for an uncommitted accordion feature that allows the Company to increase the revolving credit facility by up to 200 000 plus any additional amount that would not cause the Company to exceed a consolidated total leverage ratio of 3 50 to 1 00 subject to securing additional commitments from existing lenders or new lending institutions The 2025 Credit Facility also initially provided for a 250 000 delayed draw term loan facility the Delayed Draw Term Facility which was terminated on June 13 2025 in connection with the Company s issuance and sale of 345 000 aggregate principal amount of 1 75 Senior Convertible Notes due in 2030 the 2030 Notes See further information regarding the 2030 Notes described below
In accordance with the 2025 Revolving Credit Facility outstanding borrowings bear interest at the Company s election either at 1 the Term Secured Overnight Financing Rate SOFR plus an applicable margin based on the Company s consolidated total leverage ratio the Applicable Margin or 2 a base rate equal to the greatest of i the prime rate ii a rate that is 0 5 in excess of the Federal Funds Rate and iii one month Term SOFR plus 1 0 in each case plus an Applicable Margin At August 01 2025 the Company had no borrowings under the 2025 Revolving Credit Facility At August 02 2024 the Company had 180 000 in outstanding borrowings with a weighted average interest rate of 7 19 under the 2022 Revolving Credit Facility
At August 01 2025 the Company had 34 004 of standby letters of credit which reduce the Company s borrowing availability under the 2025 Revolving Credit Facility See Note 14 regarding the standby letters of credit At August 01 2025 the Company had 515 996 in borrowing availability under the 2025 Revolving Credit Facility
The 2025 Revolving Credit Facility contains customary financial covenants which include maintenance of a maximum consolidated total leverage ratio and a minimum consolidated interest coverage ratio At August 01 2025 the Company was in compliance with all financial covenants under the 2025 Revolving Credit Facility
The 2025 Revolving Credit Facility also imposes restrictions on the amount of dividends the Company is permitted to pay and the amount of shares the Company is permitted to repurchase Under the 2025 Revolving Credit Facility provided there is no default existing and the total of the Company s availability under the 2025 Revolving Credit Facility plus the Company s cash and cash equivalents on hand is at least 100 000 the Cash Availability the Company may declare and pay cash dividends on shares of its common stock and repurchase shares of its common stock 1 in an unlimited amount if at the time such dividend or repurchase is made the Company s consolidated total leverage ratio is 3 50 to 1 00 or less and 2 in an aggregate amount not to exceed 100 000 in any fiscal year if at the time such dividend or repurchase is made the Company s consolidated total leverage ratio is greater than 3 50 to 1 00 at the time the dividend or repurchase is made notwithstanding 1 and 2 so long as immediately after giving effect to the payment of any such dividends Cash Availability is at least 100 000 the Company may declare and pay cash dividends on shares of its common stock in an aggregate amount not to exceed in any fiscal year the product of the aggregate amount of dividends declared in the fourth quarter of the immediately preceding fiscal year multiplied by four
On June 18 2021 the Company completed a private offering of 300 000 aggregate principal amount of its 0 625 convertible Senior Notes due in 2026 the 2026 Notes which included the exercise in full of the initial purchasers option to purchase up to an additional 25 000 principal amount of the 2026 Notes The 2026 Notes are governed by the terms of an indenture between the Company and U S Bank National Association as the Trustee The 2026 Notes will mature on June 15 2026 unless earlier converted repurchased or redeemed The 2026 Notes bear cash interest at an annual rate of 0 625 payable semi annually in arrears on June 15 and December 15 of each year
The 2026 Notes are unsecured obligations and do not contain any financial or operating covenants or restrictions on the payments of dividends the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries Upon the occurrence of an event of default the principal amount of and all accrued and unpaid interest on all of the notes then outstanding will immediately become due and payable However notwithstanding the foregoing the Company may elect at its option that the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture will consist exclusively of the right of the noteholders to receive special interest on the 2026 Notes for up to 180 calendar days during which such event of default has occurred and is continuing at a specified rate for the first 90 days of 0 25 per annum and thereafter at a rate of 0 50 per annum on the principal amount of the 2026 Notes
The initial conversion rate applicable to the 2026 Notes was 5 3153 shares of the Company s common stock per 1 000 principal amount of 2026 Notes which represented an initial conversion price of approximately 188 14 per share of the Company s common stock a premium of 25 0 over the last reported sale price of 150 51 per share on June 15 2021 the date on which the 2026 Notes were priced The conversion rate is subject to customary adjustments upon the occurrence of certain events including for the payment of dividends to holders of the Company s common stock On August 01 2025 the conversion rate as adjusted was 6 3962 shares of the Company s common stock per 1 000 principal amount of the 2026 Notes In addition if certain corporate events that constitute a Make Whole Fundamental Change occur then the conversion rate will in certain circumstances be increased for a specified period of time
Net proceeds from the 2026 Notes offering were approximately 291 000 after deducting the initial purchasers discounts and commissions and the Company s offering fees and expenses Contemporaneously with the 2030 Notes offering described below the Company used approximately 145 900 of the net proceeds from the 2030 Notes for the repurchase of 150 000 aggregate principal amount of 2026 Notes in separate and privately negotiated transactions and recorded a gain on extinguishment of debt of 3 186 This amount is recorded in the gain on extinguishment of debt line on the Consolidated Statements of Income
During any calendar quarter preceding September 30 2021 in which the closing price of the Company s common stock exceeds 130 of the applicable conversion price of the 2026 Notes on at least 20 of the last 30 consecutive trading days of the quarter holders may in the immediate quarter following convert all or a portion of their 2026 Notes When a conversion notice is received the Company has the option to pay or deliver the conversion amount entirely in cash or a combination of cash and shares of the Company s common stock The holders of the 2026 Notes were not eligible to convert their 2026 Notes during 2025 2024 2023 or 2022 Accordingly as August 02 2024 the Company could not be required to settle the 2026 Notes in cash and therefore the 2026 Notes were classified as long term debt As of August 01 2025 the 2026 Notes are classified as a current liability due to their maturity date in 2026
On June 13 2025 the Company completed a private offering of 345 000 aggregate principal amount of the 2030 Notes which included the exercise in full of the initial purchasers option to purchase up to an additional 45 000 principal amount of the 2030 Notes The 2030 Notes are governed by the terms of an indenture between the Company and U S Bank Trust Company National Association as the Trustee The 2030 Notes will mature on September 15 2030 unless earlier converted repurchased or redeemed The 2030 Notes bear cash interest at an annual rate of 1 75 payable semi annually in arrears on March 15 and September 15 of each year commencing on March 15 2026
The 2030 Notes are unsecured obligations and do not contain any financial or operating covenants or restrictions on the payments of dividends the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries Upon the occurrence of an event of default the principal amount of and all accrued and unpaid interest on all of the 2030 Notes then outstanding will immediately become due and payable However notwithstanding the foregoing the Company may elect at its option that the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture will consist exclusively of the right of the noteholders to receive special interest on the 2030 Notes for up to 180 calendar days during which such event of default has occurred and is continuing at a specified rate for the first 90 days of 0 25 per annum and thereafter at a rate of 0 50 per annum on the principal amount of the 2030 Notes
The initial conversion rate applicable to the 2030 Notes was 13 8455 shares of the Company s common stock per 1 000 principal amount of 2030 Notes which represented an initial conversion price of approximately 72 23 per share of the Company s common stock a premium of approximately 32 5 over the last reported sale price of 54 51 per share on June 10 2025 the date on which the 2030 Notes were priced The conversion rate is subject to customary adjustments upon the occurrence of certain events On August 01 2025 the conversion rate was 13 8455 shares of the Company s common stock per 1 000 principal amount of the 2030 Notes In addition if certain corporate events that constitute a Make Whole Fundamental Change occur then the conversion rate will in certain circumstances be increased for a specified period of time
During any calendar quarter commencing after the calendar quarter ending on September 30 2025 and only during such calendar quarter if the last reported sale price per share of the Company s common stock exceeds 130 of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on and including the last trading day of the immediately preceding calendar quarter holders may in the immediate quarter following convert all or a portion of their 2030 Notes When a conversion notice is received the Company will settle any conversions by paying or delivering as applicable cash or if applicable and at the Company s election a combination of cash which shall not be less than 1 000 for each 1 000 principal amount of 2030 Notes being settled and shares of the Company s common stock based on the applicable conversion rate s at the time of each such conversion
In connection with the offering of the 2026 Notes the Company entered into convertible note hedge transactions the Convertible Note Hedge Transactions with certain of the initial purchasers of the 2026 Notes and or their respective affiliates and other financial institutions in this capacity the Hedge Counterparties Concurrently with the Company s entry into the Convertible Note Hedge Transactions the Company also entered into separate warrant transactions with the Hedge Counterparties collectively relating to the same number of shares of the Company s common stock which initially is approximately 1 600 000 shares subject to customary anti dilution adjustments and for which the Company received proceeds that partially offset the cost of entering into the Convertible Note Hedge Transactions the Warrant Transactions
The Convertible Note Hedge Transactions cover subject to customary anti dilution adjustments the number of shares of the Company s common stock that initially underlie the 2026 Notes and are expected generally to reduce the potential equity dilution and or offset any cash payments in excess of the principal amount due as the case may be upon conversion of the 2026 Notes By default the Warrant Transactions are net share settled and the Company has the option to settle in cash or shares The Warrant Transactions could have a dilutive effect on the Company s common stock to the extent that the price of its common stock exceeds the strike price of the Warrant Transactions The strike price was initially 263 39 per share and is subject to certain adjustments under the terms of the Warrant Transactions On August 01 2025 the strike price as adjusted of the Warrant Transactions was adjusted to 218 88 per share as a result of dividends declared since the 2026 Notes were issued
In connection with the repurchase of the 2026 Notes on June 16 2025 the Company entered into partial unwind agreements with the Hedge Counterparties to unwind a portion of the Convertible Note Hedge Transactions and Warrant Transactions underlying the repurchased 2026 Notes These transactions were recorded in shareholders equity within additional paid in capital
The Capped Call Transactions cover subject to customary anti dilution adjustments the number of shares of the Company s common stock that initially underlie the 2030 Notes and are expected generally to reduce or offset the potential equity dilution upon any conversion of the 2030 Notes and or offset any cash payments that the Company may be required to make in excess of the principal amount of converted 2030 Notes with such reduction and or offset subject to a cap based on the cap price of the Capped Call Transactions The cap price of the Capped Call Transactions is initially approximately 87 22 and is subject to certain adjustments under the terms of the Capped Call Transactions
Subject to the limits imposed by the Company s revolving credit facility in the fourth quarter of 2022 the Company was authorized by its Board of Directors to repurchase shares of the Company s outstanding common stock at management s discretion up to a total value of 200 000 On June 2 2023 the Company s Board of Directors renewed this authorization for an additional year which expired on June 2 2024 In 2025 and 2024 the Company did not repurchase any shares of its common stock In 2023 the Company repurchased 171 792 shares of its common stock in the open market at an aggregate cost of 17 449
The Company represents a single integrated operation with two related and substantially integrated product lines The operating expenses of the restaurant and retail product lines of a store are shared and are indistinguishable in many respects As such the Company has determined it operates as one operating segment and one reportable segment All of the Company s operations are located within the United States
The Company s chief operating decision maker CODM is the Company s Chief Executive Officer The CODM uses consolidated net income to evaluate performance and as a basis for allocating resources The CODM uses consolidated net income primarily in the forecasting process and periodic reviews of actual performance as compared to forecasts The CODM reviews balance sheet and capital expenditure information at a consolidated level and as such the measure of total assets is reflected at the consolidated balance sheet level
For 2025 2024 and 2023 gift card breakage was 11 653 11 397 and 10 713 respectively Revenue recognized in the Consolidated Statements of Income for 2025 2024 and 2023 respectively for the redemption of gift cards which were included in the deferred revenue balance at the beginning of the fiscal year was 34 935 36 958 and 40 103 respectively Deferred revenue related to the Company s gift cards was 82 452 and 84 854 respectively at August 01 2025 and August 02 2024 and is included in the deferred revenue on the Consolidated Balance Sheets
During the first quarter of 2024 the Company launched its customer loyalty program Cracker Barrel Rewards which allows members to earn points pegs for each qualifying purchase in store or online Pegs earned are then converted to rewards upon reaching certain thresholds These rewards may be redeemed on future restaurant or retail purchases in store or online
The estimation of the standalone selling price of pegs and other rewards issued to customers involves several assumptions primarily the estimated value of the product for which the reward is expected to be redeemed and the probability that the pegs or reward will expire These inputs are subject to change over time due to factors such as increased costs or changes in customer behavior
The Company defers a portion of the revenue related to the pegs earned at the time of the original transaction based on the estimated value of the item for which the reward is expected to be redeemed net of estimated unredeemed pegs Pegs expire after twelve months Revenue is recognized for these performance obligations upon redemption of pegs or rewards earned by the customer As of August 01 2025 and August 02 2024 deferred revenue related to the loyalty program was 5 419 and 1 544 respectively and is included in deferred revenue on the Consolidated Balance Sheets
In 2009 the Company completed sale and leaseback transactions involving 15 of its Cracker Barrel stores and its retail distribution center Under the transactions the land buildings and building improvements at the locations were sold and leased back for terms of 20 and 15 years respectively The leases include specified renewal options for up to 20 additional years
The Company s employee compensation plans are administered by the Compensation Committee of the Company s Board of Directors the Committee The Committee is authorized to determine at time periods within its discretion and subject to the direction of the Board of Directors which employees will be granted awards the number of shares covered by any awards granted and within applicable limits the terms and provisions relating to the exercise and vesting of any awards
On November 19 2020 the Company s shareholders approved the 2020 Omnibus Incentive Plan the 2020 Omnibus Plan which became effective on that date The 2020 Omnibus Plan authorizes the following types of awards for employees and non employee directors stock options stock appreciation rights nonvested stock restricted stock units other share based awards and performance awards After the effective date of the 2020 Omnibus Plan no additional awards could be granted under the Company s 2010 Omnibus Incentive Stock and Incentive Plan the Prior Plan
The 2020 Omnibus Plan allows the Committee to grant awards for an aggregate of 1 033 441 shares the number of shares that were available for issuance as of September 24 2020 the Cutoff Date pursuant to the Prior Plan plus the number of shares that became available for issuance pursuant to the terms of the Prior Plan following the Cutoff Date and prior to the effective date However this share reserve is increased by shares awarded under this and the Prior Plan which are forfeited expired settled for cash and shares withheld by the Company in payment of a tax withholding obligation after the effective date of the 2020 Omnibus Plan Additionally this share reserve was decreased by shares granted from the 2020 Omnibus Plan after the effective date At August 01 2025 the number of shares authorized for future issuance under the Company s active plan is 925 994 At August 01 2025 the number of outstanding awards under the 2020 Omnibus Plan and the Prior Plan was 544 988 and 1 259 respectively
The weighted average grant date fair value of the stock options granted during 2025 was 17 83 The weighted average remaining contractual term of the stock options outstanding as of August 01 2025 was 9 2 years and the aggregate intrinsic value of the outstanding stock options was 1 558 The intrinsic value for stock options is defined as the difference between the current market value and the grant price As of August 01 2025 none of the stock options were exercisable and none were exercised during 2025
The Company s nonvested stock awards consist of the Company s common stock generally accrue dividend equivalents and vest over one to three years The fair value of the Company s nonvested stock awards which accrue dividends is equal to the market price of the Company s stock at the date of the grant Dividends are forfeited for any nonvested stock awards that do not vest
The Company s nonvested stock awards include its long term performance plans which were established by the Committee for the purpose of rewarding certain officers with shares of the Company s common stock if the Company achieves certain performance targets The stock awards under the long term performance plans are calculated or estimated based on achievement of financial performance measures
On February 22 2024 the Company s Board of Directors unanimously determined to extend the Company s shareholder rights agreement for a further three year term which was approved at the Company s 2024 annual shareholder meeting In connection with this determination the Board of Directors declared a dividend of one preferred share purchase right a Right for each outstanding share of common stock par value 0 01 per share and adopted a shareholder rights agreement as set forth in the Rights Agreement dated as of February 27 2024 the Rights Agreement by and between the Company and Equiniti Trust Company LLC as rights agent The dividend was payable on March 8 2024 to the shareholders of record on March 8 2024
The Rights initially trade with and are inseparable from the Company s common stock The Rights are evidenced only by certificates or book entries that represent shares of common stock New Rights will accompany any new shares of common stock the Company issues after March 8 2024 until the Distribution Date as defined below
Each Right will allow its holder to purchase from the Company one one hundredth of a share of Series A Junior Participating Preferred Stock Preferred Share for 600 00 the Exercise Price once the Rights become exercisable This portion of a Preferred Share will give the shareholder approximately the same dividend and liquidation rights as would one share of common stock Prior to exercise the Right does not give its holder any dividend voting or liquidation rights
Certain synthetic interests in securities created by derivative positions whether or not such interests are considered to be ownership of the underlying common stock or are reportable for purposes of Regulation 13D of the Securities Exchange Act of 1934 as amended the Exchange Act are treated as beneficial ownership of the number of shares of the Company s common stock equivalent to the economic exposure created by the derivative
The date when the Rights become exercisable is the Distribution Date Until the Distribution Date the common stock certificates will also evidence the Rights and any transfer of shares of common stock will constitute a transfer of Rights After that date the Rights will separate from the common stock and will be evidenced by book entry credits or by Rights certificates that the Company will mail to all eligible holders of common stock Any Rights held by an Acquiring Person will be void and may not be exercised
The Board of Directors may redeem the Rights for 0 01 per Right at any time before any person or group becomes an Acquiring Person If the Board of Directors redeems any Rights it must redeem all of the Rights Once the Rights are redeemed the only right of the holders of Rights will be to receive the redemption price of 0 01 per Right The redemption price will be adjusted if the Company has a stock split or stock dividends of its common stock
The Rights would also not interfere with any all cash fully financed tender offer exchange offer of common stock of the offeror meeting certain terms and conditions further described below or a combination thereof in each case for all shares of common stock that remain open for a minimum of 60 business days and subject to a minimum condition of a majority of the outstanding shares and provide for a 20 business day subsequent offering period after consummation such offers are referred to as qualifying offers If an offer includes shares of common stock of the offeror the Rights would not interfere with such offer if such consideration consists solely of freely tradeable common stock of a publicly owned United States corporation such common stock is listed or admitted to trading on the New York Stock Exchange Nasdaq Global Select Market or Nasdaq Global Market the offeror has already received stockholder approval to issue such common stock prior to the commencement of such offer or no such approval is or will be required the offeror has no other class of voting stock outstanding no person including such person s affiliated and associated persons beneficially owns twenty percent 20 or more of the shares of common stock of the offeror then outstanding at the time of commencement of the offer or at any time during the term of the offer and the offeror meets the registrant eligibility requirements for use of a registration statement on Form S 3 for registering securities under the Securities Act of 1933 as amended including the filing of all reports required to be filed pursuant to the Exchange Act in a timely manner during the twelve 12 calendar months prior to the date of commencement and throughout the term of such offer In the event the Company receives a qualifying offer and the Board of Directors has not redeemed the Rights prior to the consummation of such offer the consummation of the qualifying offer will not cause the offeror or its affiliates to become an Acquiring Person and the Rights will immediately expire upon consummation of the qualifying offer
After a person or group becomes an Acquiring Person but before an Acquiring Person owns 50 or more of the Company s outstanding common stock the Board of Directors may extinguish the Rights by exchanging one share of common stock or an equivalent security for each Right other than Rights held by the Acquiring Person
The Board of Directors may adjust the purchase price of the Preferred Shares the number of Preferred Shares issuable and the number of outstanding Rights to prevent dilution that may occur from a stock dividend a stock split a reclassification of the Preferred Shares or common stock No adjustments to the Exercise Price of less than 1 will be made
The Company sponsors a qualified defined contribution retirement plan 401 k Savings Plan covering salaried and hourly employees who have completed ninety days of service and have attained the age of twenty one This plan allows eligible employees to defer receipt of up to 50 of their compensation as defined in the plan The Company also sponsors a non qualified defined contribution retirement plan Non Qualified Savings Plan covering highly compensated employees as defined in the plan This plan allows eligible employees to defer receipt of up to 50 of their base compensation and 100 of their eligible bonuses as defined in the plan
Contributions under both plans may be invested in various investment funds at the employee s discretion Such contributions including the Company s matching contributions described below may not be invested in the Company s common stock In 2025 2024 and 2023 the Company matched 50 of employee contributions for each participant in the 401 k Savings Plan up to a total of 5 of the employee s compensation and matched 25 of employee contributions in the Non Qualified Savings Plan up to a total of 6 of the employee s compensation Employee contributions vest immediately while Company contributions vest 20 annually beginning on the first anniversary of a contribution date and are vested 100 on the fifth anniversary of such contribution date
At the inception of the Non Qualified Savings Plan the Company established a Rabbi Trust to fund the plan s obligations The market value of the trust assets for the Non Qualified Savings Plan of 22 700 is included in other assets and the related liability to the participants of 22 700 is included in other long term obligations in the Consolidated Balance Sheets Company contributions under both plans are recorded as either labor and other related expenses or general and administrative expenses in the Consolidated Statements of Income
The Company s income tax benefit decreased in 2025 primarily due to the increase in income before income taxes and fewer favorable audit settlements as compared to 2024 The decrease in the Company s provision for income taxes income tax benefit in 2024 as compared to 2023 is primarily due to the decrease in income before income taxes and favorable audit settlements in 2024
The Company has a deferred tax asset of 28 556 reflecting federal income tax credit carryforwards that expire in 2044 The Company has state income tax net operating loss carryforwards NOL of 110 534 and has recorded a deferred tax asset of 5 737 reflecting this benefit These state NOLs generally expire in years beginning 2037 and after
The Company believes that adequate amounts of tax interest and penalties have been provided for potential tax uncertainties these amounts are included in other long term liabilities in the Consolidated Balance Sheets As of August 01 2025 and August 02 2024 the Company s gross liability for uncertain tax positions exclusive of interest and penalties was 6 703 and 7 404 respectively
If the Company were to prevail on all uncertain tax positions the reversal of this accrual would be a tax benefit to the Company and impact the effective tax rate The following table highlights the amount of uncertain tax positions exclusive of interest and penalties which if recognized would affect the effective tax rate for each of the three years
In many cases the Company s uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities Based on the outcome of these examinations or as a result of the expiration of the statutes of limitations for specific taxing jurisdictions it is reasonably possible that the related uncertain tax positions taken regarding previously filed tax returns could decrease from those recorded as liabilities for uncertain tax positions in the Company s financial statements at August 01 2025 by approximately 300 to 1 200 within the next twelve months At August 01 2025 the Company was subject to income tax examinations for its U S federal income taxes after 2018 and for state and local income taxes generally after 2019
The Company and its subsidiaries are party to various legal and regulatory proceedings and claims incidental to their business in the ordinary course In the opinion of management based upon information currently available the ultimate liability with respect to these proceedings and claims will not materially affect the Company s consolidated results of operations or financial position
The Company maintains insurance coverage for various aspects of its business and operations The Company has elected however to retain all or a portion of losses that occur through the use of various deductibles limits and retentions under its insurance programs This situation may subject the Company to some future liability for which it is only partially insured or completely uninsured The Company intends to mitigate any such future liability by continuing to exercise prudent business judgment in negotiating the terms and conditions of its contracts See Note 1 for a further discussion of insurance and insurance reserves
Related to its insurance coverage the Company is contingently liable pursuant to standby letters of credit as credit guarantees to certain insurers As of August 01 2025 the Company had 34 004 of standby letters of credit related to securing reserved claims under workers compensation insurance and certain sale and leaseback transactions All standby letters of credit are renewable annually and reduce the Company s borrowing availability under its 2025 Revolving Credit facility See Note 4 for additional information regarding the 2025 Revolving Credit Facility
The Company enters into certain indemnification agreements in favor of third parties in the ordinary course of business The Company believes that the probability of incurring an actual liability under other indemnification agreements is sufficiently remote so that no liability has been recorded in the Consolidated Balance Sheets
Our management with the participation of our principal executive and financial officers including the Chief Executive Officer and the Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a 15 e and 15d 15 e promulgated under the Exchange Act as of the end of the period covered by this report Based upon this evaluation our Chief Executive Officer and Chief Financial Officer each concluded that as of August 01 2025 our disclosure controls and procedures were effective
There have been no changes including corrective actions with regard to material weaknesses during the quarter ended August 01 2025 in our internal control over financial reporting as defined in Exchange Act Rule 13a 15 f that have materially affected or are reasonably likely to materially affect our internal control over financial reporting
We are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a 15 f and 15d 15 f promulgated under the Exchange Act We maintain a system of internal controls that is designed to provide reasonable assurance in a cost effective manner as to the fair and reliable preparation and presentation of the consolidated financial statements as well as to safeguard assets from unauthorized use or disposition
Our control environment is the foundation for our system of internal control over financial reporting and is embodied in our Corporate Governance Guidelines and our Code of Business Conduct and Ethics both of which may be viewed on our website They set the tone for our organization and include factors such as integrity and ethical values Our internal control over financial reporting is supported by formal policies and procedures which are reviewed modified and improved as changes occur in business conditions and operations Neither our disclosure controls and procedures nor our internal controls however can or will prevent all errors or fraud A control system no matter how well conceived and operated can provide only reasonable not absolute assurance that the objectives of the control system are met Further the design of a control system must reflect the benefits of controls relative to their costs Because of the inherent limitations in all control systems no evaluation of controls can provide absolute assurance that all control issues and instances of fraud if any within the Company have been detected
We conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission This evaluation included review of the documentation of controls evaluation of the design effectiveness of controls testing of the operating effectiveness of controls and a conclusion based on this evaluation We have concluded that our internal control over financial reporting was effective as of August 01 2025 based on these criteria
We have audited the internal control over financial reporting of Cracker Barrel Old Country Store Inc and subsidiaries the Company as of August 1 2025 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO In our opinion the Company maintained in all material respects effective internal control over financial reporting as of August 1 2025 based on criteria established in Internal Control Integrated Framework 2013 issued by COSO
We have also audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated financial statements as of and for the year ended August 1 2025 of the Company and our report dated September 26 2025 expressed an unqualified opinion on those financial statements
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Report on Internal Control over Financial Reporting Our responsibility is to express an opinion on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects Our audit included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists testing and evaluating the design and operating effectiveness of internal control based on the assessed risk and performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinion
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
On September 24 2025 Laura Daily provided notice to the Company of her intention to retire from her position as the Company s Senior Vice President Chief Merchant and Retail Supply Chain as contemplated under the terms of her Consulting Agreement with the Company Pursuant to the terms of such Consulting Agreement the Company determined that Ms Daily s retirement will be effective October 1 2025 and no further services will be required Ms Daily will thus receive the previously disclosed benefits under the Consulting Agreement associated with her retirement
The information required by this Item with respect to directors of the Company is incorporated herein by this reference to the following sections of the 2025 Proxy Statement Board of Directors and Committees Proposal 1 Election of Directors Certain Relationships and Related Transactions Code of Ethics and if applicable Delinquent Section 16 a Reports The information required by this Item with respect to executive officers of the Company is set forth in Part I of this Annual Report on Form 10 K under the heading Information About our Executive Officers
The Company has adopted a Code of Business Conduct and Ethics that applies to all directors officers and employees The Code of Business Conduct and Ethics is available on our website at www crackerbarrel com under the Investors Corporate Governance section We intend to satisfy the disclosure requirements under the Exchange Act regarding amendment to or waiver from a material provision of our Code of Business Conduct and Ethics involving our principal executive financial or accounting officer or controller by posting such information on our website
The Company has adopted a Statement of Policy Regarding Insider Trading and integrated Special Trading Procedures Policy that governs the purchase sale and or other dispositions of the Company s securities by directors officers and employees that is reasonably designed to promote compliance with insider trading laws rules and regulations and any listing standards applicable to the Company A copy of the Company s Statement of Policy Regarding Insider Trading and integrated Special Trading Procedures Policy is filed as Exhibit 19 to this Annual Report on Form 10 K
The information required by this Item is incorporated herein by this reference to the following sections of the 2025 Proxy Statement Executive Compensation and Board of Directors and Committees Compensation of Directors The Compensation Committee Report set forth in the section of the 2025 Proxy Statement entitled Executive Compensation is deemed to be furnished and is not and shall not be deemed to be filed for purposes of Section 18 of the Exchange Act
The information required by this Item is incorporated herein by this reference to the sections entitled Fees Paid to Auditors and Audit Committee Report in the 2025 Proxy Statement No other portion of the section of the 2025 Proxy Statement entitled Audit Committee Report is nor shall it be deemed to be incorporated by reference into this Annual Report on Form 10 K Deloitte Touche LLP PCAOB ID No 34 is our principal accountant
Rights Agreement dated as of February 27 2024 between Cracker Barrel Old Country Store Inc and Equiniti Trust Company LLC which includes the Articles of Amendment to the Amended and Restated Charter as Exhibit A the form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C incorporated by reference to Exhibit 4 1 to the Company s Quarterly Report on Form 10 Q filed under the Exchange Act on February 27 2024
Second Amended and Restated Credit Agreement dated as of May 16 2025 among Cracker Barrel Old Country Store Inc the Subsidiary Guarantors named therein the Lenders party thereto and Bank of America N A as Administrative Agent and Collateral Agent incorporated by reference to Exhibit 10 1 to the Company s Current Report on Form 8 K filed under the Exchange Act on May 16 2025

Company Name	CRACKER BARREL OLD COUNTRY STORE, INC Vist SEC web-site
Category	RETAIL-EATING PLACES
Trading Symbol	CBRL