CRACKER BARREL OLD COUNTRY STORE, INC

Cracker Barrel Old Country Store, Inc. operates in the restaurant and retail industries in the United States, with each store consisting of a full-service restaurant and a gift shop. The restaurant and retail industries are intensely competitive, with competition based on 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. The company competes with national and regional restaurant and retail chains, some with greater resources, as well as locally owned restaurants and retail stores, and faces growing competition from the supermarket industry offering convenient meals, fast casual restaurants, quick-service restaurants, and casual and family dining restaurants. The industries are affected by changes in consumer taste and preference, national, regional or local economic conditions, demographic trends, traffic and weather patterns, and consumers' discretionary purchasing power.

The company believes it competes effectively and has successfully differentiated itself from many competitors through a unique brand and guest experience, offering a diversified full-service menu and a large variety of nostalgic and unique retail items. The company's long-term strategy is anchored on the priorities of food, experience, people, and profitability. Management believes the Cracker Barrel brand remains one of the strongest and most differentiated brands in the restaurant industry, and plans to continue to leverage and build on that strength as a core competitive component of its business strategy.

The company generates revenue through its Cracker Barrel Old Country Store concept, which combines a full-service restaurant with a gift shop. The restaurants generated approximately 81% of total revenue in 2026, offering home-style country cooking with breakfast, lunch, and dinner served daily, along with dine-in, pick-up, and delivery services. The gift shops offer a variety of decorative and functional items, including rocking chairs, holiday and seasonal gifts, toys, apparel, cookware, and foods. Approximately 20% of restaurant sales are generated through off-premise channels, which include Individual To Go, Third-Party Delivery, and Catering and Occasion. The company also previously operated Maple Street Biscuit Company, a breakfast and lunch fast casual concept, but sold 35 MSBC locations and closed the remaining Company-owned locations during the fourth quarter of 2026, and as of July 31, 2026, no longer operated any MSBC locations.

The restaurants serve breakfast, lunch, and dinner daily, with menu items moderately priced. Approximately 93% of restaurants also serve an assortment of beer and wine. The average check per guest during 2026 was $15.58 ¹, a 3.7% increase over the prior year ². The company served an average of approximately 4,900 restaurant guests per week in a typical store in 2026 ³. Breakfast items can be ordered at any time throughout the day, and 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. The gift shops feature approximately 3,100 stock keeping units at July 31, 2026 ⁴, with certain food items sold under the Cracker Barrel Old Country Store brand name. The company achieves high retail sales per square foot of retail selling space, approximately $432 per square foot in 2026 ⁵.

During 2026, the company opened two new Cracker Barrel stores and closed four Cracker Barrel stores ⁶. The company completed the divestiture of its Maple Street Biscuit Company business, including the MSBC tradename and the assets used in 35 MSBC locations, and simultaneously closed the remaining 16 MSBC locations ⁷. The company also faced challenges related to negative publicity from brand initiatives related to its previously-announced strategic plan, including the launch of a new logo and modern test store remodels, to which it responded by returning to its former logo and discontinuing the modern test store remodels during the first quarter of 2026. In August 2025, the Board of Directors approved an authorization to repurchase up to $100,000 of common stock ⁸, with such authorization to expire on September 30, 2027.

In fiscal year 2026, total revenue was $3,486,000 ⁹, compared to $3,486,000 ¹⁰ in fiscal 2025. Net income was $34,000 ¹¹ in 2026, compared to $45,000 ¹² in 2025. Operating income was a loss of $14,000 ¹³ in 2026, compared to income of $55,000 ¹⁴ in 2025. The company experienced a 3.7% increase in average check per guest ¹⁵, but faced inflationary pressures on food, labor, and other operating costs. The company also recorded a gain on sale and leaseback transaction, net of $48,000 ¹⁶, and a loss on sale of business assets of $28,000 ¹⁷ in 2026.

The company does not plan on opening any new Cracker Barrel stores during 2027 ¹⁸. Management believes there are significant challenges in the macroeconomic outlook for the coming quarters, including continued inflation volatility, higher consumer debt levels and lower savings rates, as well as potential uncertainty associated with the geopolitical environment and global trade. The company expects inflationary pressures and other fluctuations impacting the cost of items could have a negative impact on its business in 2027.

The company's long-term strategy is anchored on the priorities of food, experience, people, and profitability. The company plans to continue to leverage and build on the strength of the Cracker Barrel brand as a core competitive component of its business strategy. The company is focused on driving retail sales by converting restaurant guests to gift shop customers, and its merchandising department selects and develops products for the gift shop, with assortment including both core and seasonal themes. The company also continues to enhance its technology in line with its strategic vision, including a digital experience that drives its loyalty program, enables to-go and catering business, allows for mobile payments, and provides a digital waitlist.

The company is focused on menu-driven growth through three areas: enhancements to current core menu offerings, the addition of new core menu offerings, and limited time offer seasonal events or promotions. The company's product development department develops new and improved menu items either in response to shifts in customer preferences or to create customer interest, using a formal development and testing process including guest research and in-store market tests. The company also continues to optimize its non-billboard advertising mix, which includes television, digital display and video, mobile, social media, and search marketing, and its digital marketing efforts have expanded to focus on improving brand preference, guest engagement, and sales.

The company has experienced and continues to experience inflationary pressures with respect to a variety of costs, including food, ingredients, retail merchandise, transportation, distribution, labor, and utilities. While inflationary trends have fluctuated over time, cost increases in these areas may continue to affect operating expenses. The company has partially offset the impact of these inflationary pressures with menu price increases and operational improvements, but there can be no assurance that such conditions will not adversely affect consumer demand or its cost structure in ways that it may be unable to manage without diminishing profitability.

The company's supply chain involves a contract with an unaffiliated distributor with custom distribution centers in seven locations, and the majority of retail items are processed through its retail distribution center in Lebanon, Tennessee. Approximately one-third of 2026 retail items were purchased directly from vendors in the People's Republic of China ¹⁹. The company continuously evaluates the potential for disruptions to its retail supply chain and ways to mitigate such disruptions. The company also relies on technology across its operations, including point of sales processing, supply chain management, retail merchandise allocation and distribution, labor productivity, and expense management.

In August 2025, the Board of Directors approved an authorization to repurchase up to $100,000 of common stock ²⁰, with such authorization to expire on September 30, 2027. The company may make repurchases from time to time in the open market, through privately negotiated transactions or otherwise, in accordance with applicable SEC and other legal requirements. The company did not repurchase any shares of its common stock in the fourth quarter ended July 31, 2026 ²¹. The company's ability to make scheduled payments or to refinance its obligations with respect to indebtedness will depend on its operating and financial performance, which is subject to prevailing economic conditions and to financial, business, and other factors beyond its control.

The company faces intense competition, and failure to continue to compete effectively may have an adverse effect on its business. The company also faces risks related to inflationary conditions, supply chain disruptions, changes in trade policy, and the effects of increased competition on sales and labor recruiting, cost, and retention. The company's business is somewhat seasonal, with revenue and profits historically lower in the first and third fiscal quarters and higher in the second and fourth fiscal quarters, primarily due to the holiday shopping season and the summer vacation and travel season.

The company is subject to various federal, state, and local laws affecting its business, including areas of food safety, minimum wage increases, health care, zoning requirements, preparation and sale of food and alcoholic beverages, information security, and environmental matters. The company's advertising is heavily dependent on billboards, which are highly regulated, and a number of states in which it operates restrict highway signage and billboards. The company also faces risks related to litigation, activist shareholders, and provisions in its charter, Tennessee law, and its shareholder rights agreement that may discourage potential acquirers.

The company faces significant risks from inflationary pressures on food, ingredients, retail merchandise, transportation, distribution, labor, and utilities, which have caused and may continue to cause higher costs and lower margins, and the company may not be able to pass along price increases to customers without adversely affecting demand. The company relies on a single retail distribution facility in Lebanon, Tennessee for the majority of its retail inventory, and a natural disaster or public health crisis affecting this warehouse could materially adversely affect its business. Approximately one-third of 2026 retail items were purchased directly from vendors in the People's Republic of China ²², subjecting the company to risks including tariffs, trade barriers, and foreign political and economic instability. The company's business is dependent on attracting and retaining qualified employees while controlling labor costs, and increases in minimum wage, competition, unemployment rates, or health care and other benefit costs could have a material adverse effect on results of operations. The company's level of indebtedness could prevent it from meeting obligations under its revolving credit facility or the indenture governing its 1.75% Convertible Senior Notes due 2030, and there can be no assurance that it will be able to actively repurchase its common stock or pay cash dividends.

Management's message emphasizes that the Cracker Barrel brand remains one of the strongest and most differentiated brands in the restaurant industry, and the company plans to continue to leverage and build on that strength as a core competitive component of its business strategy. The long-term strategy is anchored on the priorities of food, experience, people, and profitability. Management acknowledges significant challenges in the macroeconomic outlook for the coming quarters, including continued inflation volatility, higher consumer debt levels and lower savings rates, as well as potential uncertainty associated with the geopolitical environment and global trade. During 2026, the company faced challenges related to negative publicity from brand initiatives, including the launch of a new logo and modern test store remodels, to which it responded by returning to its former logo and discontinuing the modern test store remodels during the first quarter of 2026. The company also completed the divestiture of its Maple Street Biscuit Company business and undertook a number of strategic, leadership, and financing actions intended to support its long-term business objectives.