CRACKER BARREL OLD COUNTRY STORE INC

Previous wording

Cracker Barrel Old Country Store, Inc., and its subsidiaries (collectively, the “Company,” “our” or “we”) are principally engaged in the operation and development in the United States of the Cracker Barrel Old Country Store Ò (“Cracker Barrel”) concept. As of November 01, 2024, we operated 658 Cracker Barrel stores in 44 states and 69 Maple Street Biscuit Company (“MSBC”) locations in ten states.

Current wording

Cracker Barrel Old Country Store, Inc., and its subsidiaries (collectively, the “Company,” “our” or “we”) are principally engaged in the operation and development in the United States of the Cracker Barrel Old Country Store Ò (“Cracker Barrel”) concept. As of January 31, 2025, we operated 657 Cracker Barrel stores in 43 states and 69 Maple Street Biscuit Company (“MSBC”) locations in ten states.

Previous wording

For the first quarter of 2025, our comparable store restaurant sales increase resulted primarily from the average check increase partially offset by the guest traffic decrease. For the first quarter of 2025, the average check increase included an average menu price increase of 4.7%.

Current wording

For the second quarter and first six months of 2025, our comparable store restaurant sales increases resulted primarily from the average check increases partially offset by the guest traffic decreases. For the second quarter and first six months of 2025, the average check increases included average menu price increases of 6.0% and 5.4%, respectively.

Previous wording

Our retail sales are made substantially to our restaurant guests. For the first quarter of 2025, our comparable store retail sales decrease resulted primarily from the guest traffic decrease.

Current wording

Our retail sales are made substantially to our restaurant guests. For the second quarter of 2025, our comparable store retail sales increase resulted primarily from strong performance in the apparel merchandise category partially offset by the guest traffic decrease. For the first six months of 2025, our comparable store retail sales decrease resulted primarily from the guest traffic decrease.

Previous wording

The decrease in guest traffic is primarily the result of lower consumer demand arising from multiple macroeconomic factors, including inflationary pressures, higher interest rates, higher consumer debt levels and lower savings rates.

Current wording

The decreases in guest traffic are primarily the result of lower consumer demand arising from multiple macroeconomic factors, including inflationary pressures, higher consumer debt levels and lower savings rates.

Previous wording

Restaurant cost of goods sold as a percentage of restaurant revenue remained relatively constant in the first quarter of 2025 as compared to the same period in the prior year. Commodity inflation was 1.9% in the first quarter of 2025. We presently expect the rate of commodity inflation to be approximately 2% to 3% in 2025.

Current wording

The decreases in restaurant cost of goods sold as a percentage of restaurant revenue for the second quarter and first six months of 2025 as compared to the same periods in the prior year were primarily the result of our menu price increases and a shift to lower cost menu items. Commodity inflation was 1.3% and 1.6%, respectively, in the second quarter and first six months of 2025. We presently expect the rate of commodity inflation to be approximately 2% to 3% in 2025.

Previous wording

The decrease in retail cost of goods sold as a percentage of retail revenue in the first quarter of 2025 as compared to the same period in the prior year resulted primarily from higher vendor allowances and higher initial margin partially offset by higher markdowns.

Current wording

The decrease in retail cost of goods sold as a percentage of retail revenue in the first six months of 2025 as compared to the same period in the prior year resulted primarily from higher vendor allowances and higher initial margin partially offset by higher markdowns.

Previous wording

This percentage change for the first quarter of 2025 as compared to the same period in the prior year resulted primarily from the following:

Current wording

This percentage change for the second quarter of 2025 as compared to the same period in the prior year resulted primarily from the following:

Previous wording

The decreases in store hourly labor and store management compensation as a percentage of total revenue for the first quarter of 2025 as compared to the same period in the prior year resulted primarily from menu price increases being higher than wage inflation. Additionally, store hourly labor benefited from improved productivity.

Current wording

The decreases in store hourly labor and store management compensation as a percentage of total revenue for the second quarter and first six months of 2025 as compared to the same periods in the prior year resulted primarily from menu price increases being higher than wage inflation. Additionally, store hourly labor benefited from improved productivity.

Previous wording

We presently expect the rate of wage inflation to be approximately 3% to 4% in 2025.

Current wording

We presently expect the rate of wage inflation to be approximately 3% in 2025.

Previous wording

The increase in other wages as a percentage of total revenue for the first quarter of 2025 as compared to the same period in the prior year resulted primarily from a revision in our employee benefits policy that resulted in a reduction in other wages expense in the first quarter of 2024.

Current wording

The increases in other wages as a percentage of total revenue for the second quarter and first six months of 2025 as compared to the same periods in the prior year resulted primarily from revisions in our employee benefits policy that resulted in a reduction in other wages expense in the second quarter and first six months of 2024.

Previous wording

The decrease in store occupancy costs as a percentage of total revenue for the first quarter of 2025 as compared to the same period in the prior year period resulted primarily from lower utilities expense partially offset by higher depreciation. The decrease in utilities expense for the first quarter of 2025 as compared to the prior year period resulted primarily from lower electricity, natural gas and water usage. The increase in depreciation expense for the first quarter of 2025 as compared to the prior year period resulted primarily from higher capital expenditures.

Current wording

The increase in store occupancy costs as a percentage of total revenue for the first six months of 2025 as compared to the same period in the prior year period resulted primarily from higher depreciation expense and higher maintenance expense partially offset by lower utilities expense. The increase in depreciation expense resulted primarily from higher capital expenditures. The increase in maintenance expenses resulted primarily from increased spending related to strategic initiatives and preventative maintenance services. The decrease in utilities expense resulted primarily from lower electricity usage.

Previous wording

The increase in other store operating expense as a percentage of total revenue for the first quarter of 2025 as compared to the same period in the prior year resulted primarily from higher conference expense due to a biennial district manager conference held in the first quarter of 2025, costs associated with our off-premise business and hurricane-related expenses incurred in the first quarter of 2025.

Current wording

The increase in other store operating expense as a percentage of total revenue for the first six months of 2025 as compared to the same period in the prior year resulted primarily from higher conference expense due to a biennial district manager conference held in the first quarter of 2025, costs associated with our off-premise business and hurricane-related expenses incurred in the first quarter of 2025.

Previous wording

This percentage change for the first quarter of 2025 as compared to the same period in the prior year resulted primarily from higher professional fees. The increase in professional fees as a percentage of total revenue in the first quarter of 2025 as compared to the prior year period resulted primarily from an approximate $3,300 charge in connection with our settlement of a series of wage and hour arbitrations, $2,958 in costs related to a proxy contest in connection with the Company’s 2024 annual shareholders meeting held on November 21, 2024 and $3,298 in costs associated with the Company’s strategic transformation plan.

Current wording

This percentage change for the second quarter and first six months of 2025 as compared to the same periods in the prior year resulted primarily from higher professional fees related to legal fees and proxy contest expenses. Additionally, the Company incurred higher costs of approximately $2,300 associated with the Company’s strategic transformation plan for the first six months of 2025 as compared to the same period in the prior year. Higher legal fees for the first six months of 2025 included an approximate $3,300 charge in connection with our settlement of a series of wage and hour arbitrations. The Company incurred proxy contest expenses of $5,263 and $8,220, respectively, in the second quarter and first six months of 2025 related to a proxy contest in connection with the Company’s 2024 annual shareholders meeting held on November 21, 2024.

Previous wording

During the first quarter of 2025, we recorded impairment charges of $700 as a result of the deterioration in operating performance in two MSBC locations. No impairment was recorded in the first quarter of 2024. No stores were closed in the first quarter of 2025 or in the first quarter of 2024.

Current wording

During the second quarter and first six months of 2025, we recorded impairment charges of $2,163 and $2,863, respectively, as a result of the deterioration in operating performance in three MSBC locations and two Cracker Barrel locations. No impairment was recorded in the second quarter and first six months of 2024. One Cracker Barrel store was closed in the second quarter and first six months of 2025 resulting in closing costs of $288. No stores were closed in the second quarter or first six months of 2024.

Previous wording

The increase in interest expense for the first quarter of 2025 as compared to the same period in the prior year resulted primarily from higher weighted average debt levels under our 2022 Revolving Credit Facility (as defined below).

Current wording

Interest expense for the second quarter of 2025 as compared to the same period in the prior year remained relatively constant. The increase in interest expense for the first six months of 2025 as compared to the same period in the prior year resulted primarily from higher weighted average debt levels under our 2022 Revolving Credit Facility (as defined below).

Previous wording

The Company’s quarterly provision (benefit) for income taxes has historically been calculated using the annualized effective tax rate method (“AETR method”) which applies an estimated annual effective tax rate to pre-tax income or loss. However, the Company recorded its interim income tax provision (benefit) using the discrete-period computation method as of November 01, 2024, as allowed under Accounting Standards Codification 740-240,*Accounting for Income Taxes – Interim Reporting.*Use of the AETR method would have resulted in an unreliable tax rate as small changes in the projected ordinary annual income would have resulted in significant changes in the annualized effective tax rate.

Current wording

The Company’s quarterly provision (benefit) for income taxes has historically been calculated using the annualized effective tax rate method (“AETR method”) which applies an estimated annual effective tax rate to pre-tax income or loss. Beginning in the third quarter of 2024, the Company records its interim income tax provision (benefit) using the discrete-period computation method, as allowed under Accounting Standards Codification 740-240,*Accounting for Income Taxes – Interim Reporting.*The Company recorded its interim income tax provision (benefit) using the discrete-period computation method as of January 31, 2025. Use of the AETR method would have resulted in an unreliable tax rate as small changes in the projected ordinary annual income would have resulted in significant changes in the annualized effective tax rate.

Previous wording

We presently expect our effective tax rate for 2025 to be approximately (7%) to (11%).

Current wording

We presently expect our effective tax rate for 2025 to be approximately (13%) to (19%).

Previous wording

Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under our 2022 Revolving Credit Facility. Cash generated from operations, together with our borrowing capacity under the 2022 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 the first three months of 2025. We believe that cash on hand at November 01, 2024, 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 strategic transformation initiative and continuing expansion plans, debt service, dividend payments, capital expenditures and working capital needs for the next twelve months and thereafter. Our ability to draw on our 2022 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 our 2022 Revolving Credit Facility and other debt instruments prior to maturity.

Current wording

Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under our 2022 Revolving Credit Facility. Cash generated from operations, together with our borrowing capacity under the 2022 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 the first six months of 2025. We believe that cash on hand at January 31, 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 strategic transformation plan and continuing expansion plans, debt service, dividend payments, capital expenditures and working capital needs for the next twelve months and thereafter. Our ability to draw on our 2022 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 our 2022 Revolving Credit Facility and other debt instruments prior to maturity.

Previous wording

Our operating activities used net cash of $4,395 for the first three months of 2025 as compared to $15,797 net cash used during the first three months of 2024. This change resulted primarily from the timing of payments for accounts payable and certain taxes partially offset by higher bonus payments made in the first quarter of 2025 as a result of the prior year’s performance.

Current wording

Our operating activities provided net cash of $93,693 for the first six months of 2025 as compared to $61,879 net cash provided during the first six months of 2024. This increase resulted primarily from the timing of cash receipts for accounts receivable and timing of payments for accounts payable and payroll.

Previous wording

Capital expenditures (purchase of property and equipment) net of proceeds from insurance recoveries were $38,887 for the first three months of 2025 as compared to $24,637 for the same period in the prior year. Our capital expenditures consisted primarily of capital investments for existing stores, new store locations and capital expenditures for strategic initiatives. The increase in capital expenditures in the first three months of 2025 as compared to the first three months of 2024 resulted primarily from our maintenance and remodel initiatives, including as part of our strategic transformation plan.

Current wording

Capital expenditures (purchase of property and equipment) net of proceeds from insurance recoveries were $76,986 for the first six months of 2025 as compared to $51,080 for the same period in the prior year. Our capital expenditures consisted primarily of capital investments for existing stores, new store locations and capital expenditures for strategic initiatives. The increase in capital expenditures in the first six months of 2025 as compared to the first six months of 2024 resulted primarily from our maintenance and remodel initiatives, including as part of our strategic transformation plan.

Previous wording

At November 01, 2024, we had $230,000 of outstanding borrowings under the 2022 Revolving Credit Facility and $34,004 of standby letters of credit related to securing reserved claims under our workers’ compensation insurance and certain sale and leaseback transactions, which reduce our borrowing availability under the 2022 Revolving Credit Facility. At November 01, 2024, we had $435,996 in borrowing availability under our 2022 Revolving Credit Facility. During the first three months of 2025, we borrowed $136,500 and repaid $86,500 under the 2022 Revolving Credit Facility.

Current wording

At January 31, 2025, we had $174,000 of outstanding borrowings under the 2022 Revolving Credit Facility and $34,004 of standby letters of credit related to securing reserved claims under our workers’ compensation insurance and certain sale and leaseback transactions, which reduce our borrowing availability under the 2022 Revolving Credit Facility. At January 31, 2025, we had $491,996 in borrowing availability under our 2022 Revolving Credit Facility. During the first six months of 2025, we borrowed $199,500 and repaid $205,500 under the 2022 Revolving Credit Facility.

Previous wording

During the first three months of 2025, we paid a regular dividend of $0.25 per share and declared a dividend of $0.25 per share that was subsequently paid on November 13, 2024, to shareholders of record on October 18, 2024. In addition, in the second quarter of 2025, our Board of Directors approved a regular dividend payable on February 12, 2025 to shareholders of record as of January 17, 2025 of $0.25 per share.

Current wording

During the first six months of 2025, we paid a regular dividend of $0.50 per share and declared a dividend of $0.25 per share that was subsequently paid on February 12, 2025, to shareholders of record on January 17, 2025. In addition, in the third quarter of 2025, our Board of Directors approved a regular dividend payable on May 14, 2025 to shareholders of record as of April 11, 2025 of $0.25 per share.

Previous wording

During the first three months of 2025, we issued 39,185 shares of our common stock resulting from the vesting of share-based compensation awards. Related tax withholding payments on these share-based compensation awards resulted in a net use of cash of $1,239.

Current wording

During the first six months of 2025, we issued 60,438 shares of our common stock resulting from the vesting of share-based compensation awards. Related tax withholding payments on these share-based compensation awards resulted in a net use of cash of $1,379.

Previous wording

Like many other restaurant companies, we are able to, and often do, operate with negative working capital. We had negative working capital of $137,737 at November 01, 2024 as compared to negative working capital of $175,993 at August 02, 2024. The change in working capital at November 01, 2024 as compared to August 02, 2024 primarily resulted from higher inventory levels which reflect our normal seasonal build to support our expected holiday sales and lower incentive compensations accruals due to the payment of annual and long-term incentive bonuses and the timing of payments for payroll.

Current wording

Like many other restaurant companies, we are able to, and often do, operate with negative working capital. We had negative working capital of $173,982 at January 31, 2025 as compared to negative working capital of $175,993 at August 02, 2024. The change in working capital at January 31, 2025 as compared to August 02, 2024 primarily resulted from the timing of certain payments partially offset by the decrease in retail inventory levels and an increase in sales of our gift cards during the holiday shopping season.