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Cracker Barrel Soars 90% in 6 Months: Buy or Sell the Stock?
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Key Takeaways
Cracker Barrel's turnaround gains momentum as traffic, guest metrics and its retail business improve.
CBRL plans to lift food quality, enhance guest experience and use its 12.5M-member loyalty base.
Margin initiatives and lower debt could support growth, though consumer weakness remains a key risk.
Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) stock has surged about 90% over the past six months, significantly outperforming the restaurant industry, which has declined 16.6% during the same period.
The sharp rally reflects improving investor sentiment around the company’s turnaround, supported by better traffic trends, a resilient retail business, stronger guest metrics, a large loyalty base and opportunities to improve food quality and margins. Management’s focus on food, experience and people, combined with cost efficiencies and a stronger balance sheet, could further support the recovery.
In the same time frame, CBRL has also outperformed other stocks like Darden Restaurants, Inc. (DRI - Free Report) and BJ's Restaurants, Inc. (BJRI - Free Report) .
Price Performance
Image Source: Zacks Investment Research
Differentiated Business Model Supports Growth
Cracker Barrel’s combination of a full-service restaurant and retail store remains one of its biggest competitive advantages. The company offers customers a distinct dining and shopping experience that is difficult to replicate among traditional casual-dining chains.
Management sees considerable potential in the retail business and plans to improve product layouts, widen aisles and enhance visibility to make the shopping experience more appealing. The company also sees opportunities to connect its retail and restaurant operations better to drive traffic across the entire business.
Large Loyalty Base Is a Key Asset
Cracker Barrel has built a sizable customer ecosystem through its Cracker Barrel Rewards program. The program has more than 12.5 million members, accounting for over 40% of tracked sales.
Management views this large loyalty base as an important traffic-driving opportunity. Greater personalization, targeted marketing and the company’s new website and app could help strengthen engagement and encourage repeat visits.
This gives CBRL an important advantage as it works to improve traffic without relying entirely on broad-based advertising.
Food Quality Offers Significant Upside
New CEO David Deno has identified food, experience and people as the company’s three primary priorities. Among these, food quality represents an important opportunity, particularly during the dinner daypart.
Cracker Barrel plans to improve its chicken, hamburger and steak offerings while focusing on consistency in taste, temperature and quality. Meanwhile, breakfast remains a strong area for the company in terms of both food scores and traffic.
Successful execution could strengthen customer satisfaction and help rebuild restaurant traffic over time.
Better Guest Experience Can Drive Traffic
The company has also made progress in hospitality and operational execution. Management highlighted improvements in food taste, service and food-temperature scores, while employee turnover has also moved favorably.
These trends are important because restaurant traffic depends heavily on consistent service and customer experience. Management intends to further invest in employee training and development to improve execution at the store level.
Margin Expansion Could Boost Earnings
Another major fundamental catalyst is the opportunity to improve margins. Management intends to increase profitability through better menu mix, higher attachment rates, desserts, sides, technology and productivity initiatives.
Importantly, management emphasized that it wants to pursue margin opportunities that customers do not see rather than simply cutting food or labor costs. This approach could allow CBRL to improve profitability while continuing to invest in the guest experience.
For fiscal 2027, management expects adjusted EBITDA of $180-$200 million, with comparable restaurant sales growth of approximately 3-5%.
Stronger Balance Sheet Adds Flexibility
Cracker Barrel has also significantly strengthened its balance sheet. Total debt declined $147.4 million year over year to $337.2 million, while the company ended the quarter with $541.3 million of available liquidity.
The improved financial position gives management greater flexibility to invest in food, stores, technology and other initiatives. Management also plans to maintain a conservative balance sheet while evaluating dividends and future share repurchases.
Consumer Weakness Remains a Risk
The investment case is not without risks. Management acknowledged continued pressure among lower-income consumers, while commodity and wage inflation are expected to remain headwinds.
After a 90% advance, investors should also consider whether the stock has already priced in a meaningful portion of the turnaround.
CBRL’s Growth Projection
Analysts have slightly raised their fiscal 2027 earnings expectations for Cracker Barrel over the past seven days, with the Zacks Consensus Estimate increasing to $1.45 per share from $1.18. The fiscal 2028 estimate has increased to $1.88 from $1.82 per share. The consensus estimates point to earnings growth, with fiscal 2027 and 2028 EPS expected to increase 81.3% and 29.4% year over year, respectively.
Image Source: Zacks Investment Research
Revenue growth is also expected to remain steady. The Zacks Consensus Estimate projects revenues of $3.35 billion for fiscal 2027 and $3.54 billion for fiscal 2028, representing year-over-year growth of 1% and 5.5%, respectively.
CBRL Stock Trades at a Discount
Cracker Barrel currently trades at a premium to its industry based on the forward 12-month price-to-sales (P/S) ratio. The stock’s multiple stands at 0.37X, below the industry average of 2.87X. By comparison, Darden Restaurants and BJ's Restaurants trade at higher forward P/S multiples of 1.64X and 0.84X, respectively.
P/S (F12M)
Image Source: Zacks Investment Research
Conclusion
Cracker Barrel’s improving fundamentals make the 90% rally more than just a momentum story. Its differentiated brand, large loyalty base, food-quality initiatives, improving guest experience, retail opportunity, margin potential and stronger balance sheet provide several avenues for sustained growth.
View the Zacks #1 Rank List
Image: Bigstock
Cracker Barrel Soars 90% in 6 Months: Buy or Sell the Stock?
Key Takeaways
Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) stock has surged about 90% over the past six months, significantly outperforming the restaurant industry, which has declined 16.6% during the same period.
The sharp rally reflects improving investor sentiment around the company’s turnaround, supported by better traffic trends, a resilient retail business, stronger guest metrics, a large loyalty base and opportunities to improve food quality and margins. Management’s focus on food, experience and people, combined with cost efficiencies and a stronger balance sheet, could further support the recovery.
In the same time frame, CBRL has also outperformed other stocks like Darden Restaurants, Inc. (DRI - Free Report) and BJ's Restaurants, Inc. (BJRI - Free Report) .
Price Performance
Image Source: Zacks Investment Research
Differentiated Business Model Supports Growth
Cracker Barrel’s combination of a full-service restaurant and retail store remains one of its biggest competitive advantages. The company offers customers a distinct dining and shopping experience that is difficult to replicate among traditional casual-dining chains.
Management sees considerable potential in the retail business and plans to improve product layouts, widen aisles and enhance visibility to make the shopping experience more appealing. The company also sees opportunities to connect its retail and restaurant operations better to drive traffic across the entire business.
Large Loyalty Base Is a Key Asset
Cracker Barrel has built a sizable customer ecosystem through its Cracker Barrel Rewards program. The program has more than 12.5 million members, accounting for over 40% of tracked sales.
Management views this large loyalty base as an important traffic-driving opportunity. Greater personalization, targeted marketing and the company’s new website and app could help strengthen engagement and encourage repeat visits.
This gives CBRL an important advantage as it works to improve traffic without relying entirely on broad-based advertising.
Food Quality Offers Significant Upside
New CEO David Deno has identified food, experience and people as the company’s three primary priorities. Among these, food quality represents an important opportunity, particularly during the dinner daypart.
Cracker Barrel plans to improve its chicken, hamburger and steak offerings while focusing on consistency in taste, temperature and quality. Meanwhile, breakfast remains a strong area for the company in terms of both food scores and traffic.
Successful execution could strengthen customer satisfaction and help rebuild restaurant traffic over time.
Better Guest Experience Can Drive Traffic
The company has also made progress in hospitality and operational execution. Management highlighted improvements in food taste, service and food-temperature scores, while employee turnover has also moved favorably.
These trends are important because restaurant traffic depends heavily on consistent service and customer experience. Management intends to further invest in employee training and development to improve execution at the store level.
Margin Expansion Could Boost Earnings
Another major fundamental catalyst is the opportunity to improve margins. Management intends to increase profitability through better menu mix, higher attachment rates, desserts, sides, technology and productivity initiatives.
Importantly, management emphasized that it wants to pursue margin opportunities that customers do not see rather than simply cutting food or labor costs. This approach could allow CBRL to improve profitability while continuing to invest in the guest experience.
For fiscal 2027, management expects adjusted EBITDA of $180-$200 million, with comparable restaurant sales growth of approximately 3-5%.
Stronger Balance Sheet Adds Flexibility
Cracker Barrel has also significantly strengthened its balance sheet. Total debt declined $147.4 million year over year to $337.2 million, while the company ended the quarter with $541.3 million of available liquidity.
The improved financial position gives management greater flexibility to invest in food, stores, technology and other initiatives. Management also plans to maintain a conservative balance sheet while evaluating dividends and future share repurchases.
Consumer Weakness Remains a Risk
The investment case is not without risks. Management acknowledged continued pressure among lower-income consumers, while commodity and wage inflation are expected to remain headwinds.
After a 90% advance, investors should also consider whether the stock has already priced in a meaningful portion of the turnaround.
CBRL’s Growth Projection
Analysts have slightly raised their fiscal 2027 earnings expectations for Cracker Barrel over the past seven days, with the Zacks Consensus Estimate increasing to $1.45 per share from $1.18. The fiscal 2028 estimate has increased to $1.88 from $1.82 per share. The consensus estimates point to earnings growth, with fiscal 2027 and 2028 EPS expected to increase 81.3% and 29.4% year over year, respectively.
Image Source: Zacks Investment Research
Revenue growth is also expected to remain steady. The Zacks Consensus Estimate projects revenues of $3.35 billion for fiscal 2027 and $3.54 billion for fiscal 2028, representing year-over-year growth of 1% and 5.5%, respectively.
CBRL Stock Trades at a Discount
Cracker Barrel currently trades at a premium to its industry based on the forward 12-month price-to-sales (P/S) ratio. The stock’s multiple stands at 0.37X, below the industry average of 2.87X. By comparison, Darden Restaurants and BJ's Restaurants trade at higher forward P/S multiples of 1.64X and 0.84X, respectively.
P/S (F12M)
Image Source: Zacks Investment Research
Conclusion
Cracker Barrel’s improving fundamentals make the 90% rally more than just a momentum story. Its differentiated brand, large loyalty base, food-quality initiatives, improving guest experience, retail opportunity, margin potential and stronger balance sheet provide several avenues for sustained growth.
With a Zacks Rank #1 (Strong Buy), CBRL remains fundamentally attractive. You can see the complete list of today’s Zacks #1 Rank stocks here.