Last Update 16 Nov 25
CBRL: Sales Recovery Will Accelerate As Brand Turnaround Remains On Track
Analysts have reduced their average price target for Cracker Barrel Old Country Store, Inc. by several dollars in response to weaker-than-expected quarterly results and ongoing concerns about the impact of brand updates on sales recovery.
Analyst Commentary
Following the recently reported quarterly results and updated guidance, research analysts have provided a mixed assessment of Cracker Barrel’s current outlook. Their commentary reflects diverging opinions on the company’s valuation, execution, and future growth prospects.
Bullish Takeaways
- Bullish analysts see the company’s rebranding and renewed marketing efforts, such as the Fall Menu campaign, as potential catalysts for sales recovery in the coming quarters.
- They note that the core drivers of the brand turnaround remain intact. This suggests that near-term disruptions may be temporary and that traffic could improve as consumer sentiment stabilizes.
- Despite lower initial guidance for FY26, the elevated marketing and labor investment is viewed as a positive sign. It reflects management’s commitment to driving sustainable growth and winning back customers.
- Some analysts believe recent share price weakness presents a buying opportunity, provided that execution on the turnaround plan continues as outlined.
Bearish Takeaways
- Bearish analysts express concern over the sharp decline in traffic following the new logo announcement. Some highlight that the initial weeks of FY2026 have seen continued softness.
- The reduction in both EBITDA and EPS estimates indicates lower expectations for the company’s ability to offset ongoing consumer pressures and reputational challenges in the near term.
- Ongoing uncertainty around the effectiveness of the rebranding and prototype store changes has raised doubts about the timing and magnitude of any sales recovery.
- Some caution that Cracker Barrel’s target demographic may make the brand more sensitive to economic headwinds, which could further complicate the path to turnaround and earnings stability.
What's in the News
- Sardar Biglari, CEO of Steak 'n Shake and a shareholder in Cracker Barrel, publicly called for Cracker Barrel's CEO to be fired after the company's reversal on its logo change, intensifying ongoing shareholder tensions (Wall Street Journal).
- Cracker Barrel abandoned its plans for a new logo after widespread complaints and public criticism. Former President Donald Trump also issued a statement urging a return to the previous branding (Bloomberg).
- Biglari Capital Corp actively urged shareholders to vote against several Cracker Barrel directors, arguing that company leadership and strategy have failed to deliver results and that new leadership is needed to reverse continued underperformance.
- Independent proxy advisory firms recommended voting against some incumbent directors at the upcoming annual shareholder meeting, citing concerns over marketing expertise, recent bylaw amendments, and ongoing operational challenges.
- Cracker Barrel launched a seasonal holiday menu featuring customer favorites and new dishes, with expanded Heat & Serve meal offerings for Thanksgiving and Christmas.
Valuation Changes
- Consensus Analyst Fair Value: Remains unchanged at $46.38 per share.
- Discount Rate: Increased slightly from 12.32% to 12.5%.
- Revenue Growth: Remains stable at approximately 0.51% year-over-year.
- Net Profit Margin: Essentially unchanged, holding steady at around 1.92%.
- Future P/E Ratio: Increased modestly from 21.25x to 21.35x.
Key Takeaways
- Enhanced guest experience and service standards may boost customer satisfaction and same-store sales growth through improved guest journey mapping.
- Investments in digital, off-premise channels and efficient menu processes are expected to enhance profitability, execution, and potentially lower labor costs.
- Macroeconomic uncertainties, supply chain issues, and elevated expenses could pressure revenue growth and compress net margins.
Catalysts
About Cracker Barrel Old Country Store- Develops and operates the Cracker Barrel Old Country Store concept in the United States.
- Cracker Barrel's focus on evolving and improving guest experience through comprehensive guest journey mapping and new service standards may drive higher customer satisfaction and repeat visits, positively impacting same-store sales growth.
- The company's strategic transformation includes enhancing its menu with craveable items and simplifying processes in the back of the house, which is expected to improve execution and lower labor costs, potentially boosting net margins.
- Investment in digital and off-premise channels, including a more profitable dine-in focus and streamlined offerings, has already improved EBITDA and is expected to continue bolstering future profitability.
- Cracker Barrel's remodel and refresh program, which remains in the test-and-learn phase, aims to significantly enhance store atmosphere and guest experience, potentially leading to increased foot traffic and higher sales, positively affecting revenue growth.
- The strategic refinement of Cracker Barrel's pricing capability, combined with a strong value perception among consumers, supports potential future price adjustments, which could drive revenue without sacrificing customer base, thereby enhancing overall earnings.
Cracker Barrel Old Country Store Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Cracker Barrel Old Country Store's revenue will decrease by 0.8% annually over the next 3 years.
- Analysts assume that profit margins will increase from 1.6% today to 2.4% in 3 years time.
- Analysts expect earnings to reach $86.3 million (and earnings per share of $3.82) by about September 2028, up from $57.8 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.6x on those 2028 earnings, up from 19.4x today. This future PE is lower than the current PE for the US Hospitality industry at 23.9x.
- Analysts expect the number of shares outstanding to grow by 0.28% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 11.5%, as per the Simply Wall St company report.
Cracker Barrel Old Country Store Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- There are macroeconomic uncertainties and consumer anxiety, which could impact consumer spending and lead to softer traffic trends, potentially affecting revenue growth.
- Challenges in maintaining supply chain reliability, such as egg supply issues due to avian influenza, could lead to increased costs and impact net margins.
- The company plans to refinance the $300 million convertible debt, with expectations of higher interest rates, which could result in increased interest expenses and affect earnings.
- The retail segment saw a decrease in revenue by 2.8%, indicating potential vulnerabilities in consumer retail spending that could continue to pressure total revenue.
- Elevated corporate expenses, including legal accruals and investments in strategic initiatives, could increase G&A as a percentage of sales and compress net margins.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $55.429 for Cracker Barrel Old Country Store based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $69.0, and the most bearish reporting a price target of just $47.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.6 billion, earnings will come to $86.3 million, and it would be trading on a PE ratio of 19.6x, assuming you use a discount rate of 11.5%.
- Given the current share price of $50.36, the analyst price target of $55.43 is 9.1% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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