Cracker Barrel Old Country Store, Inc. Annual Report 2018

FY2018 Annual Report · Cracker Barrel Old Country Store, Inc.

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CRACKER BARREL OLD COUNTRY STORE, INC.

To our shareholders,

For the past forty-nine years, we have prided ourselves on our home-style food, unique shopping, and honest value. During fiscal 2018, as part of our
Pleasing People mission, which is core to the Cracker Barrel brand, we welcomed more than 232 million travelers and neighbors alike with our genuine
hospitality and made-from-scratch meals.

We made progress this year on several key initiatives such as the growth of our off-premise platform through enhancements to our large party and
individual to-go offerings and by adding the convenience of online ordering. Guest responses have been great, and we have plans to expand off-premise
in fiscal 2019 including additional menu offerings and increased delivery coverage.

I am also pleased with the success of our specialty beverage initiative, which included the system-wide rollout of Crafted Coffee in fiscal 2018. In addition
to the introduction of new core menu iced and hot latte offerings, we featured limited time only flavors such as Peppermint Mocha, Goo Goo Cluster®, and
S’mores as part of our seasonal menu promotions. In fiscal 2019 we have plans to expand our specialty beverage platform through the introduction of core
menu and limited time only flavored teas, lemonades, and crafted sodas.

On the retail front, our teams continue to do a great job assembling new and unique assortments that offer a compelling value and resonate with our
guests. From decor and collectibles, seasonal items, on-trend apparel and accessories, as well as year-round favorites like our rockers, we are making
sure there is something on our shelves to delight every guest each time they visit. We believe our merchandising efforts resulted in sequential quarterly
improvements in our retail sales performance in fiscal 2018.

In addition to these initiatives, we continued to pursue sustainable business model improvements, delivering approximately six million dollars in cost
reductions during the fiscal year. We have plans in place to deliver more than ten million of savings in fiscal 2019 as we remain focused on identifying
future operating expense improvements.

In fiscal 2018 we further expanded our footprint, opening eight new Cracker Barrel stores, including our first California location, and three new Holler &
Dash Biscuit House restaurants. We are very proud that Holler & Dash, which now has seven locations, was one of five recipients of the 2018 Hot Concept
Award from Nation’s Restaurant News, and we look forward to the future of this brand.

Also during fiscal 2018, we grew our regular quarterly dividend to $1.25 per share. Further reflecting our commitment to a balanced approach to capital
allocation, we declared a special dividend of $3.75 per share. This was our fourth special dividend declaration in as many years.

Lastly, I want to thank the dedicated efforts of the 73,000 people who are part of our organization and who make it the brand it is today. As we look forward
to 2019, we plan to build on our brand strengths and execute our business initiatives to drive sales growth and achieve sustainable business model
improvements.

Thank you for your interest and commitment to our brand,

Sandy Cochran

Board of Directors

Thomas H. Barr

President of Sono Bello LLC; former Vice President, Global Coffee
at Starbucks Corporation

James W. Bradford

Chairman of the Board; Retired; former Dean and Professor for the
Practice of Management at Vanderbilt University’s Owen Graduate
School of Management

Sandra B. Cochran

President and CEO of Cracker Barrel Old Country Store, Inc.

Meg G. Crofton

Retired; former President of Parks and Resorts Operations, U.S.
and France for The Walt Disney Company

Richard J. Dobkin

Retired; former Managing Partner of the Tampa, FL office of Ernst &
Young, LLP

Norman E. Johnson

Retired; former Executive Chairman and CEO of CLARCOR Inc.

William W. McCarten

Retired; former Chairman of the board of directors of DiamondRock
Hospitality Company

Coleman H. Peterson

President and CEO of Hollis Enterprises, LLC; former Chief People
Officer of Wal-Mart Stores, Inc.

Andrea W. Weiss

President and CEO of Retail Consulting, Inc.; former senior
executive of various high-profile retail companies

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended August 3, 2018

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from

Commission file number: 000-25225

Cracker Barrel Old Country Store, Inc.
(Exact name of registrant as specified in its charter)

Tennessee
(State or other jurisdiction of
incorporation or organization)

305 Hartmann Drive
Lebanon, Tennessee
(Address of principal executive offices)

62-0812904
(I.R.S. Employer
Identification Number)

37087-4779
(Zip code)

Registrant's telephone number, including area code: (615) 444-5533

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock (Par Value $0.01)
Rights to Purchase Series A Junior Participating
Preferred Stock (Par Value $0.01)

Name of each exchange on which registered
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes  No 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter)
is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”,
”smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 
Smaller reporting company 

Accelerated filer 
Emerging growth company 

Non-accelerated filer 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes  No 

The aggregate market value of voting stock held by nonaffiliates of the registrant as of January 26, 2018 (the last business

day of the registrant’s most recently completed second fiscal quarter) was $4,213,396,663.

As of September 20, 2018, there were 24,011,550 shares of common stock outstanding.

Documents Incorporated by Reference

Document from which Portions
are Incorporated by Reference

1. Proxy Statement for Annual Meeting of

Shareholders to be held November 15, 2018
(the “2018 Proxy Statement”)

Part of Form 10-K
into which incorporated

Part III

PART I

PAGE

INTRODUCTION ................................................................................................................................................... 4
ITEM 1. BUSINESS ............................................................................................................................................ 5
ITEM 1A. RISK FACTORS ................................................................................................................................. 10
ITEM 1B. UNRESOLVED STAFF COMMENTS ................................................................................................ 23
ITEM 2. PROPERTIES ..................................................................................................................................... 23
ITEM 3. LEGAL PROCEEDINGS ..................................................................................................................... 23
EXECUTIVE OFFICERS OF THE REGISTRANT .............................................................................. 24

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES .................................................................... 25
ITEM 6. SELECTED FINANCIAL DATA ........................................................................................................... 26
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ................................................................................................................................ 27
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. .............................. 40
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ............................................................ 41
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE ................................................................................................................. 67
ITEM 9A. CONTROLS AND PROCEDURES ..................................................................................................... 68
ITEM 9B. OTHER INFORMATION ...................................................................................................................... 70

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ................................. 71
ITEM 11. EXECUTIVE COMPENSATION ......................................................................................................... 72
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS ............................................................................................ 72
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE ................................................................................................................................ 72
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES ......................................................................... 72

ITEM 15. EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES ................................................................ 72

PART IV

INDEX TO EXHIBITS .......................................................................................................................................... 72

SIGNATURES ..................................................................................................................................................... 76

General

INTRODUCTION

This report contains references to years 2018, 2017 and 2016, which represent our fiscal years ended August 3, 2018,
July 28, 2017 and July 29, 2016, respectively. 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 stores) 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.

Forward-Looking Statements/Risk Factors

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 Cracker Barrel Old
Country Store, Inc. (the “Company”) expects will or may occur in the future are forward-looking statements that, by their nature,
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, those 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 the 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.

ITEM 1. BUSINESS

OVERVIEW

PART I

Cracker Barrel Old Country Store, Inc. (“we,” “us,” “our” or the “Company,” which reference, unless the context requires
otherwise, also includes our direct and indirect wholly-owned subsidiaries), is principally engaged in the operation and
development of the Cracker Barrel Old Country Store® concept (“Cracker Barrel”). We are headquartered in Lebanon,
Tennessee and were originally founded in 1969. We are organized under the laws of the State of Tennessee.

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.

Cracker Barrel Old Country Store Concept

As of September 20, 2018, we operated 655 Cracker Barrel stores in 45 states. None of our stores are franchised. Our
stores are intended to appeal to both the traveler and the local customer, and we believe they have consistently been a consumer
favorite. We pride ourselves on our consistent quality, value and friendly service.

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 that can be used by guests while waiting for a table in our dining room or after
enjoying a meal and are sold by the gift shop.

Products: Our restaurants, which generated approximately 80% of our total revenue in 2018, offer home-style country
cooking featuring many of our own recipes that emphasize authenticity and quality. Our restaurants serve breakfast, lunch and
dinner daily. Menu items are moderately priced. The restaurants do not serve alcoholic beverages.

Breakfast items can be ordered at any time throughout the day and include juices, eggs, pancakes, fruit and yogurt parfaits,
meat, grits, and a variety of biscuit specialties, such as gravy and biscuits and country ham and biscuits. Lunch and dinner
items include chicken and dumplings, chicken fried chicken, meatloaf, country fried steak, pork chops, fish, steak, roast beef,
vegetable plates, sandwiches and a variety of salads. Additionally, we may from time to time feature new items as off-menu
specials or in 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 for both breakfast and lunch/dinner. The average check per guest
during 2018 was $10.48, which represents a 2.5% increase over the prior year. We served an average of approximately 6,900
restaurant guests per week in a typical store in 2018.

The following table highlights the price ranges for our meals in 2018:

Breakfast
Lunch and Dinner

Price Range
$3.99 to $12.49
$4.79 to $17.49

The following table highlights each day-part’s percentage of restaurant sales in 2018:

Breakfast Day-Part (until 11:00 a.m.)
Lunch Day-Part (11:00 a.m. to 4:00 p.m.)
Dinner Day-Part (4:00 p.m. to close)

Percentage of
Restaurant
Sales in 2018
24%
39%
37%

We also offer items for sale in our gift shops that are featured on, or related to, the restaurant menu, such as pies, cornbread
mix, coffee, syrups and pancake mixes. Our gift shops offer a wide variety of decorative and functional items such as rocking
chairs, seasonal gifts, apparel, toys, music CDs, cookware and various other gift items, as well as various candies, preserves
and other food items.

The following table highlights the five categories which accounted for the largest shares of our retail sales in 2018:

Apparel and Accessories
Food
Décor
Toys
Media

Percentage of
Retail Sales in
2018
31%
18%
12%
11%
8%

Our typical gift shop features approximately 4,100 stock keeping units. A selection of the 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 $434 per square foot in 2018) as compared to mall stores both by offering appealing merchandise and by
having a significant source of customers who are typically our restaurant guests.

Product Development and Merchandising: We maintain a product development department, which 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 promotions we call seasonal events. 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 core and seasonal themes. Our seasonal
themes are designed to create interest and excitement in our stores by providing our guests with additional choices. Our
licensees develop new licensed food products under our direction for consideration and approval.

Store Management and Quality Controls: At each store, our store management typically consists of one general
manager, four associate managers and one retail manager. Our store management is responsible for an average of 102
employees operating two shifts. The relative complexity of operating one of our stores requires an effective management
team at the individual store level. To motivate store managers to improve sales and operational performance, we maintain
bonus plans designed to provide store managers with an opportunity to share in the profits of their store. The bonus plans
also reward managers who achieve specific operational targets. Each store is assigned to both a restaurant and a retail
district manager which each report to a regional vice president.

To ensure that individual stores operate at a high level of quality, we focus significant attention on the selection and
training of store managers. The store management recruiting and training program begins with an evaluation and screening
process. In addition to multiple interviews and verification of background and experience, we conduct assessments designed
to identify those applicants most likely to be best suited to manage store operations. Candidates who successfully pass this
screening process are then required to complete a training program. We believe that our training programs develop managers
who effectively deliver a great employee and guest experience through the leadership and execution of our operating systems.
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. Additionally, each
store typically has an employee training coordinator who oversees the training of the store’s hourly employees.

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 three times a week through a network of approximately fifty independent produce suppliers. Fluid dairy is
delivered three times a week through approximately fifty regional dairies, the majority of which are under the ownership of two
separate companies.

The following table highlights the five food categories which accounted for the largest shares of our food purchasing expense

in 2018:

Beef
Dairy (including eggs)
Fruits and vegetables
Poultry
Pork

Percentage of
Food Purchases
in 2018
14%
13%
12%
11%
11%

Each of these categories includes several individual items. The single food item within these categories that accounted
for the largest share of our food purchasing expense in 2018 was bacon at approximately 5% of total food purchases. Dairy,
fruits and vegetables are purchased through numerous vendors, including local vendors. Eggs are purchased through three
vendors. We purchase our pork through six vendors, poultry through nine vendors and beef through eight vendors. Should
any food items from a particular vendor become unavailable, we generally believe that these food items could 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.

We purchase the majority of our retail items (approximately 80% in 2018) directly from domestic and international vendors
and warehouse, or crossdock, such items at our retail distribution center in Lebanon, Tennessee, which we lease. The
distribution center fulfills retail item orders generated by our automated replenishment system and generally ships the retail
orders once a week to the individual stores by a third-party dedicated freight line. Certain retail items, not centrally purchased
and warehoused at the distribution center, are drop-shipped directly by our vendors to individual stores.

Approximately one-third of our 2018 retail items were purchased directly from vendors in the People’s Republic of China.
We have relationships with several foreign buying agencies to source product, monitor quality control and supplement product
development.

Operational and Inventory Controls: Our information technology and telecommunications systems and various analytical
tools are used to evaluate store operating information and provide management with reports to support prompt detection of
unusual variances in food costs, labor costs or operating expenses. Management also monitors individual store restaurant and
retail sales on a daily basis and closely monitors sales mix, sales trends, operational costs and inventory levels. The information
generated by the information technology and telecommunication systems, analysis tools and monitoring processes is used to
manage the operations of each store, replenish retail inventory levels and facilitate retail purchasing decisions. These systems
and processes also are used in the development of forecasts, budget analyses and planning.

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 also are 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 use Internet and interactive voice
response systems to 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 or toll-free telephone number 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 to reach and engage our guests. Outdoor advertising (i.e., billboards and state
department of transportation signs) is the largest advertising vehicle we use to reach our traveling and local guests. In 2018, we
had over 1,600 billboards and this expenditure accounts for approximately one-third of total advertising spend annually. Our
use of non-billboard media has increased in recent years as we look to build market awareness for local occasions. This
increased support has used broadcast television, national cable, Web, mobile, social, email and search marketing. We
continued to increase our efforts in the digital space to drive preference and engagement with the brand. We now have
properties on multiple social media sites, an e-commerce platform and our brand site. Our exclusive music program drives
awareness for the brand and builds cultural relevance and affinity with our guests.

Store Development: We opened eight new stores in 2018. We plan to open eight new stores during 2019. As of
September 20, 2018, approximately 83% of our stores are located along interstate highways. Our remaining stores are
located off-interstate or near tourist destinations. We believe we should pursue development of both interstate locations
and off-interstate locations to capitalize on the strength of our brand associated with travelers on the interstate highway
system and by locating in certain local markets where our guests live and work, including locations outside of our existing
core markets and in states where we currently do not operate.

Of the 655 stores open as of September 20, 2018, we own the land and buildings for 421, while the other 234 properties
are either ground leases or ground and building leases. Land costs for stores opened during 2018 averaged $1,164 per
site if owned. Building, site improvement, furniture, equipment and related development costs for stores opened during 2018
averaged $4,356. Pre-opening costs averaged $579 per store in 2018.

Our current store prototype is approximately 9,000 square feet, including approximately 2,100 square feet of retail
selling space, and has dining room seating for approximately 180 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.

Holler & Dash Concept

In 2016, the Company launched its new fast casual concept, Holler & Dash Biscuit HouseTM. The concept offers biscuit-
inspired entrées and a unique portfolio of alcoholic and non-alcoholic beverage options. We opened three new locations in
2018. We currently do not plan to open any new locations in 2019. At September 20, 2018, seven Holler & Dash locations
were open - all leased properties in Alabama, Florida, Tennessee, Georgia and North Carolina. The new concept operates
in a smaller footprint and has operating hours limited to the breakfast and lunch day parts.

EMPLOYEES

As of August 3, 2018, we employed approximately 73,000 people, of whom 571 were in advisory and supervisory capacities,
3,677 were in-store management positions and 40 were officers. Many store personnel are employed on a part-time basis.
None of our employees is represented by any union, and management considers its employee relations to be good.

COMPETITION

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 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. We expect competition to continue in
all of these areas, which could cause consumers to choose less expensive alternatives. 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. In addition, 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.

RAW MATERIALS SOURCES AND AVAILABILITY

Essential restaurant supplies and raw materials are generally available from several 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.

ENVIRONMENTAL MATTERS

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.

TRADEMARKS

We deem the various Cracker Barrel trademarks and service marks that we own to be of substantial value. Our policy is to
obtain federal registration of trademarks and other intellectual property whenever possible and to pursue vigorously any
infringement of our trademarks and service marks.

RESEARCH AND DEVELOPMENT

While research and development is important to us, these expenditures have not been material due to the nature of the

restaurant and retail industries.

SEASONAL ASPECTS

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. Therefore, the results of operations for any interim period
cannot be considered indicative of the operating results for an entire year.

WORKING CAPITAL

In the restaurant industry, substantially all sales are either for cash or third-party credit card. 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 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 product turnover of the
restaurant inventory. Employees generally are paid on weekly or semi-monthly schedules in arrears of hours worked 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.

ITEM 1A. RISK FACTORS

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.

General economic, business and societal conditions as well as those specific to the restaurant or retail industries
that are largely out of our control may adversely affect our business, financial condition and results of operations.

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. Global economic factors and a weak economic recovery may reduce consumer
confidence and affected consumers’ ability or desire to spend disposable income. A deterioration in the economy or other
economic conditions affecting disposable consumer income, such as unemployment levels, reduced home values,
investment losses, inflation, 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.

In addition, many of the factors discussed above, along with the current economic environment and 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.

Unfavorable changes in the factors described above or in other business and economic conditions affecting our
customers could increase our costs, reduce traffic in some or all of our locations or impose practical limits on pricing, any
of which could lower our profit margins and have a material adverse effect on our financial condition and results of
operations.

There can be no assurance that the economic conditions that have adversely affected the restaurant and retail
industries, and the capital, credit and real estate markets generally or us in particular will remain static in 2019, or thereafter,
in which case we could experience declines in revenues and profits, and could face capital and liquidity constraints or other
business challenges.

A privacy breach could adversely affect our business.

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. 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. For example, in connection with credit and debit card
sales, we transmit 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. As privacy and information security laws, regulations and practices
change and cyber risks continue to evolve, we may incur additional costs to ensure we remain in compliance and protect
guest, employee and Company information.

Our reported results can be affected adversely and unexpectedly by the implementation of new, or changes in the
interpretation of existing, accounting principles or financial reporting requirements.

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
(including the upcoming lease accounting changes), our reported results of operations and financial condition could be
affected substantially, including requirements to restate historical financial reporting.

We face intense competition, and if we are unable to continue to compete effectively, our business, financial
condition and results of operations would be adversely affected.

The restaurant and retail industries are intensely competitive, and we face many well-established competitors. We
compete within each market with national and regional restaurant and retail chains and locally-owned restaurants and
retailers. Competition from other regional or national restaurant and retail chains typically represents the more important
competitive influence, principally because of their significant marketing and financial resources. We also 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. 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.
We also compete with other restaurant chains and other retail businesses for quality site locations, management and hourly
employees, and competitive pressures could affect both the availability and cost of these important resources. If we are
unable to continue to compete effectively, our business, financial condition and results of operations would be adversely
affected.

The price and availability of food, ingredients, retail merchandise, transportation, distribution and utilities used by
our stores could adversely affect our revenues and results of operations.

We are subject to the general risks of inflation, and our operating profit margins and results of operations depend
significantly on our ability to anticipate and react to changes in the price, quality and availability of food and other
commodities, ingredients, retail merchandise, transportation, distribution, utilities and other related costs over which we
have limited control. Fluctuations in economic conditions, weather, demand and other factors affect the availability, quality
and cost of the ingredients and products that we buy. Furthermore, many of the products that we use and their costs are
interrelated. Changes in global demand for corn, wheat and dairy products could cause volatility in the feed costs for poultry
and livestock. 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 affect our operating margins. In
addition, food safety concerns, widespread outbreaks of livestock and poultry diseases, such as, among other things, the
Avian Flu, 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. 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 inability to anticipate and respond effectively to one or
more adverse changes in any of these factors could have a significant adverse effect on our results of operations. In
addition, because we provide a moderately-priced product, we may not seek to or be able to pass along price increases to
our customers sufficient to completely offset cost increases.

Our plans depend significantly on our strategic priorities and business initiatives designed to enhance our menu
and retail offerings, support our brand, improve operating margins and improve the efficiencies and effectiveness
of our operations. Failure to achieve or sustain these plans could adversely affect our results of operations.

We have had, and expect to continue to have, priorities and initiatives in various stages of testing, evaluation and
implementation, upon which we expect to improve our results of operations and financial condition. These priorities and
initiatives include, but are not limited to, tiered menu and retail pricing, evolving our marketing messaging to support the
brand, improving the quality and breadth of retail assortments, evolving our menu, re-engineering store processes to reduce
costs and improve store margins, applying technology to improve the employee and guest experience, expanding our store
footprint, focusing on our new fast casual concept, focusing on our off premise business and transactions such as joint
ventures and acquisitions. It is possible that our focus on these priorities and initiatives and constantly changing consumer
preferences could cause unintended changes to our current results of operations. Additionally, many of these initiatives are
inherently risky and uncertain in their application to our business in general, even when tested successfully on a more limited
scale. It is possible that successful testing can result partially from resources and attention that cannot be duplicated in
broader implementation. Testing and general implementation also can be affected by other risk factors described herein
that reduce the results expected. 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 could
adversely affect our results of operations.

Our annual and quarterly operating results may fluctuate significantly and could fall below the expectations of
investors and securities analysts due to a number of factors, some of which are beyond our control, resulting
either in volatility or a decline in the price of our securities.

Our business is not static – it changes periodically as a result of many factors, including, among other items discussed

in other risk factors, the following:

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•
•
•

increases and decreases in guest traffic, average weekly sales, restaurant and retail sales and restaurant profitability;
the rate at which we open new stores, the timing of new store openings and the related high initial operating costs;
changes in advertising and promotional activities and expansion into new markets; and
impairment of long-lived assets and any loss on store closures.

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 reliance on certain significant vendors, particularly for foreign-sourced retail products, subjects us to
numerous risks, including possible interruptions in supply, which could adversely affect our business.

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. In some cases,
we may have only one supplier for a product or service. Our dependence on single-source suppliers 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 tends to
make the supply environment more expensive. If any of these vendors is 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.

Additionally, we use a number of products that are or may be manufactured in a number of foreign countries. In addition
to the risk presented by the possible long lead times to source these products, our results of operations may be materially
affected by risks such as:

fluctuating currency exchange rates or control regulations;
foreign government regulations;

•
•
• product testing regulations;
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• disruptions due to labor stoppages, strikes or slowdowns, or other disruptions, involving our vendors or the

foreign political and economic instability;

•

transportation and handling industries; and
tariffs, trade barriers and other trade restrictions by the U.S. government on products or components shipped from
foreign sources.

Possible shortages or interruptions in the supply of food items, retail merchandise and other supplies to our stores
caused by inclement weather, natural disasters such as droughts, floods and earthquakes, the inability of our vendors to
obtain credit in a tightened credit market or other conditions beyond our control could adversely affect the availability, quality
and cost of the items we buy and the operations of our stores. Our inability to effectively manage supply chain risk could
increase our costs and limit the availability of products that are critical to our store operations. If we temporarily close a
store or remove popular items from a store’s menu or retail product assortment, that store may experience a significant
reduction in revenue during the time affected by the shortage or thereafter as a result of our customers changing their dining
and shopping habits.

Health concerns, government regulation relating to the consumption of food products and widespread infectious
diseases could affect consumer preferences and could negatively affect our results of operations.

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 health concerns about the consumption of beef or chicken or health
concerns and publicity concerning food quality, illness and injury generally. In recent years there has been publicity
concerning E. coli bacteria, hepatitis A, “mad cow” disease, “foot-and-mouth” disease, salmonella, the bird/Avian Flu, peanut
and other food allergens, and other public health concerns affecting the food supply, including beef, chicken, pork, dairy
and eggs. In addition, if a regional or global health pandemic occurs, depending upon its location, duration and severity,
our business could be severely affected. In the event a health pandemic occurs, customers might avoid public places, and
local, regional or national governments might limit or ban public gatherings to halt or delay the spread of disease. A regional
or global health pandemic might also adversely affect our business by disrupting or delaying production and delivery of
materials and products in our supply chain and by causing staffing shortages in our stores. In addition, government
regulations or the likelihood of government regulation could increase the costs of obtaining or preparing food products. 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.

We are dependent upon attracting and retaining qualified employees while also controlling labor costs.

Our performance is dependent on attracting and retaining a large and growing number of qualified store employees.
Availability of staff varies widely from location to location. Many staff members are in entry-level or part-time positions,
typically with high rates of turnover. Even though recent trends in employee turnover have been favorable, if store
management and staff turnover were to increase, we could suffer 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 be operated 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 paid to attract such personnel, resulting in higher
labor costs, together with 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. If competitive pressures or other factors prevent us from offsetting
increased labor costs by increases in prices, our profitability may decline.

If we fail to execute our business strategy, which includes our ability to find new store locations and open new
stores that are profitable, our business could suffer.

One of the means of achieving our growth objectives is opening and operating new and profitable stores. This strategy
involves numerous risks, and we may not be able to open all of our planned new stores and the new stores that we open
may not be profitable or as profitable as our existing stores.

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. Recently, our target markets have been expanded to include markets
that are outside of our existing core markets and in states where we currently do not have existing operations, which
increases the risk of executing our business strategy. Economic conditions may also reduce commercial development
activity and limited 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 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.

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
could adversely affect our business.

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 affecting either of these warehouses 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 and 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.

A material disruption in our information technology, network infrastructure and telecommunication systems could
adversely affect our business and results of operations.

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. 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. Any material interruption in our information technology and telecommunication systems could adversely
affect 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.

Our ability to manage our retail inventory levels and changes in merchandise mix may adversely affect 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. Any of these factors could have an adverse effect on our results
of operations, cash flows from operations and our financial condition.

Our capital structure contains significant indebtedness, which may decrease our flexibility, increase our borrowing
costs and adversely affect our liquidity. In addition, we cannot provide any guaranty 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 our leverage ratio may have the effect, among other things, of reducing our flexibility
to respond to changing business and economic conditions and increasing borrowing costs. There are various financial
covenants and other restrictions in our revolving credit facility. If we fail to comply with any of these requirements, the related
indebtedness (and other unrelated indebtedness) could become due and payable prior to its stated maturity. A default
under our credit agreement 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
these covenants and restrictions.

Our ability to make scheduled interest 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 would materially and adversely affect our liquidity and results of operations.

In recent years, we have increased the quarterly cash dividends on our common stock and, beginning in 2015, we have
also declared special dividends on our common stock. Any determination to pay cash dividends on our common stock in
the future will be based primarily upon our financial condition, results of operations, 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.

Our advertising is heavily dependent on billboards, which are highly regulated; and our evolving marketing
strategy involves increased advertising and marketing costs that could adversely affect our 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 and online and digital media. 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 expansion into new geographic markets may present increased risks due to our relative unfamiliarity with
these markets.

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. Stores
opened in new markets may open at lower average weekly sales volumes than stores opened in existing markets and may
have higher store-level operating expense ratios than in existing markets. Sales at stores opened in new markets may take
longer to reach average unit volume and margins, if at all, thereby affecting our overall profitability.

Unfavorable publicity could harm our business. In addition, our failure to recognize, respond to and effectively
manage the impact of social media could materially impact 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, food-borne illness, product defects, personal injury, adverse health effects (including obesity)
or other concerns stemming from one or a limited number of our stores. Even when the allegations or complaints are not
valid, unfavorable publicity relating to one or more of our stores, or only to a single store, could adversely affect public
perception of the entire brand. Additionally, negative publicity from online social network postings may also result from
actual or alleged incidents taking place in our stores. 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.

Our business is somewhat seasonal and also can be affected by extreme weather conditions and natural
disasters.

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 weather conditions in the areas where our stores are located can adversely affect our business.
For example, frequent or unusually heavy snowfall, ice storms, rain storms, floods, droughts or other 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. Our business is also susceptible to
unseasonable weather conditions. For example, 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. Reduced sales from extreme or prolonged unseasonable weather conditions could adversely
affect our business. 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.

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.

Individual store locations are affected by local conditions that could change and adversely affect the carrying
value of those locations.

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. The expenses of opening, closing, relocating or remodeling any of our stores 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.

We are subject to a number of risks relating to federal, state and local regulation of our business, including the
areas of minimum wage increases, health care reform and environmental matters, and an insufficient or
ineffective response to government regulation may increase our costs and decrease our profit margins.

The restaurant industry is subject to extensive federal, state and local laws and regulations, including those relating to
food safety, minimum wage and other labor issues (such as unionization), health care, menu labeling and building and
zoning requirements and those relating to the preparation and sale of food 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, 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), 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.

Increases in state or federal minimum wage rates, including recent proposals to increase state or federal minimum
wage rates and index future increases to inflation, or other changes in these laws could increase our labor costs. 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.

The Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of
2010 require restaurant companies such as ours to disclose calorie and nutritional information on their menus effective as
of May 2018. We cannot fully predict the long-term changes, if any, in guest behavior that could result from the
implementation of this provision, which could have an adverse effect on our sales or results of operations.

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, such as the emission of greenhouse
gases. 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 adversely affect our
operating results. 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
adversely affect our business and results of operations.

Failure to maximize or to successfully assert our intellectual property rights could adversely affect our business
and results of operations.

We rely on trademark, trade secret and copyright laws to protect our intellectual property rights. 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. Our failure to perfect 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.

We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in
business and increased costs; our use of third party technologies has increased and if we are unable to maintain
our rights to these technologies our business may be harmed.

Some of our business processes are currently outsourced to third parties. Such processes include distribution of food
and retail products to our store locations, credit and debit card authorization and processing, gift card tracking and
authorization, 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 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.

Litigation may adversely affect our business, financial condition and 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, including
wage and hour violations and employment discrimination; guest discrimination; food safety issues, including poor food
quality, food-borne illness, food tampering, food contamination, and adverse health effects from consumption of various
food products or high-calorie foods (including obesity); other personal injury; 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 as well. As a result, litigation may adversely affect our business, financial condition and results of operations.

The loss of key executives or difficulties in recruiting and retaining qualified personnel could jeopardize our
future growth and success.

We have assembled a senior management team which has substantial background and experience in the restaurant
and retail industries. Our future growth and success depends 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. A loss of key employees or a significant shortage of high quality store employees could jeopardize our
ability to meet our business goals.

Our current insurance programs may expose us to unexpected costs, which could have a material adverse effect
on our financial condition and results of operations.

Our insurance coverage is structured to include deductibles, self-insured retentions, limits of liability, stop loss limits
and similar provisions that we believe 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.

Failure of our internal control over financial reporting could adversely affect our business and financial results.

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.

Our business could be negatively affected as a result of actions of activist shareholders.

The Lion Fund II, L.P., an affiliate of Biglari Holdings Inc. (“BH”), is the beneficial owner of approximately 19.7% of our
outstanding common stock. In the past, BH and its affiliates have nominated candidates for election to our board of directors
at our annual meetings of shareholders, resulting in proxy contests, and called publicly for special meetings of shareholders
to consider other proposals. While BH and its affiliates have not nominated director candidates for election at our 2018
Annual Meeting of Shareholders, the actions of BH and its affiliates or another activist shareholder in the future could
adversely affect our business because:

•

responding to public proposals, special meeting requests and other actions by activist shareholders can disrupt our
operations, be costly and time-consuming, and divert the attention of our management and employees;

• perceived uncertainties as to our future direction may result in the loss of potential business opportunities, and may

make it more difficult to attract and retain qualified personnel and business partners; and

• pursuit of an activist shareholder’s agenda may adversely affect our ability to effectively implement our business strategy

and create additional value for our shareholders.

Provisions in our charter, Tennessee law and our shareholder rights plan may discourage potential acquirers of
the Company.

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 have
adopted a shareholder rights plan, 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 plan is currently scheduled to
expire on April 9, 2021, but would expire promptly following the 2018 Annual Meeting of Shareholders if the shareholder
rights plan is not approved by our shareholders. 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 plan 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.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

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 250,000 square feet of office space for our home office headquarters
and decorative fixtures warehouse. We also lease our retail distribution center, which consists of approximately 370,000 square
feet of warehouse facilities and an additional approximately 14,000 square feet of office and maintenance space.

In addition to the various corporate facilities, we have five owned properties for future development, a motel used for housing
management trainees and for the general public, and three parcels of excess real property and improvements that we intend to
sell.

In addition to the properties mentioned above, we own or lease the following store properties (including both our 655 Cracker

Barrel Old Country Store locations and seven locations for our Holler & Dash brand) as of September 20, 2018:

State
Tennessee
Florida
Texas
Georgia
North Carolina
Kentucky
Alabama
Virginia
Ohio
Indiana
South Carolina
Pennsylvania
Illinois
Missouri
Michigan
Mississippi
Arizona
Arkansas
Louisiana
Maryland
New York
West Virginia
Oklahoma

Owned
37
40
33
31
24
23
22
19
22
22
14
9
19
15
13
10
2
5
8
3
8
3
6

Leased
16
20
18
17
17
14
11
13
9
7
12
16
2
3
3
4
11
7
2
6
1
6
2

State

New Jersey
Wisconsin
Colorado
Kansas
Massachusetts
New Mexico
Utah
Idaho
Iowa
California
Connecticut
Montana
Nebraska
Nevada
Delaware
Maine
Minnesota
New Hampshire
North Dakota
Oregon
Rhode Island
South Dakota

Owned
2
5
3
3
0
3
4
2
3
0
1
2
1
0
0
0
1
1
1
0
0
1
421

Leased
4
0
1
1
4
1
0
1
0
2
1
0
1
2
1
1
0
0
0
3
1
0
241

We believe that our properties are suitable, adequate, well-maintained and sufficient for the operations contemplated.
See “Operations" and "Store Development" in Item 1 of this Annual Report on Form 10-K for additional information on our
properties.

ITEM 3. LEGAL PROCEEDINGS

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.

Pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) to Form 10-K, the following information
is included in Part I of this Form 10-K.

Executive Officers of the Registrant

The following table sets forth certain information concerning our executive officers:

Name

Age

Position with the Company

Sandra B. Cochran

President and Chief Executive Officer

Jill M. Golder

Senior Vice President and Chief Financial Officer

Laura A. Daily

Senior Vice President, Retail

Nicholas V. Flanagan

Senior Vice President, Operations

Donald H. Hoffman

Senior Vice President, Marketing

Richard M. Wolfson

Senior Vice President, General Counsel and Secretary

Doug Couvillion

Senior Vice President, Sourcing and Supply Chain

Jeffrey M. Wilson

Vice President, Corporate Controller and Principal Accounting Officer

The following information summarizes the business experience of each of our executive officers for at least the past five

years:

Ms. Cochran has been employed with us since 2009 and assumed her current position as President and Chief Executive
Officer in September 2011, when she also became a member of our Board of Directors. Prior to September 2011, Ms. Cochran
served as our President and Chief Operating Officer since November 2010 and as our Executive Vice President and Chief
Financial Officer from April 2009 to November 2010. Before joining us in April 2009, she was the Chief Executive Officer of
Books-A-Million, Inc. Ms. Cochran has 25 years of experience in the retail industry and nine years of experience in the restaurant
industry.

Ms. Golder has been employed with us since April 2016 and assumed the responsibilities of Senior Vice President and
Chief Financial Officer in June 2016. Prior to April 2016, she served as Executive Vice President and Chief Financial Officer of
Ruby Tuesday, Inc. since June 2014, and as Senior Vice President, Finance from April 2013 to June 2014. Prior to her tenure
with Ruby Tuesday, Inc., she was Chief Financial Officer of Cooper’s Hawk Winery & Restaurants from December 2012 to April
2013. Before joining Cooper’s Hawk Winery & Restaurants, Ms. Golder spent 23 years at Darden Restaurants, Inc., where she
held progressively more responsible positions in finance, including Senior Vice President of Finance. Ms. Golder has almost 31
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 25 years of experience as a merchant with a number of
retail organizations.

Mr. Flanagan has been employed with us since 2004 and assumed his current position in November 2010. From 2004 to
2010, he served in various capacities including Vice President of Restaurant Operations. Mr. Flanagan has over 29 years of
experience in the restaurant industry.

Mr. Hoffman has been employed with us since November 2015 and assumed his current position in April 2017. Prior to
April 2017, Mr. Hoffman served as Vice President, Marketing. Before joining us in November 2015, Mr. Hoffman spent 20 years
at DDB Worldwide Communications Group, where he held various positions including Executive Vice President. Mr. Hoffman
has almost 30 years of marketing and communications 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., a publicly traded (NYSE:CLC) 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 26 years of legal experience.

Mr. Couvillion has been employed with us since 2001 and assumed his current position in November 2016. From 2001 to
2016, he served in various capacities including Vice President of Supply Chain and Quality Assurance and Corporate Controller
and Principal Accounting Officer. Mr. Couvillion has 24 years of experience in the restaurant industry and 17 years of experience
in the retail industry.

Mr. Wilson has been employed with us since 2007 and assumed his current position in June 2015. From 2007 to 2015, he
served in various capacities including Vice President, Operations Analysis. Mr. Wilson has 21 years of experience in the
restaurant industry and seven years of experience in the retail industry.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “CBRL.” There were 8,222

shareholders of record as of September 20, 2018.

The following table indicates the high and low sales prices of our common stock, as reported by Nasdaq, and dividends

declared and paid for the quarters indicated.

Fiscal Year 2018

Fiscal Year 2017

Prices

High

Low

First
Second
Third
Fourth

$157.87 $141.75
144.76
177.34
153.51
179.12
143.00
167.06

Dividends
Declared
$1.20
1.20
1.20
5.00

Dividends
Paid
$1.20
1.20
1.20
4.95

Prices

High
$162.33
175.04
169.07
170.50

Low
$130.15
131.74
154.79
154.46

Dividends
Declared
$1.15
1.15
1.15
4.70

Dividends
Paid
$1.15
1.15
1.15
4.65

See Note 5 to Consolidated Financial Statements with respect to dividend restrictions.

See the table labeled “Equity Compensation Plan Information” to be contained in the 2018 Proxy Statement, incorporated

by reference in Part III, Item 12 of this Annual Report on Form 10-K.

Part III, Item 12 of this Annual Report on Form 10-K is incorporated herein by this reference.

Unregistered Sales of Equity Securities

There were no equity securities sold by the Company during the period covered by this Annual Report on Form 10-K that

were not registered under the Securities Act of 1933, as amended.

Issuer Purchases of Equity Securities

On September 29, 2017, our Board of Directors approved the repurchase of up to $25,000 of our common stock, with
such authorization to expire on October 5, 2018 to the extent it remains unused. We did not repurchase any of our common
stock in the fourth quarter ended August 3, 2018. On September 25, 2018, our Board of Directors extended this repurchase
authorization for an additional year.

ITEM 6. SELECTED FINANCIAL DATA

Selected Income Statement Data:
Total revenue
Net income
Net income per share:

Basic
Diluted

Dividends declared per share
Dividends paid per share

As Percent of Total Revenue:
Cost of goods sold (exclusive of

depreciation and rent)

Labor and related expenses
Other store operating expenses
Store operating income
General and administrative expenses
Operating income
Income before income taxes

Selected Balance Sheet Data:
Working capital (deficit)
Total assets
Long-term debt
Long-term interest rate swap liability
Other long-term obligations
Shareholders’ equity

(Dollars in thousands except percentages and share data)
For each of the fiscal years ended

August 3,
2018(a)

July 28,
2017

July 29,
2016

July 31,
2015(b)

August 1,

2014(c)

$ 3,030,445
247,620

$ 2,926,289
201,899

$ 2,912,351
189,299

$ 2,842,284
163,903

$ 2,683,677
132,128

10.31
10.29
8.60
8.55

30.9
34.8
19.9
14.4
4.7
9.7
9.2

8.40
8.37
8.15
8.10

30.5
34.8
19.2
15.5
4.8
10.7
10.2

7.91
7.86
7.70
10.65

31.9
34.6
19.0
14.5
4.9
9.6
9.1

6.85
6.82
7.10
4.00

32.5
34.9
18.4
14.2
5.2
9.0
8.4

5.55
5.51
3.25
3.00

32.5
36.0
18.9
12.6
4.8
7.8
7.1

$ (57,867)
1,527,355
400,000
--
128,794
581,781

$ (16,971)
1,521,942
400,000
6,833
129,353
544,507

$ (13,077)
1,497,664
400,000
22,070
126,608
526,443

$ 11,213
1,576,208
400,000
8,704
133,594
538,268

$ (14,789)
1,432,248
375,000
3,239
123,221
528,641

Selected Cash Flow Data:
Purchase of property and equipment, net
Share repurchases

$ 151,633
14,772

$ 110,108
--

$ 113,360
14,653

$ 90,490
--

$ 90,564
12,473

Selected Other Data:
Common shares outstanding at end of year 24,011,550
660
Stores open at end of year

24,055,682
649

23,956,134
641

23,975,755
637

23,821,227
631

Average Unit Volumes(d):

Restaurant
Retail

Comparable Store Sales(e):
Period to period increase (decrease) in

comparable store sales:

Restaurant
Retail
Number of stores in comparable base

$ 3,724
902

$ 3,646
892

$ 3,651
926

$ 3,581
904

$ 3,415
873

0.6 %
(0.1)
635

0.2 %
(3.7)
632

2.2 %
2.7
623

5.1 %
3.6
621

0.7 %
0.4
609

(a) Fiscal 2018 consisted of 53 weeks while all other periods presented consisted of 52 weeks. The estimated impact
of the additional week was to increase consolidated fiscal 2018 results as follows: total revenue, $58,353; store
operating income, 0.1% of total revenue; operating income, 0.2% of total revenue; net income, 0.2% of total
revenue; and diluted net income per share, $0.36. Additionally, as a result of P.L. 115-97, the Tax Cuts and Jobs
Act, which was enacted on December 22, 2017 by the U.S. government and lowered the federal corporate income
tax rate to 21%, we recorded a provisional tax benefit in fiscal 2018 for the re-measurement of deferred tax liabilities
of $30,482.

(b) We incurred approximately $3,500 in costs related to a litigation matter, which are included in general and
administrative expenses. Our debt refinancing in the second quarter of fiscal 2015 resulted in additional interest
expense of $412 related to the write-off of deferred financing costs.

meeting, which are included in general and administrative expenses.

(d) Average unit volumes include sales of all stores. Fiscal 2018 consisted of 53 weeks while all other periods

presented consisted of 52 weeks.

(e) Comparable store sales consist of sales of stores open at least six full quarters at the beginning of the year and are
measured on comparable calendar weeks.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

This overview summarizes the MD&A, which includes the following sections:

• Executive Overview – a general description of our business, the restaurant and retail industries, our key performance

indicators and the Company’s performance in 2018.

• Results of Operations – an analysis of our consolidated statements of income for the three years presented in our

Consolidated Financial Statements.

• Liquidity and Capital Resources – an analysis of our primary sources of liquidity, capital expenditures and material

commitments.

• Critical Accounting Estimates – a discussion of accounting policies that require critical judgments and estimates.

EXECUTIVE OVERVIEW

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 20, 2018, the Company operated
655 Cracker Barrel stores located in 45 states.

Restaurant and Retail Industries

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 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. We primarily operate in the full-service
segment of the restaurant industry. 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. 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 and unemployment rates 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
strongest in the second quarter, which includes the holiday shopping season. Severe weather also affects restaurant and
retail sales adversely from time to time.

Key Performance Indicators

Management uses a number of key performance measures to evaluate our operational and financial performance,

including the following:

Comparable store restaurant and retail sales and restaurant guest traffic consist of sales and calculated number of
guests, respectively, of stores open at least six full quarters at the beginning of the year and are measured on comparable
calendar weeks. This measure excludes the impact of new store openings.

Retail conversion is the percentage of dine-in restaurant guest traffic that make a retail purchase. Management uses

retail conversion as its metric to analyze a store’s ability to convert restaurant traffic into a retail sales occasion.

Average check per guest is an indicator which management uses to analyze the dollars spent per guest in our stores
on restaurant purchases. This measure aids management in identifying trends in guest preferences as well as the
effectiveness of menu price increases and other menu changes.

Store operating margins are defined as total revenue less cost of goods sold (exclusive of depreciation and rent), labor
and other related expenses and other store operating expenses, all as a percentage of total revenue. Management uses
this indicator as a primary measure of operating profitability.

Company Performance in 2018

Management believes that the Cracker Barrel brand remains one of the strongest and most differentiated brands in the

restaurant industry.

Our long-term strategy includes the following:

• Enhancing the Core business to drive sustainable sales growth and continued business model improvements. During
2018, we laid the foundation for multiple long-term sales growth opportunities. In addition to introducing new and unique
menu offerings, such as our Southern Bowls and our Crafted Coffee program featuring specialty lattes and mochas, we
implemented our enhanced off-premise platform system wide. Also, during 2018, we further delivered on our
commitment to achieve ongoing cost reductions through business model improvements.

• Expanding the Footprint by building profitable stores in core and developing markets. In 2018, we opened eight new

Cracker Barrel locations, including our first location in California as part of our westward expansion.

• Extending the Brand by optimizing on long-term drivers, such as Holler & Dash Biscuit HouseTM, to further drive
shareholder value. In 2018, we opened three new Holler and Dash Biscuit HouseTM locations as we continued to
leverage our brand strengths through this brand.

Additionally, during 2018, we increased shareholder return by growing our regular quarterly dividend to $1.25 per
share. Also reflecting our commitment to a balanced approach to capital allocation, we declared a special dividend of $3.75
per share.

RESULTS OF OPERATIONS

The following table highlights operating results over the past three years:

Total revenue
Cost of goods sold (exclusive of depreciation and rent)
Labor and other related expenses
Other store operating expenses
Store operating income
General and administrative
Operating income
Interest expense
Income before income taxes
Provision for income taxes
Net income

Total Revenue

Relationship to Total Revenue
2017
2018
100.0%
100.0%
30.5
34.8
19.2
15.5
4.8
10.7
0.5
10.2
3.3
6.9

2016
100.0%
31.9
34.6
19.0
14.5
4.9
9.6
0.5
9.1
2.6
6.5

30.9
34.8
19.9
14.4
4.7
9.7
0.5
9.2
1.0
8.2

The following table highlights the key components of revenue for the past three years:

2018

2017

2016

Revenue in dollars(1):

Restaurant
Retail
Total revenue

Total revenue percentage increase(1)
Total revenue by percentage relationships:

Restaurant
Retail

Comparable number of stores
Comparable store averages per store: (2)

Restaurant
Retail
Total

Restaurant average weekly sales (3)
Retail average weekly sales (3)

591,056

$ 2,439,389 $ 2,351,212 $ 2,323,199
589,152
575,077
$ 3,030,445 $ 2,926,289 $ 2,912,351
2.5%

0.5%

3.6%

80.5%
19.5%

635

80.3%
19.7%
632

79.8%
20.2%
623

$ 3,762
903
$ 4,665
$ 70.3
17.0

890

$ 3,669 $ 3,670
925
$ 4,559 $ 4,595
$ 70.1 $ 70.2
17.8

17.1

(1) 2018 consists of 53 weeks while the other periods presented consist of 52 weeks.
(2) 2018 is calculated on a 53-week basis while the other periods are calculated on a 52-week basis.
(3) Average weekly sales are calculated by dividing net sales by operating weeks and include all stores.

Total revenue benefited from the opening of eleven new stores in 2018, eight new stores in 2017 and six new stores in
2016. In 2018, total revenue also benefited by the additional week in 2018, which resulted in an increase in revenues of
$58,353.

The following table highlights comparable store sales* results over the past two years:

Restaurant
Retail
Restaurant & Retail

Period to Period
Increase (Decrease)

2018 vs 2017
(635 Stores)

2017 vs 2016
(632 Stores)

0.6%
(0.1)
0.5%

0.2%
(3.7)
(0.6)

*Comparable store sales consist of sales of stores open at least six full quarters at the beginning of the year and are
measured on comparable calendar weeks.

Our comparable store restaurant sales increase from 2017 to 2018 resulted from a higher average check of 2.5%,
primarily attributable to a 2.4% average menu price increase, partially offset by a decrease in guest traffic of 1.9%. Our
comparable store restaurant sales increase from 2016 to 2017 resulted from a higher average check of 1.6%, primarily
attributable to a 1.8% average menu price increase, partially offset by a decrease in guest traffic of 1.4%.

Our comparable store retail sales decrease from 2017 to 2018 resulted primarily from the decrease in guest traffic and
lower performance in décor, toys, and bed and bath merchandise categories partially offset by strong performance in the
apparel and accessories merchandise category. Our comparable store retail sales decrease from 2016 to 2017 resulted
primarily from the decrease in guest traffic and lower performance in apparel and accessories, bed and bath, and toys
merchandise categories.

Cost of Goods Sold (Exclusive of Depreciation and Rent)

The following table highlights the components of cost of goods sold in dollar amounts for the past three years:

2018

2017

2016

Cost of Goods Sold:
Restaurant
Retail
Total Cost of Goods Sold

$ 625,999 $ 595,186 $ 627,713
300,463
$ 935,397 $ 891,293 $ 928,176

309,398

296,107

The following table highlights restaurant cost of goods sold as a percentage of restaurant revenue for the past three

years:

Restaurant Cost of Goods Sold

2018
25.7%

2017
25.3%

2016
27.0%

The increase from 2017 to 2018 was primarily the result of food commodity inflation of 3.3% and higher food waste
partially offset by our menu price increase referenced above. Higher food waste accounted for 0.1% in restaurant cost of
goods sold as a percentage of restaurant revenue. The decrease from 2016 to 2017 was primarily the result of food
commodity deflation of 4.6%, our menu price increase referenced above and lower food waste. Lower food waste accounted
for 0.1% in restaurant cost of goods sold as a percentage of restaurant revenue.

We presently expect the rate of commodity inflation to be approximately 2.0% in 2019 as compared to 3.3% in 2018.

The following table highlights retail cost of goods sold as a percentage of retail revenue for the past three years:

Retail Cost of Goods Sold

2018
52.3%

2017
51.5%

2016
51.0%

The increase in retail cost of goods sold as a percentage of retail revenue in 2018 as compared to 2017 resulted from
lower initial margin, an increase in the provision for obsolete inventory, higher inventory shrinkage and higher freight
expense partially offset by lower markdowns.

Lower initial margin
Provision for obsolete inventory
Inventory shrinkage
Freight expense
Markdowns

2017 to 2018
Increase (Decrease) a
Percentage of Total Revenue
1.0%
0.3%
0.2%
0.1%
(0.8%)

The increase in retail cost of goods sold as a percentage of retail revenue in 2017 as compared to 2016 resulted
primarily from higher markdowns, lower initial margin and an increase in the provision for obsolete inventory partially offset
by higher retail credits.

Markdowns
Lower initial margin
Provision for obsolete inventory
Retail credits

Labor and Related Expenses

2016 to 2017
Increase (Decrease) as a
Percentage of Total Revenue
0.4%
0.2%
0.1%
(0.3%)

Labor and other related expenses include all direct and indirect labor and related costs incurred in store operations.

The following table highlights labor and other related expenses as a percentage of total revenue for the past three years:

Labor and other related expenses

2018
34.8%

2017
34.8%

2016
34.6%

Labor and other related expenses as a percentage of total revenue in 2018 remained flat to 2017 as a result of the

following offsetting percentage changes:

Store hourly labor
Store bonus expense
Employee health care expenses

2017 to 2018
Increase (Decrease) as a
Percentage of Total Revenue
0.3%
(0.2%)
(0.1%)

The increase in store hourly labor in 2018 as compared to 2017 resulted primarily from lower productivity and wage

inflation exceeding menu price increases.

The decrease in store bonus expense in 2018 as compared to 2017 resulted from lower performance against

financial objectives in 2018 as compared to 2017.

The decrease in employee health care expenses in 2018 as compared to 2017 resulted primarily from lower claims

activity.

The year-to-year percentage change from 2016 to 2017 resulted primarily from the following:

Store hourly labor
Store management compensation
Employee health care expenses

2016 to 2017
Increase (Decrease) as a
Percentage of Total Revenue
0.1%
0.1%
(0.1%)

The increase in store hourly labor in 2017 as compared to 2016 resulted primarily from wage inflation partially offset by

improvements in productivity resulting from the continuation of our cost-saving initiatives.

The increase in store management compensation in 2017 as compared to 2016 was primarily the result of an increase

in variable costs resulting from a higher rate of vacancy in management headcounts.

The decrease in employee health care expenses in 2017 as compared to 2016 resulted primarily from lower claims

activity.

Other Store Operating Expenses

Other store operating expenses include all store-level operating costs, the major components of which are utilities,
operating supplies, repairs and maintenance, depreciation and amortization, advertising, rent, credit card fees, real and
personal property taxes, general insurance and costs associated with our store manager conference. The following table
highlights other store operating expenses as a percentage of total revenue for the past three years:

Other store operating expenses

2018
19.9%

2017
19.2%

2016
19.0%

The year-to-year percentage change from 2017 to 2018 resulted from the following:

Maintenance
Depreciation
Supplies
Store manager conference expense

2017 to 2018
Increase as a Percentage
of Total Revenue

0.3%
0.2%
0.1%
0.1%

The increase in maintenance expense as a percentage of total revenue for 2018 as compared to 2017 resulted primarily
from the implementation of previously announced initiatives, higher costs associated with snow removal due to adverse
weather, higher costs associated with site maintenance and expenses associated with the related repair of certain building
components and kitchen equipment.

The increase in depreciation expense as a percentage of total revenue for 2018 as compared to 2017 resulted from

higher capital expenditures.

The increase in supplies expense as a percentage of total revenue for 2018 as compared to 2017 resulted primarily

from costs associated with growth in our off-premise business.

In the first quarter of 2018, we held a bi-annual manager conference and training event that was attended by our store

operations management team. We did not hold a manager’s conference and training event in 2017.

The year-to-year percentage change from 2016 to 2017 resulted from the following:

Depreciation
Advertising
Maintenance

2016 to 2017
Increase (Decrease) as a
Percentage of Total Revenue
0.3%
0.1%
(0.2%)

The increase in depreciation expense as a percentage of total revenue for 2017 as compared to 2016 resulted from

higher capital investments in 2016 and the capital additions in 2017.

The increase in advertising expense as a percentage of total revenue for 2017 as compared to 2016 is consistent with

our planned increase in advertising spend for 2017.

Lower maintenance expense as a percentage of total revenue for 2017 as compared to 2016 resulted primarily from

reduced spending on building repairs.

General and Administrative Expenses

The following table highlights general and administrative expenses as a percentage of total revenue for the past three

years:

General and administrative expenses

2018
4.7%

2017
4.8%

2016

4.9%

The year-to-year percentage change from 2017 to 2018 resulted primarily from the following:

Incentive compensation expense
Payroll and related expenses

2017 to 2018
(Decrease) Increase as a
Percentage of Total Revenue
(0.3%)
0.2%

The decrease in incentive compensation expense as a percentage of total revenue in 2018 as compared to 2017

resulted primarily from lower performance against financial objectives in 2018 as compared to 2017.

The increase in payroll and related expenses as a percentage of total revenue in 2018 as compared to 2017 resulted

primarily from more manager-in-training weeks and higher average wages.

The year-to-year percentage change from 2016 to 2017 resulted primarily from lower incentive compensation. Lower
incentive compensation in 2017 as compared to 2016 was driven by lower performance against financial objectives as compared
to the prior year period.

Interest Expense

The following table highlights interest expense for the past three years:

Interest expense

2018

2017

$ 15,169 $ 14,271

2016
$ 14,052

The year-to-year increases from 2017 to 2018 and from 2016 to 2017 resulted primarily from higher weighted average

interest rates. The additional week in 2018 also increased interest expense by $323.

Provision for Income Taxes

The following table highlights the provision for income taxes as a percentage of income before income taxes (“effective

tax rate”) for the past three years:

Effective tax rate

2018
11.1%

2017
32.4%

2016
28.9%

The decrease in our effective tax rate from 2017 to 2018 reflected the significant impact of P.L. 115-97, the Tax
Cuts and Jobs Act (the “Tax Act”), enacted on December 22, 2017 by the U.S. government. The Tax Act made broad and
complex changes to the U.S. tax code, including, but not limited to, reducing the U.S. federal corporate tax rate from 35%
to 21% effective January 1, 2018. In accordance with Section 15 of the Internal Revenue Code, we used a blended rate of
26.9% for our fiscal 2018 tax year, by applying a prorated percentage of the number of days prior to and subsequent to the
January 1, 2018 effective date of the Tax Act.

We presently expect our effective tax rate for 2019 to be approximately 17% to 18%. While we are able to make
reasonable estimates of the impact of the reduction in corporate rate, the final impact of the Tax Act may differ from these
estimates, due to, among other things, additional guidance that may be issued by the Internal Revenue Service, expected
state tax responses to either follow or reject the federal changes, and changes in our interpretations and assumptions. We
continue to gather additional information to determine the final impact.

The increase in our effective tax rate from 2016 to 2017 resulted primarily from lower Work Opportunity Tax Credit

collections in 2017 than in the prior year and a reduction in certain reserves for uncertain tax positions in 2016.

LIQUIDITY AND CAPITAL RESOURCES

The following table presents a summary of our cash flows for the last three years:

Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents

2018

2017
$ 330,620 $ 320,767 $ 271,378
(112,515)
(273,352)
$ (114,489)

(109,605)
(201,127)
$ (46,345) $ 10,035

(151,222)
(225,743)

2016

Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under our revolving
credit facility. Our internally generated cash, along with cash on hand at July 28, 2017, was sufficient to finance all of our
growth, dividend payments, working capital needs and other cash payment obligations in 2018.

We believe that cash at August 3, 2018, 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 continuing
expansion plans, our expected share repurchases and our expected dividend payments for 2019.

Cash Generated from Operations

The increase in net cash flow provided by operating activities from 2017 to 2018 primarily reflected higher net income
and the timing of payments for accounts payable partially offset by lower income tax payments, the timing of payroll
payments as compared to prior year as a result of our fiscal year end dates, lower spending on advertising and a lesser
increase in the sales of our gift cards in 2018 as compared to 2017.

The increase in net cash flow provided by operating activities from 2016 to 2017 primarily reflected the timing of
payments for income taxes, higher net income, the timing of payroll payments as compared to prior year due to our fiscal
year end dates and lower incentive compensation payments made in 2017 as a result of the prior year’s performance
partially offset by the decrease in accounts payable. The decrease in accounts payable reflected the results of conversion
to more electronic invoice methods and lower accounts payable related to retail inventory.

Capital Expenditures

The following table presents our capital expenditures (purchase of property and equipment), net of proceeds from

insurance recoveries, for the last three years:

Capital expenditures, net of proceeds from insurance recoveries

2018

2017
$ 151,633 $ 110,108 $ 113,360

2016

Our capital expenditures consisted primarily of capital investments for existing stores, new store locations and strategic
initiatives. The increase in capital expenditures from 2017 to 2018 resulted primarily from an increase in the number of new
store locations and capital expenditures for strategic initiatives. The increase in capital expenditures from 2016 to 2017
resulted primarily from capital for existing stores, as well as an increase in the number of new store locations.

We estimate that our capital expenditures during 2019 will be approximately $160,000 to $170,000. This estimate includes
the acquisition of sites and construction costs of eight new Cracker Barrel stores that we plan to open during 2019, as well as
acquisition and construction costs for store locations to be opened in 2020. We also expect to increase capital expenditures
for equipment, technology and strategic initiatives, which are intended to improve the guest experience and improve margins.
We intend to fund our capital expenditures with cash generated by operations and borrowings under our revolving credit facility,
as necessary.

Borrowing Capacity and Debt Covenants

In 2015, we entered into a five-year $750,000 revolving credit facility (the “2015 Revolving Credit Facility”). On
September 5, 2018, we entered into a five-year $950,000 revolving credit facility (the “2019 Revolving Credit Facility”) with
substantially the same terms and financial covenants as the 2015 Revolving Credit Facility, which it replaced. The 2019
Revolving Credit Facility also contains an option to increase the revolving credit facility by $300,000.

The following table highlights our borrowing capacity and outstanding borrowings under the 2015 Revolving Credit
Facility, our standby letters of credit and our borrowing availability under the 2015 Revolving Credit Facility as of August 3,
2018:

August 3, 2018
$ 750,000
400,000
9,455
$ 340,545

Borrowing capacity under the 2015 Revolving Credit Facility

Less: Outstanding borrowings under the 2015 Revolving Credit Facility
Less: Standby letters of credit*

Borrowing availability under the 2015 Revolving Credit Facility
*Our standby letters of credit relate to securing reserved claims under workers’ compensation insurance and reduce our
borrowing availability under the 2015 Revolving Credit Facility.

We did not borrow or make any debt payments in 2018, 2017 or 2016.

See “Material Commitments” below and Note 5 to our Consolidated Financial Statements for further information on our

long-term debt.

Both the 2015 Revolving Credit Facility and 2019 Revolving Credit Facility contain 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 2015 Revolving Credit Facility’s financial covenants at August 3, 2018, and we presently
expect to be in compliance with the 2019 Revolving Credit Facility’s financial covenants for the remaining term of the facility.

Dividends, Share Repurchases and Share-Based Compensation Awards

Our 2015 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 2015 Revolving Credit Facility, provided there is no default
existing and the total of our availability under the 2015 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 3.00 to 1.00 or less and (2) in an aggregate amount not to exceed $100,000 in any
fiscal year if our consolidated total leverage ratio is greater than 3.00 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, 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. These restrictions are the same under the 2019 Revolving Credit
Facility.

During each of the first three quarters of 2018, we declared a regular quarterly dividend of $1.20 per share of our
common stock. Each of these dividends was paid in the immediately following quarter. Additionally, during the fourth
quarter of 2018, we increased our regular quarterly dividend by 4.2% by declaring a dividend of $1.25 per share and declared
a special dividend of $3.75 per share. The special dividend was paid on August 3, 2018 to shareholders of record on July
13, 2018. The regular quarterly dividend was paid on August 6, 2018 to shareholders of record on July 13, 2018. The
special dividend of $3.50 per share of common stock declared in the fourth quarter of 2017 was paid in 2017. Both special
dividends of $3.00 and $3.25 per share of common stock declared in the fourth quarters of 2015 and 2016, respectively,
were paid in 2016.

The following table highlights the dividends per share we paid for the last three years:

Dividends per share paid

2018

2017

2016

8.55 $

8.10 $

10.65

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. Subject to the limits imposed by our 2015 Revolving Credit Facility, in each of 2018,
2017 and 2016, we were authorized by our Board of Directors to repurchase shares at the discretion of management up to
$25,000. In 2018, we repurchased 100,000 shares of our common stock in the open market at an aggregate cost of $14,772.
We did not repurchase any shares of our common stock in 2017. In 2016, we repurchased 100,000 shares of our common
stock in the open market at an aggregate cost of $14,653.

In 2018, 2017 and 2016, related tax withholding payments on certain share-based compensation awards exceeded
proceeds received from the exercise of stock options which resulted in a net use of cash of $3,816, $6,896, and $5,779,
respectively.

Working Capital

In the restaurant industry, substantially all sales are either for cash or third-party credit card. 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 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 on weekly or semi-monthly schedules in arrears for hours worked
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 following table highlights our working capital deficit:

Working capital deficit

2018

2017
$ (57,867) $ (16,971) $ (13,077)

2016

The change in working capital at August 3, 2018 compared to July 28, 2017 primarily reflected the decrease in cash
and the timing of payments for income taxes partially offset by lower incentive compensation accruals based on lower
performance against financial objectives in 2018 and lower payroll accruals due to the timing of payments. The decrease
in cash resulted primarily from higher spending for capital expenditures and the repurchase of shares in 2018 partially offset
by an increase in cash generated by operations. The change in working capital at July 28, 2017 compared to July 29, 2016
primarily reflected the timing of payments for income taxes, an increase in deferred revenue related to the sale of our gifts
cards and higher payroll accruals due to the timing of payments partially offset by lower accounts payable and an increase
in cash. The decrease in accounts payable reflected the results of conversion to more electronic invoice methods and lower
accounts payable related to retail inventory. The increase in cash resulted primarily from cash generated by operations
partially offset by spending for capital expenditures and the payment of dividends.

Off-Balance Sheet Arrangements

Other than various operating leases, which are disclosed more fully in “Material Commitments” below and Notes 2 and

9 to our Consolidated Financial Statements, we have no other material off-balance sheet arrangements.

Material Commitments

Our contractual cash obligations and commitments as of August 3, 2018, are summarized in the tables below:

Contractual Obligations (a)
2015 Revolving Credit Facility(b)
Operating leases (c)
Purchase obligations (d)
Other long-term obligations (e)
Total contractual cash obligations

2015 Revolving Credit Facility(b)
Standby letters of credit(f)
Guarantees (g)
Total commitments

2019

Total

Payments due by Years
After 2023
2022-2023
2020-2021
$ 400,000 $ -- $ 400,000 $ -- $ --
493,557
--
34,413
$1,208,016 $ 107,612 $ 508,402 $ 64,032 $ 527,970

710,135
58,814
39,067

66,029
41,532
51

63,869
--
163

86,680
17,282
4,440

2019

Total

Amount of Commitment Expirations by Years
After 2023
2020-2021
$ 750,000 $ -- $ 750,000 $ -- $ --
--
--
$ 760,172 $ 9,691 $ 750,432 $ 49 $ --

9,455
236

9,455
717

--
432

2022-2023

--
49

(a) At August 3, 2018, the entire liability 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. As such, the liability
for uncertain tax positions of $24,315 is not included in the contractual cash obligations and commitments table above.
(b) Our 2015 Revolving Credit Facility expires on January 8, 2020. On September 5, 2018, we refinanced our debt for an
additional five-year term. Using projected interest rates, we anticipate having interest payments of $15,168, $30,865,
$31,761 and $12,216 in 2019, 2020-2021, 2022-2023 and after 2023, respectively. The projected interest rates for our
swapped portion of our outstanding borrowings are our fixed rates under our interest rate swaps (see Note 6 to the
Consolidated Financial Statements) plus our current credit spread of 1.25%. The projected interest rate for our
unswapped portion of our outstanding borrowings is the average of the three-year and five-year swap rates at August
3, 2018 of 2.94% plus our current credit spread of 1.25%. Based on our outstanding borrowings and our standby letters
of credit at August 3, 2018 and our current unused commitment fee as defined in both the 2015 Revolving Credit Facility
and the 2019 Revolving Credit Facility, our unused commitment fees in 2019-2020 would be $988; however, the actual
amount will differ based on actual usage of the 2015 Revolving Credit Facility and the 2019 Revolving Credit Facility.
(c) Includes base lease terms and certain optional renewal periods for which, at the inception of the lease, it is reasonably

assured that we will exercise.

(d) Purchase obligations consist of 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. We have excluded contracts that do not contain minimum purchase obligations. We
excluded long-term agreements for services and operating needs that can be cancelled within 60 days without penalty.
We included long-term agreements and certain retail purchase orders for services and operating needs that can be
cancelled with more than 60 days notice without penalty only through the term of the notice. We included long-term
agreements for services and operating needs that only can be cancelled in the event of an uncured material breach or
with a penalty through the entire term of the contract. Because of the uncertainties of seasonal demands and
promotional calendar changes, our best estimate of usage for food, supplies and other operating needs and services is
ratably over either the notice period or the remaining life of the contract, as applicable, unless we had better information
available at the time related to each contract.

(e) Other long-term obligations include our Non-Qualified Savings Plan ($32,669, with a corresponding long-term asset to
fund the liability; see Note 12 to the Consolidated Financial Statements), Deferred Compensation Plan ($1,794) and
our long-term incentive plans ($4,604).

(f) Our standby letters of credit relate to securing reserved claims under workers’ compensation insurance and reduce our

borrowing availability under the Revolving Credit Facility.

(g) Consists solely of guarantees associated with lease payments for two properties. We are not aware of any non-
performance under these arrangements that would result in us having to perform in accordance with the terms of these
guarantees.

Recent Accounting Pronouncements Adopted and Not Yet Adopted

See Note 2 to the accompanying Consolidated Financial Statements for a discussion of recent accounting guidance
adopted and not yet adopted. The adopted accounting guidance discussed in Note 2 did not have a significant impact on
our consolidated financial position or results of operations. The Company either expects that the accounting guidance not
yet adopted will not have a significant impact on the Company’s consolidated financial position or results of operations or is
currently evaluating the impact of adopting the accounting guidance.

CRITICAL ACCOUNTING ESTIMATES

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 2 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:

• management believes are most important to the accurate portrayal of both our financial condition and operating results;

•

and
require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain.

We consider the following accounting estimates to be most critical in understanding the judgments that are involved in

preparing our Consolidated Financial Statements:

•
Impairment of Long-Lived Assets
•
Insurance Reserves
• Retail Inventory Valuation

Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our
Board of Directors.

Impairment of Long-Lived Assets

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.

Insurance Reserves

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 $250, $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 at the end of our third quarter and is adjusted by the actuarially determined losses and actual claims
payments for 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 end 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.

Retail Inventory Valuation

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 management judgments and estimates, 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
throughout the third quarter based upon a cyclical inventory schedule. An estimate of shrinkage is recorded for the time
period between physical inventory counts by using a three-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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, such as changes in interest rates and commodity prices. We do not hold or use

derivative financial instruments for trading purposes.

Interest Rate Risk. We have interest rate risk relative to our outstanding borrowings under our revolving credit facility.
At both August 3, 2018 and July 28, 2017, our outstanding borrowings totaled $400,000 (see Note 5 to our Consolidated
Financial Statements). Loans under our credit facility bear interest, at our election, either at the prime rate or LIBOR plus a
percentage point spread based on certain specified financial ratios. Our policy has been to manage interest cost using a
mix of fixed and variable rate debt (see Notes 5, 6 and 9 to our Consolidated Financial Statements). To manage this risk in
a cost efficient manner, we have entered into interest rate swaps. A summary of our interest rate swaps at August 3, 2018
is as follows:

Trade Date

June 18, 2014
June 24, 2014
July 1, 2014
January 30, 2015
January 30, 2015
January 30, 2015
January 30, 2015
January 30, 2015

Effective Date

May 3, 2015
May 3, 2015
May 5, 2015
May 3, 2019
May 3, 2019
May 4, 2021
May 3, 2019
May 4, 2021

Term
(in Years)

4
4
4
2
2
3
2
3

Notional Amount
$ 160,000
120,000
120,000
80,000
60,000
120,000
60,000
80,000

Fixed
Rate

2.51%
2.51%
2.43%
2.15%
2.16%
2.41%
2.15%
2.40%

At August 3, 2018 and July 28, 2017, our outstanding borrowings were swapped at a weighted average interest rate of
3.73% and 3.21%, respectively, which are the weighted average fixed rates of our interest rate swaps plus our current credit
spread. See Note 6 to our Consolidated Financial Statements for further discussion of our interest rate swaps.

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.

The following table highlights the five food categories which accounted for the largest shares of our food purchases in 2018

and 2017:

Beef
Dairy (including eggs)
Fruits and vegetables
Poultry
Pork

Percentage of Food Purchases

2018
14%
13%
12%
11%
11%

2017
14%
12%
12%
11%
10%

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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Cracker Barrel Old Country Store, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cracker Barrel Old Country Store, Inc. and its
subsidiaries (the “Company”) as of August 3, 2018 and July 28, 2017, and the related consolidated statements of income,
comprehensive income, changes in shareholders’ equity, and cash flows, for each of the three years in the period ended
August 3, 2018, 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 3, 2018 and July 28,
2017, and the results of its operations and its cash flows for each of the three years in the period ended August 3, 2018, 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 3, 2018, based on the criteria established in
Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated September 28, 2018 expressed an unqualified opinion on the Company’s internal control
over financial reporting.

Basis for Opinion

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.

Deloitte & Touche LLP

Nashville, Tennessee
September 28, 2018

We have served as the Company’s auditor since 1974.

CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED BALANCE SHEETS

ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable
Income taxes receivable
Inventories
Prepaid expenses and other current assets
Deferred income taxes
Total current assets
Property and Equipment:
Land
Buildings and improvements
Buildings under capital leases
Restaurant and other equipment
Leasehold improvements
Construction in progress
Total

Less: Accumulated depreciation and amortization of capital leases

Property and equipment – net
Other assets
Total

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
Taxes withheld and accrued
Accrued employee compensation
Accrued employee benefits
Deferred revenues
Dividend payable
Other current liabilities
Total current liabilities
Long-term debt
Long-term interest rate swap liability
Other long-term obligations
Deferred income taxes

Commitments and Contingencies (Notes 9 and 15)

Shareholders’ Equity:
Preferred stock – 100,000,000 shares of $.01 par value authorized;

300,000 shares designated as Series A Junior Participating Preferred
Stock; no shares issued

Common stock – 400,000,000 shares of $.01 par value authorized; 2018

– 24,011,550 shares issued and outstanding; 2017 – 24,055,682

shares issued and outstanding
Additional paid-in capital
Accumulated other comprehensive income (loss)
Retained earnings
Total shareholders’ equity
Total

See Notes to Consolidated Financial Statements.

(In thousands except share data)

August 3, 2018

July 28, 2017

$ 114,656
19,496

$ 161,001
18,116

156,253
16,347
--
306,752

4,265

156,367
16,047
3,061
358,857

307,207
861,949
3,289
658,978
353,329
27,849
2,212,601
1,063,466
1,149,135
71,468
$ 1,527,355

306,105
837,804
3,289
604,413
326,750
15,087
2,093,448
995,351
1,098,097
64,988
$ 1,521,942

$ 122,332
37,069
60,562
25,416
76,292
31,117
11,831
364,619
400,000
--
128,794
52,161

$ 118,395
36,725
70,945
26,759
72,376
30,639
19,989
375,828
400,000
6,833
129,353
65,421

240
44,049
4,685
532,807
581,781
$ 1,527,355

241
55,659
(4,229)
492,836
544,507
$ 1,521,942

CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED STATEMENTS OF INCOME

Total revenue
Cost of goods sold (exclusive of depreciation and rent)
Labor and other related expenses
Other store operating expenses
Store operating income
General and administrative expenses
Operating income
Interest expense
Income before income taxes
Provision for income taxes
Net income

(In thousands except share data)
Fiscal years ended
July 28, 2017

July 29, 2016

August 3, 2018

$ 3,030,445 $ 2,926,289 $ 2,912,351
928,176
1,006,188
554,534
423,453
142,982
280,471
14,052
266,419
77,120
$ 247,620 $ 201,899 $ 189,299

891,293
1,017,124
563,300
454,572
141,414
313,158
14,271
298,887
96,988

935,397
1,055,811
601,889
437,348
143,756
293,592
15,169
278,423
30,803

Net income per share - basic
Net income per share - diluted

$ 10.31 $ 8.40 $ 7.91
$ 10.29 $ 8.37 $ 7.86

Basic weighted average shares outstanding
Diluted weighted average shares outstanding

24,011,161
24,075,614

24,031,810
24,118,288

23,945,041
24,074,273

See Notes to Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)
Fiscal years ended
July 28, 2017

August 3, 2018

July 29, 2016

Net income

$ 247,620 $ 201,899

$ 189,299

Other comprehensive income (loss) before income tax
expense (benefit):

Change in fair value of interest rate swaps

Income tax expense (benefit)
Other comprehensive income (loss), net of tax
Comprehensive income

13,103
15,402
4,189
5,891
9,511
8,914
$ 256,534 $ 211,410

(16,188)
(6,173)
(10,015)
$ 179,284

See Notes to Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands except share data)

Balances at July 31, 2015

Comprehensive Income:

Net income
Other comprehensive income, net of tax
Total comprehensive income

Cash dividends declared - $7.70 per share
Share-based compensation
Issuance of share-based compensation awards,
net of shares withheld for employee taxes
Tax benefit realized upon exercise of share-based

compensation awards

Purchases and retirement of common stock

Balances at July 29, 2016
Comprehensive Income:

Net income
Other comprehensive income, net of tax
Total comprehensive income

Cash dividends declared - $8.15 per share
Share-based compensation
Issuance of share-based compensation awards,
net of shares withheld for employee taxes
Tax benefit realized upon exercise of share-based

compensation awards

Purchases and retirement of common stock

Balances at July 28, 2017
Comprehensive Income:

Net income
Other comprehensive income, net of tax
Total comprehensive income

Cash dividends declared - $8.60 per share
Share-based compensation
Issuance of share-based compensation awards,
net of shares withheld for employee taxes
Tax benefit realized upon exercise of share-based

compensation awards

Purchases and retirement of common stock

Balances at August 3, 2018

Common Stock

Amount

Additional
Paid-In
Capital

23,975,755

240

56,066

Accumulated
Other
Retained
Comprehensive
Income (Loss)
Earnings
$ (3,725) $ 485,687

Total
Shareholders’
Equity

538,268

--
--
--
--
--

80,379

--
--
--
--
--

--
--
--
--
13,202

(5,780)

--
(10,015)
(10,015)
--
--

189,299
--
189,299
(186,505)
--

189,299
(10,015)
179,284
(186,505)
13,202

(5,779)

--
(100,000)
23,956,134

--
(1)
240

2,626
(14,652)
51,462

--
--
(13,740)

--
--
488,481

2,626
(14,653)
526,443

--
--
--
--
--

--
--
--
--
8,458

--
9,511
9,511
--
--

201,899
--
201,899
(197,544)
--

201,899
9,511
211,410
(197,544)
8,458

99,548

(6,897)

(6,896)

--
--
24,055,682

--
--
241

2,636
--
55,659

--
--
(4,229)

--
--
492,836

2,636
--
544,507

--
--
--
--
--

--
--
--
--
6,977

--
8,914
8,914
--
--

247,620
--
247,620
(207,649)
--

247,620
8,914
256,534
(207,649)
6,977

55,868

(3,816)

--
(100,000)
24,011,550

--
(1)

(14,771)
$ 240 $ 44,049

--
(14,772)
$ 4,685 $ 532,807 $ 581,781

--
--

See Notes to Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

Net income

Adjustments to reconcile net income to net cash provided
by operating activities:

Depreciation and amortization
Loss on disposition of property and equipment
Share-based compensation
Excess tax benefit from share-based compensation

Changes in assets and liabilities:

Accounts receivable
Income taxes receivable
Inventories
Prepaid expenses and other current assets
Other assets
Accounts payable
Taxes withheld and accrued
Accrued employee compensation
Accrued employee benefits
Deferred revenues
Other current liabilities
Other long-term obligations
Deferred income taxes

Net cash provided by operating activities

Cash flows from investing activities:

Purchase of property and equipment
Proceeds from insurance recoveries of property and

equipment

Proceeds from sale of property and equipment
Net cash used in investing activities

Cash flows from financing activities:

(Taxes withheld) and proceeds from issuance of share-

based compensation awards, net

Purchases and retirement of common stock
Dividends on common stock
Excess tax benefit from share-based compensation
Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Interest, net of amounts capitalized
Income taxes

Supplemental schedule of non-cash investing and financing

activities:
Capital expenditures accrued in accounts payable
Change in fair value of interest rate swaps
Change in deferred tax asset for interest rate swaps
Dividends declared but not yet paid

August 3, 2018

(In thousands)
Fiscal years ended
July 28, 2017

July 29, 2016

$ 247,620 $ 201,899 $ 189,299

93,692
7,119
6,977
--

86,319
5,585
8,458
(2,636)

78,223
7,146
13,202
(2,626)

(1,380)
4,265
114
(500)
(1,400)
3,937
344
(10,389)
(1,343)
3,916
(8,121)
157
(14,388)
330,620

1,273
14,555
(4,059)
(1,274)
(4,344)
(14,098)
(836)
9,752
(1,169)
8,348
4,470
3,461
5,063
320,767

(1,339)
(13,558)
750
(406)
130
(624)
(1,500)
(6,246)
211
5,048
(3,705)
(6,269)
13,642

271,378

(152,249)

(110,591)

(114,022)

616
411
(151,222)

483
503
(109,605)

662
845
(112,515)

(6,896)
--

(3,816)
(14,772)
(207,155)
--
(225,743)
(46,345)
161,001

(5,779)
(14,653)
(255,546)
2,626
(273,352)
(114,489)
265,455
$ 114,656 $ 161,001 $ 150,966

(196,867)
2,636
(201,127)
10,035
150,966

$ 17,272 $ 12,847 $ 12,752
43,471
84,868

78,092

$ 8,183 $ 6,743 $ 6,379
13,103 15,402 (16,188)
(4,189) (5,891)
6,173
30,625

31,296

31,784

See Notes to Consolidated Financial Statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)

1. Description of the Business

Cracker Barrel Old Country Store, Inc. and its affiliates (collectively, in the Notes, the “Company”) are principally
engaged in the operation and development in the United States (“U.S.”) of the Cracker Barrel Old Country Store® (“Cracker
Barrel”) concept.

2. Summary of Significant Accounting Policies

GAAP – The accompanying Consolidated Financial Statements have been prepared in accordance with generally

accepted accounting principles in the U.S. (“GAAP”).

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 Company’s fiscal year ended August 3, 2018 consisted of 53 weeks and the fourth
quarter of 2018 consisted of fourteen weeks. References in these Notes to a year or quarter are to the Company’s fiscal
year or quarter unless noted otherwise.

Principles of consolidation – The Consolidated Financial Statements include the accounts of the Company and its
subsidiaries, all of which are wholly owned. All significant intercompany transactions and balances have been eliminated.

Cash and cash equivalents – The Company’s policy is to consider all highly liquid investments purchased with an

original maturity of three months or less to be cash equivalents.

Accounts receivable – Accounts receivable represent their estimated net realizable value. Accounts receivable are

written off when they are deemed uncollectible.

Inventories – In 2017, inventories were stated at the lower of cost or market. In the first quarter of 2018, the Company
adopted new accounting guidance which required companies to measure certain inventory at lower of cost and net realizable
value (see section below entitled “Inventory” under “Recent Accounting Pronouncements Adopted”. 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 80% 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 4 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. Retail inventory also includes an estimate of retail inventory shrinkage that is adjusted upon physical
inventory counts. Annual physical inventory counts are conducted throughout the third quarter based upon a cyclical
inventory schedule. An estimate of shrinkage is recorded for the time period between physical inventory counts by using a
three-year average of the physical inventories’ results on a store-by-store basis.

Property and equipment – Property and equipment are stated at cost. For financial reporting purposes, depreciation
and amortization on these assets are computed by use of the straight-line and double-declining balance methods over the
estimated useful lives of the respective assets, as follows:

Buildings and improvements
Buildings under capital leases
Restaurant and other equipment
Leasehold improvements

Accelerated depreciation methods are generally used for income tax purposes.

Years
30-45
15-25
2-10
1-35

Total depreciation expense and depreciation expense related to store operations for each of the three years are as

follows:

Total depreciation expense
Depreciation expense related to store operations*

2018

2017
$ 93,266 $ 85,912 $ 77,816
71,382
79,214

86,913

2016

*Depreciation expense related to store operations is included in other store operating expenses in the Consolidated
Statements of Income.

Gain or loss is recognized upon disposal of property and equipment. The asset and related accumulated depreciation

and amortization amounts are removed from the accounts.

Maintenance and repairs, including the replacement of minor items, are charged to expense and major additions to

property and equipment are capitalized.

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.

Derivative instruments and hedging activities – The Company is exposed to market risk, such as changes in interest
rates and commodity prices. The Company has interest rate risk relative to its outstanding borrowings, which bear interest
at the Company’s election either at the prime rate or LIBOR plus a percentage point spread based on certain specified
financial ratios under its revolving credit facility (see Note 5). The Company’s policy has been to manage interest cost using
a mix of fixed and variable rate debt. To manage this risk in a cost efficient manner, the Company uses derivative
instruments, specifically interest rate swaps.

Companies may elect whether or not to offset related assets and liabilities and report the net amount on their financial
statements if the right of setoff exists. Under a master netting agreement, the Company has the legal right to offset the
amounts owed to the Company against amounts owed by the Company under a derivative instrument that exists between
the Company and a counterparty. When the Company is engaged in more than one outstanding derivative transaction with
the same counterparty and also has a legally enforceable master netting agreement with that counterparty, its credit risk
exposure is based on the net exposure under the master netting agreement. If, on a net basis, the Company owes the
counterparty, the Company regards its credit exposure to the counterparty as being zero.

The Company does not hold or use derivative instruments for trading purposes. The Company also does not have any
derivatives not designated as hedging instruments and has not designated any non-derivatives as hedging instruments.
See Note 6 for additional information on the Company’s derivative and hedging activities.

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 reportable operating
segment (see Note 8 for additional information regarding segment reporting).

Revenue recognition – The Company records revenue from the sale of products as they are sold. 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.

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. For those states that exempt gift cards and
certificates from their escheat laws, the Company makes estimates of the ultimate unredeemed (“breakage”) gift cards and
certificates in the period of the original sale and amortizes this breakage over the redemption period that other gift cards
and certificates historically have been redeemed by reducing its liability and recording revenue accordingly. For those
states that do not exempt gift cards and certificates from their escheat laws, the Company records breakage in the period
that gift cards and certificates are remitted to the state and reduces its liability accordingly. 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.

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 $250, $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 at the end of the Company’s third quarter and is adjusted by the actuarially
determined losses and actual claims payments for 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 end 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.

Store pre-opening costs – Start-up costs of a new store are expensed when incurred, with the exception of rent expense
under operating leases, in which the straight-line rent includes the pre-opening period during construction, as explained
further under the “Leases” section in this Note.

Leases – The Company’s leases are classified as either capital or operating leases. The Company has ground leases
and office space leases that are recorded as operating leases. The Company also leases its advertising billboards which
are recorded as operating leases. A majority of the Company’s lease agreements provide renewal options and some of
these options contain rent escalation clauses. Additionally, some of the leases have rent holiday and contingent rent
provisions. 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. 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 liabilities under these leases are recognized on the straight-line basis over the shorter of the useful life, with a
maximum of 35 years, or the related lease life. The Company uses a lease life that generally begins on the date that the
Company becomes legally obligated under the lease, including the rent holiday periods, and generally extends through
certain renewal periods that can be exercised at the Company’s option, for which at the inception of the lease, it is
reasonably assured that the Company will exercise those renewal options. This lease period is consistent with the period
over which leasehold improvements are amortized.

Advertising – The Company expenses the costs of producing advertising the first time the advertising takes place. Other

advertising costs are expensed as incurred.

Advertising expense for each of the three years was as follows:

Advertising expense

2018

2017
$ 83,448 $ 83,623 $ 79,409

2016

Share-based compensation – The Company’s share-based compensation consists of nonvested stock awards and units
and performance-based market stock units (“MSU Grants”). 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 and the Company’s MSU Grants 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 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.

Additionally, the Company’s policy is to issue shares of common stock to satisfy exercises of share-based compensation

awards.

Income taxes – The Company’s provision for income taxes includes employer tax credits for FICA taxes paid on
employee tip income and other employer tax credits are accounted for by 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. See Note 13 for additional information regarding income
taxes.

Comprehensive income – Comprehensive income includes net income and the effective unrealized portion of the

changes in the fair value of the Company’s interest rate swaps.

Net income per share – Basic consolidated net income per share is computed by dividing consolidated net income 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 year. Common equivalent shares related to stock options,
nonvested stock awards and units and MSU Grants issued by the Company are calculated using the treasury stock method.
The outstanding stock options, nonvested stock awards and units and MSU Grants issued by the Company represent the
only dilutive effects on diluted consolidated net income per share. See Note 14 for additional information regarding net
income per share.

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.

Recent Accounting Pronouncements Adopted

Inventory

In July 2015, the Financial Accounting Standards Board (“FASB”) issued accounting guidance which requires
companies to measure certain inventory at the lower of cost and net realizable value. This accounting guidance does not
apply to inventories measured by using either the last-in, first-out method or the retail inventory method. This accounting
guidance is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years on a
prospective basis. The adoption of this accounting guidance in the first quarter of 2018 did not have a significant impact on
the Company’s consolidated financial position or results of operations.

Deferred Taxes

In November 2015, in order to simplify the presentation of deferred income taxes, the FASB issued accounting
guidance which requires deferred tax liabilities and assets to be classified as noncurrent in the balance sheet. This
accounting guidance is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal
years. This accounting guidance may be applied either prospectively to all deferred tax liabilities and assets or
retrospectively to all periods presented. Other than the revised balance sheet presentation of deferred tax liabilities and
assets, the adoption of this accounting guidance on a prospective basis in the first quarter of 2018 did not have a significant
impact on the Company’s consolidated financial position or results of operations. Prior periods were not retrospectively
adjusted for the adoption of this accounting guidance.

Share-Based Payments

In March 2016, the FASB issued accounting guidance in order to simplify certain aspects of the accounting and
presentation of share-based payments, including the income tax consequences, classification of awards as either equity or
liabilities and classification on the statement of cash flows. This accounting guidance is effective for fiscal periods beginning
after December 15, 2016, and interim periods within those fiscal years. This guidance may be applied either on a
prospective basis, retrospective basis or a modified retrospective basis depending on the specific accounting topic covered
in the accounting guidance. The Company adopted this accounting guidance in the first quarter of 2018. The impact of
recognizing excess tax benefits of $759 as a reduction to the provision for income taxes on a prospective basis resulted in
a benefit of $0.03 per diluted share in the first quarter of 2018. The Company elected to apply the presentation of excess
tax benefits on the statement of cash flows on a prospective basis; prior periods were not retrospectively adjusted. The
Company also elected to continue estimating forfeitures of share-based awards.

Recent Accounting Pronouncements Not Yet Adopted

Revenue Recognition

In May 2014, the FASB issued accounting guidance which clarifies the principles for recognizing revenue and provides
a comprehensive model for revenue recognition. Revenue recognition should depict the transfer of goods or services to a
customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The
guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows
arising from customer contracts. This accounting guidance is effective for fiscal years beginning after December 15, 2017
and interim periods within those years. The Company is in the process of evaluating the Company’s current revenue
recognition process in comparison to the adoption of this guidance. The Company plans to adopt this accounting guidance
using the modified retrospective transition method. The adoption of this accounting guidance in the first quarter of 2019 is
not expected to have a material effect on the Company’s consolidated financial position or results of operations, and the
Company does not anticipate recording a cumulative catch-up adjustment to the opening balance of retained earnings.

Leases

In February 2016, the FASB issued accounting guidance which requires the recognition of lease assets and lease
liabilities on the balance sheet and disclosure of key information about leasing arrangements. The accounting guidance is
effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years on a modified
retrospective basis. Early adoption is permitted. The Company is in the process of implementing software to assist in the
quantification of the impact on the Company’s consolidated financial position and results of operations related to the
adoption of this accounting guidance in the first quarter of 2020.

Recognition of Breakage for Certain Prepaid Stored-Value Products

In March 2016, in order to address diversity in practice related to the derecognition of a prepaid stored-value product
liability, the FASB issued accounting guidance requiring breakage for prepaid stored-value product liabilities to be accounted
for consistent with the breakage guidance in the revenue recognition standard (see “Revenue Recognition” above). This
accounting guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years.
This accounting guidance may be applied either on a modified retrospective basis or on a retrospective basis. The Company
does not expect that the adoption of this accounting guidance in the first quarter of 2019 will have a significant impact on
the Company’s consolidated financial position or results of operations.

Modification of Share-Based Payment Awards

In May 2017, the FASB issued accounting guidance to provide clarity, reduce the diversity in practice and to simplify
the accounting guidance related to a change to the terms or conditions of a share-based payment award. This new standard
provides guidance for evaluating which changes to the terms or conditions of a share-based payment award are substantive
and require modification accounting to be applied. This accounting guidance is effective for fiscal periods beginning after
December 15, 2017, and interim periods within those years on a prospective basis. The Company does not expect that the
adoption of this accounting guidance in the first quarter of 2019 will have a significant impact on the Company’s consolidated
financial position or results of operations.

Accounting for Hedging Activities

In August 2017, the FASB issued accounting guidance which amends the recognition, presentation and disclosure
requirements of hedge accounting in order to better portray the economics of entities’ risk management activities, increase
transparency and understandability of hedging relationships and simplify the application of hedge accounting. This
accounting guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal
years. Early application is permitted. The recognition requirements for cash flow and net investment hedges existing at the
date of adoption will be applied using a cumulative-effect adjustment to retained earnings. The amended presentation and
disclosure requirements will be applied on a prospective basis. The Company is currently evaluating the impact of adopting
this accounting guidance in the first quarter of 2020.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

On December 22, 2017, the U.S. government enacted P.L. 115-97, the Tax Cuts and Jobs Act (the “Tax Act”). In
February 2018, the FASB issued accounting guidance which allows a reclassification from accumulated other
comprehensive income to retained earnings for stranded tax effects resulted from the Tax Act. This accounting guidance
is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. If elected, this
accounting guidance should be applied either in the period of adoption or retrospectively to each period in which the change
in the U.S. federal corporate rate in the Tax Act is recognized. Early application is permitted. The Company is currently
evaluating the impact of adopting this accounting guidance in the first quarter of 2020.

Share-Based Payment Arrangements With Nonemployees

In June 2018, the FASB issued accounting guidance in order to simplify accounting for share-based payments granted
to nonemployees for goods and services. This new guidance aligns most of the accounting requirements for share-based
payments granted to nonemployees with the existing guidance for share-based payments granted to employees. This
accounting guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal
years, using a modified retrospective transition approach. Early adoption is permitted. The Company does not expect that
the adoption of this accounting guidance in the first quarter of 2020 will have a significant impact on the Company’s
consolidated financial position or results of operations.

3. Fair Value Measurements

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:

• Quoted Prices in Active Markets for Identical Assets (“Level 1”) – quoted prices (unadjusted) for an identical asset or

liability in an active market.

• Significant Other Observable Inputs (“Level 2”) – quoted prices for a similar asset or liability in an active market or
model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or
liability.

• Significant Unobservable Inputs (“Level 3”) – unobservable and significant to the fair value measurement of the asset

or liability.

The Company’s assets and liabilities measured at fair value on a recurring basis at August 3, 2018 were as follows:

Cash equivalents*
Interest rate swap asset (see Note 6)
Total
Deferred compensation plan assets**
measured at net asset value
Total assets at fair value

Level 1
$ 38,446
--
$ 38,446

Level 2
$ --
6,255
$ 6,255

Level 3
$ --
--
$ --

Total Fair
Value

$ 38,446
6,255

$ 44,701

32,669
$ 77,370

Interest rate swap liability (see Note 6)
Total liabilities at fair value

$ --
$ --

The Company’s assets and liabilities measured at fair value on a recurring basis at July 28, 2017 were as follows:

Cash equivalents*
Interest rate swap asset (see Note 6)
Deferred compensation plan assets**
Total assets at fair value

Level 1
$ 82,524
--
31,196
$ 113,720

Level 2
$ --
32
--
$ 32

Level 3
$ --
--
--
$ --

Total Fair
Value

$ 82,524
32
31,196
$ 113,752

Interest rate swap liability (see Note 6)
Total liabilities at fair value

$ --
$ --

$ 6,880
$ 6,880

$ --
$ --

$ 6,880
$ 6,880

*Consists of money market fund investments.
**Represents plan assets invested in mutual funds established under a Rabbi Trust for the Company’s non-qualified savings
plan and is included in the Consolidated Balance Sheets as other assets (see Note 12).

The Company’s money market fund investments are measured at fair value using quoted market prices. The fair values
of the Company’s interest rate swap assets and liabilities are determined based on the present value of expected future
cash flows. Since the Company’s interest rate swap values are based on the LIBOR forward curve, which is observable at
commonly quoted intervals for the full terms of the swaps, it is considered a Level 2 input. Nonperformance risk is reflected
in determining the fair value of the interest rate swaps by using the Company’s credit spread less the risk-free interest rate,
both of which are observable at commonly quoted intervals for the terms of the swaps. Thus, the adjustment for
nonperformance risk is also considered a Level 2 input. 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 3, 2018 and July 28, 2017, 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 3, 2018 and July 28, 2017.

4. Inventories

Inventories were comprised of the following at:

Retail
Restaurant
Supplies
Total

July 28, 2017

August 3, 2018
$ 117,606 $ 119,446
20,252
16,669
$ 156,253 $ 156,367

20,659
17,988

5. Debt

On January 8, 2015, the Company entered into a five-year $750,000 revolving credit facility (the “2015 Revolving Credit
Facility”). At both August 3, 2018 and July 28, 2017, the Company had $400,000 in outstanding borrowings under the 2015
Revolving Credit Facility. On September 5, 2018, the Company entered into a five-year $950,000 revolving credit facility
(“2019 Revolving Credit Facility”) with substantially the same terms and financial covenants as the 2015 Revolving Credit
Facility, which it replaced. The 2019 Revolving Credit Facility also contains an option to increase the revolving credit facility
by $300,000.

At August 3, 2018, the Company had $9,455 of standby letters of credit, which reduce the Company’s borrowing
availability under the 2015 Revolving Credit Facility (see Note 15). At August 3, 2018, the Company had $340,545 in
borrowing availability under the 2015 Revolving Credit Facility.

In accordance with the 2015 Revolving Credit Facility, outstanding borrowings bear interest, at the Company’s election,
either at LIBOR or prime plus a percentage point spread based on certain specified financial ratios. At August 3, 2018 and
July 28, 2017, the Company’s outstanding borrowings were swapped at a weighted average interest rates of 3.73% and
3.21%, respectively (see Note 6 for information on the Company’s interest rate swaps).

The 2015 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 3, 2018 and July 28, 2017,
the Company was in compliance with all debt covenants.

The 2015 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 2015 Revolving Credit Facility, provided
there is no default existing and the total of the Company’s availability under the 2015 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 3.00 to 1.00 or less
and (2) in an aggregate amount not to exceed $100,000 in any fiscal year if the Company’s consolidated total leverage ratio
is greater than 3.00 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.

6. Derivative Instruments and Hedging Activities

For each of the Company’s interest rate swaps, the Company has agreed to exchange with a counterparty the difference
between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount. The
interest rates on the portion of the Company’s outstanding debt covered by its interest rate swaps are fixed at the rates in
the table below plus the Company’s credit spread. The Company’s credit spread was 1.25% at both August 3, 2018 and
July 28, 2017. All of the Company’s interest rate swaps are accounted for as cash flow hedges.

A summary of the Company’s interest rate swaps at August 3, 2018 is as follows:

Trade Date

June 18, 2014
June 24, 2014
July 1, 2014
January 30, 2015
January 30, 2015
January 30, 2015
January 30, 2015
January 30, 2015

Effective Date

May 3, 2015
May 3, 2015
May 5, 2015
May 3, 2019
May 3, 2019
May 4, 2021
May 3, 2019
May 4, 2021

Term
(in Years)

4
4
4
2
2
3
2
3

Notional Amount
$ 160,000
120,000
120,000
80,000
60,000
120,000
60,000
80,000

Fixed
Rate

2.51%
2.51%
2.43%
2.15%
2.16%
2.41%
2.15%
2.40%

The estimated fair values of the Company’s derivative instruments were as follows:

(See Note 3)
Interest rate swaps
Interest rate swaps
Total assets

Interest rate swaps
Interest rate swaps
Total liabilities

Balance Sheet Location
Prepaid expenses and other current assets
Other assets

August 3, 2018
$ 169
6,086
$ 6,255

July 28, 2017
$ 32

$ 32

Other current liabilities
Long-term interest rate swap liability

$ --
--
$ --

$ 47
6,833
$ 6,880

**These interest rate swap assets and liabilities are recorded at gross at both August 3, 2018 and July 28, 2017 since

there were no offsetting assets and liabilities under the Company’s master netting agreements.

The estimated fair values of the Company’s interest rate swap assets and liabilities incorporate the Company’s non-
performance risk. The adjustment related to the Company’s non-performance risk at August 3, 2018 and July 28, 2017
resulted in reductions of $213 and $103, respectively, in the total fair value of the interest rate swap assets and liabilities.
The offset to the interest rate swap assets and liabilities is recorded in accumulated other comprehensive income (loss)
(“AOCIL”), net of the deferred tax assets, and will be reclassified into earnings over the term of the underlying debt. As of
August 3, 2018, the estimated pre-tax portion of AOCIL that is expected to be reclassified into earnings over the next twelve
months is $533. Cash flows related to the interest rate swaps are included in interest expense and in operating activities.

The following table summarizes the pre-tax effects of the Company’s derivative instruments on AOCIL for each of the

three years:

Cash flow hedges:
Interest rate swaps

Amount of Income (Loss) Recognized in AOCIL
on Derivatives (Effective Portion)
2017

2018

2016

$ 13,103

$ 15,402

$ (16,188)

The following table summarizes the changes in AOCIL, net of tax, related to the Company’s interest rate swaps for the

years ended August 3, 2018, July 28, 2017 and July 29, 2016:

Beginning AOCIL balance

August 3,
2018
$ (4,229)

July 28,
2017
$ (13,740)

July 29,
2016

$ (3,725)

Other comprehensive income (loss) before reclassifications
Amounts reclassified from AOCIL into earnings

Other comprehensive income (loss), net of tax
Ending AOCIL balance

11,274
(2,360)
8,914
$ 4,685

12,082
(2,571)
9,511
$ (4,229)

(6,683)
(3,332)
(10,015)
$ (13,740)

The following table summarizes the pre-tax effects of the Company’s derivative instruments on income for each of the

three years:

Cash flow hedges:
Interest rate swaps

Location of Loss Reclassified from
AOCIL into Income (Effective Portion)

Amount of Loss Reclassified from AOCIL into
Income (Effective Portion)
2017

2018

2016

Interest expense

$ 3,398

$ 4,163

$ 5,395

The following table summarizes the amounts reclassified out of AOCIL related to the Company’s interest rate swaps for

the years ended August 3, 2018, July 28, 2017 and July 29, 2016:

Details about AOCIL
Loss on cash flow hedges:

Interest rate swaps

Tax benefit

August 3, 2018

July 28, 2017

July 29, 2016

Affected Line Item in
the Consolidated
Statement of Income

$ (3,398)
1,038
$ (2,360)

$ (4,163)
1,592
$ (2,571)

$ (5,395)
2,063
$ (3,332)

Interest expense

Provision for income taxes
Net of tax

Any portion of the fair value of the interest rate swaps determined to be ineffective will be recognized currently in earnings.
No ineffectiveness has been recorded in 2018, 2017 and 2016.

7. Share Repurchases

In each of 2018, 2017 and 2016, subject to a maximum amount of $25,000 and the limits imposed by its credit facility,
the Company was authorized to repurchase shares at management’s discretion. In 2018, the Company repurchased
100,000 shares of its common stock in the open market at an aggregate cost of $14,772. The Company did not repurchase
any shares of its common stock in 2017. In 2016, the Company repurchased 100,000 shares of its common stock in the
open market at an aggregate cost of $14,653.

8. Segment Information

Cracker Barrel stores represent a single, integrated operation with two related and substantially integrated product lines.
The operating expenses of the restaurant and retail product lines of a Cracker Barrel store are shared and are
indistinguishable in many respects. Accordingly, the Company manages its business on the basis of one reportable
operating segment. All of the Company’s operations are located within the United States.

Total revenue was comprised of the following at:

Restaurant
Retail

Total revenue

9. Leases

2018

2017

$ 2,439,389 $ 2,351,212
575,077
$ 3,030,445 $ 2,926,289

591,056

2016
$ 2,323,199
589,152
$ 2,912,351

As of August 3, 2018, the Company operated 240 stores in leased facilities and also leased certain land, a retail

distribution center and advertising billboards.

Rent expense under operating leases, including the sale-leaseback transactions discussed below, for each of the last

three years was:

Year
2018
2017
2016

Minimum
$ 76,445
75,000
74,405

Contingent
$ 255
252
263

Total

$ 76,700
75,252
74,668

The following is a schedule by year of the future minimum rental payments required under the Company’s operating

leases as of August 3, 2018:

Year
2019
2020
2021
2022
2023
Later years
Total

Sale-Leaseback Transactions

Total

$ 66,029
53,510
33,170
31,763
32,106
493,557
$ 710,135

In 2009, the Company completed sale-leaseback transactions involving 15 of its owned stores and its retail distribution
center. Under the transactions, the land, buildings and improvements at the locations were sold and leased back for terms
of 20 and 15 years, respectively. Equipment was not included. The leases include specified renewal options for up to 20
additional years.

The Company leases 65 of its stores pursuant to a sale-leaseback transaction which closed in 2000. Under the
transaction, the land, buildings and building improvements at the locations were sold and leased back for a term of 21 years.
The leases for these stores include specified renewal options for up to 20 additional years and have certain financial
covenants related to fixed charge coverage for the leased stores. At August 3, 2018 and July 28, 2017, the Company was
in compliance with these covenants.

10. Share-Based Compensation

Stock Compensation Plans

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.

The Company has one active compensation plan, the 2010 Omnibus Incentive Compensation Plan (the “2010 Omnibus
Plan”), for employees and non-employee directors which authorizes the granting of nonvested stock awards and units,
performance-based MSU Grants, stock options and other types of share-based awards.

The 2010 Omnibus Plan allows the Committee to grant awards for an aggregate of 1,500,000 shares of the Company’s
common stock. However, this share reserve is increased by shares awarded under this and prior plans which are forfeited,
expired, settled for cash and shares withheld by the Company in payment of a tax withholding obligation. Additionally, this
share reserve was decreased by shares granted from prior plans after July 30, 2010 until December 1, 2010. At August 3,
2018, the number of shares authorized for future issuance under the Company’s active plan is 1,020,477. At August 3,
2018, the number of outstanding awards under the 2010 Omnibus Plan was 103,539.

Types of Share-Based Awards

Nonvested Stock Awards

Nonvested stock awards consist of the Company’s common stock, generally accrue dividend equivalents and vest
over 1–5 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
achieved certain performance targets. The stock awards under the long-term performance plans are calculated or estimated
based on achievement of financial performance measures.

The following table summarizes the performance periods and vesting periods for the Company’s nonvested stock

awards under its long-term performance plans at August 3, 2018:

Long-Term Performance Plan (“LTPP”)
2018 LTPP
2017 LTPP

Performance Period
2018 – 2019
2017 – 2018

Vesting Period
(in Years)
2 or 3
2 or 3

The following table summarizes the shares that have been accrued under the 2018 LTPP and 2017 LTPP at August

3, 2018:

2018 LTPP
2017 LTPP

8,892
23,511

A summary of the Company’s nonvested stock activity as of August 3, 2018, and changes during 2018 are presented

in the following table:

Nonvested Stock
Unvested at July 28, 2017
Granted
Vested
Forfeited
Unvested at August 3, 2018

Weighted-Average Grant
Date Fair Value

Shares
32,017 $ 139.04
154.28
51,406
153.66
(38,889)
145.92
(2,776)
41,758 $ 143.73

The following table summarizes the total fair value of nonvested stock that vested for each of the three years:

Total fair value of nonvested stock

Nonvested Stock Units

2018

2016
$ 5,976 $ 14,700 $ 8,418

2017

Beginning in 2017, the Company adopted long-term incentive plans that award nonvested stock units based upon relative
total shareholder return (“rTSR RSUs”). The number of nonvested stock units that will ultimately be awarded and will vest at
the end of the applicable three-year performance period is based on relative total shareholder return, which is defined as
increases in the Company’s stock price plus dividends paid during the performance period as compared to the total shareholder
return of a group of peer companies determined by the Committee. The number of shares awarded at the end of the
performance period for each nonvested stock unit may range from 75% to 125% of the target award. The probability of the
actual shares expected to be earned is considered in the grant date valuation; therefore, the expense will not be adjusted to
reflect the actual units earned. In addition to a service requirement, the vesting of the nonvested stock units is also subject to
the achievement of a specified level of operating income during the performance period. If this performance goal is not met, no
nonvested stock units will be awarded and no compensation expense will be recorded.

The fair value of the nonvested stock units is determined using the Monte-Carlo simulation model, which simulates a
range of possible future stock prices and estimates the probabilities of the potential payouts. This model uses the average
prices for the 60 consecutive calendar days beginning 30 days prior to and ending 30 days after the first business day of
the performance period. This model also incorporates the following ranges of assumptions:

• The expected volatilities are the historical volatilities of the Company’s stock and the members of the peer group over

the period commensurate with the three-year performance period.

• The risk-free interest rate is based on the U.S. Treasury rate assumption commensurate with the three-year
performance period. The risk-free rates for the nonvested stock units granted in 2017 ranged from 1.0% to 1.4%. The
risk-free interest rate for the nonvested stock units granted in 2018 was 1.6%.

• The expected dividend yield is assumed to be zero since the award holders are entitled to any dividends paid over the

performance period.

Dividends accrue on the nonvested stock units. Dividends will be forfeited for nonvested stock units that do not vest.

The following table summarizes the shares that have been accrued for rTSR RSUs awards under the 2018 and 2017

long-term incentive plans at August 3, 2018:

2018 rTSR RSUs
2017 rTSR RSUs

Performance-Based Market Stock Units

Shares
3,368
5,676

The number of MSU Grants (last granted in 2016) that will ultimately be awarded and will vest at the end of the applicable
three-year performance period for each annual plan is based on total shareholder return, which is defined as the change in the
Company’s stock price plus dividends paid during the performance period. The number of shares awarded at the end of the
performance period will vary in direct proportion to a target number of shares set at the beginning of the period, up to a maximum
of 150% of target, based on the change in the Company’s cumulative total shareholder return over the performance period.
The probability of the actual shares expected to be earned is considered in the grant date valuation; therefore, the expense will
not be adjusted to reflect the actual units earned. In addition to a service requirement, the vesting of the MSU Grants is also
subject to the achievement of a specified level of operating income during the performance period. If this performance goal is
not met, no MSU Grants will be awarded and no compensation expense will be recorded.

The fair value of the MSU Grants was determined using the Monte-Carlo simulation model, which simulated a range of
possible future stock prices and estimated the probabilities of the potential payouts. This model used the average prices
for the 60 consecutive calendar days beginning 30 days prior to and ending 30 days after the first business day of the
performance period. This model also incorporated the following ranges of assumptions:

• The expected volatility was a blend of implied volatility based on market-traded options on the Company’s stock and
historical volatility of our stock over the period commensurate with the three-year performance period. The expected
volatility for the 2016 MSU Grants ranged from 23% to 24%.

• The risk-free interest rate was based on the U.S. Treasury rate assumption commensurate with the three-year

performance period. The risk-free rates for the 2016 MSU Grants ranged from 0.9% to 1.0%.

• The expected dividend yield was assumed to be zero since the award holders are entitled to any dividends paid over

the performance period.

Dividends accrue on the 2016 MSU Grants. Dividends will be forfeited for any MSU Grants that do not vest. No MSU

Grants were awarded in 2017 or 2018. At August 3, 2018, 20,334 shares for the 2016 MSU Grants were accrued.

Stock Options

Prior to 2012, stock options were granted with an exercise price equal to the market price of the Company’s stock on
the grant date; those option awards generally vest at a cumulative rate of 33% per year beginning on the first anniversary
of the grant date and expire ten years from the date of grant. No stock options were granted in 2016, 2017 or 2018.

A summary of the Company’s stock option activity as of August 3, 2018, and changes during 2018 are presented in the

following table:

Fixed Options
Outstanding at July 28, 2017
Exercised
Outstanding at August 3, 2018

Weighted-
Average
Price

4,000 $ 32.86
32.86
(4,000)
--
--

The following table summarizes the total intrinsic values of options exercised during each of the three years:
2016
$ 917

Total intrinsic values of options exercised*

2018
$ 466

2017
$ 1,070

*The intrinsic value for stock options is defined as the difference between the current market value and the grant price.

Compensation Expense

The following table highlights the components of share-based compensation expense for each of the three years:

Nonvested stock awards and units
MSU Grants

Total compensation expense

2018
2016
2017
$ 6,052 $ 6,654 $ 10,277
2,925
1,804
$ 6,977 $ 8,458 $ 13,202

925

The following table highlights the total unrecognized compensation expense related to the outstanding nonvested stock
awards and nonvested stock units and the weighted-average periods over which the expense is expected to be recognized
as of August 3, 2018:

Total unrecognized compensation
Weighted-average period in years

Nonvested
Stock Awards

Nonvested
Stock Units
$ 3,189 $ 1,341
1.71

1.82

The following table highlights the total income tax benefit recognized in the Consolidated Statements of Income for each

of the three years:

Total income tax benefit

2018
2016
2017
$ 774 $ 2,740 $ 3,819

During 2018, the Company issued 55,868 shares of its common stock resulting from the vesting of share-based
compensation awards and stock option exercises. Related tax withholding payments on certain share-based compensation
awards exceeded proceeds received from the exercise of stock options which resulted in a net reduction to shareholders’
equity of $3,816.

11. Shareholder Rights Plan

On April 9, 2018, the Company’s 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 plan, as set forth
in the Rights Agreement dated as of April 9, 2018 (the “Rights Agreement”), by and between the Company and American
Stock Transfer & Trust Company, LLC, as rights agent. The dividend was payable on April 19, 2018 to the shareholders of
record on April 19, 2018. The Rights Agreement replaced the Company’s previous shareholder rights plan adopted in 2015
(the “2015 Plan”), and it became effective immediately following the expiration of the 2015 Plan at the close of business on
April 9, 2018. The 2015 Plan and the preferred share purchase rights issued thereunder expired by their own terms and
shareholders of the Company were not entitled to any payment as a result of the expiration of the 2015 Plan. The Rights
Agreement will terminate unless approved by shareholders at the Company’s 2018 annual meeting.

The Rights

The Rights initially trade with, and are inseparable from, the Company’s common stock. The Rights are evidenced only
by the balances indicated in the book-entry account system of the transfer agent for the Company’s common stock or, in
the case of certificated shares, by certificates that represent shares of the Company’s common stock. New Rights will
accompany any new shares of common stock the Company issues after April 19, 2018 until the earlier to occur of the
Distribution Date, redemption of the Rights by the Company’s Board of Directors or the final expiration of the Rights
Agreement, each as described below.

Exercise Price

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.

Exercisability

The Rights will not be exercisable until 10 days after the public announcement that a person or group has become an

“Acquiring Person” by obtaining beneficial ownership of 20% or more of the Company’s outstanding common stock.

Shares held by affiliates and associates of an Acquiring Person, and Notional Common Shares (as defined in the Rights
Agreement) held by counterparties to a Derivatives Contract (as defined in the Rights Agreement) with an Acquiring Person,
will be deemed to be beneficially owned by the Acquiring Person. 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 – 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.

At August 3, 2018, none of the Rights were exercisable.

Consequences of a Person or Group Becoming an Acquiring Person

If a person or group becomes an Acquiring Person, after the Distribution Date, each Right will generally entitle the
holder, except the Acquiring Person or any associate or affiliate thereof, to acquire, for the exercise price of $600.00 per
Right (subject to adjustment as provided in the Rights Agreement), shares of the Company’s common stock (or, in certain
circumstances, Preferred Shares) having a market value equal to twice the Right’s then-current exercise price (initially
$1,200.00 per Right).

In addition, if, the Company is later acquired in a merger or similar transaction after the Distribution Date, each Right
will generally entitle the holder, except the Acquiring Person or any associate or affiliate thereof, to acquire, for the exercise
price of $600.00 per Right (subject to adjustment as provided in the Rights Agreement), shares of the acquiring corporation
having a market value equal to twice the Right’s then-current exercise price (initially $1,200.00 per Right).

Preferred Share Provisions

Each one one-hundredth of a Preferred Share, if issued:

• will not be redeemable;
• will entitle holders to quarterly dividend payments of $0.01 per share, or an amount equal to the dividend paid on

one share of common stock, whichever is greater;

• will entitle holders upon liquidation either to receive $1.00 per share or an amount equal to the payment made on

one share of common stock, whichever is greater;

• will have the same voting power as one share of common stock; and
•

if shares of the Company’s common stock are exchanged via merger, consolidation, or a similar transaction, will
entitle holders to a per share payment equal to the payment made on one share of common stock.

The value of one one-hundredth of a Preferred Share will generally approximate the value of one share of common

stock.

Redemption

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.

Qualifying Offer Provision

The Rights would also not interfere with all-cash, fully financed tender offers for all shares of common stock that remain
open for a minimum of 60 business days, are 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”). 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.

Exchange

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.

Anti-Dilution Provisions

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.

Amendments

The terms of the Rights Agreement may be amended by the Board of Directors without the consent of the holders of
the Rights. After a person or group becomes an Acquiring Person, the Board of Directors may not amend the agreement
in a way that adversely affects holders of the Rights.

Expiration

If the Rights Agreement is approved by the Company’s shareholders at the 2018 annual meeting, the Rights will expire
on April 9, 2021. If shareholders do not approve the Rights Agreement, the Rights will expire immediately following
certification of the vote at the 2018 annual meeting.

12. Employee Savings Plans

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 2018, 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. In 2017 and 2016, the Company matched 25% of
employee contributions for each participant in either 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 $32,669 is included in other assets
and the related liability to the participants of $32,669 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 following table summarizes the Company’s contributions for each plan for each of the three years:

401(k) Savings Plan
Non-Qualified Savings Plan

13. Income Taxes

2018

2017

2016

$ 3,812

342

$ 2,501 $ 2,528
296

291

The components of the provision for income taxes for each of the three years were as follows:

Current:

Federal
State
Deferred:

Federal
State

Total provision for income taxes

2018

2017

2016

$ 40,761 $ 83,743 $ 62,054
6,447
7,567

6,099

12,477
(16,779) 4,696
722
(3,858)
982
$ 30,803 $ 96,988 $ 77,120

A reconciliation of the Company’s provision for income taxes and income taxes based on the statutory U.S. federal rate

of 26.9%, 35.0% and 35.0% in 2018, 2017 and 2016, respectively, was as follows:

Provision computed at federal statutory income tax rate
State and local income taxes, net of federal benefit
Revaluation of deferred taxes due to a reduction in the federal tax rate at

2016
2017
2018
$ 74,859 $ 104,611 $ 93,247
1,427

5,856

5,066

the enactment date of the Tax Act

(26,772)

Revaluation of deferred taxes due to the impact of the change in rate on

2018 temporary items

Employer tax credits for FICA taxes paid on employee tip income
Other employer tax credits
Other-net
Total provision for income taxes

(3,710)
--
--
(13,707) (11,543) (11,048)
(4,476) (2,814) (7,326)
(457) 878 820
$ 30,803 $ 96,988 $ 77,120

The decrease in the Company’s provision for income taxes from 2017 to 2018 reflected the significant impact of the Tax
Act. The Tax Act made broad and complex changes to the U.S. tax code, including, but not limited to, reducing the U.S.
federal corporate tax rate from 35% to 21% effective January 1, 2018. In accordance with Section 15 of the Internal Revenue
Code, the Company used a blended rate of 26.9% for its fiscal 2018 tax year, by applying a prorated percentage of the
number of days prior to and subsequent to the January 1, 2018 effective date of the Tax Act.

Significant components of the Company’s net deferred tax liability consisted of the following at:

Deferred tax assets:

Compensation and employee benefits
Deferred rent
Accrued liabilities
Insurance reserves
Inventory
Other

Deferred tax assets

Deferred tax liabilities:

Property and equipment
Inventory
Other

Deferred tax liabilities

Net deferred tax liability

August 3, 2018

July 28, 2017

$ 6,342
12,667
8,546
7,291
3,106
--
$ 37,952

$ 10,110
18,270
13,233
12,401
4,411
2,767
$ 61,192

$ 75,433
7,448
7,232
90,113
$ 52,161

$ 100,373
10,906
12,273
123,552
$ 62,360

The decrease in the Company’s net deferred tax liability reflected the significant impact of the Tax Act on rate and
capitalization policies. While the Company is able to make reasonable estimates of the impact of both, the final impact of
the Tax Act may differ from these estimates, due to, among other things, additional guidance that may be issued by the
Internal Revenue Service, expected state tax responses to either follow or reject the federal changes, and changes in our
interpretations and assumptions. The Company continues to gather additional information to determine the final impact.

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
3, 2018 and July 28, 2017, the Company’s gross liability for uncertain tax positions, exclusive of interest and penalties, was
$18,634 and $20,731, respectively. Summarized below is a tabular reconciliation of the beginning and ending balance of
the Company’s total gross liability for uncertain tax positions exclusive of interest and penalties:

Balance at beginning of year
Tax positions related to the current year:

Additions
Reductions

Tax positions related to the prior year:

Additions
Reductions

Settlements
Expiration of statute of limitations
Balance at end of year

August 3, 2018
July 28, 2017
$ 20,731 $ 21,899 $ 25,507

July 29, 2016

3,029
--

4,003
--

4,860

2,186
582
610
(6,896)
(2,966)
(575)
(2,324)
(1,027)
(3,878)
(1,283)
(1,434)
(1,760)
$ 18,634 $ 20,731 $ 21,899

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:

Uncertain tax positions

2016
2017
2018
$ 14,721 $ 13,475 $ 14,234

The Company had $5,681, $6,128, and $5,497 in interest and penalties accrued as of August 3, 2018, July 28, 2017,

and July 29, 2016, respectively.

The Company recognized accrued interest and penalties related to unrecognized tax benefits of $(447), $631 and
$(4,256) in its provision for income taxes on August 3, 2018, July 28, 2017 and July 29, 2016, respectively. The decrease
from 2017 to 2018 was mostly attributable to audit settlements in 2018. The increase from 2016 to 2017 was attributable
to the Company’s revaluation of select reserves and audit settlements in 2016.

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 3, 2018 by approximately $2,000 to $3,000 within the next twelve months. At August 3,
2018, the Company was subject to income tax examinations for its U.S. federal income taxes after 2014 and for state and
local income taxes generally after 2014.

14. Net Income Per Share and Weighted Average Shares

The following table reconciles the components of diluted earnings per share computations:

Net income per share numerator

2018
$ 247,620

2017

2016

$ 201,899

$ 189,299

Net income per share denominator:

Basic weighted average shares outstanding
Add potential dilution:

Stock options, nonvested stock awards and units and

24,011,161

24,031,810

23,945,041

MSU Grants

Diluted weighted average shares outstanding

64,453
24,075,614

86,478
24,118,288

129,232
24,074,273

15. Commitments and Contingencies

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 2 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 3, 2018, the Company had $9,455 of standby letters of credit related to securing
reserved claims under workers’ compensation insurance. All standby letters of credit are renewable annually and reduce
the Company’s borrowing availability under its Revolving Credit facility (see Note 5).

As of August 3, 2018, the Company is secondarily liable for lease payments associated with two properties. The
Company is not aware of any non-performance under these lease arrangements that would result in the Company having
to perform in accordance with the terms of these guarantees, and therefore, no provision has been recorded in the
Consolidated Balance Sheets for amounts to be paid in case of non-performance by the third party by the primary obligor
under such lease agreements.

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 Sheet.

16. Quarterly Financial Data (Unaudited)

Quarterly financial data for 2018 and 2017 are summarized as follows:

1st Quarter

2nd Quarter 3rd Quarter

4th Quarter (a)

2018
Total revenue
Store operating income
Income before income taxes
Net income
Net income per share – basic
Net income per share – diluted
2017
Total revenue
Store operating income
Income before income taxes
Net income
Net income per share – basic
Net income per share – diluted

$ 710,368 $ 787,771 $ 721,413 $ 810,893
118,213
78,494
61,354
2.56
2.55

112,686
72,994
91,139
3.80
3.79

107,731
67,220
46,380
1.93
1.92

98,718
59,715
48,747
2.03
2.03

$ 709,971 $ 772,682 $ 700,410 $ 743,226
119,749
79,672
53,893
2.24
2.23

107,478
68,089
46,924
1.95
1.95

117,513
79,058
52,727
2.19
2.19

109,832
72,068
48,355
2.01
2.01

(a) The Company’s fourth quarter of fiscal 2018 consisted of 14 weeks.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

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 3, 2018, our disclosure
controls and procedures were effective.

There have been no changes (including corrective actions with regard to significant deficiencies and material weaknesses)
during the quarter ended August 3, 2018 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.

Management’s Report on 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, our Financial Code of Ethics, and our Code of Business Conduct and Ethics, all 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 and all 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 3, 2018, based on these criteria.

In addition, Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report

on our internal control over financial reporting, which is included herein.

/s/Sandra B. Cochran
Sandra B. Cochran
President and Chief Executive Officer

/s/Jill M. Golder
Jill M. Golder
Senior Vice President and Chief Financial Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Cracker Barrel Old Country Store, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Cracker Barrel Old Country Store, Inc. and subsidiaries
(the “Company”) as of August 3, 2018, 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 3, 2018, based on the
criteria established in Internal Control—Integrated Framework (2013) issued by the 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 3, 2018, of the Company and our
report dated September 28, 2018, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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.

Definition and Limitations of Internal Control over Financial Reporting

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 the controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

Deloitte & Touche LLP

Nashville, Tennessee
September 28, 2018

ITEM 9B. OTHER INFORMATION

Cracker Barrel Old Country Store, Inc. and Subsidiaries FY 2019 Annual Bonus Plan

On September 25, 2018, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of the
Company adopted the Cracker Barrel Old Country Store, Inc. and Subsidiaries FY 2019 Annual Bonus Plan (the “2019
Annual Bonus Plan”) in order to reward executive officers of the Company and its subsidiaries if the Company successfully
meets established performance targets, up to a maximum of 200% of target. The 2019 Annual Bonus Plan is substantially
identical in form to the bonus plan that was in place in respect of 2018.

The Committee also approved target and maximum potential bonuses for each of the Company’s named executive
officers (as defined in Item 5.02 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended) under
the 2019 Annual Bonus Plan, with the exception of the target and maximum potential bonuses for the Company’s President
and Chief Executive Officer, Sandra B. Cochran, which were approved by the independent members of the Board on the
Committee’s recommendation. The following table indicates the target and maximum potential bonuses established for
2019, expressed as a percentage of base salary, for which each of the named executive officers would be eligible depending
on the Company’s performance in 2019:

Name

Sandra B. Cochran

Jill M. Golder

Nicholas V. Flanagan

Richard M. Wolfson

Laura A. Daily

2019 Target
Bonus
Percentage

2019 Maximum
Bonus
Percentage

120%

75%

70%

65%

240%

150%

140%

130%

In no case can an executive’s actual award under the 2019 Annual Bonus Plan exceed the maximum potential award,

regardless of the Company’s 2019 performance.

A copy of the 2019 Annual Bonus Plan is filed as Exhibit 10(x) to this Annual Report on Form 10-K and incorporated

herein by reference. The foregoing description is qualified in its entirety by reference to such exhibit.

Cracker Barrel Old Country Store, Inc. and Subsidiaries FY 2019 Long-Term Incentive Program

On September 25, 2018, the Committee adopted the Cracker Barrel Old Country Store, Inc. and Subsidiaries FY 2019
Long-Term Incentive Program (the “2019 Long-Term Incentive Program”) to govern long-term incentive equity awards
designed to reinforce alignment of the interests of the Company’s executive officers with those of shareholders and to serve
as a retention tool. The 2019 Long-Term Incentive Program is substantially identical in form to the long-term incentive
program that was in place in respect of 2018 and consists of three components: (i) the 2019 Long-Term Performance Plan
(the “2019 LTPP”); (ii) the 2019 Performance-Based Restricted Stock Unit Award (the “2019 Performance-Based RSU
Award”); and (iii) the 2019 Time-Based Restricted Stock Unit Award (the “2019 Time-Based RSU Award”). The 2019 LTPP
provides for awards of performance shares tied to the Company’s successful achievement of a target return on invested
capital goal over fiscal years 2019 and 2020 (the “LTPP Performance Goal”). The 2019 Performance-Based RSU Award
provides for awards of performance-based restricted stock units, with cliff vesting after three years from the date of grant,
that may be increased or decreased by 25% of the target award amounts depending on the Company’s total shareholder
return (“Relative TSR”) relative to a peer group of companies approved by the Committee (the “Peer Group”) over fiscal
years 2019, 2020 and 2021. The 2019 Time-Based RSU provides for awards of time-based restricted stock units that cliff-
vest after three years from the date of grant, subject to the executive’s continued employment with the Company on the
vesting date. At the time of grant, the value of each eligible participant’s target awards under the 2019 Long-Term Incentive
Program were allocated approximately as follows: 50% under the 2019 LTPP, 25% under the 2019 Performance-Based
RSU Award, and 25% under the 2019 Time-Based RSU Award.

The Committee also approved equity award percentages for each of the named executive officers that represent his or
her target opportunities for awards under the 2019 LTPP (the “LTPP Percentage”) and the 2019 Performance-Based RSU
Award (the “Performance-Based RSU Percentage”) as well as the amount of his or her 2019 Time-Based RSU Award (the
“Time-Based RSU Percentage”), in each case expressed as a percentage of the named executive officer’s base salary.
The LTPP Percentage, Performance-Based RSU Percentage and Time-Based RSU Percentage for the named executive

officers were established by the Committee simultaneously with the establishment of the 2019 LTPP, 2019 Performance-
Based RSU Award and 2019 Time-Based RSU Award, respectively, with the exception of Ms. Cochran’s LTPP Percentage,
Performance-Based RSU Percentage and Time-Based RSU Percentage, which were approved by the independent
members of the Board on the Committee’s recommendation. Set forth below are each named executive officer’s LTPP
Percentage, Performance-Based RSU Percentage and Time-Based RSU Percentage, as well as total target award
opportunity, under the 2019 Long-Term Incentive Program:

Name

Sandra B. Cochran

Jill M. Golder

Nicholas V. Flanagan

Richard M. Wolfson

Laura A. Daily

LTPP
Percentage

Performance-
Based RSU
Percentage

Time-Based
RSU Percentage

190%

70%

60%

37.5%

95%

35%

30%

95%

35%

30%

18.75%

Total

380%

140%

120%

75%

Under the 2019 LTPP, each named executive officer’s realized award, if any, relative to the target award based on the
LTPP Percentage will be determined based on the Company’s performance relative to the LTPP Performance Goal during
the performance period.

Under the 2019 Performance-Based RSU Award, the Company’s Relative TSR over the three-year performance period
will be measured against an under/overachievement scale with specified thresholds and may result in an adjustment to the
realized award relative to the target award based on the Performance-Based RSU Percentage, as set forth in the table
below (there is no interpolation within the percentile ranges):

Performance Range of
Company’s Relative TSR versus
Peer Group
75th Percentile or Above
(Maximum)

Percentage Adjustment in Number of

Target Performance-Based RSU
Shares

+25%

Between 25th and 75th Percentile

No adjustment

25th Percentile or Below

-25%

A copy of the 2019 Long-Term Incentive Program is filed as Exhibit 10(y) to this Annual Report on Form 10-K and

incorporated herein by reference. The foregoing description is qualified in its entirety by reference to such exhibit.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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 2018 Proxy Statement: “Board of Directors and Committees,” “Proposal 1: Election of Directors,”
“Section 16(a) Beneficial Ownership Reporting Compliance” and “Certain Relationships and Related Transactions—Code of
Ethics.” 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 “Executive Officers of the Registrant.”

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by this reference to the following sections of the 2018 Proxy
Statement: “Executive Compensation” and “Board of Directors and Committees—Compensation of Directors.” The
“Compensation Committee Report” set forth in the section of the 2018 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.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS

The information required by this Item is incorporated herein by this reference to the sections entitled “Stock Ownership of

Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the 2018 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated herein by this reference to the sections entitled "Certain Relationships

and Related Transactions” and “Director Independence” in the 2018 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

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 2018 Proxy Statement. No other portion of the section of the 2018 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.

ITEM 15. EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES

(a)

List of documents filed as part of this report:

PART IV

All financial statements – see Item 8.

All schedules have been omitted since they are either not required or not applicable, or
the required information is included.

The exhibits listed in the accompanying Index to Exhibits immediately prior to the
signature page to this Annual Report on Form 10-K.

Exhibit

INDEX TO EXHIBITS

3(I), 4(a)

Amended and Restated Charter of Cracker Barrel Old Country Store, Inc. (1)

3(II), 4(b)

Amended and Restated Bylaws of Cracker Barrel Old Country Store, Inc. (2)

4(c), 10(a)

4(d), 10(b)

4(e)

10(c)

Credit Agreement, dated as of January 8, 2015, among Cracker Barrel Old Country Store, Inc., the
Subsidiary Guarantors named therein, the Lenders party thereto, and Wells Fargo Bank, National
Association as Administrative Agent and Collateral Agent (3)

Credit Agreement, dated as of September 5, 2018, 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 (4)

Rights Agreement, dated as of April 9, 2018, between Cracker Barrel Old Country Store, Inc. and
American Stock Transfer & Trust Company, LLC, as rights agent (5)

Form of Stock Option Award under the CBRL Group, Inc. 2002 Omnibus Incentive
Compensation Plan† (6)

10(d)

10(e)

10(f)

10(g)

10(h)

10(i)

10(j)

10(k)

10(l)

10(m)

10(n)

10(o)

10(p)

10(q)

10(r)

10(s)

10(t)

10(u)

10(v)

10(w)
10(x)

10(y)

Master Lease, dated July 31, 2000, between Country Stores Property I, LLC, as Lessor, and
Cracker Barrel Old Country Store, Inc., as Lessee, for lease of 21 Cracker Barrel Old Country
Store® sites (7)

Master Lease, dated July 31, 2000, between Country Stores Property I, LLC, as Lessor, and
Cracker Barrel Old Country Store, Inc., as Lessee, for lease of nine Cracker Barrel Old Country
Store® sites (8)

Master Lease, dated July 31, 2000, between Country Stores Property II, LLC, as Lessor, and
Cracker Barrel Old Country Store, Inc., as Lessee, for lease of 23 Cracker Barrel Old Country
Store® sites (9)

Master Lease, dated July 31, 2000, between Country Stores Property III, LLC, as Lessor, and
Cracker Barrel Old Country Store, Inc., as Lessee, for lease of 12 Cracker Barrel Old Country
Store® sites (10)

Cracker Barrel Old Country Store, Inc. Amended and Restated Stock Option Plan (as amended
to date)† (11)

Cracker Barrel Old Country Store, Inc. Corporate Policy—Severance Benefits Policy (as
amended to date)† (12)

Cracker Barrel Old Country Store, Inc. 2002 Omnibus Incentive Compensation Plan (as
amended to date)† (13)

Cracker Barrel Old Country Store, Inc. 2010 Omnibus Stock and Incentive Plan† (14)

Cracker Barrel Old Country Store, Inc. Form of Performance-Based Stock Unit Award† (15)

Cracker Barrel Old Country Store, Inc. Non-Qualified Savings Plan (as amended to date)† (16)

Cracker Barrel Old Country Store, Inc. Deferred Compensation Plan† (17)

Amendment to Deferred Compensation Plan†(18)

Cracker Barrel Old Country Store, Inc. Form of Restricted Stock Award Notice† (19)

Cracker Barrel Old Country Store, Inc. and Subsidiaries FY 2016 Long-Term Incentive Program†
(20)

Cracker Barrel Old Country Store, Inc. and Subsidiaries FY 2017 Long-Term Incentive Program†
(21)

Cracker Barrel Old Country Store, Inc. and Subsidiaries FY 2018 Annual Bonus Plan† (22)

Cracker Barrel Old Country Store, Inc. and Subsidiaries FY 2018 Long-Term Incentive Program†
(23)

Form of Severance Agreement between Cracker Barrel Old Country Store, Inc., and certain of
its named executive officers† (24)

Form of Change of Control Agreement between Cracker Barrel Old Country Store, Inc., and
certain of its named executive officers† (25)

Employment Agreement with Sandra B. Cochran, dated as of July 27, 2018† (26)
Cracker Barrel Old Country Store, Inc. and Subsidiaries FY 2019 Annual Bonus Plan† (filed
herewith)

Cracker Barrel Old Country Store, Inc. and Subsidiaries FY 2019 Long-Term Incentive Program†
(filed herewith)

31.1

31.2

32.1

32.2

Subsidiaries of the Registrant (filed herewith)

Consent of Independent Registered Public Accounting Firm - Deloitte & Touche LLP (filed
herewith)

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 (filed herewith)

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 (filed herewith)

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith)

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith)

101.INS

XBRL Instance Document (filed herewith)

101.SCH

XBRL Taxonomy Extension Schema (filed herewith)

101.CAL

XBRL Taxonomy Extension Calculation Linkbase (filed herewith)

101.LAB

XBRL Taxonomy Extension Label Linkbase (filed herewith)

101.PRE

XBRL Taxonomy Extension Presentation Linkbase (filed herewith)

101.DEF

XBRL Taxonomy Extension Definition Linkbase (filed herewith)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed under the
Exchange Act on April 10, 2012 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on February 24, 2012 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on January 9, 2015.

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on September 10, 2018.
Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on April 9, 2018.

Incorporated by reference to Exhibit 10(l) to the Company’s Annual Report on Form 10-K filed under the
Exchange Act for the fiscal year ended July 29, 2005 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10(r) to the Company’s Annual Report on Form 10-K filed under the
Exchange Act for the fiscal year ended July 28, 2000 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10(d) to the Company’s Annual Report on Form 10-K filed under the
Exchange Act for the fiscal year ended July 28, 2017.

Incorporated by reference to Exhibit 10(e) to the Company’s Annual Report on Form 10-K filed under the
Exchange Act for the fiscal year ended July 28, 2017.

Incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K filed under the
Exchange Act for the fiscal year ended July 28, 2017.

Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed under
the Exchange Act for the quarterly period ended January 30, 2009 (Commission File No. 000-25225).
74

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19)

(20)

(21)

(22)

(23)

(24)

(25)

(26)

Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed under
the Exchange Act for the quarterly period ended May 1, 2009 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed under
the Exchange Act for the quarterly period ended January 29, 2010 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on December 7, 2010 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on December 7, 2010 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10(aa) to the Company’s Annual Report on Form 10-K filed under
the Exchange Act for the fiscal year ended July 29, 2011 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10(bb) to the Company’s Annual Report on Form 10-K filed under
the Exchange Act for the fiscal year ended July 29, 2011 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10(cc) to the Company’s Annual Report on Form 10-K filed under
the Exchange Act for the fiscal year ended July 29, 2011 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on July 31, 2013 (Commission File No. 000-25225).

Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on September 30, 2015.

Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on October 28, 2016.

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on October 3, 2017.
Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on October 3, 2017.

Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed under
the Exchange Act for the quarterly period ended April 27, 2018.
Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed under
the Exchange Act for the quarterly period ended April 27, 2018.

Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on July 30, 2018.

†Denotes management contract or compensatory plan, contract or arrangement.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized on this 28th day of September, 2018.

SIGNATURES

CRACKER BARREL OLD COUNTRY STORE, INC.

By:

/s/Sandra B. Cochran
Sandra B. Cochran,
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant in the capacities on this 28th day of September, 2018.

Name

Title

/s/Sandra B. Cochran
Sandra B. Cochran

/s/Jill M. Golder
Jill M. Golder

/s/Jeffrey M. Wilson
Jeffrey M. Wilson

/s/Thomas H. Barr
Thomas H. Barr

/s/James W. Bradford
James W. Bradford

/s/Meg G. Crofton
Meg G. Crofton

/s/Richard J. Dobkin
Richard J. Dobkin

/s/Norman E. Johnson
Norman E. Johnson

/s/William W. McCarten
William W. McCarten

/s/Coleman H. Peterson
Coleman H. Peterson

/s/Andrea M. Weiss
Andrea M. Weiss

President, Chief Executive Officer and Director

Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Vice President, Corporate Controller (Principal Accounting Officer)

Director

Director and Chairman of the Board

Director

CRACKER BARREL OLD COUNTRY STORE, INC.
Corporate Information

Corporate Offices
Cracker Barrel Old Country Store, Inc.
P.O. Box 787
305 Hartmann Drive
Lebanon, TN 37088-0787
Phone: 615-444-5533
crackerbarrel.com

Transfer Agent
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219

Dividend Reinvestment and Direct Stock Purchase Plan
Although our company does not sponsor a dividend reinvestment or direct
stock purchase plan, our transfer agent, American Stock Transfer & Trust
Company, LLC (“AST”), sponsors and administers such programs. You may
call AST at 800-485-1883 to obtain enrollment forms.

10-K Report
A copy of the Cracker Barrel Old Country Store, Inc. Form 10-K Annual
Report for Fiscal 2018, filed with the Securities and Exchange Commission,
may be obtained without charge through our Internet website, located at
crackerbarrel.com.

Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Nashville, Tennessee

Annual Meeting
The annual meeting of shareholders will be held at 10:00 a.m.
Thursday, November 15, 2018, at the Cracker Barrel Old Country
Store home office on Hartmann Drive, Lebanon, Tennessee.

Unless specifically noted otherwise, references in this annual report to
“CBRL,” “Cracker Barrel” or “The Company” refer to Cracker Barrel Old
Country Store, Inc. and its subsidiaries; or its Cracker Barrel Old Country
Store® concept.

“Cracker Barrel Old Country Store” name and logo, “Cracker Barrel”,
“Pleasing People”, “CB Old Country Store”, and “Holler & Dash Biscuit
House” are trademarks of CBOCS Properties, Inc.

Comparison of Five-Year Total Return
Among Cracker Barrel Old Country Store,
Inc., S&P 400 Restaurants Index, and S&P
Mid Cap Index. Assumes $100 invested on
reinvestment of
8/2/13 and
dividends. Copyright @ Standard and Poor’s,
Inc.

includes

$200

$150

$100

$50

Corporate Officers

2013

2014

2015

2016

2017

2018

Cracker Barrel Old Country Store, Inc.

S&P Mid Cap

S&P 400 Restaurants

Sandra B. Cochran
President and Chief Executive Officer

Alan L. Emery
Regional Vice President, Restaurant Operations

Benjamin E. Noyes
Regional Vice President, Restaurant Operations

P. Doug Couvillion
Senior Vice President, Sourcing and Supply Chain

Bevan T. Flavin
Divisional Vice President, Restaurant Operations

Thomas R. Pate
Vice President, Operations Business Model and New

Laura A. Daily
Senior Vice President, Retail

Deborah A. Fratrik
Regional Vice President, Restaurant Operations

Nicholas V. Flanagan
Senior Vice President, Restaurant and Retail

Scott A. Gardner
Vice President, Distribution and Logistics

Operations

Jill M. Golder
Senior Vice President and Chief Financial Officer

Donald H. Hoffman
Senior Vice President, Marketing

Richard M. Wolfson
Senior Vice President, General Counsel and

Corporate Secretary

Charlie E. Austin
Regional Vice President, Restaurant Operations

Jennifer C. Beougher
Vice President, Financial Planning & Analysis

Michael J. Chissler
COO, Holler & Dash

Derrick L. Collins
Regional Vice President, Retail Operations

Brenda L. Cool
Regional Vice President, Retail Operations

Leon M. De Wet
Vice President, Information Services and CIO

Michael T. Hackney
Vice President, Management and Employee Training

Christie A. Hale
Vice President, Internal Audit

Erin T. Hasselgren
Regional Vice President, Restaurant Operations

Beth J. Hatfield
Regional Vice President, Retail Operations

Douglas Hisel
Regional Vice President, Restaurant Operations

Ray T. Johnson
Divisional Vice President, Restaurant Operations

Serena G. Johnson
Regional Vice President, Retail Operations

Timothy B. Mei
Regional Vice President, Restaurant Operations

Sherri L. Moore
Vice President, Restaurant and Retail Operations

Support

Unit Openings

Maja N. Patton
Vice President, Merchandise Planning and Allocation

Myson S. Rice
Regional Vice President, Restaurant Operations

Donna Roberts
Vice President and Deputy General Counsel

Todd H. Rodgers
Vice President, Strategic Sourcing

Cindy M. Sasse
Vice President, Retail Operations

Jeffrey J. Sigel
Vice President, Marketing

Cammie Spillyards-Schaefer
Vice President, Culinary

David R. Swartling
Regional Vice President, Restaurant Operations

Walter W. Tyree
Regional Vice President, Restaurant Operations

Andress R. Urteaga
Regional Vice President, Restaurant Operations

Jeffrey M. Wilson
Vice President, Corporate Controller and Principal

Accounting Officer