ANNUAL REPORT
2023
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 July 28, 2023
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
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)
Trading Symbol(s)
CBRL
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
1
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 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 has filed a report on and attestation to its management
assessment of the effectiveness of internal control over financial reporting under Section 404(b) of the Sarbanes-
Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial
statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements.
Yes No
Indicate by check mark whether any of those error corrections are restatements that required a recovery
analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant
recovery period pursuant to §240.10D-1(b).
Yes No
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 non-affiliates of the registrant as of January 27, 2023 (the
last business day of the registrant’s most recently completed second fiscal quarter) was $2,404,698,473.
As of September 13, 2023, there were 22,157,665 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 16, 2023
(the “2023 Proxy Statement”)
Part of Form 10-K
into which incorporated
Part III
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PART I
PAGE
INTRODUCTION ..................................................................................................................................................... 4
ITEM 1. BUSINESS ............................................................................................................................................. 5
ITEM 1A. RISK FACTORS ...................................................................................................................................13
ITEM 1B. UNRESOLVED STAFF COMMENTS ..................................................................................................28
ITEM 2. PROPERTIES ......................................................................................................................................28
ITEM 3. LEGAL PROCEEDINGS ......................................................................................................................28
ITEM 4. MINE SAFETY DISCLOSURES ...........................................................................................................29
INFORMATION ABOUT OUR EXECUTIVE OFFICERS ......................................................................30
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES .....................................................................31
ITEM 6. RESERVED ...........................................................................................................................................31
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ..................................................................................................................................32
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. ................................46
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ..............................................................48
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE ...................................................................................................................75
ITEM 9A. CONTROLS AND PROCEDURES .......................................................................................................75
ITEM 9B. OTHER INFORMATION .......................................................................................................................77
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS ...........77
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE…………………………...77
ITEM 11. EXECUTIVE COMPENSATION…………………………………………………………………………… 77
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS ...............................................................................................77
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE ..................................................................................................................................78
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES………………………………………………………78
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES………………………………………………..78
INDEX TO EXHIBITS ............................................................................................................................................78
SIGNATURES .......................................................................................................................................................82
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General
INTRODUCTION
This report contains references to years 2023, 2022 and 2021, which represent our fiscal years ended July
28, 2023, July 29, 2022 and July 30, 2021, 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 units) 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 risks and uncertainties associated with inflationary conditions with respect
to the price of commodities, transportation, distribution and labor; disruptions to our restaurant or retail supply chain;
the COVID-19 pandemic, including the duration of the COVID-19 pandemic and its ultimate impact on our business;
our ability to identify, acquire and sell successful new lines of retail merchandise and new menu items at our
restaurants; our ability to sustain or the effects of plans intended to improve operational or marketing execution and
performance; the effects of increased competition at our locations on sales and on labor recruiting, cost, and
retention; consumer behavior based on negative publicity or changes in consumer health or dietary trends or safety
aspects of our food or products or those of the restaurant industry in general, including concerns about outbreaks
of infectious disease, as well as the possible effects of such events on the price or availability of ingredients used in
our restaurants; the effects of our indebtedness and associated restrictions on our financial and operating flexibility
and ability to execute or pursue our operating plans and objectives; changes in interest rates, increases in borrowed
capital or capital market conditions affecting our financing costs and ability to refinance our indebtedness, in whole
or in part; our reliance on limited distribution facilities and certain significant vendors; information technology-related
incidents, including data privacy and information security breaches, whether as a result of infrastructure failures,
employee or vendor errors, or actions of third parties; changes in or implementation of additional governmental or
regulatory rules, regulations and interpretations affecting tax, wage and hour matters, health and safety, animal
welfare, pensions, insurance or other undeterminable areas; the effects of plans intended to promote or protect our
brands and products; the actual results of pending, future or threatened litigation or governmental investigations and
the costs and effects of negative publicity or our ability to manage the impact of social media associated with these
activities; the impact of activist shareholders; our ability to enter successfully into new geographic markets that may
be less familiar to us; changes in land, building materials and construction costs; the availability and cost of suitable
sites for restaurant development and our ability to identify those sites; our ability to retain key personnel; the ability
of and cost to us to recruit, train, and retain qualified hourly and management employees; uncertain performance of
acquired businesses, strategic investments and other initiatives that we may pursue from time to time; the effects of
business trends on the outlook for individual restaurant locations and the effect on the carrying value of those
locations; general or regional economic weakness, business and societal conditions and the weather impact on
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sales and customer travel; discretionary income or personal expenditure activity of our customers; economic or
psychological effects of natural disasters or other unforeseen events such as terrorist acts, social unrest or war and
the military or government responses to such events; changes in foreign exchange rates affecting our future retail
inventory purchases; workers’ compensation, group health and utility price changes; implementation of new or
changes in interpretation of existing accounting principles generally accepted in the United States of America
(“GAAP”), and those factors 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 this 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.
PART I
ITEM 1. BUSINESS
OVERVIEW
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.
As of September 13, 2023, we operated 661 Cracker Barrel stores in 45 states and 59 Maple Street Biscuit
Company stores in 10 states. The following description of our business should be read in conjunction with the
information in Part II of this report under the caption “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.”
Cracker Barrel Old Country Store Concept
Our 661 Cracker Barrel stores are not 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, which are a popular
item sold by the gift shops and which we invite guests to use while waiting for a table in our dining room or after
enjoying a meal.
Products: Our restaurants, which generated approximately 79% of our total revenue in 2023, offer home-style
country cooking featuring many of our own recipes that emphasize authenticity and quality. Our restaurants serve
breakfast, lunch and dinner daily and offer dine-in, pick-up and delivery services. Menu items are moderately priced.
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Beginning in 2020, certain of our Cracker Barrel restaurants began serving an assortment of beer and wine, and the
subsequent ongoing expansion of this program throughout our system has resulted in beer and wine service in
approximately 590 stores, or approximately 89%, of our Cracker Barrel restaurants as of the end of 2023.
Breakfast items can be ordered at any time throughout the day and include juices, eggs, pancakes, meats, grits,
and a variety of biscuit specialties, such as gravy and biscuits and country ham and biscuits. Lunch and dinner items
include fried and grilled chicken, chicken and dumplings, chicken pot pie, meatloaf, country fried steak, pork chops,
fish, country fried shrimp, steak, roast beef, ham, vegetable plates, sandwiches and a variety of salads. We also offer
multi-serving takeout family meal baskets. Additionally, from time to time, we feature new items as off-menu specials
or on 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. The average check
per guest during 2023 was $13.36, which represents a 10.3% increase over the prior year. We served an average
of approximately 5,800 restaurant guests per week in a typical store in 2023.
The following table highlights the price ranges for our meals in 2023:
Breakfast
Lunch and Dinner
The following table highlights each day-part’s percentage of restaurant sales in 2023:
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)
Price Range
$6.99 to $17.49
$5.19 to $19.49
Percentage of
Restaurant
Sales in 2023
25%
40%
35%
We also offer for sale in our gift shops items 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, cookware and various other gift items, as well
as various candies, preserves and other food items.
The following table highlights the five categories that accounted for the largest shares of our retail sales in 2023:
Apparel and Accessories
Food
Décor
Toys
Bed and Bath
Percentage of
Retail Sales in
2023
30%
18%
14%
14%
7%
Our typical gift shop features approximately 4,100 stock keeping units. Certain 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 $523 per square foot in 2023) as compared to traditional retail 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 seasonal events or promotions.
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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 both core and
seasonal themes. Our seasonal themes are designed to create interest and excitement in our stores by providing
our guests with additional choices that vary throughout the year.
Store Management: At each store, our store management typically consists of one general manager, four
associate managers and one retail manager. The relative complexity of operating one of our stores requires an
effective management team at the individual store level. To motivate managers to improve sales and operational
performance, we maintain bonus plans designed to provide managers with incentives to meet and exceed the
operational targets of their store. Each store is assigned to both a restaurant and a retail district manager who
each report to a regional vice president.
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 two to three times a week through a network of
approximately fifty independent produce suppliers. Fluid dairy is delivered two to three times a week through
approximately fifty regional dairies, the majority of which are under the ownership of two separate unaffiliated
companies. Beer and wine are purchased and distributed through approximately 565 distributors with deliveries
ranging from weekly to monthly.
The following table highlights the five food categories which accounted for the largest shares of our food
purchasing expense in 2023:
Poultry
Fruits and vegetables
Dairy (including eggs)
Beef
Pork
Percentage of
Food Purchases
in 2023
14%
14%
13%
11%
10%
Each of these categories includes several individual items. Chicken is the single food item within these
categories that accounted for the largest share of our food purchasing expense in 2023 at approximately 5% of
total food purchases. Dairy, fruits and vegetables are purchased through numerous vendors, including local
vendors. Eggs are purchased through five vendors. We purchase our pork through six vendors, poultry through
nine vendors and beef through seven vendors. Should any food items from a particular vendor become
unavailable, we generally believe that these food items could readily 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 2023) directly from domestic and international
vendors, and we warehouse, or crossdock, such items at our retail distribution center in Lebanon, Tennessee. 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 two third-party dedicated freight lines. 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 2023 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.
Information Technology: We believe that an essential part of pleasing people is established through our ability to
leverage technology. We use technology to enhance the experiences of our guests and our employees, and to assist
management in all aspects of operating the business. Examples include a digital experience that effectively enables
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our off-premise business, allows for mobile payments in store, and provides guests with a digital waitlist that can be
accessed remotely through our own mobile application. Our store employees use a range of systems to manage
inventory, labor, forecasting and orders for retail and restaurants. In our distribution center, we manage retail
merchandise planning, purchasing, warehousing, and distribution using various retail management solutions. Our
data solutions provide management with daily reports used to operate stores in a cost-effective manner. Our service
desk leverages technology solutions that enable an efficient and effective way to resolve technology concerns. We
believe our technology is highly effective in supporting Cracker Barrel’s daily operations, and we continue to enhance
this technology in line with our Company’s strategic vision.
We continue to make investments in our cybersecurity program to protect and fortify our brands. From protecting
guest information to ensuring systems are reliably available and effective, data privacy and cybersecurity are
organization-wide efforts that are incorporated into every technology and business decision at both our brands. Led
by our Chief Information Officer and Senior Director of Security, cybersecurity is a top priority that is reviewed by our
Audit Committee on a quarterly basis and the Board of Directors on an annual basis. Our program is designed to
monitor, assess, and manage cyber-risk with a continuous improvement mindset.
Our cybersecurity program is aligned with the National Institute of Standards and Technology (NIST)
Cybersecurity Framework. Every year we have a third-party organization assess and measure the maturity of our
program, which has shown annual improvement for the past three years. We also perform regular technical
assessments, including annual penetration testing of our online systems and internal networks. Feedback from our
maturity and technical assessments is incorporated into our systems and procedures through continual upgrades
intended to further improve our security posture.
Off-Premise Business: Approximately 20% of our restaurant sales are generated through our off-premise
channels. Our off-premise business consists of three channels. Individual To Go includes to go orders that guests
pick up from our stores. Third-Party Delivery includes to go orders that are placed through an aggregator, i.e., Door
Dash, Uber Eats, etc. and delivered to guests by an employee of the aggregator. Catering and Occasion includes
offerings for large party sizes, which includes our popular Heat n’ Serve offerings that are available for certain
holidays. In 2023, Individual To Go, Third-Party Delivery and Catering and Occasion accounted for approximately
40%, 34% and 26% of total off-premise sales, respectively.
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 2023, we had over 1,400 billboards and this expenditure accounted for approximately one-third of our total
advertising spend for the year. We continue to optimize our non-billboard advertising mix which includes television
(increasingly digital), digital display and video, mobile, social media, and search marketing. Our digital marketing
efforts have also expanded to focus on improving brand preference, guest engagement and sales. We have a
presence on multiple social media sites and several food delivery apps, an e-commerce platform that integrates
individual-to-go and catering shopping, and a customer relationship management (CRM) program that employs email,
text messages, push notifications and personalization. Our event activations drive awareness for the brand and build
cultural relevance and affinity with our guests.
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Store Development: We opened two new Cracker Barrel stores in 2023. Currently, we plan to open one to
two new stores during the first quarter of 2024. As of September 13, 2023, approximately 83% of our stores are
located along interstate highways. Our remaining stores are located off-interstate or near tourist destinations.
Of the 661 stores open as of September 13, 2023, we own the land and buildings for 358, while the other 303
properties are either ground leases or ground and building leases. Building, site improvement, furniture,
equipment and related development costs for stores opened during 2023 averaged approximately $5,500 and
pre-opening costs averaged $826 per store in 2023.
Our current store prototype is approximately 8,900 square feet, including approximately 1,900 square feet of
retail selling space and dining room seating for approximately 170 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.
Maple Street Biscuit Company
We acquired 100% ownership of Maple Street Biscuit Company (“MSBC”) on October 10, 2019. MSBC is a
breakfast and lunch fast casual concept. Like Cracker Barrel, MSBC values genuine hospitality and made-from-
scratch cooking including biscuit-inspired entrées as well as freshly roasted coffee with a proprietary blend and a
limited selection of beer and wine in certain locations. MSBC operates in a smaller footprint than our Cracker
Barrel Old Country Store concept and has operating hours limited to the breakfast and lunch day parts. As of
September 13, 2023, 59 MSBC locations were open, an increase from 53 at the same time last year — all are
currently leased properties in Alabama, Florida, Georgia, Kentucky, Ohio, North Carolina, South Carolina,
Tennessee, Texas and Virginia. As of September 13, 2023, no locations were franchised.
MSBC will serve as a long-term growth vehicle that complements Cracker Barrel while providing increased
exposure to urban and suburban markets. We anticipate accelerating unit growth in the coming years. Currently,
we plan to open approximately four to five MSBC locations during the first quarter of 2024.
HUMAN CAPITAL
As of July 28, 2023, we employed approximately 77,000 people (as compared to approximately 73,000 people
as of July 29, 2022), of whom approximately 350 were in advisory and supervisory capacities, approximately 3,300
were in-store management positions and 44 were officers. Many store personnel are employed on a part-time basis.
Our employees are not represented by any union, and management considers its employee relations to be good.
People are at the core of our business and an essential part of our Company.
Diversity, Equity & Inclusion
Since 1969, our corporate mission has been Pleasing People. As an organization, we have a responsibility to
live up to our mission of Pleasing People each day, ensuring that every member of our team and every guest feels
at home, feels cared for like family, and feels like they belong. Our teams work hard to create a culture of hospitality
that’s welcoming, respectful and inclusive to everyone who walks through our doors – whether as an employee or as
a guest. Also guiding our way is the sense of belonging we strive to deliver as part of our People Promise. This
includes embracing openness for all people, ideas, and perspectives. Our food and décor celebrate warm memories
of the past, and we believe our inclusive culture and beliefs are vital to reinforcing these positive feelings in our
employees and guests, and are thus critical to the strength of our brand and our corporate strategy. Our firmly held
organization-wide policy is that discrimination, overt or through unconscious bias, has no place at Cracker Barrel Old
Country Store.
As of July 28, 2023, more than 30% of our employee population is comprised of racial and ethnic minorities and
approximately 68% of our employee population is female.
We provide opportunities for our employees to drive our Diversity, Equity & Inclusion strategy by creating
programs that raise awareness and allow for a more inclusive culture. Our Business Resource Groups allow
employees to come together with common interests, perspectives, and experiences around topics such as race,
ethnicity, gender identity, and other special interests. These employee-led organizations provide opportunities to
network, to obtain and develop leadership skills, and to inform and influence on all aspects of the Cracker Barrel
9
brand.
Currently, there are seven Business Resource Groups in Cracker Barrel:
- AMPT (“Advancing Modern Professionals for Tomorrow”): Aims to connect and empower modern
professionals by promoting a community of inclusive, ambitious, and diverse members that unify through
Cracker Barrel to equip our community and leaders for the future;
- Be Bold: Cultivates and develops Black Leaders within the Cracker Barrel organization utilizing allyship,
mentorship, and education to create a path to continued excellence as well as a vibrant and diverse
community;
- B-WELL: Improving the employee experience by sponsoring health and wellness activities that nurture
employees’ physical, emotional, financial and intellectual wellbeing;
- HOLA (“Hispanic Organization for Leadership and Advancement"): Promoting Hispanic and Latino culture
through hiring, developing and retaining talent within Cracker Barrel;
LGBTQ+ Alliance: Promoting LGBTQ+ Awareness and Building Workplace Inclusion;
-
- SERVE: Advocating for leadership and development opportunities for Veterans, fostering an environment
of networking and volunteerism and focusing on recruitment, retention and advancement; and
- Women’s Connect: Inspiring Women Leaders.
Employee Development / Training
Because of the importance of our employees’ ability to deliver the service levels that are a vital part of the
hospitality that drives our brand appeal to guests, we emphasize employee development and training. To ensure
that individual stores operate at a high level of quality, we focus significant attention on the training of store managers.
We believe that our training programs are key in developing our managers’ leadership skills and commitment to
operational excellence, which we believe are important to delivering a positive employee and guest experience. 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.
We are increasing our focus on leadership development and mentorship programs to better secure strong, diverse
talents across all facets of our organization. This commitment is exemplified by our D.E.L.T.A program (“Diverse
Employee Leadership Talent Advancement”). This leadership program identifies diverse managers who have
exhibited all the skills we value in our top-performing managers, brings them together to learn from each other,
positions them to advance to their next role, while continuing to advance our business and strategic goals in the
process.
Our new, robust diversity training includes education throughout all levels of the Company about unconscious and
implicit bias and focuses on creating an inclusive culture and fostering a sense of belonging for all.
Employee Benefits / Compensation
Cracker Barrel is committed to providing comprehensive and competitive benefits to meet our employees’ needs.
We offer a robust set of benefits to help our employees and their families stay healthy and effectively manage spend
related to health and financial well-being. These benefits include programs such as medical, dental, vision,
prescription drug, and life insurance coverage, as well as short and long term disability insurance coverage.
Additionally, Cracker Barrel is pleased to offer our Employee Assistance Program to all employees and family
members. This confidential program is available 24/7 for personal or professional consultations.
In addition, we provide all of our employees with access to paid parental leave and adoption benefits, a 401(k)
savings plan, an employee discount policy at our Cracker Barrel stores, an employee stock purchase plan, and a
competitive vacation policy.
Our compensation and performance evaluation systems are carefully designed to maintain pay equity by focusing
pay decisions on experience and performance to ensure the Company retains a highly productive workforce to
operate our business while providing a high level of service to our guests.
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Health & Safety
While all of our dining rooms are currently operating without COVID-19-related restrictions, it is possible that
renewed outbreaks or increases in cases and/or further new variants of the disease, either as part of a national
trend or on a more localized basis, could result in COVID-19-related restrictions including capacity restrictions or
otherwise limit our dine-in services, or negatively affect consumer demand.
In response to the COVID-19 pandemic, we instituted operational protocols to comply with applicable
regulatory requirements to protect the health and safety of employees and guests, and we implemented and
continually adapted a number of strategies to support the recovery of our business and navigate through the
uncertain environment. We continue to focus on growing our off-premise business and investing in our digital
infrastructure to improve the guest experience in the face of these ongoing challenges.
Following the COVID-19 pandemic, our teams have maintained close contact with applicable regulatory
agencies, from the Centers for Disease Control and Prevention (“CDC”) and the U.S. Food and Drug Administration
to state and local regulatory agencies and health authorities, to ensure we are following the latest recommended
practices and procedures to protect the health and safety of employees and guests. We instituted operational
changes and enhancements to safety protocols to ensure that both our guests and employees experience a clean
and safe environment. These enhanced processes were added to the already rigorous food safety and sanitation
standards that we continuously follow and are verified by a third-party firm.
Cracker Barrel incorporates robust quality assurance and food safety processes to ensure the safety of all
our food and retail products delivered to our guests including the following:
Extensive requirements for food supplier approval;
Ongoing third-party food safety audits of food production and distribution centers;
Periodic food product audits conducted by Cracker Barrel quality assurance team;
Rigid processes to ensure new or alternative source suppliers deliver food products to exact
specifications;
Third-party testing of retail non-food products to ensure compliance with all specifications and Federal
regulations;
Food safety audits conducted on all Cracker Barrel locations three times per year;
Ensuring a pest free environment in our locations though a stringent pest control process;
Monitoring of all national and local food safety regulations pertaining to both food products and store
operations;
Monitoring of all health department inspections of all Cracker Barrel locations; and
Monitoring and responding to:
o Food borne illness outbreaks,
o Food and product recalls, and
o Pandemic situations, e.g., COVID-19.
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, availability of carryout and home
delivery, internet and mobile ordering capabilities 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. In
addition, improving product offerings at fast casual restaurants and quick-service restaurants and expansion of home
delivery services, together with negative economic conditions, could cause consumers to choose less expensive
alternatives. We expect competition to continue in all of these areas. 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
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retailers; and consumers’ discretionary purchasing power. 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 a number of 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.
GOVERNMENT REGULATION
We are subject to various federal, state and local laws affecting our business, including areas of food safety,
minimum wage increases, health care, zoning requirements, preparation and sale, among others, of food and
alcoholic beverages, information security, and environmental matters. Each of our stores must comply with licensing
requirements and regulations by a number of governmental authorities and we have not been significantly affected
by any delay in obtaining these licenses. 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 and MSBC 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
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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 have a lower product turnover than our restaurants, 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.
Risks Related to Macroeconomic and Industry Conditions
We have experienced and continue to experience inflationary conditions with respect to the cost for food,
ingredients, retail merchandise, transportation, distribution, labor and utilities, and we may not be able
to increase prices or implement operational improvements sufficient to fully offset inflationary pressures
on such costs, which may have a material adverse effect on our results of operations.
The strength of our revenues and results of operations are dependent upon, among other things, the price
and availability of food, ingredients, retail merchandise, transportation, distribution, labor and utilities. In fiscal
2023, we faced significant inflationary pressures. Fluctuations in economic conditions, weather, supply chain
disruptions, freight efficiency, demand and other factors also affect the availability, quality and cost of the
ingredients and retail merchandise that we buy. Changes in global demand for corn, wheat and dairy products
have caused and could continue to cause volatility in the feed costs for poultry and livestock. Operating margins
for our restaurants are subject to changes in the price and availability of food commodities, including beef, pork,
chicken, dairy and produce. 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 adversely affect our operating margins. In addition, the prices of our retail merchandise are similarly
impacted by economic and inflationary pressures, which have caused and may continue to cause higher costs
and lower margins. Our attempts to offset cost pressures, such as through menu price increases and operational
improvements, may not be successful. We seek to provide a moderately priced product, and, as a result, we may
not seek to or be able to pass along price increases to our customers sufficient to completely offset cost increases
without adversely affecting our customers’ demand. Consumers may be less willing to pay our menu prices and
may increasingly visit lower-priced competitors, or may forgo some purchases altogether. The extent to which
price increases are not sufficient to offset higher costs adequately or in a timely manner, and/or result in significant
decreases in revenue volume, may have a material adverse effect on our revenues and results of operations.
Labor is a primary component in our operating costs, and increases in labor costs due to increased minimum
wages, competition, unemployment rates, or health care and other benefit costs may have a material adverse
effect on our results of operations. We operate in many states and localities where the minimum wage is
significantly higher than the federal minimum wage. Our distributors and suppliers could also be affected by
higher minimum wage, benefit standards and compliance costs, which could result in higher costs for goods and
services supplied to us. The market for labor in the United States is competitive, which has resulted in upward
pressure on wages and may continue to do so in the future.
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 failure to anticipate and respond effectively to one or more adverse changes in any of these factors
could have a material adverse effect on our results of operations. Inflationary pressures and other fluctuations
impacting the cost of these items could have a negative impact on our business in 2024.
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The COVID-19 pandemic has had and may in the future have a material adverse effect on our business,
financial condition, results of operations, and our ability to make distributions to our shareholders for
an extended period of time.
The Department of Health and Human Services declared the end of the COVID-19 public health emergency
on May 11 2023. However, during 2023, we continued to experience negative economic pressures related to the
COVID-19 pandemic. We cannot predict how quickly or whether consumer demand for our business will return
to pre-pandemic levels in 2024. Additionally, we cannot anticipate whether our suppliers will face economic
challenges caused or exacerbated by the COVID-19 pandemic, and as a result, we may face shortages of food
items or other supplies at our restaurants, and our operations and sales may be adversely impacted by such
supply interruptions. Similarly, many of the products sold in our retail operations are sourced from international
suppliers, including from the People’s Republic of China, and have experienced, and will likely continue to
experience, disruptions, temporary closures and worker shortages that may result in an inability to fulfill our orders
timely or, in some cases, at all, which could have an adverse impact on our retail sales and margins. In addition,
we also cannot predict whether future variants of COVID-19 or outbreaks of other infectious disease will have
similar effects on consumer demand. As a result of these factors, diminished economic activity has had and may
continue to have a material adverse effect on our guest traffic, sales and operating costs, and we cannot predict
the duration of the ongoing economic uncertainty.
Risks Related to Our Business
Health concerns, government regulation relating to the consumption of food products and widespread
infectious diseases could affect consumer preferences and could have a material adverse effect on our
results of operations.
In addition to the COVID-19 pandemic, the United States and other countries have experienced, and may
experience in the future, outbreaks of other viruses, such as norovirus, the bird/avian flu or other diseases. In
recent years there has been publicity concerning E. coli bacteria, hepatitis A, “mad cow” disease, “foot-and-
mouth” disease, salmonella, African swine fever, peanut and other food allergens, and other public health
concerns affecting the food supply, including beef, chicken, pork, dairy and eggs. Food safety concerns,
widespread outbreaks of livestock and poultry diseases, 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. Additionally, we rely on our suppliers to comply with applicable laws and industry standards,
and if our suppliers are unable to comply with such laws or do not otherwise meet our quality standards, we may
face a disruption in our supply chain that could have a material adverse effect on our business. If we are unable
to respond effectively, food safety concerns could have a negative impact on our business and our reputation.
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 changes in consumer health or dietary trends and preferences regarding meat consumption or health concerns
and publicity concerning food quality, illness and injury generally. Changes in consumer dietary preferences may
impact our menu offerings. Further, consumers may change their dining-in preferences, such as during the
COVID-19 pandemic, when consumers often chose to order food to go or for delivery. In addition, government
regulations or the likelihood of government regulation could increase the costs of obtaining or preparing food
products. Failure to respond and adapt to changing consumer preferences could have a material adverse effect
on our results of operation and financial condition. 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.
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.
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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 new and existing fast casual concepts,
focusing on our off premise business and transactions such as strategic relationships, 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.
We face intense competition, and if we are unable to continue to compete effectively, our business,
financial condition and results of operations may be adversely affected.
The restaurant and retail industries are intensely competitive, and we face many well-established competitors.
We compete with national and regional restaurant and retail chains and locally owned restaurants and retailers
within each market. Competition from other regional or national restaurant and retail chains typically represent
the more important competitive influence, principally because of their significant marketing and financial
resources. We 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 other competitive pressures that 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.
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, guest discrimination, food-borne illness, viruses, product defects,
personal injury, adverse health effects (including obesity), employee relations or other concerns stemming from
one or a limited number of our stores. Even when the allegations or complaints are not accurate or 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, social media can be utilized to target specific companies or brands
as a result of a variety of actual or perceived actions or inactions that are disfavored by our customers, local
culture, employees, or interest groups, which can materially and immediately impact consumer behavior. Social
media allows users to organize collective actions and engage in other brand-damaging behaviors that, if targeted
at us, could impact our business. 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.
Additionally, social media uses and platforms are constantly evolving, and as a result, we need to innovate
and develop our social media strategies to maintain brand relevance. We rely on social media and other forms
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of digital marketing to increase brand recognition and reach a broader audience. If our social media initiatives or
strategies are not successful, our brand awareness may decline or we may otherwise suffer reputational harm.
In addition, a variety of risks are associated with the use of social media, including the public dissemination of
proprietary or confidential information, negative comments about us, personally identifiable information, or out-of-
date or false information. The inappropriate use of social media by our guests or employees could increase our
costs, lead to litigation or result in negative publicity that could damage our reputation.
Failure to maximize or to successfully assert our intellectual property rights could adversely affect our
business and results of operations.
We rely on trademark, unfair competition, trade secret and copyright laws to protect our intellectual property
rights. We have registered certain trademarks and service marks with appropriate governmental authorities. 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. Additionally,
we cannot guarantee that third parties will not claim our trademarks or menu offerings will infringe on their
intellectual property rights, regardless of merit. Our failure to protect 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.
Risks Related to our Capital Structure
The performance of our business as affected by the level of our indebtedness could prevent us from
meeting the obligations under our revolving credit facility or the indenture governing the $300 million
aggregate principal amount of 0.625% Convertible Senior Notes due 2026 (the “Notes”), maintaining
sufficient liquidity to operate our business or service our debt obligations, and we cannot provide any
guarantee 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 restrictions in our revolving credit facility may have the effect, among
other things, of reducing our flexibility to respond to changing business and economic conditions and increasing
borrowing costs. Given the significant uncertainty relating to the macroeconomic environment, there are potential
scenarios under which we could fail to comply with these covenants, which would result in an event of default
that, if not waived, could have a material adverse effect on our financial condition, results of operations or ability
to continue to service our debt obligations. A default under our credit agreement or under the indenture governing
the Notes 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 may have a material adverse effect on our liquidity and results of
operations.
Depending on the impact of macroeconomic environment, we may seek other sources of liquidity and other
ways of preserving liquidity. No assurance can be made that sources of additional liquidity will be readily available
or that we will be successful in obtaining additional liquidity or preserving liquidity. Further, no assurance can be
made that sources of additional liquidity will be available on terms that are favorable to us.
Any determination to pay cash dividends on our common stock in the future will be based primarily upon our
financial condition, prospects, results of operations and 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.
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We may be unable to raise the funds necessary to repurchase the Notes for cash following a fundamental
change, or to pay the cash amounts due upon conversion, and our other indebtedness may limit our
ability to repurchase the Notes or pay cash upon their conversion.
Noteholders may require us to repurchase their Notes following a fundamental change at a cash repurchase
price generally equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if
any. In addition, all conversions of Notes will be settled partially or entirely in cash. We may not have enough
available cash or be able to obtain financing at the time we are required to repurchase the Notes or pay the cash
amounts due upon conversion. In addition, applicable law, regulatory authorities and the agreements governing
our other indebtedness may restrict our ability to repurchase the Notes or pay the cash amounts due upon
conversion.
Our failure to repurchase Notes or to pay the cash amounts due upon conversion when required will constitute
a default under the indenture governing the Notes. A default under the indenture governing the Notes or the
fundamental change itself could also lead to a default under agreements governing our other indebtedness, which
may result in that other indebtedness becoming immediately payable in full. We may not have or be able to
secure financing for sufficient funds to satisfy all amounts due under the other indebtedness and the Notes.
Provisions in the indenture governing the Notes could delay or discourage a takeover of us.
Certain provisions in the Notes and the indenture governing the Notes could make a third party attempt to
acquire us more difficult or expensive. For example, if a takeover constitutes a fundamental change, then
noteholders will have the right to require us to repurchase their Notes for cash. In addition, if a takeover
constitutes a make-whole fundamental change, then we may be required to temporarily increase the conversion
rate for the Notes. In either case, and in other cases, our obligations under the Notes and the indenture governing
the Notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or
removing incumbent management, including in a transaction that noteholders or holders of our common stock
may view as favorable.
The convertible note hedge and warrant transactions may affect the value of the notes and our common
stock.
In connection with the issuance of the Notes, we entered into convertible note hedge transactions with the
hedge counterparties. The convertible note hedge transactions cover, subject to customary anti-dilution
adjustments, the number of shares of common stock that initially underlie the Notes. We also entered into warrant
transactions with the hedge counterparties collectively relating to the same number of shares of our common
stock, subject to customary anti-dilution adjustments, and for which we received premiums to partially offset the
cost of entering into the hedge transactions.
The convertible note hedge transactions are expected generally to reduce or offset potential dilution to our
common stock upon any conversion of the Notes and/or offset any cash payments we may be required to make
in excess of the principal amount of converted Notes, as the case may be. However, the warrant transactions
could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds
the strike price of the warrants. In connection with establishing and maintaining their initial hedges of the
convertible note hedge and warrant transactions, we understand that the hedge counterparties or their respective
affiliates may modify their hedge positions with respect to the convertible note hedge transactions and the warrant
transactions from time to time by purchasing or selling shares of our common stock or the Notes in privately
negotiated transactions or open-market transactions or by entering into or unwinding various over-the-counter
derivative transactions with respect to our common stock.
The effect, if any, of these activities on the trading price of our common stock will depend on a variety of
factors, including market conditions, and is uncertain at this time. Any of these activities could, however,
adversely affect the trading price of our common stock.
We are subject to counterparty risk with respect to the convertible note hedge transactions.
The hedge counterparties are financial institutions, and we are subject to the risk that one or more of the
hedge counterparties might default under their respective convertible note hedge transactions. Our exposure to
the credit risk of the hedge counterparties is not secured by any collateral. Global economic conditions have from
time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions. If a
hedge counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those
proceedings with a claim equal to our exposure at that time under our transactions with such hedge counterparty.
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Our exposure will depend on many factors, but, generally, the increase in our exposure will be correlated to
the increase in the market price and in the volatility of our common stock. In addition, upon a default by any
hedge counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with
respect to our common stock. We can provide no assurances as to the financial stability or viability of any of the
hedge counterparties.
Conversion of the Notes or exercise of the warrants evidenced by the warrant transactions may dilute the
ownership interest of existing shareholders, including noteholders who have previously converted their
Notes.
At our election, if applicable, we may settle Notes tendered for conversion partly in shares of our common
stock. Furthermore, the warrants evidenced by the warrant transactions are expected to be settled on a net-
share basis. As a result, the conversion of some or all of the Notes or the exercise of some or all of such warrants
may dilute the ownership interests of existing shareholders. Any sales in the public market of the shares of our
common stock issuable upon such conversion of the Notes or such exercise of the warrants could adversely
affect prevailing market prices of our common stock. In addition, the existence of the Notes may encourage short
selling by market participants because the conversion of the Notes could depress the price of our common stock.
Risks Related to Supply Chains
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:
tariffs, trade barriers, sanctions, import limitations and other trade restrictions by the U.S. government on
products or components shipped from foreign sources (particularly, the People’s Republic of China);
fluctuating currency exchange rates or control regulations;
foreign government regulations;
product testing regulations;
disruptions due to labor stoppages, strikes or slowdowns, or other disruptions, involving our vendors or the
foreign political and economic instability; and
transportation and handling industries.
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.
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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.
Inventory shrinkage may also result 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 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 or public health crisis
(such as the COVID-19 pandemic) affecting either of these warehouses or their personnel and operations 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, 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.
Risks Related to IT Systems, Cybersecurity and Data Privacy
A material disruption in our information technology, network infrastructure and telecommunication
systems could have a material adverse effect on 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. In addition,
from time to time, our systems may become obsolete or require attention and could result in interruptions in our
services and non-compliance with certain laws or regulations. Any material interruption in our information
technology and telecommunication systems could have a material adverse effect on 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.
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. As a merchant and service provider of point-of-sale services, we are also subject to the Payment
Card Industry Data Security Standard issued by the Payment Card Industry Council. The regulatory environment
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surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and
constantly changing requirements, including the California Consumer Privacy Act, which became effective on
January 1, 2020. 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.
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 and customers, 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 maintain relationships with various third-party delivery apps and services such as DoorDash® and Uber
Eats. Our sales may be negatively affected if these platforms are damaged or interrupted through technological
failures or otherwise. The drivers fulfilling third-party delivery orders may make errors or fail to make timely
deliveries such that our food or brands are poorly represented. This could cause reputational harm or adversely
impact sales and customer satisfaction. Our sales through these services may also depend on the availability of
delivery drivers, who are generally independent contractors.
We use third parties to authorize and process credit and debit card payments, which requires the collection
and retention of customer data, including sensitive financial data and other personally identifiable information.
Such personal information is maintained by third parties who provide payment processing services. A weakness
in such third party’s systems or software products (or in the systems or software products in the service providers
of those third parties) may lead to a data breach or pose cybersecurity risks. If we, or one of our third party
service providers experience a cyber attack or security data breach, our results of operations and brand may
suffer. Additionally, we may have to make a significant investment to remedy or replace such systems.
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.
Legal and Regulatory Risks
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.
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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, animal health
and welfare, menu labeling and building and zoning requirements and those relating to the preparation and sale
of food and alcoholic beverages 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 and the sale of
alcoholic beverages, 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), and 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.
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. 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 have a material adverse effect on our results of operations.
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 have
a material adverse effect on our business and results of operations.
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
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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.
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, including claims related to COVID-19; violation of “dram shop” laws; 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, such as by
diverting management’s attention away from operations. As a result, litigation may adversely affect our business,
financial condition and results of operations.
Our business could be negatively affected as a result of actions of activist shareholders.
In the past, activist shareholders 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 relating to corporate policies of the Company, including on matters such
as our dividend policy, capital structure and strategic alternatives. If we become engaged in a proxy contest or
other public engagement with an activist shareholder in the future, our business could be adversely affected
because:
responding to public proposals and director nominations, 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;
claims made by activist shareholders in connection with a proxy contest or otherwise may harm our
reputation, damage our relations with customers, employees and business relations such as suppliers, or
otherwise impair our business; 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 will expire on April 9, 2024. 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.
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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.
Risks Related to Our Business Strategy
Failure to adequately address environmental, social and governance (“ESG”) matters, could adversely
affect our brand, business, results of operations and financial condition.
There has been increasing public focus by investors, environmental activists, the media and governmental
and regulatory agencies on ESG matters, including packaging and waste, animal health and welfare, human
rights, climate change, greenhouse gases and land, energy and water use. In response to shareholders’
heightened level of expectation for expanded ESG disclosure, we publish an ESG Report annually describing our
ESG efforts and goals. Execution of the strategies and achievement of the goals outlined in the ESG Report are
subject to risks and uncertainties, including our ability to meet our goals within the currently projected costs and
the expected timeframes; unforeseen design, operational and technological difficulties; the outcome of research
efforts and future technology developments; and the actions of competitors and competitive pressures. There is
no assurance that we will be able to successfully execute our strategies and achieve our goals. Failure, or
perceived failure, to achieve these goals could damage our reputation and relationships with customers,
government agencies and investors. Such conditions could have an adverse effect on our business, results of
operations and financial condition.
The SEC is expected to adopt rules governing climate change disclosures that could significantly increase
compliance burdens and associated regulatory costs of publicly traded companies. Other federal, state and local
legislative and regulatory efforts to combat other ESG concerns could also result in new or more stringent forms
of oversight and mandatory reporting, diligence and disclosure requirements, which could increase our reporting
costs. Any failure or perceived failure by us to manage ESG issues or comply with regulations could have a
material adverse effect on our reputation and on our business, results of operations, financial condition or stock
price, including the sustainability of our business over time.
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. High turnover of store management and staff would
cause us to incur 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 operate with reduced
staff, which negatively affects our ability to provide appropriate service levels to our customers. The market for
the most qualified talent continues to be competitive and we must provide competitive wages, benefits and
workplace conditions to maintain our most qualified employees. Competition for qualified employees exerts
upward pressure on wages paid to attract such personnel, resulting in higher labor costs, including 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.
The loss of key executives or difficulties in recruiting and retaining qualified personnel could jeopardize
our future growth and success.
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We have assembled a senior management team which has substantial background and experience in the
restaurant and retail industries. Our future growth and success depend 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. We
have experienced and may continue to experience challenges in recruiting and retaining team members in various
locations. Additionally, Julie Felss Masino began serving as Chief Executive Officer-Elect on August 7, 2023 and
will begin serving as Chief Executive Officer on November 1, 2023, replacing Sandra B. Cochran, who will
thenceforth serve as Executive Chair of the Board of Directors through her retirement as of September 30, 2024
(or such earlier date that the Board of Directors of the Company may determine upon 30 days’ prior written notice
to Ms. Cochran). Such transition in our executive management team may divert the attention of management or
otherwise be disruptive to our business.
We may pursue strategic investments or initiatives now or in the future, which may not yield their
expected benefits, resulting in a loss of some or all of our investment.
We may, from time to time, evaluate and pursue other opportunities for growth, including through strategic
investments, joint ventures, other acquisitions, and other initiatives, such as our recent rollout of a limited selection
of beer and wine in certain locations and our new customer loyalty program. These initiatives involve various
inherent risks, including, without limitation, general business risk, integration and synergy risk, market acceptance
risk and risks associated with the potential distraction of management. It may be difficult to predict the success
of any endeavor, and such transactions and initiatives may not ultimately create value for us or our shareholders
and may harm our reputation and materially adversely affect our business, financial condition and results of
operations. Additionally, failure to maximize or successfully execute our customer loyalty program could
adversely impact growth.
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.
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
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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 limit 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 recruit and 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 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.
General Risk Factors
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 have a material adverse effect on 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. General economic conditions, including an inflationary
environment, geopolitical or other macroeconomic conditions and uncertainty about the strength of the economy
may adversely affect our results of operations. A protracted economic downturn, a worsening economy,
increased energy prices, and rising interest rates may reduce consumer confidence and affect consumers’ ability
or desire to spend disposable income. Current inflationary pressures and other economic conditions affecting
disposable consumer income, such as unemployment levels, reduced home values, investment losses, 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
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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
2024, or thereafter, in which case we could experience declines in revenues and profits, and could face capital
and liquidity constraints or other business challenges.
Our business is somewhat seasonal and also can be affected by extreme weather conditions and natural
disasters, social unrest or other catastrophic events.
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 or unseasonable 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. Similarly, 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, and reduced sales from such extreme or prolonged unseasonable weather conditions
could adversely affect our business. Severe weather may disrupt our ability to receive food items, which may
adversely affect the availability, quality and cost of the items we buy. In the event we increase menu prices or
adjust menu offerings to offset such increases, we may experience a negative consumer response. 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.
Other unforeseen events, such as hostile acts (including terrorist activities and public or workplace violence),
social unrest or other catastrophic events, and our ability to appropriately respond and adapt to such events could
negatively impact our business, results of operations and financial condition. If our disaster recovery procedures
fail, we may experience delays in recovery of data, inability to perform vital corporate functions or failures to
adequately support field operations.
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 are prudent based on our operations. However, there are types
26
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.
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:
increases and decreases in guest traffic, average weekly sales, restaurant and retail sales and restaurant
profitability;
inflationary and other market conditions that affect the costs and availability of commodities, labor, energy,
fuel, transportation and other inputs necessary to operate our stores effectively in a manner consistent with
our strategy;
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 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, our reported results of operations and financial condition could be affected substantially,
including requirements to restate historical financial reporting.
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.
27
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 260,000 square feet of office space for our home office
headquarters and decorative fixtures warehouse. We lease our retail distribution center, which consists of
approximately 370,000 square feet of warehouse facilities and an additional approximately 10,000 square feet of
office and maintenance space. We also lease an additional distribution center of approximately 52,000 square feet
in Lebanon, Tennessee. This additional distribution center is primarily used for ecommerce fulfillment and overflow
retail storage. We also lease 105,000 square feet located in Mount Juliet, Tennessee that is used for overflow storage
for retail merchandise and supplies.
We lease office space for our MSBC headquarters which consists of approximately 15,000 square feet. In
addition to the various corporate facilities, we have three owned properties for future development, a motel used for
housing management trainees and for the general public, and four 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
661 Cracker Barrel Old Country Store locations and 59 locations for our MSBC locations) as of September 13, 2023:
State
Tennessee
Florida
Texas
Georgia
North Carolina
Kentucky
Alabama
Ohio
Virginia
Indiana
South Carolina
Pennsylvania
Illinois
Missouri
Michigan
Arizona
Mississippi
Arkansas
Louisiana
Maryland
New York
West Virginia
Oklahoma
Owned
29
31
19
26
17
22
19
22
15
20
13
8
19
13
12
2
9
5
8
3
8
3
6
Leased
30
50
44
27
27
17
15
12
19
8
15
17
2
4
3
12
4
7
2
6
1
6
2
State
California
New Jersey
Kansas
Wisconsin
Colorado
Massachusetts
New Mexico
Utah
Idaho
Iowa
Connecticut
Montana
Nebraska
Nevada
Delaware
Maine
Minnesota
New Hampshire
North Dakota
Oregon
Rhode Island
South Dakota
Owned
0
0
3
5
3
0
1
4
2
3
1
2
1
0
0
0
1
1
1
0
0
1
358
Leased
7
6
2
0
1
4
3
0
1
0
1
0
1
2
1
1
0
0
0
1
1
0
362
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
28
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 to Item 401 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.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
29
Information about Our Executive Officers
The following table sets forth certain information concerning our executive officers:
Name
Age
Position with the Company
Sandra B. Cochran*
65
President and Chief Executive Officer
Julie F. Masino*
52
Chief Executive Officer - Elect
Craig A. Pommells
Senior Vice President and Chief Financial Officer and Principal
Accounting Officer
48
J. Mark Spurgin
55
Senior Vice President, Chief Restaurant Supply Chain Officer
Laura A. Daily
59
Senior Vice President, Retail
Cammie Spillyards-Schaefer
46
Senior Vice President, Operations
Richard M. Wolfson
57
Senior Vice President, General Counsel and Secretary
Bruce A. Hoffmeister
62
Senior Vice President, Chief Information Officer
Donna L. Roberts
48
Senior Vice President and Chief Human Resources Officer
*As previously announced, Ms. Cochran will step down as President and Chief Executive Officer effective
November 1, 2023 and will continue her service on the Company’s Board of Directors as Executive Chair through her
retirement from the Company as of September 30, 2024 (or such earlier date that the Board of Directors of the
Company may determine upon 30 days’ prior written notice to Ms. Cochran). Ms. Masino will assume the role of
President and Chief Executive Officer effective as of November 1, 2023.
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 29 years of experience in the retail industry
and fourteen years of experience in the restaurant industry.
Ms. Masino joined us in August 2023 as Chief Executive Officer – Elect. Prior to joining us, she served as
President, International of Taco Bell, a subsidiary of Yum! Brands from January 2020 to June 2023. From January
2018 to December 2019, she served as President, North America of Taco Bell. Ms. Masino served as the President,
SVP and GM Fisher-Price at Mattel, Inc. from April 2017 to January 2018. Prior to her service at Mattel, she served
as the President and then the Chief Executive Officer of Sprinkles Cupcakes from 2014 to 2017. From 2002 to 2014,
Ms. Masino served in various leadership roles at Starbucks Corporation. Ms. Masino has over 20 years of experience
in the restaurant industry.
Mr. Pommells has been employed with us since December 2021 in his current capacity. From October 2020 to
December 2021, he served as Executive Vice President and Chief Financial Officer of Red Lobster Seafood
Company. Prior to serving as Chief Financial Officer of Red Lobster Seafood Company, he served as Senior Vice
President, Finance and Strategy from January 2015 to October 2020. Prior to Red Lobster, he spent more than ten
years with Darden Restaurants in various finance and business analytics roles. Mr. Pommells has more than 20
years of experience in the restaurant industry.
Mr. Spurgin joined us in January 2023 as Senior Vice President, Chief Restaurant Supply Chain Officer. Prior to
January 2023, he served as the Chief Supply Chain Officer for Restaurant Growth Services. Prior to that, he was
30
with The Cheesecake Factory and Bloomin’ Brands, where he led global procurement, logistics and international
supply chain teams. He has over 30 years of supply chain experience.
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 29 years of experience
as a merchant with a number of retail organizations.
Ms. Spillyards-Schaefer has been employed with us since 2017 and assumed her current position in January
2022. From 2017 to 2021, she served in various capacities in both operations and home office functions including
Regional Vice President of Restaurant Operations and Vice President of Culinary. Ms. Spillyards-Schaefer has over
20 years of experience in the restaurant industry.
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., an 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 30 years of legal experience.
Mr. Hoffmeister joined us in January 2021 as Senior Vice President and Chief Information Officer. Prior to joining
us, he worked at Marriott International for over 30 years where he served in a number of finance and technology
executive positions, including Senior Vice President of Lodging Finance, Senior Vice President of Global Revenue
Management and his most recent role as Global Chief Information Officer.
Ms. Roberts has been employed with us since 2012 and assumed her current position in May 2020. Prior to her
current role, she held other positions in the human resources and legal departments including Vice President of
Human Resources and Vice President and Deputy General Counsel. Before joining us, she practiced law for ten
years, most recently as a partner focused on commercial litigation and employment law.
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 6,615 shareholders of record as of September 13, 2023.
See Note 4 to Consolidated Financial Statements with respect to dividend restrictions. See Dividends, Share
Repurchases and Share-Based Compensation Awards under Part II, Item 7 Management’s Discussion and
Analysis of Financial Condition, Liquidity and Capital Resources for further information regarding our dividends.
See the table labeled “Equity Compensation Plan Information” to be contained in the 2023 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
We did not repurchase any shares of our common stock in the fourth quarter ended July 28, 2023. On June
2, 2022, our Board of Directors approved the repurchase of up to $200,000 of our common stock with such
authorization to expire on June 2, 2023. On June 2, 2023, our Board of Directors extended this repurchase
authorization for an additional year.
ITEM 6. RESERVED
31
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
strategic priorities and our key performance indicators.
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 13, 2023, the Company operated 661 Cracker Barrel stores located in 45 states. On October
19, 2019, the Company acquired 100% ownership of Maple Street Biscuit Company (“MSBC”), a breakfast and
lunch fast casual concept. As of September 13, 2023, the Company operated 59 MSBC locations in ten states.
Strategic Priorities
Management believes that the Cracker Barrel brand remains one of the strongest and most differentiated
brands in the restaurant industry, and we plan to continue to leverage and build on that strength as a core
component of our business strategy.
Our long-term strategy remains centered on driving sustainable sales growth, continued business model
improvements, building profitable Cracker Barrel and MSBC stores, and ultimately driving shareholder returns.
Our strategic priorities include the following:
Delivering an exceptional guest experience;
Emphasizing and protecting our strong value proposition;
Accelerating frequency of visits among our growth segments; and
Enhancing our business model through our cost savings program and investing in technology.
Additionally, during 2023, we continued our focus on generating shareholder returns by paying $5.20 per share
in dividends for fiscal 2023 and declaring a dividend of $1.30 per share that was subsequently paid on August 8,
2023 to shareholders of record on July 21, 2023, totaling $144,302 dividends declared or paid in 2023, and
repurchasing $17,449 in shares of our common stock.
32
Key Performance Indicators
Management uses a number of key performance indicators to evaluate our operational and financial
performance, including the following:
Comparable store restaurant sales increase/(decrease): To calculate comparable store restaurant sales
increase/(decrease), we determine total restaurant sales of stores open at least six full quarters before the
beginning of the applicable period, measured on comparable calendar weeks. We then subtract total
comparable store restaurant sales for the current year period from total comparable store restaurant sales
for the applicable historical period to calculate the absolute dollar change. To calculate comparable store
restaurant sales increase/(decrease), which we express as a percentage, we divide the absolute dollar
change by the comparable store restaurant sales for the historical period.
Comparable store average restaurant sales: To calculate comparable store average restaurant sales, we
determine total restaurant sales of stores open at least six full quarters before the beginning of the applicable
period, measured on comparable calendar weeks, and divide by the number of comparable stores for the
applicable period.
Comparable store retail sales increase/(decrease): To calculate comparable store retail sales
increase/(decrease), we determine total retail sales of stores open at least six full quarters before the
beginning of the applicable period, measured on comparable calendar weeks. We then subtract total
comparable store retail sales for the current year period from total comparable store retail sales for the
applicable historical period to calculate the absolute dollar change. To calculate comparable store retail
sales increase/(decrease), which we express as a percentage, we divide the absolute dollar change by
the comparable store retail sales for the historical period.
Comparable store retail average weekly sales: To calculate comparable store average retail sales, we
determine total retail sales of stores open at least six full quarters before the beginning of the applicable
period, measured on comparable calendar weeks, and divide by the number of comparable stores for the
applicable period.
Comparable restaurant guest traffic increase/(decrease): To calculate comparable restaurant guest traffic
increase/(decrease), we determine the number of entrees sold in our dine-in and off-premise business
from stores open at least six full quarters at the beginning of the applicable period, measured on
comparable calendar weeks. We then subtract total entrees sold for the current year period from total
entrees sold for the applicable historical period to calculate the absolute numerical change. To calculate
comparable restaurant guest traffic increase/(decrease), which we express as a percentage, we divide
the absolute numerical change by the total entrees sold for the historical period.
Average check increase per guest: To calculate average check per guest, we determine comparable
store restaurant sales, as described above, and divide by comparable guest traffic, as described above.
We then subtract average check per guest for the current year period from average check per guest for
the applicable historical period to calculate the absolute dollar change. The absolute dollar change is
divided by the prior year average check number to calculate average check increase per guest, which we
express as a percentage.
These performance indicators exclude the impact of new store openings and sales related to MSBC.
We use comparable store sales metrics as indicators of sales growth to evaluate how our established stores
have performed over time. We use comparable restaurant guest traffic increase/(decrease) to evaluate how
established stores have performed over time, excluding growth achieved through menu price and sales mix
change. Finally, we use average check per guest to identify trends in guest preferences, as well as the
effectiveness of menu changes. We believe these key performance indicators are useful for investors to provide
a consistent comparison of sales results and trends across comparable periods within our core, established store
base, unaffected by results of store openings, closings, and other transitional changes.
33
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, availability of
carryout and home delivery, internet and mobile ordering capabilities 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. Cracker Barrel
primarily operates in the full-service segment of the restaurant industry, and our growing MSBC concept operates
in the fast casual segment. 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 features. 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, such as elevated inflation, and higher 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 historically strongest in the second quarter,
which includes the holiday shopping season.
Severe weather events such as hurricanes, floods, tornadoes, and winter storms may prevent or dissuade
guests from visiting our stores, impair our ability to staff our stores or force us to temporarily close affected stores,
adversely impacting our restaurant and retail sales. Additionally, severe drought conditions and associated
restrictions on water use may impair restaurant operations or increase costs in locations affected by such
conditions. Climate change, changing weather patterns or unpredictable weather patterns may increase the
incidence of any of these events and otherwise also impact guest visitation patterns on a macro scale. In addition
to its impact on store operations, severe weather may also disrupt our supply chain, both in distribution to ports
and central warehouses and in distribution to local stores. In general, we believe that the geographic dispersion
of our stores and multiple sources of distribution adequately mitigate the potential impact of severe weather and
changing weather patterns on our stores, but our Board of Directors and management team continually monitor
and reexamine these considerations in light of ongoing trends.
External Impacts to Our Operating Environment
Our operating results have been impacted by the COVID-19 pandemic and other macroeconomic conditions.
During 2021, our business began recovering from the COVID-19 pandemic, but we continued to see negative
impacts on our sales and traffic as a result of both changes in consumer behavior and federal, state and local
governmental authorities’ continuation of various restrictions on travel, group gatherings and dine-in
services. Dining room service was operational to varying degrees, yet most locations were impacted at times by
capacity restrictions, social distancing guidelines and decreased consumer demand for in-person dining. In 2022,
the Company continued to recover from the COVID-19 pandemic; however, we believe outbreaks of new variants
adversely impacted consumer demand in 2022. While our dining rooms operated without COVID-related
restrictions in 2023, it is possible that renewed outbreaks, increases in cases and/or new variants of the disease,
either as part of a national trend or on a more localized basis, could result in COVID-19-related restrictions
including capacity restrictions or otherwise limit our dine-in services, or negatively affect consumer demand. In
2023 and 2022, we experienced inflationary conditions with respect to the cost for food, ingredients, retail
merchandise, transportation, distribution, labor and utilities resulting, in part, from economic pressures related to
the COVID-19 pandemic.
34
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
General and administrative
Gain on sale and leaseback transactions
Impairment and store closing costs
Operating income
Interest expense
Income before income taxes
Provision for income taxes
Net income
Total Revenue
Relationship to Total Revenue
2022
2023
100.0%
100.0%
32.1
32.8
35.2
35.1
23.2
23.2
4.8
5.0
—
—
—
0.4
4.7
3.5
0.3
0.5
4.4
3.0
0.4
0.1
4.0
2.9
2021
100.0%
30.7
34.8
24.0
5.2
(7.7)
—
13.0
2.0
11.0
2.0
9.0
The following table highlights the key components of revenue for the past three years:
2023
2022
2021
Revenue in dollars(1):
Restaurant
Retail
Total revenue
Total revenue percentage increase
Total revenue by percentage relationships:
Restaurant
Retail
Comparable number of stores
Comparable store sales averages per store: (1)
Restaurant
Retail
Total
Restaurant average weekly sales (2)
Retail average weekly sales (2)
Average check increase
Comparable restaurant guest traffic increase/(decrease) (3)
701,942
$ 2,740,866 $ 2,565,628 $ 2,227,246
594,198
702,158
$ 3,442,808 $ 3,267,786 $ 2,821,444
11.8%
15.8%
5.4%
79.6%
20.4%
78.5%
21.5%
659
659
78.9%
21.1%
655
1,049
$ 4,047 $ 3,804 $ 3,312
890
1,052
$ 5,096 $ 4,856 $ 4,202
$ 77.7 $ 72.9 $ 63.4
17.2
20.3
20.3
3.1%
7.0%
9.8%
5.3%
8.0%
(3.5%)
(1) Comparable store averages exclude MSBC.
(2) Average weekly sales are calculated by dividing net sales by operating weeks and include all stores except
for MSBC.
(3) Comparable store sales and traffic consist of sales of stores open at least six full quarters at the beginning of
the period and are measured on comparable calendar weeks. Comparable store sales and traffic exclude MSBC.
Total revenue benefited from the opening of two new Cracker Barrel and 12 new MSBC units in 2023, the
opening of seven new MSBC units in 2022 and two new units for both Cracker Barrel and MSBC in 2021, partially
offset by the closing of six Cracker Barrel and four MSBC units in 2023 and one Cracker Barrel unit in 2021.
Additionally, in the fourth quarter of 2022, the Company acquired direct ownership of MSBC’s seven franchised
units from their respective franchisees.
35
The following table highlights comparable store sales* results over the past two years:
Restaurant
Retail
Restaurant & Retail
Period to Period
Increase (Decrease)
2023 vs 2022
(659 Stores)
6.3%
(0.4%)
4.9%
2022 vs 2021
(659 Stores)
15.0%
18.2
15.7%
*Comparable store sales consist of sales of stores open at least six full quarters at the beginning of the year, are
measured on comparable calendar weeks and exclude MSBC.
Our comparable store restaurant sales increase in 2023 as compared to 2022 resulted from an average check
increase of 9.8% (including an 8.6% average menu price increase) partially offset by a decrease in guest traffic
of 3.5%. Off-premise sales represented approximately 20% of restaurant sales volumes in both 2023 and 2022.
Our comparable store restaurant sales increase in 2022 as compared to 2021 resulted from an average check
increase of 7.0% (including a 5.9% average menu price increase) and an increase in guest traffic of 8.0%. Off-
premise sales represented approximately 24% of restaurant sales volumes in 2021 when a large number of
restaurants were operating with limitations on or full prohibitions of dine-in services due to the COVID-19
pandemic.
Our retail sales are made primarily to our restaurant guests. The decrease in our comparable store retail
sales in 2023 as compared to 2022 resulted primarily from the decrease in guest traffic partially offset by strong
performance in the apparel merchandise category. The increase in our comparable store retail sales in 2022 as
compared to 2021 resulted primarily from the increase in guest traffic and strong performance in the apparel and
accessories, food and convenience, toys, décor, and bed and bath 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:
2023
2022
2021
Cost of Goods Sold:
Restaurant
Retail
Total Cost of Goods Sold
$ 769,295 $ 706,125 $ 567,825
297,436
$ 1,127,617 $ 1,049,884 $ 865,261
343,759
358,322
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
2023
28.1%
2022
27.5%
2021
25.5%
The increase in restaurant cost of goods sold as a percentage of restaurant revenue in 2023 as compared to
2022 was primarily the result of higher cost menu items. The increase in restaurant cost of goods sold as a
percentage of restaurant revenue in 2022 as compared to 2021 was primarily the result of commodity inflation of
13.1% partially offset by our menu price increase referenced above.
We presently expect the rate of commodity deflation to be approximately 1% to 2% in the first quarter of 2024.
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
2023
51.1%
2022
49.0%
2021
50.1%
36
The year-to-year percentage change in 2023 as compared to 2022 resulted primarily from the following:
Markdowns
Freight expense
2023 Compared to 2022
Increase as a Percentage
of Total Retail Revenue
1.7%
0.5%
The increase in retail cost of goods sold as a percentage of retail revenue in 2023 as compared to 2022
resulted primarily from higher markdowns and higher freight expense.
The year-to-year percentage change in 2022 as compared to 2021 resulted from the following:
Markdowns
Provision for obsolete inventory
2022 Compared to 2021
(Decrease) Increase as
a Percentage of Total
Retail Revenue
(1.4%)
0.4%
The decrease in retail cost of goods sold as a percentage of retail revenue in 2022 as compared to 2021
resulted primarily from lower markdowns partially offset by the change in the provision for obsolete inventory.
Labor and Other Related Expenses
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
2023
35.1%
2022
35.2%
2021
34.8%
The year-to-year percentage change in 2023 as compared to 2022 resulted from the following:
Employee health care expense
Store management compensation
Store hourly labor
2023 Compared to 2022
(Decrease) Increase as a
Percentage of Total Revenue
(0.2%)
(0.1%)
0.2%
The decrease in employee health care expenses as a percentage of total revenue in 2023 as compared to
2022 resulted primarily from lower enrollment.
The decrease in store management compensation as a percentage of total revenue in 2023 as compared to
2022 was primarily driven by the increase in total revenue in 2023 partially offset by wage inflation.
The increase in store hourly labor expense as a percentage of total revenue in 2023 as compared to 2022
resulted primarily from wage inflation exceeding menu price increases and investments in additional labor hours
to support the guest experience. In addition to menu price increases, we continue to partially offset inflationary
pressures through labor productivity initiatives, and we presently expect the rate of wage inflation to be
approximately 4.0% to 5.0% in the first quarter of 2024.
37
The year-to-year percentage change in 2022 as compared to 2021 resulted from the following:
Store hourly labor
Store management compensation
2022 Compared to 2021
Increase (Decrease) as a
Percentage of Total Revenue
1.1%
(0.7%)
The increase in store hourly labor in 2022 as compared to 2021 as a percentage of total revenue resulted
primarily from wage inflation exceeding menu price increases and lower productivity, i.e., fewer guests served
per labor hours incurred.
The decrease in store management compensation as a percentage of total revenue in 2022 as compared to
2021 was primarily driven by lower bonus expense in 2022 and the increase in total revenue in 2022 partially
offset by wage inflation. The lower bonus expense resulted from lower performance against financial objectives
for certain components of the incentive plan in 2022 as compared to 2021.
Other Store Operating Expenses
Other store operating expenses include all store-level operating costs, the major components of which are
occupancy costs, operating supplies, advertising, third-party delivery fees, credit card and gift card fees, real and
personal property taxes and general insurance. Occupancy costs include maintenance, utilities, depreciation and
rent.
The following table highlights other store operating expenses as a percentage of total revenue for the past
three years:
Other store operating expenses
2023
23.2%
2022
23.2%
2021
24.0%
Other store operating expenses as a percentage of total revenue in 2023 as compared to 2022 remained flat
at 23.2%.
The year-to-year percentage change in 2022 as compared to 2021 resulted primarily from the following:
Store occupancy costs
Advertising
Other store expenses
2022 Compared to 2021
(Decrease) Increase as a
Percentage of Total Revenue
(0.7%)
(0.2%)
0.2%
The decreases in store occupancy costs and advertising expenses as a percentage of total revenue for 2022
as compared to 2021 were primarily driven by the increase in total revenue in 2022. Additionally, the decrease
in store occupancy costs was partially offset by higher maintenance expenditures, which were the result of
increased repair costs associated with limited availability of replacement equipment.
The increase in other store expenses as a percentage of total revenue for 2022 as compared to the same
period in the prior year resulted primarily from costs associated with the expansion of our off-premise business.
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
2023
5.0%
2022
4.8%
2021
5.2%
38
The year-to-year percentage change in 2023 as compared to 2022 resulted from higher corporate-level
incentive compensation resulting from better performance against financial objectives in 2023 as compared to
2022.
The year-to-year percentage change in 2022 as compared to 2021 resulted from lower incentive
compensation. The decrease in incentive compensation as a percentage of total revenue in 2022 as compared
to 2021 was primarily the result of lower performance against financial objectives in 2022 as compared to 2021.
Gain on Sale and Leaseback Transactions
On July 29, 2020, we entered into a sale and leaseback transaction involving 64 of our owned Cracker Barrel
properties and recorded a gain of $69,954. On August 4, 2020, we entered into a second sale and leaseback
transaction involving 62 of our owned Cracker Barrel stores and recorded a gain of $217,722. See Note 8 to the
Consolidated Financial Statements for additional information regarding these sale and leaseback transactions.
Impairment and Store Closing Costs
During 2023, we recorded impairment charges of $11,692 as a result of the deterioration in operating
performance of six Cracker Barrel locations. Additionally, during 2023, we incurred costs of $2,307 in connection
with the closure of six Cracker Barrel and four MSBC locations because of poor operating performance.
Impairment and store closing costs consisted of the following:
Impairment
Store closing costs
Total
Interest Expense
2023
$ 11,692
2,307
$ 13,999
The following table highlights interest expense for the past three years:
Interest expense
2023
$ 17,006
2022
$ 9,620
2021
$ 56,108
The year-to-year increase in 2023 as compared to 2022 resulted primarily from higher weighted average debt
levels during 2023 and higher weighted average interest rates under our revolving credit facility.
The year-to-year decrease in 2022 as compared to 2021 resulted primarily from lower weighted average debt
levels, lower weighted average interest rates and the prior year including costs associated with the termination of
the Company’s interest rate swaps.
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
2023
4.4%
2022
8.0%
2021
18.0%
Our effective tax rate is lower than statutory rates primarily due to the benefit of tax credits. The decreases
in our effective tax rate in 2023 as compared to 2022 and in 2022 as compared to 2021 reflect the impact of
higher tax credits on lower income before income tax.
We presently expect our effective tax rate for 2024 to be approximately 6%.
39
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 provided by (used in) investing activities
Net cash used in financing activities
Net decrease in cash and cash equivalents
2023
$ 250,457
(124,319)
(146,096)
$ (19,958)
2022
2021
$ 205,253 $ 301,903
78,330
(98,499)
(206,242)
(672,636)
$ (99,488) $ (292,403)
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 29, 2022 and
borrowings under our revolving credit facility, were sufficient to finance all of our growth, share repurchases,
dividend payments, working capital needs, interest payments on long-term debt obligations and other cash
payment obligations in 2023. We believe that cash at July 28, 2023, 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, debt service, dividend payments and working
capital needs for the next twelve months. Furthermore, we believe that 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, capital expenditures, interest expense on long-term debt obligations, operating lease
obligations, continuing expansion plans and working capital needs beyond the next twelve months.
A summary of our contractual cash obligations and commitments as of July 28, 2023, is as follows:
Contractual Obligations (a)
2022 Revolving Credit Facility (b)
Convertible Debt (c)
Leases (d)
Purchase obligations (e)
Other long-term obligations (f)
Total contractual cash obligations
After 2028
Total
$ —
$ 120,000
—
305,625
773,692
1,134,447
4,117
156,455
32,366
29,579
$ 1,748,893 $ 192,796 $ 480,493 $ 268,216 $ 807,388
Payments due by Years
2025-2026 2027-2028
$ 120,000
$ —
—
134,309
13,831
76
2024
$ —
1,875
82,360
108,561
—
303,750
144,086
29,946
2,711
Amount of Commitment Expirations by Years
2025-2026
$ —
2027-2028
$ 700,000
Total
$ 700,000
300,000
31,896
2024
$ —
—
25,502
300,000
—
—
$ 1,031,896 $ 25,502 $ 306,394 $ 700,000
2022 Revolving Credit Facility(b)
Convertible Debt (c)
Standby letters of credit(g)
Total commitments
(a) At July 28, 2023, 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 $17,572 is not included in the contractual cash obligations and commitments table above.
(b) Our 2022 Revolving Credit Facility expires on June 17, 2027. Using our weighted average interest rate of 6.79% at July
28, 2023 and the outstanding borrowings at July 28, 2023, we anticipate having interest payments of $8,398, $16,478
and $7,243 in 2024, 2025-2026 and 2027, respectively. Based on our outstanding borrowings and our standby letters of
credit at July 28, 2023 and our current unused commitment fee as defined in the 2022 Revolving Credit Facility, our
unused commitment fees in 2024, 2025-2026 and 2027 would be $1,694, $3,325 and $1,462, respectively; however, the
actual amount will differ based on actual usage of the 2022 Revolving Credit Facility.
6,394
After 2028
$ —
—
—
$ —
(c) Our $300,000 aggregate principal amount of 0.625% Convertible Senior Notes mature on June 15, 2026. The Notes bear
cash interest at an annual rate of 0.625%, payable semi-annually in arrears on June 15 and December 15 of each year.
(d) Includes base lease terms and certain optional renewal periods for which, at the inception of the lease, it is reasonably
certain that we will exercise.
(e) 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
40
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.
(f) Other long-term obligations include our Non-Qualified Savings Plan ($27,129, with a corresponding long-term asset to
fund the liability; see Note 11 to the Consolidated Financial Statements), Deferred Compensation Plan ($2,450) and our
long-term incentive plans ($2,787).
(g) Our standby letters of credit relate to securing reserved claims under workers’ compensation insurance and securing
certain sale and leaseback transactions. Our standby letters of credit reduce our borrowing availability under our revolving
credit facility.
Cash Generated from Operations
The increase in net cash flow provided by operating activities in 2023 as compared to 2022 primarily reflected
lower retail inventory partially offset by the timing of payments for accounts payable and certain taxes.
The decrease in net cash flow provided by operating activities in 2022 as compared to 2021 primarily reflected
higher retail inventory, the timing of payments for certain taxes and higher bonus payments made in 2022 as a
result of the prior year’s performance. The higher retail inventory in 2022 as compared to 2021 was driven by
unusually low retail inventory in 2021 resulting from market constraints on the availability of goods.
Capital Expenditures and Proceeds from Sale of Property and Equipment
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
2023
2022
$ 125,387 $ 97,104
2021
$ 70,130
Our capital expenditures consisted primarily of capital investments for existing stores, new store locations
and strategic initiatives. The increase in capital expenditures in 2023 from 2022 resulted primarily from higher
capital expenditures for existing stores and higher capital expenditures for strategic initiatives, including
investments in digital and technology infrastructure and the development of a loyalty program. The increase in
capital expenditures in 2022 from 2021 resulted primarily from higher capital expenditures for existing stores and
an increase in the number of new store locations partially offset by lower capital expenditures for strategic
initiatives.
We estimate that our capital expenditures during the first quarter of 2024 will be approximately $27,000 to
$32,000. This estimate includes existing store maintenance and aging equipment replacement, the acquisition of
sites and construction costs of one to two new Cracker Barrel stores and approximately four to five MSBC locations
that we plan to open during the first quarter of 2024. We intend to fund our capital expenditures with cash generated
by operations and cash on hand as the result of borrowings under our revolving credit facility, as necessary.
The following table presents our proceeds from sale of property and equipment for the last three years:
Proceeds from sale of property and equipment
2023
2022
$ 1,068 $ 105 $ 149,960
2021
The increase in proceeds from sale of property and equipment in 2023 from 2022 resulted primarily from the
sale of excess real property in 2023. In 2021, we completed a sale and leaseback transaction. The decrease in
proceeds from sale of property and equipment in 2022 from 2021 resulted from the sale and leaseback transaction
in 2021. See Note 8 to the Consolidated Financial Statements for additional information regarding the sale and
leaseback transaction.
Borrowing Capacity, Debt Covenants and Notes
On June 17, 2022, we entered into a five-year $700,000 revolving credit facility (the “2022 Revolving Credit
Facility”) with substantially the same terms and financial covenants as our previous amended $800,000 revolving
41
credit facility (the “2019 Revolving Credit Facility”). The 2022 Revolving Credit Facility also contains an option
for the Company to increase the revolving credit facility by $200,000.
The following table highlights our borrowing capacity and outstanding borrowings under the 2022 Revolving
Credit Facility, our standby letters of credit and our borrowing availability under the 2022 Revolving Credit Facility
as of July 28, 2023:
Borrowing capacity under the 2022 Revolving Credit Facility
Less: Outstanding borrowings under the 2022 Revolving Credit Facility
Less: Standby letters of credit*
July 28, 2023
$ 700,000
120,000
31,896
$ 548,104
Borrowing availability under the 2022 Revolving Credit Facility
*Our standby letters of credit relate to securing reserved claims under workers’ compensation insurance and
securing certain sale and leaseback transactions. Our standby letters of credit reduce our borrowing availability
under the 2022 Revolving Credit Facility.
During 2023, we borrowed $180,000 and repaid $190,000 under the 2022 Revolving Credit Facility. During
2022, in addition to the refinancing of the revolving credit facility, we borrowed $100,000 and repaid $55,000 of
borrowings under the 2019 Revolving Credit Facility. During 2021, we repaid $924,395 under the 2019 Revolving
Credit Facility and borrowed an additional $60,000 under the 2019 Revolving Credit Facility.
Our 2022 Revolving Credit Facility contains customary financial covenants, which include maintenance of a
maximum consolidated total senior secured leverage ratio and a minimum consolidated interest coverage ratio.
We were in compliance with the 2022 Revolving Credit Facility’s financial covenants at July 28, 2023, and we
expect to be in compliance with the 2022 Revolving Credit Facility’s financial covenants for the remaining term of
the facility.
On June 18, 2021, the Company issued and sold $300,000 in aggregate principal amount of 0.625%
Convertible Senior Notes due 2026. The Notes are senior, unsecured obligations of the Company and bear cash
interest at a rate of 0.625% per annum, payable semi-annually in arrears on June 15 and December 15 of each
year, beginning on December 15, 2021. The Notes mature on June 15, 2026, unless earlier converted,
repurchased or redeemed. Net proceeds from the Notes were $291,125, after deducting the initial purchasers’
discounts and commissions and the Company’s offering fees and expenses.
In connection with the issuance of the Notes, the Company entered into privately negotiated convertible note
hedge transactions (the “Convertible Note Hedge Transactions”) with certain of the initial purchasers of the Notes
and/or their respective affiliates and other financial institutions (in this capacity, the “Hedge Counterparties”),
which cover, subject to customary anti-dilution adjustments, the aggregate number of shares of the Company’s
common stock that initially underlie the Notes. Concurrently with the Company’s entry into the Convertible Note
Hedge Transactions, the Company also entered into separate, privately negotiated warrant transactions with the
Hedge Counterparties collectively relating to the same number of shares of the Company’s common stock
underlying the Notes, subject to customary anti-dilution adjustments, and for which the Company received
premiums that partially offset the cost of entering into the Convertible Note Hedge Transactions (the “Warrant
Transactions”). The portion of the net proceeds to the Company from the offering of the Notes that was used to
pay the premium on the Convertible Note Hedge Transactions, net of the proceeds to the Company from the
Warrant Transactions, was approximately $30,300.
See Note 4 to our Consolidated Financial Statements for further information on our long-term debt.
Dividends, Share Repurchases and Share-Based Compensation Awards
Our 2022 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 2022 Revolving Credit Facility, provided
there is no default existing and the total of our availability under the 2022 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 senior secured leverage ratio is 2.75
to 1.00 or less and (2) in an aggregate amount not to exceed $100,000 in any fiscal year if our consolidated total
42
leverage ratio is greater than 2.75 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.
In 2023, we paid regular dividends of $5.20 per share and declared a dividend of $1.30 per share that was
subsequently paid on August 8, 2023 to shareholders of record on July 21, 2023. Additionally, on August 29,
2023, our Board of Directors declared a dividend of $1.30 per share payable on November 7, 2023 to
shareholders of record on October 20, 2023. In 2022, we paid regular dividends of $4.90 per share and declared
a dividend of $1.30 per share that was subsequently paid on August 5, 2022 to shareholders of record on July
15, 2022. In 2021, in order to preserve available cash during the COVID-19 pandemic and in light of the
uncertainties as to its duration and economic impact, we deferred the payment of the dividend of $1.30 per share
declared in the third quarter of 2020 until the first quarter of 2021 and temporarily suspended future dividend
payments. In the fourth quarter of 2021, in light of the ongoing recovery from the COVID-19 pandemic, our Board
of Directors resumed our dividend program.
The following table highlights the dividends per share we paid for the last three years:
Dividends per share paid
2023
2022
2021
$
5.20 $
4.90 $
1.30
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 revolving credit facility,
in September 2021, we were authorized by our Board of Directors to repurchase shares at the discretion of
management up to $100,000. In the fourth quarter of 2022, we were authorized by our Board of Directors to
repurchase shares of the Company’s outstanding common stock at management’s discretion up to a total value
of $200,000 with such authorization to expire on June 2, 2023; this authorization replaced the previous unused
portion of the previous $100,000 authorization and expired on June 2, 2023. On June 2, 2023, our Board of
Directors extended this repurchase authorization for an additional year.
The following table highlights our share repurchases for the last three years:
Shares of common stock repurchased
Cost of shares repurchased
Working Capital
2022
2021
2023
171,792
$ 17,449
1,248,184
$ 131,542
232,543
$ 35,000
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
2023
2022
$ (206,679) $ (185,048) $ (111,666)
2021
The change in working capital at July 28, 2023 compared to July 29, 2022 primarily reflected the decrease in
retail inventory levels and the decrease in cash partially offset by the timing of payments for certain taxes. The
decrease in cash resulted primarily from share repurchases during 2023.
43
The change in working capital at July 29, 2022 compared to July 30, 2021 primarily reflected the decrease in
cash, higher accounts payable and the timing of payments for income taxes partially offset by higher inventory
levels. The decrease in cash resulted primarily from higher share repurchases partially offset by net borrowings
under of revolving credit facility.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements.
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 1 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
Lease Accounting
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
44
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. During 2023, we recorded impairment charges
of $11,692 as a result of the deterioration in operating performance of six Cracker Barrel locations.
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 $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 half 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 inputs, 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 based upon a cyclical inventory schedule. An estimate of shrinkage is
recorded for the time period between physical inventory counts by using a two-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.
Lease Accounting
45
We have ground leases for our leased stores and office space leases that are recorded as operating leases
under various non-cancellable operating leases. Additionally, we lease our retail distribution center, advertising
billboards, vehicle fleets, and certain equipment under various non-cancellable operating leases.
We evaluate our leases at contract inception to determine whether we have the right to control use of the
identified asset for a period of time in exchange for consideration. If we determine that we have the right to obtain
substantially all of the economic benefit from use of the identified asset and the right to direct the use of the
identified asset, we recognize a right-of-use asset and lease liability. Also, at contract inception, we evaluate our
leases to estimate their expected term which includes renewal options that we are reasonably assured that we
will exercise, and the classification of the lease as either an operating lease or a finance lease. Additionally, as
our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information
available at the time of commencement or modification date in determining the present value of lease payments.
Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate
of secured borrowing rates based on comparable market data. We assess the impairment of the right-of-use
asset at the asset group level whenever events or changes in circumstances indicate that the carrying value of
the asset may not be recoverable.
Changes in these assumptions and management judgments may produce materially different amounts in the
recognition of the right-of-use assets and lease liabilities. Additionally, any loss resulting from an impairment of
the right-of-use assets is recognized by a charge to income, which could be material.
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 July 28, 2023 and July 29, 2022, our outstanding borrowings totaled $120,000 and $130,000,
respectively (see Note 4 to our Consolidated Financial Statements). Loans under the 2022 Revolving Credit
Facility bear interest, at our election, either at the prime rate or a rate 0.5% in excess of the Federal Funds Rate
or a rate 1.0% in excess of one-month Term Secured Overnight Financing Rate (SOFR), in each case plus an
applicable margin, or the one-, three-, or six-month per annum Term SOFR plus an applicable margin. Our policy
has been to manage interest cost using a mix of fixed and variable rate debt (see Notes 4, 5 and 8 to our
Consolidated Financial Statements). Additionally, in the fourth quarter of 2021, we issued and sold the Notes,
which bear cash interest at a fixed rate of 0.625% per annum.
At July 28, 2023, the weighted average interest rate of our outstanding $120,000 borrowings was 6.79%. At
July 29, 2022, the weighted average interest rate of our outstanding $130,000 borrowings was 3.49%.
The impact of a one-percentage point increase in the $120,000 of our outstanding borrowings at July 28,
2023 is approximately $1,200.
Credit Risk. In June 2021, the Company issued the Notes and entered into the Convertible Note Hedge
Transactions and the Warrant Transactions with the Hedge Counterparties. Subject to the movement in the
Company’s common stock price, the Company could be exposed to credit risk arising out of the net settlement of
the Convertible Note Hedge Transactions and the Warrant Transactions in its favor. Based on the Company’s
review of the possible net settlements and the creditworthiness of the Hedge Counterparties and their affiliates,
the Company believes it does not have a material exposure to credit risk as a result of these transactions at this
time.
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.
46
The following table highlights the five food categories which accounted for the largest shares of our food
purchases in 2023 and 2022:
Poultry
Fruits and vegetables
Dairy (including eggs)
Beef
Pork
Percentage of Food Purchases
2023
14%
14%
13%
11%
10%
2022
12%
12%
11%
15%
12%
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. In 2022 and 2023, we
continued to partially offset commodity pressures through menu price increases and operational improvements.
47
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
subsidiaries (the "Company") as of July 28, 2023, and July 29, 2022, and the related consolidated statements of
income, consolidated statements of comprehensive income, consolidated statements of changes in
shareholders' equity, and consolidated statements of cash flows, for each of the three years in the period ended
July 28, 2023, 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 July 28,
2023, and July 29, 2022, and the results of its operations and its cash flows for each of the three years in the
period ended July 28, 2023, 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 July 28, 2023, based on
criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated September 26, 2023, expressed an
unqualified opinion on the Company's internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for debt
with conversion options as of July 31, 2021, due to adoption of Accounting Standards Update No. 2020-06,
Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own
Equity.
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.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates
to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any
48
way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to
which it relates.
Commitments and Contingencies – Insurance Reserves – Refer to Notes 1 and 14 to the financial
statements
Critical Audit Matter Description
The Company self-insures a significant portion of its workers’ compensation and general liability program and
records a reserve for all unresolved claims and an estimate of incurred but not reported (IBNR) claims. These
reserves and estimates of IBNR claims are based upon a full-scope actuarial study performed annually by
management’s specialist at the end of the third quarter and are adjusted by the actuarially determined losses
and actual claims payments for the fourth quarter. 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. Using this
information, the Company records the expected losses in the lower half of the range, which is discounted to
present value using a risk-free interest rate. The Company also monitors actual claims development as another
means of estimating the adequacy of the historical reserves.
We identified insurance reserves as a critical audit matter because estimating the reserve for all unresolved
claims and IBNR claims involves significant estimation by management. This required a high degree of auditor
judgment and an increased extent of effort, including the need to involve our actuarial specialists, when
performing audit procedures to evaluate whether insurance reserves were appropriately recorded as of July 28,
2023.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the insurance reserves included the following, among others:
We tested the effectiveness of controls related to insurance reserves, including management’s controls
over the claims data provided to the actuary and those over the estimation of unresolved claims and IBNR
claims.
We evaluated the methods and assumptions used by management to estimate the insurance reserves by:
- Reconciling the claims data to the actuarial analysis.
- Comparing management’s selected insurance reserve estimates within the range provided by their
third-party actuary to historical trends.
- Performing a retrospective review by comparing the prior-year recorded amounts to the subsequent
claim emergence.
- Developing, with the assistance of our actuarial specialists, an independent range of estimates of the
insurance reserves, utilizing paid and reported loss development factors from the Company’s historical
data and industry loss development factors as deemed necessary, and comparing our estimated range
to management’s estimates.
/s/ Deloitte & Touche LLP
Nashville, Tennessee
September 26, 2023
We have served as the Company's auditor since 1974.
49
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
Total current assets
Property and Equipment:
Land
Buildings and improvements
Restaurant and other equipment
Leasehold improvements
Construction in progress
Total
Less: Accumulated depreciation and amortization
Property and equipment – net
Operating lease right-of-use assets, net
Goodwill
Intangible assets
Other assets
Total
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
Current portion of long-term debt
Current operating lease liabilities
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 operating lease liabilities
Other long-term obligations
Deferred income taxes
Commitments and Contingencies (Notes 8 and 14)
Shareholders’ Equity:
Preferred stock – 100,000,000 shares of $0.01 par value authorized; 300,000
shares designated as Series A Junior Participating Preferred Stock; no
shares issued
Common stock – 400,000,000 shares of $0.01 par value authorized; 2023 –
22,153,625 shares issued and outstanding; 2022– 22,281,443
shares issued and outstanding
Additional paid-in capital
Retained earnings
Total shareholders’ equity
Total
See Notes to Consolidated Financial Statements.
50
(In thousands except share data)
July 28, 2023
July 29, 2022
$ 25,147
30,446
2,062
189,364
35,268
282,287
254,813
807,585
852,442
438,495
26,978
2,380,313
1,408,368
971,945
889,306
4,690
23,426
46,440
$ 2,218,094
$ 45,105
32,246
2,451
213,249
24,225
317,276
255,238
792,211
817,240
422,485
22,404
2,309,578
1,339,969
969,609
933,524
4,690
21,210
48,602
$ 2,294,911
$ 165,484
75
46,336
38,835
64,821
24,417
95,016
29,491
24,491
488,966
414,904
702,413
53,730
74,256
$ 169,871
124
54,571
60,212
51,670
25,002
93,615
29,960
17,299
502,324
423,249
722,159
55,507
80,193
—
—
221
3,886
479,718
483,825
$ 2,218,094
223
—
511,256
511,479
$ 2,294,911
CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share data)
Fiscal years ended
July 29, 2022
July 30, 2021
July 28, 2023
Total revenue
Cost of goods sold (exclusive of depreciation and rent)
Labor and other related expenses
Other store operating expenses
General and administrative expenses
Gain on sale and leaseback transactions
Impairment and store closing costs
Operating income
Interest expense
Income before income taxes
Provision for income taxes
Net income
$ 3,442,808 $ 3,267,786
1,049,884
1,149,077
758,389
157,433
—
—
153,003
9,620
143,383
11,503
$ 131,880
1,127,617
1,208,669
797,815
174,091
—
13,999
120,617
17,006
103,611
4,561
$ 99,050
$ 2,821,444
865,261
983,120
676,301
147,825
(217,722)
—
366,659
56,108
310,551
56,038
$ 254,513
Net income per share – basic
Net income per share – diluted
$ 4.47 $ 5.69
$ 4.45 $ 5.67
$ 10.74
$ 10.71
Basic weighted average shares outstanding
Diluted weighted average shares outstanding
22,167,875
22,265,399
23,164,180
23,246,010
23,692,063
23,767,390
See Notes to Consolidated Financial Statements.
51
CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Fiscal years ended
July 29, 2022
July 28, 2023
July 30, 2021
Net income
$ 99,050 $ 131,880
$ 254,513
Other comprehensive income before income tax
expense:
Change in fair value of interest rate swaps
Income tax expense
Other comprehensive income, net of tax
Comprehensive income
See Notes to Consolidated Financial Statements.
—
—
—
—
—
—
$ 99,050 $ 131,880
27,110
6,764
20,346
$ 274,859
52
CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands except share data)
Balances at July 31, 2020
Comprehensive Income:
Net income
Other comprehensive income, net of tax
Total comprehensive income
Cash dividends declared - $1.00 per share
Share-based compensation
Issuance of share-based compensation awards, net
of shares withheld for employee taxes
Purchases and retirement of common stock
Equity component value of convertible note
issuance, net of tax
Sale of common stock warrant
Purchase of convertible note hedge
Balances at July 30, 2021
Net income
Other comprehensive income, net of tax
Total comprehensive income
Cash dividends declared - $5.20 per share
Share-based compensation
Issuance of share-based compensation awards, net
of shares withheld for employee taxes
Purchases and retirement of common stock
Cumulative-effect of change in accounting principle,
net of taxes
Balances at July 29, 2022
Net income
Other comprehensive income, net of tax
Total comprehensive income
Cash dividends declared - $5.20 per share
Share-based compensation
Issuance of share-based compensation awards, net
of shares withheld for employee taxes
Purchases and retirement of common stock
Balances at July 28, 2023
Common Stock
Shares
23,697,396
Amount
$ 237
—
—
—
—
—
32,313
(232,543)
—
—
—
23,497,166
—
—
—
—
—
32,461
(1,248,184)
—
22,281,443
—
—
—
—
—
—
—
—
—
—
—
(2)
—
—
—
$ 235
—
—
—
—
—
—
(12)
—
$ 223
—
—
—
—
—
Accumulated
Other
Additional
Paid-In
Comprehensive
Income (Loss)
Capital
$ — $ (20,346)
—
—
—
—
8,729
(2,282)
(29,151)
53,004
—
20,346
20,346
—
—
—
—
—
—
31,710
—
(62,010)
$ — $ —
—
—
—
—
—
—
—
—
—
8,198
(2,599)
(5,599)
—
—
— —
$ — $ —
—
—
—
—
—
—
—
—
—
9,045
Retained
Earnings
$ 438,498
254,513
—
254,513
(23,766)
—
—
(5,847)
—
—
—
$ 663,398
131,880
—
131,880
(121,135)
—
Total
Shareholders’
Equity
$ 418,389
254,513
20,346
274,859
(23,766)
8,729
(2,282)
(35,000)
53,004
31,710
(62,010)
$ 663,633
131,880
—
131,880
(121,135)
8,198
—
(125,931)
(2,599)
(131,542)
(36,956)
$ 511,256
99,050
—
99,050
(115,852)
—
(36,956)
$ 511,479
99,050
—
99,050
(115,852)
9,045
43,974
(171,792)
22,153,625
—
(2)
$ 221
(2,448)
—
(2,711) —
$ 3,886 $ —
—
(14,736)
$ 479,718
(2,448)
(17,449)
$ 483,825
53
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
Amortization of debt discount and issuance costs
Loss on disposition of property and equipment
Gain on sale and leaseback transactions
Impairment
Share-based compensation
Noncash lease expense
Amortization of asset recognized from gain on sale and leaseback
transactions
Changes in assets and liabilities:
Accounts receivable
Income taxes receivable
Inventories
Prepaid expenses and other current assets
Other assets
Accounts payable
Current operating lease liabilities
Taxes withheld and accrued
Accrued employee compensation
Accrued employee benefits
Deferred revenues
Other current liabilities
Long-term operating lease 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
Acquisition of business, net of cash acquired
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from issuance of long-term debt
Proceeds from issuance of convertible senior notes
Taxes withheld from issuance of share-based compensation awards
Principal payments under long-term debt
Proceeds from issuance of warrants
Purchase of convertible note hedge
Purchases and retirement of common stock
Deferred financing costs
Dividends on common stock
Net cash used in financing activities
Net decrease 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
See Notes to Consolidated Financial Statements.
54
July 28, 2023
(In thousands)
Fiscal years ended
July 29, 2022
July 30, 2021
$ 99,050
$ 131,880
$ 254,513
104,485
1,730
6,600
—
11,692
9,045
59,767
103,568
1,755
5,637
—
—
8,198
58,498
108,604
864
4,064
(217,722)
—
8,729
55,817
12,735
12,735
12,735
3,404
389
23,885
(11,043)
(848)
(4,387)
(8,235)
(21,377)
13,151
(585)
1,401
7,192
(49,634)
(2,023)
(5,937)
250,457
(2,039)
18,672
(74,929)
(2,771)
8,459
34,695
4,120
12,181
(13,129)
1,278
458
(6,591)
(59,227)
(32,048)
(6,147)
205,253
(7,016)
7,729
771
(3,538)
(3,997)
31,672
8,150
16,854
8,472
(653)
(1,605)
2,791
(59,388)
6,919
67,138
301,903
(126,987)
1,600
1,068
—
(124,319)
(98,341)
1,237
105
(1,500)
(98,499)
(71,409)
1,279
149,960
(1,500)
78,330
180,000
—
(2,448)
(190,124)
—
—
(17,449)
—
(116,075)
(146,096)
(19,958)
45,105
60,000
230,000
291,605
—
(2,282)
(2,599)
(924,572)
(185,124)
31,710
—
(62,010)
—
(35,000)
(131,542)
(420)
(2,148)
(31,667)
(114,829)
(672,636)
(206,242)
(292,403)
(99,488)
436,996
144,593
$ 25,147 $ 45,105 $ 144,593
$ 13,596
6,486
$ 7,698
25,948
$ 40,802
2,907
$ 9,633
—
— —
30,233
$ 7,421
—
30,456
$ 5,806
27,110
(6,764)
24,157
CRACKER BARREL OLD COUNTRY STORE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
1. Nature of Operations and Summary of Significant Accounting Policies
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.
Basis of Presentation
Fiscal year – The Company’s fiscal year ends on the Friday nearest July 31st and each quarter consists of
thirteen weeks unless noted otherwise. References in these Notes to a year or quarter are to the Company’s
fiscal year or quarter unless noted otherwise.
GAAP – The accompanying Consolidated Financial Statements have been prepared in accordance with
generally accepted accounting principles in the U.S. (“GAAP”).
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.
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.
External impacts to the Company’s operating environment – The Company’s operating results have been
impacted by the COVID-19 pandemic and other macroeconomic conditions. During 2021, the Company’s
business began recovering from the COVID-19 pandemic, but the Company continued to see negative impacts
on the Company’s sales and traffic as a result of both changes in consumer behavior and federal, state and local
governmental authorities’ continuation of various restrictions on travel, group gatherings and dine-in
services. Dining room service was operational to varying degrees, yet most locations were impacted at times by
capacity restrictions, social distancing guidelines, and decreased consumer demand for in-person dining. In
2022, the Company continued to recover from the COVID-19 pandemic; however, the Company believes
outbreaks of new variants adversely impacted consumer demand in 2022. While the Company’s dining rooms
operated without COVID-related restrictions in 2023, it is possible that renewed outbreaks, increases in cases
and/or new variants of the disease, either as part of a national trend or on a more localized basis, could result in
COVID-19-related restrictions including capacity restrictions or otherwise limit the Company’s dine-in services, or
negatively affect consumer demand. In 2023 and 2022, the Company experienced inflationary conditions with
respect to the cost for food, ingredients, retail merchandise, transportation, distribution, labor and utilities
resulting, in part, from economic pressures related to the COVID-19 pandemic.
Summary of Significant Accounting Policies
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 – 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
55
valued using moving average cost. Approximately 60% 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 3
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. The estimate of retail inventory shrinkage is adjusted upon physical inventory
counts. Annual physical inventory counts are conducted based upon a cyclical inventory schedule. An estimate
of shrinkage is recorded for the time period between physical inventory counts by using a two-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
Restaurant and other equipment
Leasehold improvements
Years
30-45
2-10
1-35
Accelerated depreciation methods are generally used for income tax purposes.
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*
2022
$ 103,691 $ 102,297 $ 107,090
100,054
*Depreciation expense related to store operations is included in other store operating expenses in the
Consolidated Statements of Income.
96,339
96,243
2023
2021
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. During 2023, six Cracker Barrel locations were determined
to be impaired and the Company recorded an impairment charge of $11,692, which is included in the impairment
and store closing costs line on the Consolidated Statement of Income.
Goodwill and other intangible assets – The Company accounts for all transactions that represent business
combinations using the acquisition method of accounting, where the identifiable assets acquired and the liabilities
assumed are recognized and measured at their fair values on the date the Company obtains control in the
acquiree. Such fair values that are not finalized for reporting periods following the acquisition date are estimated
and recorded as estimated amounts. Adjustments to these estimated amounts during the measurement period
(defined as the date through which all information required to identify and measure the consideration transferred,
the assets acquired and the liabilities assumed has been obtained, limited to one year from the acquisition date)
are recorded when identified. Goodwill is determined as the excess of the fair value of the consideration conveyed
in the acquisition over the fair value of the net assets acquired. Goodwill and other intangibles are evaluated for
impairment annually on June 1 or more frequently if events occur or circumstances change that, more likely than
not, reduce the fair value of the reporting unit below its carrying value. At July 28, 2023 and July 29, 2022, the
56
Company does not have any reporting units that are at risk of failing step one of the impairment test. At both July
28, 2023 and July 29, 2022, goodwill of $4,690 consisted of the Company’s acquisition of its 100% ownership of
Maple Street Biscuit Company (“MSBC”), a breakfast and lunch fast casual concept.
Other intangibles primarily consist of the MSBC tradename and liquor licenses. The MSBC tradename was
capitalized as an indefinite-lived intangible asset and, at both July 28, 2023 and July 29, 2022, was $20,960. The
costs of obtaining non-transferable liquor licenses that are directly issued by local government agencies for nominal
fees are expensed as incurred. The costs of purchasing transferable liquor licenses through open markets in
jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived intangible assets.
Liquor licenses capitalized as intangible assets were $2,290 and $105, respectively, at July 28, 2023 and July 29,
2022.
Convertible Senior Notes – In June 2021, the Company completed a $300,000 principal aggregate amount
private offering of 0.625% convertible Senior Notes due in 2026 (the “Notes”). In accordance with accounting
guidance on embedded conversion features indexed to and settled in equity, the Company valued and bifurcated
the conversion option associated with the Notes from the respective host debt instrument. The carrying amount
of the equity is recorded as a debt discount and represents the difference between the proceeds from the issuance
of the Notes and the fair value of the liability component of the Notes. The significant assumptions used in the
fair value of the liability component of the Notes were risk-free rate, discount rate based on the Company’s implied
credit spread and term of the Notes, expected volatility of the Company’s stock price and dividend yield. The
resulting debt discount on the Notes is amortized to interest expense using the effective interest method over the
contractual term of the Notes. In addition, the debt issuance costs related to the issuance of the Notes were
allocated between the liability and equity components based on their relative values. Debt issuance costs
attributable to the liability component were recorded as a contra-liability and are presented net against the Notes
balance on the Company’s consolidated balance sheets. These costs are amortized to interest expense using
the effective interest method over the term of the Notes.
Due to the Company’s adoption of new accounting guidance for convertible instruments on July 31, 2021, the
Company no longer bifurcates the Notes into a liability and an equity component in the Company’s Consolidated
Balance Sheets. Upon adoption of this new accounting guidance, the Notes are accounted for entirely as a
liability, and the issuance costs of the Notes are accounted for wholly as debt issuance costs. The equity
conversion feature that was recorded to equity, as well as the unamortized debt discount and amortization
expense attributable to equity, have been derecognized.
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
under the revolving credit facility (see Note 4). 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, prior to 2022, the Company
used derivative instruments, specifically interest rate swaps. In the fourth quarter of 2021, the Company
terminated all of its interest rate swaps and issued the Notes (see discussion above under “Convertible Senior
Notes” and Note 5 for further information).
Prior to the termination of the interest rate swaps in the fourth quarter of 2021, all of the Company’s interest
rate swaps were accounted for as cash flow hedges. For derivative instruments that were designated and qualify
as a cash flow hedge, the gain or loss on the derivative instrument was reported as a component of other
comprehensive income and reclassified into earnings in the same period during which the hedged transaction
affected earnings and was presented in the same statement of income line item as the earnings effect of the
hedged item. Gains and losses on the derivative instrument representing hedge components excluded from the
assessment of effectiveness, if any, are recognized currently in earnings in the same statement of income line
item as the earnings effect of the hedged item. The Company did not elect to reclassify income tax effects
resulting from the Tax Cuts and Jobs Act to retained earnings; income tax effects are released on an individual
basis to income tax expense.
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
57
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 5 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 7 for additional information regarding segment
reporting).
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. 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. See “Revenue recognition” section in this Note for information regarding breakage.
Revenue recognition – Revenue consists primarily of sales from restaurant and retail operations. The
Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or
service to a restaurant guest, retail customer or other customer. The Company recognizes revenues from
restaurant sales when payment is tendered at the point of sale, as the Company’s performance obligation to
provide food and beverages is satisfied. The Company recognizes revenues from retail sales when payment is
tendered at the point of sale, as the Company’s performance obligation to provide merchandise is satisfied.
Ecommerce sales, including shipping revenue, are recorded upon delivery to the customer. Additionally, 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.
Included in restaurant and retail revenue is gift card breakage. Customer purchases of gift cards, to be
utilized at the Company's stores, are not recognized as sales until the card is redeemed and the customer
purchases food and/or merchandise. Gift cards do not carry an expiration date; therefore, customers can redeem
their gift cards indefinitely. A certain number of gift cards will not be fully redeemed. Management estimates
unredeemed balances and recognizes gift card breakage revenue for these amounts in the Company's
Consolidated Statements of Income over the expected redemption period. Gift card breakage is recognized when
the likelihood of a gift card being redeemed by the customer is remote and the Company determines that there is
not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction. The determination of
the gift card breakage rate is based upon the Company’s specific historical redemption patterns. The Company
recognizes gift card breakage by applying its estimate of the rate of gift card breakage over the period of estimated
redemption. For 2023, 2022 and 2021, gift card breakage was $10,713, $9,572, and $6,349, respectively.
Revenue recognized in the Consolidated Statements of Income for 2023, 2022 and 2021, respectively, for the
redemption of gift cards which were included in the deferred revenue balance at the beginning of the fiscal year
was $40,103, $42,169, and $42,266, respectively. Deferred revenue related to the Company’s gift cards was
$88,566 and $93,569, respectively, at July 28, 2023 and July 29, 2022.
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 $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
58
within which no given estimate is more likely than any other estimate. As such, the Company records the losses
at the lower half 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.
Leases – The Company’s leases are classified as either finance or operating leases. The Company has
ground leases for its leased stores and office space leases that are recorded as operating leases under various
non-cancellable operating leases. The Company also leases its advertising billboards, vehicle fleets and certain
equipment under various non-cancellable operating leases. To determine whether a contract is or contains a
lease, the Company determines at contract inception whether it contains the right to control the use of an identified
asset for a period of time in exchange for consideration. If the contract has the right to obtain substantially all of
the economic benefit from use of the identified asset and the right to direct the use of the identified asset, the
Company recognizes a right-of-use asset and lease liability.
The Company’s leases all have varying terms and expire at various dates through 2058. Restaurant leases
typically have base terms of ten years with four to five optional renewal periods of five years each. The Company
uses a lease life that generally begins on the commencement date, including the rent holiday periods, and
generally extends through certain renewal periods that can be exercised at the Company’s option. 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. The Company has
included lease renewal options in the lease term for calculations of the right-of-use asset and liability for which at
the commencement of the lease it is reasonably certain that the Company will exercise those renewal
options. Additionally, some of the leases have contingent rent provisions and others require adjustments for
inflation or index. 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 Company’s lease agreements do not contain
any material residual value guarantees or material restrictive covenants.
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
2023
$ 89,798
2022
2021
$ 89,850 $ 83,630
Share-based compensation – The Company’s share-based compensation consists of nonvested stock
awards and units. 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 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
59
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 12 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. The Company terminated all of its interest
rate swaps in 2021.
Net income per share – Basic consolidated net income per share is computed by dividing consolidated net
income available 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
reporting period. Common equivalent shares related to nonvested stock awards and units issued by the Company
are calculated using the treasury stock method. The outstanding nonvested stock awards and units issued by
the Company represent the only dilutive effects on diluted consolidated net income per share. Prior to the
adoption of new accounting guidance for convertible instruments in 2022, the Company’s convertible senior notes
and related warrants were calculated using the treasury stock method. Beginning in 2022, the convertible senior
notes and related warrants are calculated using the net share settlement option under the if-converted method.
Because the principal amount of the convertible senior notes will be settled in cash with any excess conversion
value settled in cash or shares of common stock, the convertible senior notes have been excluded from the
computation of diluted earnings per share because the average market price of the Company’s common stock
during the reporting period did not exceed the conversion price of $169.80 as of July 28, 2023. Warrants were
excluded from the computation of diluted earnings per share since the warrants’ strike price of $237.73 was
greater than the average market price of the Company’s common stock during the period. See Note 13 for
additional information regarding net income per share and Note 4 for additional information regarding the
Company’s convertible senior notes.
2. 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.
60
The Company’s assets and liabilities measured at fair value on a recurring basis at July 28, 2023 were as
follows:
Cash equivalents*
Total
Deferred compensation plan assets**
measured at net asset value
Total assets at fair value
Level 1
$ 9,001
$ 9,001
Level 2
$ —
$ —
Level 3
$ —
$ —
Total Fair
Value
$ 9,001
$ 9,001
27,129
$ 36,130
The Company’s assets and liabilities measured at fair value on a recurring basis at July 29, 2022 were as
follows:
Cash equivalents*
Total
Deferred compensation plan assets**
measured at net asset value
Total assets at fair value
Level 1
$ 18,001
$ 18,001
Level 2
$ —
$ —
Level 3
$ —
$ —
Total Fair
Value
$ 18,001
$ 18,001
27,843
$ 45,844
*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 11).
The Company did not have any liabilities measured at fair value on a recurring basis at July 28, 2023 and
July 29, 2022. The Company’s money market fund investments are measured at fair value using quoted market
prices. 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
July 28, 2023 and July 29, 2022, 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 July 28, 2023 and July 29, 2022.
The Company’s financial instruments that are not remeasured at fair value include the 0.625% convertible
Senior Notes (see Note 4). The Company estimates the fair value of the Notes through consideration of quoted
market prices of similar instruments, classified as Level 2 as described above. The estimated fair value of the
Notes was $259,311 and $255,894 as of July 28, 2023 and July 29, 2022, respectively.
Assets Measured at Fair Value on a Nonrecurring Basis
During 2023, six Cracker Barrel locations were determined to be impaired because of declining operating
performance. Fair value of these locations was determined by sales prices of comparable assets or estimates of
discounted future cash flows considering their highest and best use. Assumptions used in the cash flow model
included projected annual revenue growth rates and projected cash flows, which can be affected by economic
conditions and management’s expectations. Additionally, changes in the local and national economies and
markets for real estate and other assets can impact the sales prices of the assets. The Company has determined
that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs, and thus,
are considered Level 3 inputs. Based on its analysis, the Company recorded an impairment charge of $11,692,
which is included in the impairment and store closing costs line on the Consolidated Statement of Income.
3. Inventories
Inventories were comprised of the following at:
Retail
Restaurant
Supplies
Total
July 28, 2023
$ 145,175
24,427
19,762
$ 189,364
July 29, 2022
$ 170,846
25,284
17,119
$ 213,249
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4. Debt
On June 17, 2022, the Company entered into a five-year $700,000 revolving credit facility (the “2022
Revolving Credit Facility”) with substantially the same terms and financial covenants as our previous amended
$800,000 revolving credit facility (the “2019 Revolving Credit Facility”), which it replaced. The 2022 Revolving
Credit Facility also contains an option to increase the revolving credit facility by $200,000.
At July 28, 2023 and July 29, 2022, the Company had $120,000 and $130,000, respectively, in outstanding
borrowings under the 2022 Revolving Credit Facility and 2019 Revolving Credit Facility.
At July 28, 2023, the Company had $31,896 of standby letters of credit, which reduce the Company’s
borrowing availability under the 2022 Revolving Credit Facility (see Note 14). At July 28, 2023, the Company had
$548,104 in borrowing availability under the 2022 Revolving Credit Facility.
In accordance with the 2022 Revolving Credit Facility, outstanding borrowings bear interest, at the Company’s
election, either at Term SOFR or prime plus or a rate of 0.5% in excess of the Federal Funds Rate plus an
applicable margin based on certain specified financial ratios. At July 28, 2023, the weighted average interest rate
on $120,000 of the Company’s outstanding borrowings was 6.79%. At July 29, 2022, the weighted average
interest rate on $130,000 of the Company’s outstanding borrowings was 3.49%.
The 2022 Revolving Credit Facility contains customary financial covenants, which include maintenance of a
maximum consolidated total senior secured leverage ratio and a minimum consolidated interest coverage ratio.
At July 28, 2023, the Company was in compliance with all debt covenants under the 2022 Revolving Credit
Facility.
The 2022 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 2022 Revolving
Credit Facility, provided there is no default existing and the total of the Company’s availability under the 2022
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 senior secured leverage ratio is 2.75 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 2.75
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.
Convertible Senior Notes
On June 18, 2021, the Company completed a $300,000 principal aggregate amount private offering of 0.625%
convertible Senior Notes due in 2026 (the “Notes”) which included the exercise in full of the initial purchasers’
option to purchase up to an additional $25,000 principal amount of the Notes. The Notes are governed by the
terms of an indenture between the Company and U.S. Bank National Association as the Trustee. The Notes will
mature on June 15, 2026, unless earlier converted, repurchased or redeemed. The Notes bear cash interest at
an annual rate of 0.625%, payable semi-annually in arrears on June 15 and December 15 of each year, beginning
on December 15, 2021.
The Notes are unsecured obligations and do not contain any financial or operating covenants or restrictions
on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the
Company or any of its subsidiaries. In an event of default, the principal amount of, and all accrued and unpaid
interest on, all of the notes then outstanding will immediately become due and payable. However, notwithstanding
the foregoing, the Company may elect, at its option, that the sole remedy for an event of default relating to certain
failures by the Company to comply with certain reporting covenants in the Indenture will consist exclusively of the
right of the noteholders to receive special interest on the Notes for up to 180 calendar days during which such
62
event of default has occurred and is continuing, at a specified rate for the first 90 days of 0.25% per annum, and
thereafter at a rate of 0.50% per annum, on the principal amount of the Notes.
The initial conversion rate applicable to the Notes was 5.3153 shares of the Company’s common stock per
$1,000 principal amount of Notes, which represented an initial conversion price of approximately $188.14 per
share of the Company’s common stock, a premium of 25.0% over the last reported sale price of $150.51 per
share on June 15, 2021, the date on which the Notes were priced. The conversion rate is subject to customary
adjustments upon the occurrence of certain events, including for the payment of dividends to holders of the
Company’s common stock. On July 28, 2023, the conversion rate, as adjusted, was 5.8892 shares of the
Company’s common stock per $1,000 principal amount of Notes. In addition, if certain corporate events that
constitute a “Make-Whole Fundamental Change” occur, then the conversion rate will, in certain circumstances,
be increased for a specified period of time.
Net proceeds from the 2026 Notes offering were $291,125, after deducting the initial purchasers’ discounts
and commissions and the Company’s offering fees and expenses.
The Notes are accounted for entirely as a liability, and the issuance costs of the Notes are accounted for
wholly as debt issuance costs in the Consolidated Balance Sheets as of July 28, 2023 and July 29, 2022. The
equity conversion feature that was recorded to equity, as well as the unamortized debt discount and amortization
expense attributable to equity, have been derecognized.
During any calendar quarter preceding September 30, 2021, in which the closing price of the Company’s
common stock exceeds 130% of the applicable conversion price of the Notes on at least 20 of the last 30
consecutive trading days of the quarter, holders may in the immediate quarter following, convert all of a portion
of their Notes. The holders of the Notes were not eligible to convert their Notes during 2023, 2022 or 2021. When
a conversion notice is received, the Company has the option to pay or deliver the conversion amount entirely in
cash or a combination of cash and shares of the Company’s common stock. Accordingly, as of July 28, 2023
and July 29, 2022, the Company could not be required to settle the Notes in cash and, therefore, the Notes are
classified as long-term debt.
The following table includes the outstanding principal amount and carrying value of the Notes as of the period
July 28, 2023
July 29, 2022
Less: Debt issuance costs
Net carrying amount
$ 300,000
5,171
$ 294,829
$ 300,000
6,901
$ 293,099
The effective rate of the Notes over their expected life is 1.23%. The following is a summary of interest
expense for the Notes for the year ended July 28, 2023 and July 29, 2022:
Coupon interest
Amortization of issuance costs
Total interest expense
Year Ended
July 28, 2023
$ 1,896
1,730
$ 3,626
Year Ended
July 29, 2022
$ 1,896
1,755
$ 3,651
Convertible Note Hedge and Warrant Transactions
In connection with the offering of the Notes, the Company entered into convertible note hedge transactions
(the “Convertible Note Hedge Transactions”) with certain of the initial purchasers of the Notes and/or their
respective affiliates and other financial institutions (in this capacity, the “Hedge Counterparties”). Concurrently
with the Company’s entry into the Convertible Note Hedge Transactions, the Company also entered into separate,
warrant transactions with the Hedge Counterparties collectively relating to the same number of shares of the
Company’s common stock, which initially is approximately 1,600,000 shares, subject to customary anti-dilution
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indicated:
Liability component
Principal
adjustments, and for which the Company received proceeds that partially offset the cost of entering into the
Convertible Note Hedge Transactions (the “Warrant Transactions”).
The Convertible Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number
of shares of the Company’s common stock that initially underlie the Notes, and are expected generally to reduce
the potential equity dilution, and/or offset any cash payments in excess of the principal amount due, as the case
may be, upon conversion of the Notes. By default, the Warrant Transactions are net share settled and the
Company has the option to settle in cash or shares. The Warrant Transactions could have a dilutive effect on the
Company’s common stock to the extent that the price of its common stock exceeds the strike price of the Warrant
Transactions. The strike price was initially $263.39 per share and is subject to certain adjustments under the
terms of the Warrant Transactions. On July 28, 2023, the strike price, as adjusted, of the Warrant Transactions
was adjusted to $237.73 per share as a result of dividends declared since the Notes were issued.
The portion of the net proceeds to the Company from the offering of the Notes that was used to pay the
premium on the Convertible Note Hedge Transactions, net of the proceeds to the Company from the Warrant
Transactions, was approximately $30,310. The net costs incurred in connection with the Convertible Note Hedge
Transactions and Warrant Transactions were recorded as a reduction to additional paid-in capital on the
Company’s Consolidated Balance Sheet during 2021.
As these transactions meet certain accounting criteria, the Convertible Note Hedge Transactions and
Warrant Transactions were recorded in stockholders’ equity, not accounted for as derivatives and are not
remeasured each reporting period.
5. Derivative Instruments and Hedging Activities
During the fourth quarter of 2021, in conjunction with paying down debt under the revolving credit facility, the
Company terminated all of its interest rate swap agreements which resulted in the reclassification of the remaining
losses from accumulated other comprehensive loss (“AOCL”) to the Consolidated Statements of Income as part
of interest expense. The determination of the amounts reclassified from AOCL to interest expense was based
on the Company’s assessment that the forecasted transactions under the hedging relationships were no longer
probable.
Prior to the termination of the interest rate swaps, for each of the Company’s interest rate swaps, the
Company had 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 were fixed at the rates specified in the interest
rate swap agreements plus the Company’s credit spread. All of the Company’s interest rate swaps were
accounted for as cash flow hedges.
The following table summarizes the pre-tax effects of the Company’s derivative instruments on AOCL for
2021:
Cash flow hedges:
Interest rate swaps
Amount of Income Recognized in AOCL
on Derivatives (Effective Portion)
2021
$ 27,110
The following table summarizes the pre-tax effects of the Company’s derivative instruments on income for
2021:
Location of Loss Reclassified from
AOCL into Income (Effective Portion)
Amount of Loss Reclassified from AOCL
into Income (Effective Portion)
Cash flow hedges:
Interest rate swaps
Interest expense
2021
$ 25,420
64
The following table summarizes the amounts reclassified out of AOCL related to the Company’s interest rate
swaps for the years ended July 30, 2021:
Details about AOCL
Loss on cash flow hedges:
Interest rate swaps
Tax benefit
July 30, 2021
Affected Line Item in
the Consolidated
Statement of Income
$ (25,420)
6,342
$ (19,078) Net of tax
Interest expense
Provision for income taxes
No gains or losses representing amounts excluded from the assessment of effectiveness were recognized in
earnings in 2021.
6. Share Repurchases
Subject to the limits imposed by the Company’s revolving credit facility, in September 2021, the Company
was authorized by its Board of Directors to repurchase shares at the discretion of management up to $100,000.
In the fourth quarter of 2022, the Company was authorized by its Board of Directors to repurchase shares of the
Company’s outstanding common stock at management’s discretion up to a total value of $200,000; this
authorization replaced the previous unused portion of the previous $100,000 authorization. In 2023, the Company
repurchased 171,792 shares of its common stock in the open market at an aggregate cost of $17,449. In 2022,
the Company repurchased 1,248,184 shares of its common stock in the open market at an aggregate cost of
$131,542. In 2021, the Company repurchased 232,543 shares of its common stock in conjunction with the
Company’s offering and sale of the Notes (see Note 4 for further information regarding the Notes) at an aggregate
cost of $35,000.
7. 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.
Disaggregation of revenue
Total revenue was comprised of the following at:
Restaurant
Retail
Total revenue
8. Leases
2023
$ 2,740,866
701,942
$ 3,442,808
2022
$ 2,565,628
702,158
$ 3,267,786
2021
$ 2,227,246
594,198
$ 2,821,444
In 2020, the Company adopted new accounting guidance for leases. As part of the adoption of this accounting
guidance for leases, the Company elected to not separate lease and non-lease components. Additionally, the
Company elected to apply the short term lease exemption to all asset classes and the short term lease expense
for the period reasonably reflects the short term lease commitments. As the Company’s leases do not provide
an implicit rate, the Company uses the incremental borrowing rate based on the information available at the time
of commencement or modification date in determining the present value of lease payments. For operating leases
that commenced prior to the date of adoption of the new lease accounting guidance, the Company used the
incremental borrowing rate as of the adoption date. Assumptions used in determining the Company’s incremental
borrowing rate include the Company’s implied credit rating and an estimate of secured borrowing rates based on
comparable market data.
65
The Company has entered into agreements for real estate leases that are not recorded as right-of-use assets
or lease liabilities as it has not yet taken possession. These leases are expected to commence in 2024 and 2025
with undiscounted future payments of $15,714 and $21,673, respectively.
The following table summarizes the components of lease cost for operating leases for the years ended July
28, 2023, July 29, 2022 and July 30, 2021:
Operating lease cost
Short term lease cost
Variable lease cost
Total lease cost
2023
$ 109,908
2,947
3,669
$ 116,524
2022
$ 108,903
2021
$ 106,266
2,409
2,673
$ 113,985
2,363
2,248
$ 110,877
The following table summarizes supplemental cash flow information and non-cash activity related to the
Company’s operating leases for the years ended July 28, 2023, July 29, 2022 and July 30, 2021:
Operating cash flow information:
Gain on sale and leaseback transactions
Cash paid for amounts included in the measurement of lease
liabilities
Noncash information:
Right-of-use assets obtained in exchange for new
operating lease liabilities
Lease modifications or reassessments increasing or
decreasing right-of-use assets
Lease modifications removing right-of-use assets
2023
2022
2021
$ —
$ —
$ 217,722
95,294
92,600
89,264
17,378
19,143
316,563
11,320
11,978
35,059
(413)
(670)
(544)
The following table summarizes the weighted-average remaining lease term and the weighted-average
discount rate for operating leases as of July 28, 2023, July 29, 2022 and July 30, 2021:
Weighted-average remaining lease term
Weighted-average discount rate
2023
16.88 Years
5.09%
2022
17.38 Years
4.90%
2021
18.17 Years
4.84%
The following table summarizes the maturities of undiscounted cash flows reconciled to the total operating
lease liability as of July 28, 2023:
Year
2024
2025
2026
2027
2028
Thereafter
Total future minimum lease payments
Less imputed remaining interest
Total present value of operating lease liabilities
Sale and Leaseback Transactions
Total
$ 82,360
73,888
70,198
67,451
66,858
773,692
1,134,447
(385,698)
$ 748,749
In 2009, the Company completed sale and 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.
In 2000, the Company completed a sale and leaseback transaction involving 65 of its owned Cracker Barrel
stores. Under the transaction, the land, buildings and building improvements at the locations were sold and
66
leased back for a term of 21 years. The leases for these stores included specified renewal options for up to 20
additional years. On July 29, 2020, the Company entered into an agreement with the original lessor and a third-
party financier to obtain ownership of 64 of the 65 Cracker Barrel properties and simultaneously entered into a
sale and leaseback transaction with the financier for an aggregate purchase price, net of closing costs,
of $198,083. The Company purchased the remaining property for approximately $3,200. In connection with the
sale and leaseback transaction, the Company entered into lease agreements for each of the properties for initial
terms of 20 years and renewal options up to 50 years. The aggregate initial annual rent payment for the properties
is approximately $14,379 and includes 1% annual rent increases over the initial lease terms. All the properties
qualified for sale and leaseback and operating lease accounting classification and the Company recorded a gain
on the sale and leaseback transaction of $69,954 which is recorded in the gain on sale and leaseback transactions
line in the Consolidated Statements of Income. The Company also recorded operating lease right-of-use assets
and corresponding operating lease liabilities of $261,698 and $182,649, respectively.
On August 4, 2020, the Company completed a subsequent sale and leaseback transaction involving 62 of its
owned Cracker Barrel stores for an aggregate purchase price, net of closing costs, of $146,357. Under the
transaction, the land, buildings and building improvements at the locations were sold and leased back for initial
terms of 20 years and renewal options up to 50 years. The aggregate initial annual rent payment for the properties
is approximately $10,393 and includes 1% annual rent increases over the initial lease terms. All of the properties
qualified for sale and leaseback and operating lease accounting classification, and the Company recorded a gain
of $217,722 which is recorded in the gain on sale and leaseback transaction line in the Consolidated Statement
of Income in the first quarter of 2021. The Company also recorded operating lease right-of-use assets, including
a non-cash asset recognized as part of accounting for the transaction of $175,960, and corresponding operating
lease liabilities of $309,624 and $133,663, respectively.
9. 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.
On November 19, 2020, the Company’s shareholders approved the 2020 Omnibus Incentive Plan (the “2020
Omnibus Plan”) which became effective on that date. The 2020 Omnibus Plan authorizes the following types of
awards for employees and non-employee directors: stock options, stock appreciation rights, nonvested stock,
restricted stock units, other share-based awards and performance awards. After the effective date of the 2020
Omnibus Plan, no additional awards could be granted under the Company’s 2010 Omnibus Incentive Stock and
Incentive Plan (the “Prior Plan”).
The 2020 Omnibus Plan allows the Committee to grant awards for an aggregate of 1,033,441 shares, the
number of shares that were available for issuance as of September 24, 2020 (the “Cutoff Date”) pursuant to the
Prior Plan, plus the number of shares that became available for issuance pursuant to the terms of the Prior Plan
following the Cutoff Date and prior to the effective date. However, this share reserve is increased by shares
awarded under this and the Prior Plan which are forfeited, expired, settled for cash and shares withheld by the
Company in payment of a tax withholding obligation after the effective date of the 2020 Omnibus Plan.
Additionally, this share reserve was decreased by shares granted from the 2020 Omnibus Plan after the effective
date. At July 28, 2023, the number of shares authorized for future issuance under the Company’s active plan is
1,016,341. At July 28, 2023, the number of outstanding awards under the 2020 Omnibus Plan and the Prior Plan
was 161,738 and 37,464, respectively.
Types of Share-Based Awards
Nonvested Stock Awards
67
Nonvested stock awards consist of the Company’s common stock, generally accrue dividend equivalents
and vest over one to five 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 July 28, 2023:
Long-Term Performance Plan (“LTPP”)
2023 LTPP
2022 LTPP
Performance Period
2023 – 2025
2022 – 2024
Vesting Period
(in Years)
3
3
The following table summarizes the shares that have been accrued under the 2023 LTPP and 2022 LTPP
at July 28, 2023:
2023 LTPP
2022 LTPP
3,410
15,135
A summary of the Company’s nonvested stock activity as of July 28, 2023, and changes during 2023 are
presented in the following table:
Nonvested Stock
Unvested at July 29, 2022
Granted
Vested
Forfeited
Unvested at July 28, 2023
Shares
Weighted-Average Grant
Date Fair Value
123,942 $ 131.21
111,117
104.95
148.60
(33,289)
(21,113)
108.81
180,657 $ 114.47
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
Compensation Expense
2023
2021
$ 4,947 $ 6,166 $ 3,200
2022
The following table highlights the components of share-based compensation expense for each of the three
years:
Total compensation expense
2023
2021
2022
$ 9,045 $ 8,198 $ 8,729
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 July 28, 2023:
Total unrecognized compensation
Weighted-average period in years
68
Nonvested
Stock Awards
$ 8,038
1.82
During 2023, the Company issued 43,974 shares of its common stock resulting from the vesting of share-
based compensation awards. Related tax withholding payments on these share-based compensation awards
resulted in a net reduction to shareholders’ equity of $2,448.
10. Shareholder Rights Plan
On April 9, 2021, 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, 2021 (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, 2021 to the shareholders of record on April 19, 2021. The Rights Agreement replaced
the Company’s previous shareholder rights plan adopted in 2018 (the “2018 Plan”), and it became effective
immediately following the expiration of the 2018 Plan at the close of business on April 9, 2021. The 2018 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 2018 Plan.
The Rights
The Rights initially trade with, and are inseparable from, the Company’s common stock. The Rights are
evidenced only by certificates or book entries that represent shares of common stock. New Rights will accompany
any new shares of common stock the Company issues after April 19, 2021 until the Distribution Date 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 ten 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.
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 of 1934, as amended (the “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 July 28, 2023, none of the Rights were exercisable.
Consequences of a Person or Group Becoming an Acquiring Person
Flip in. If a person or group becomes an Acquiring Person, all holders of Rights except the Acquiring
Person may, for $600.00, purchase shares of the Company’s common stock with a market value of
$1,200.00, based on the market price of the common stock prior to such acquisition.
69
Flip Over. If the Company is later acquired in a merger or similar transaction after the Distribution Date,
all holders of Rights except the Acquiring Person may, for $600.00, purchase shares of the acquiring
corporation with a market value of $1,200.00, based on the market price of the acquiring corporation’s
stock prior to such transaction.
Notional Shares. 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.
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 any all-cash, fully financed tender offer, exchange offer of common
stock of the offeror meeting certain terms and conditions further described below, or a combination thereof, in
each case for all shares of common stock that remain open for a minimum of 60 business days and 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”). If an offer includes shares of
common stock of the offeror, the Rights would not interfere with such offer if such consideration consists solely
of freely-tradeable common stock of a publicly-owned United States corporation; such common stock is listed or
admitted to trading on the New York Stock Exchange, Nasdaq Global Select Market or Nasdaq Global Market;
the offeror has already received stockholder approval to issue such common stock prior to the commencement
of such offer or no such approval is or will be required; the offeror has no other class of voting stock outstanding;
no person (including such person’s affiliated and associated persons) beneficially owns twenty percent (20%) or
more of the shares of common stock of the offeror then outstanding at the time of commencement of the offer or
at any time during the term of the offer; and the offeror meets the registrant eligibility requirements for use of a
registration statement on Form S-3 for registering securities under the Securities Act of 1933, as amended,
including the filing of all reports required to be filed pursuant to the Exchange Act in a timely manner during the
twelve (12) calendar months prior to the date of commencement, and throughout the term, of such offer. 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.
70
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
The Rights will expire on April 9, 2024.
11. 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 2023, 2022 and 2021, 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. 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 $27,129 is included in
other assets and the related liability to the participants of $27,129 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
12. Income Taxes
2023
2022
2021
$ 4,963
230
$ 4,713 $ 4,071
259
285
The components of the provision for income taxes for each of the three years were as follows:
71
Current:
Federal
State
Deferred:
Federal
State
Total provision for income taxes
2023
2022
2021
$ 6,925 $ 16,462 $ (13,505)
3,573
1,188 2,405
(4,902) (4,543) 57,580
(1,035) (1,604) 9,558
$ 4,561 $ 11,503 $ 56,038
A reconciliation of the Company’s provision for income taxes and income taxes based on the statutory U.S.
federal rate of 21.0% in 2023, 2022 and 2021 was as follows:
Provision computed at federal statutory income tax rate
State and local income taxes, net of federal benefit
Federal net operating loss benefit
Employer tax credits for FICA taxes paid on employee tip income
Other employer tax credits
Tax audit settlement
Other-net
Total provision for income taxes
1,452
2023
2021
2022
$ 21,758 $ 30,110 $ 65,216
10,589
— (5,402)
(15,395) (12,323)
(4,929) (3,234)
(1,939) —
2,204 1,192
$ 4,561 $ 11,503 $ 56,038
2,069
—
(16,772)
(3,673)
—
1,179
The decrease in the Company’s provision for income taxes in 2023 as compared to 2022 is primarily due to
the decrease in income before income taxes. The decrease in the Company’s provision for income taxes in 2022
as compared to 2021 is primarily due to the decrease in income before income taxes and the benefit of higher
income tax credits.
Significant components of the Company’s net deferred tax liability consisted of the following at:
Deferred tax assets:
Compensation and employee benefits
Accrued liabilities
Operating lease liabilities
Insurance reserves
Inventory
Deferred tax credits and carryforwards
Other
Deferred tax assets
Deferred tax liabilities:
Property and equipment
Inventory
Operating lease right-of-use asset
Other
Deferred tax liabilities
Net deferred tax liability
July 28, 2023
July 29, 2022
$ 6,406
15,843
186,813
7,360
3,204
30,720
11,057
$ 261,403
$ 100,185
6,028
221,882
7,564
335,659
$ 74,256
$ 7,329
15,770
193,794
7,115
3,002
24,896
13,875
$ 265,781
$ 101,268
5,517
232,914
6,275
345,974
$ 80,193
The Company has a deferred tax asset of $20,508 reflecting federal income tax credit carryforwards that
expire in 2043. The Company has state income tax net operating loss carryforwards (“NOL”) of $84,630 and has
recorded a deferred tax asset of $4,762 reflecting this benefit. These state NOLs generally expire in years
beginning 2037 and after.
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 July 28, 2023 and July 29, 2022, the Company’s gross liability for uncertain tax positions, exclusive of
interest and penalties, was $9,675 and $10,858, respectively.
72
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
July 28, 2023
July 30, 2021
$ 10,858 $ 14,477 $ 17,835
July 29, 2022
710
—
1,152
—
1,596
—
52
—
(1,045)
(298)
(1,786)
—
(2,123)
(1,647)
$ 9,675 $ 10,858 $ 14,477
17
(1,241)
(1,942)
(1,605)
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
2023
$ 7,644
2022
2021
$ 8,578 $ 11,437
The Company had $7,896, $7,133, and $7,755 in interest and penalties accrued as of July 28, 2023, July 29,
2022, and July 30, 2021, respectively.
The Company recognized accrued interest and penalties related to unrecognized tax benefits of $764, $(622)
and $545 in its provision for income taxes on July 28, 2023, July 29, 2022 and July 30, 2021, respectively.
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 July 28, 2023 by approximately
$3,000 to $5,000 within the next twelve months. At July 28, 2023, the Company was subject to income tax
examinations for its U.S. federal income taxes after 2018 and for state and local income taxes generally after
2018.
13. 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
Net income per share denominator:
Basic weighted average shares outstanding
Add potential dilution:
Nonvested stock awards and units
Diluted weighted average shares outstanding
14. Commitments and Contingencies
2023
$ 99,050
2022
$ 131,880
2021
$ 254,513
22,167,875
23,164,180
23,692,063
97,524
22,265,399
81,830
23,246,010
75,327
23,767,390
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.
73
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 1 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 July 28, 2023, the Company had $31,896 of standby letters of credit
related to securing reserved claims under workers’ compensation insurance and the July 29, 2020 and August 4,
2021 sale and leaseback transactions. All standby letters of credit are renewable annually and reduce the
Company’s borrowing availability under its Revolving Credit facility (see Note 4).
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.
74
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 July 28, 2023, our disclosure controls and procedures were effective.
There have been no changes (including corrective actions with regard to material weaknesses) during the
quarter ended July 28, 2023 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 and our Code of Business Conduct and Ethics, both 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 or 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 July 28, 2023, 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/Craig A. Pommells
Craig A. Pommells
Senior Vice President and Chief Financial Officer
75
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the 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 July 28 2023, 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 July 28, 2023, based on criteria established in Internal Control — Integrated Framework
(2013) issued by 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 July 28, 2023 of
the Company and our report dated September 26, 2023 expressed an unqualified opinion on those financial
statements and included an explanatory paragraph regarding the Company's adoption of Accounting Standards
Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and
Contracts in an Entity's Own Equity.
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
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
76
/s/ Deloitte & Touche LLP
Nashville, Tennessee
September 26, 2023
ITEM 9B. OTHER INFORMATION
During the fiscal quarter ended July 28, 2023, no director or officer of the Company adopted or terminated a “Rule
10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of
Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None
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 2023 Proxy Statement: “Board of Directors and Committees,” “Proposal 1:
Election of Directors,” “Certain Relationships and Related Transactions—Code of Ethics” and, if applicable,
“Delinquent Section 16(a) Reports.” 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 “Information About our Executive
Officers.”
The Company has adopted a Code of Business Conduct and Ethics that applies to all directors, officers and
employees. The Code of Business Conduct and Ethics is available on our website at www.crackerbarrel.com under
the Investors – Corporate Governance section. We intend to satisfy the disclosure requirements under the Exchange
Act regarding amendment to, or waiver from a material provision of our Code of Business Conduct and Ethics
involving our principal executive, financial or accounting officer or controller by posting such information on our
website.
The Company has adopted a Statement of Policy Regarding Insider Trading and integrated Special Trading
Procedures Policy that governs the purchase, sale, and/or other dispositions of the Company’s securities by directors,
officers and employees that is reasonably designed to promote compliance with insider trading laws, rules and
regulations, and any listing standards applicable to the Company. A copy of the Company’s Statement of Policy
Regarding Insider Trading and integrated Special Trading Procedures Policy is filed as Exhibit 19 to this Annual
Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by this reference to the following sections of the 2023
Proxy Statement: “Executive Compensation” and “Board of Directors and Committees—Compensation of Directors.”
The “Compensation Committee Report” set forth in the section of the 2023 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 2023
Proxy Statement.
77
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 2023 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 2023 Proxy Statement. No other portion of the section of the 2023
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. Deloitte & Touche LLP (PCAOB ID No. 34) is our principal accountant.
ITEM 15. EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES
(a)
List of documents filed as part of this report:
PART IV
1.
2.
3.
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.
INDEX TO EXHIBITS
Exhibit
3(I), 4(a)
Amended and Restated Charter of Cracker Barrel Old Country Store, Inc. (1)
3(II), 4(b)
Second Amended and Restated Bylaws of Cracker Barrel Old Country Store, Inc. (2)
4(c)
Rights Agreement, dated as of April 9, 2021, between Cracker Barrel Old Country Store, Inc.
and American Stock Transfer & Trust Company, LLC, as rights agent (3)
4(d), 10(a)
Indenture, as of June 18, 2021, between Cracker Barrel Old Country Store, Inc., as issuer,
and U.S. Bank National Association, as trustee (4)
4(e)
4(f)
10(b)
10(c)
10(d)
10(e)
10(f)
10(g)
Form of 0.625% Convertible Senior Note due 2026 (5)
Description of Capital Stock (6)
Amended and Restated Credit Agreement, dated as of June 17, 2022, 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 (7)
Cracker Barrel Old Country Store, Inc. Corporate Policy—Severance Benefits Policy (as
amended to date)† (8)
Cracker Barrel Old Country Store, Inc. 2010 Omnibus Stock and Incentive Plan† (9)
Cracker Barrel Old Country Store, Inc. 2020 Omnibus Stock and Incentive Plan† (10)
Cracker Barrel Old Country Store, Inc. Form of Performance-Based Stock Unit Award† (11)
Cracker Barrel Old Country Store, Inc. Non-Qualified Savings Plan (as amended to date)† (12)
78
10(h)
10(i)
10(j)
10(k)
10(l)
Cracker Barrel Old Country Store, Inc. Deferred Compensation Plan† (13)
Amendment to Deferred Compensation Plan† (14)
Cracker Barrel Old Country Store, Inc. Form of Restricted Stock Award Notice† (15)
Form of Severance Agreement between Cracker Barrel Old Country Store, Inc., and certain
of its named executive officers† (16)
Form of Change of Control Agreement between Cracker Barrel Old Country Store, Inc., and
certain of its named executive officers† (17)
10(m)
Agreement for Purchase and Sale of Real Property, dated May 28, 2020 (18)
10(n)
10(o)
10(p)
10(q)
10(r)
10(s)
10(t)
10(u)
10(v)
10(w)
10(x)
10(y)
19
21
23
31.1
31.2
First Amendment for Purchase and Sale of Real Property, dated July 29, 2020 (19)
Amended and Restated Master Lease Agreement, dated as of August 4, 2020* (20)
Master Lease Agreement, dated as of November 11, 2020* (21)
First Amendment to Amended and Restated Master Lease Agreement, dated as of November
11, 2020* (22)
Form of Convertible Note Hedge Transactions Confirmation (23)
Form of Warrant Transactions Confirmation (24)
Nomination and Cooperation Agreement dated September 28, 2022, by and among Cracker
Barrel Old Country Store, Inc. and the persons and entities listed on Schedule A thereto (25)
Employment Agreement dated as July 17, 2023, between the Company and Julie Masino†
*(26)
Employment Agreement dated as of July 17, 2023, between the Company and Sandra B.
Cochran† (27)
Form of Transitional Letter Agreement between the Company and certain executive officers
of the Company† (28)
Form of Consulting Agreement between the Company and certain executives of the
Company† (29)
Supplemental Severance Agreement dated as of September 21, 2023, between the
Company and Craig Pommells† (filed herewith)
Insider Trading Policy (filed herewith)
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)
79
32.1
32.2
97
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)
Cracker Barrel Old Country Store, Inc. Nasdaq Executive Compensation Recovery Policy (filed
herewith)
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data
File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
104
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
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 3.2 to the Company’s Quarterly Report on Form 10-Q filed under the Exchange
Act on June 7, 2022.
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, 2021.
Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed under the Exchange
Act on June 21, 2021.
Incorporated by reference to Exhibit A to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on June 21, 2021.
Incorporated by reference to Exhibit 4(f) to the Company’s Annual Report on Form 10-K filed under the Exchange
Act for the fiscal year ended July 30, 2021.
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed under the Exchange
Act on June 17, 2022.
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 10.1 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 10.1 to the Company’s Current Report on Form 8-K filed under the Exchange
Act on November 23, 2020 (Commission File No. 001-25225).
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).
80
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(28)
(29)
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 10.1 to the Company’s Quarterly Report on Form 10-Q filed under the
Exchange Act for the quarterly period ended April 27, 2018 (Commission File No. 001-25225).
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 April 27, 2018 (Commission File No. 001-25225).
Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed under the Exchange
Act on August 3, 2020.
Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed under the Exchange
Act on August 3, 2020.
Incorporated by reference to Exhibit 10.1 to the Company’s Amended Current Report on Form 8-K filed under the
Exchange Act on August 5, 2020.
Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed under the
Exchange Act on December 3, 2020.
Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed under the
Exchange Act on December 3, 2020.
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed under the Exchange
Act on June 21, 2021.
Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on June 21, 2021.
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on September 28, 2022.
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on July 18, 2023.
Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on July 18, 2023.
Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on July 18, 2023.
Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed under the
Exchange Act on July 18, 2023.
†Denotes management contract or compensatory plan, contract or arrangement.
*Certain schedules and similar attachments have been omitted in reliance on Item 601(a)(5) of Regulation S-K. The
Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
81
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 26th day of
September, 2023.
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 26th day of September, 2023.
Name
Title
/s/Sandra B. Cochran
Sandra B. Cochran
/s/Craig A. Pommells
Craig A. Pommells
/s/Thomas H. Barr
Thomas H. Barr
/s/Carl T. Berquist
Carl T. Berquist
/s/Jody L. Bilney
Jody L. Bilney
/s/Meg G. Crofton
Meg G. Crofton
/s/Gilbert R. Dávila
Gilbert R. Dávila
/s/William W. McCarten
William W. McCarten
/s/William W. Moreton
William W. Moreton
/s/Coleman H. Peterson
Coleman H. Peterson
/s/Gisel Ruiz
Gisel Ruiz
/s/Darryl Wade
Darryl L. Wade
/s/Andrea M. Weiss
Andrea M. Weiss
President, Chief Executive Officer and Director
Senior Vice President, Chief Financial Officer and Principal Accounting Officer
Director
Director
Director
Director
Director
Director and Chairman of the Board
Director
Director
Director
Director
Director
82
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
Equiniti Trust Company
6201 15th Avenue
Brooklyn, NY 11219
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 16, 2023 via a live
webcast, at www.cesonlineservices.com/cbrl23_vm.
To participate, you must pre-register at
www.cesonlineservices.com/cbrl23_vm by 10:00
a.m., Central Time, on November 15, 2023.
Comparison of Five-Year Total Return
Among Cracker Barrel Old Country Store, Inc., S&P 400
Restaurants Index, S&P Mid Cap Index, and S&P Small
Cap Index. Assumes $100 invested on 8/03/18 and
includes reinvestment of dividends. Copyright @ Standard
and Poor’s, Inc.
Dividend Reinvestment and Direct Stock Purchase Plan
Although our company does not sponsor a dividend reinvestment or direct stock
purchase plan, our transfer agent, Equiniti Trust Company, LLC (“Equiniti”),
sponsors and administers such programs. You may call Equiniti at 800-937-
5449 to obtain enrollment forms.
10-K Report
A copy of the Cracker Barrel Old Country Store, Inc. Form 10-K Annual Report
for Fiscal 2023, filed with the Securities and Exchange Commission, may be
obtained without charge through our Internet website, located at
crackerbarrel.com.
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 “Maple Street Biscuit Company” are
trademarks of subsidiaries of Cracker Barrel Old Country Store, Inc.
©2023 CBOCS Properties, Inc
Corporate Officers
Sandra B. Cochran
President and Chief Executive Officer
Julie F. Masino
Chief Executive Officer - Elect
Laura A. Daily
Senior Vice President, Chief Merchant and Retail
Supply Chain
Bruce A. Hoffmeister
Senior Vice President, Chief Information Officer
Craig A. Pommells
Senior Vice President, Chief Financial Officer
Donna L. Roberts
Senior Vice President, Chief Human Resources Officer
Cammie E. Spillyards-Schaefer
Senior Vice President, Operations
Jim M. Spurgin
Senior Vice President, Chief Restaurant Supply Chain
Officer
Richard M. Wolfson
Senior Vice President, General Counsel and Corporate
Secretary
Barbara K. Brown
Regional Vice President, Restaurant Operations
Jennifer M. Lankford
Vice President, Deputy General Counsel
Arthur T. Bushman
Vice President, Financial Planning and Analysis
Michael B. Liedberg
Vice President, Operations Systems and Support
Dottie F. Cervenka
Regional Vice President, Retail Operations
John S. Melton
Vice President, Digital
Derrick L. Collins
Regional Vice President, Retail Operations
Sherri L. Moore
Regional Vice President, Restaurant Operations
Heather A. Gammon
Vice President, Demand Planning
Scott A. Gardner
Vice President, Distribution and Logistics
Christie A. Hale
Vice President, Internal Audit
Lana R. Handle
Vice President, Corporate Controller
Joanne M. Hayes
Vice President, Merchandising
Douglas R. Hisel
Vice President, Field Operations
Julia C. Perry
Vice President, Marketing Communications
Ben Sapp
Vice President, Operations Services
Jeffrey J. Sigel
Vice President, Strategy and Business Intelligence
Marci E. Sigmund
Vice President, Talent Acquisition
Andrew D. Simpson
Regional Vice President, Restaurant Operations
Mark A. Trabucchi
Regional Vice President, Restaurant Operations
Andress R. Urteaga
Regional Vice President, Restaurant Operations
Daniel S. Agerton
Regional Vice President, Restaurant Operations
Jonathan W. Hussey
Vice President, Sales and Performance
Amy S. Barnett
Vice President, Loyalty and Digital Experience
Ashley V. Berland
Vice President, Strategic Sourcing
William C. Blondheim
Regional Vice President, Restaurant Operations
Gabrielle T. Ivey
Vice President, Organizational Learning, Development
and Diversity
Kaleb Johannes
Vice President, Investor Relations and Transformation
Management
Kevin K. Wales
Vice President, Application Development and Enterprise
Architecture
Michelle D. Wilson
Lead Regional Vice President, Retail Operations
Thomas Yun
Vice President, Culinary
83
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