ANNUAL REPORT
2024
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended August 02, 2024
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
Trading Symbol(s)
Name of each exchange on which registered
Common Stock (Par Value $0.01)
Rights to Purchase Series A Junior
Participating Preferred Stock (Par
Value $0.01)
CBRL
The Nasdaq Stock Market LLC (Nasdaq Global Select Market)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark 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
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
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 26, 2024 (the last
business day of the registrant’s most recently completed second fiscal quarter) was $1,696,655,108.
As of September 13, 2024, there were 22,204,312 shares of common stock outstanding.
Documents Incorporated by Reference
Document from which Portions
are Incorporated by Reference
Part of Form 10‑K
into which incorporated
1.
Proxy Statement for Annual Meeting of
Part III
Shareholders to be held November 21, 2024
(the “2024 Proxy Statement”)
3
PAGE
PART I
INTRODUCTION
4
ITEM 1. BUSINESS
6
ITEM 1A. RISK FACTORS
14
ITEM 1B. UNRESOLVED STAFF COMMENTS
29
ITEM 1C. CYBERSECURITY
30
ITEM 2. PROPERTIES
31
ITEM 3. LEGAL PROCEEDINGS
32
ITEM 4. MINE SAFETY DISCLOSURES
32
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
33
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
34
ITEM 6. RESERVED
35
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
35
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
50
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
52
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
79
ITEM 9A. CONTROLS AND PROCEDURES
79
ITEM 9B. OTHER INFORMATION
83
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
83
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
83
ITEM 11. EXECUTIVE COMPENSATION
83
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
83
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
83
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
84
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
84
INDEX TO EXHIBITS
84
SIGNATURES
88
4
INTRODUCTION
General
Unless the context otherwise requires, references to “Company,” “we,” “us,” and “our” refer to Cracker
Barrel Old Country Store, Inc. and its direct and indirect wholly owned subsidiaries. This report contains
references to years that are the Company’s 52-week or 53-week fiscal year, which ends on the Friday nearest
July 31st in the calendar year. The periods presented in our financial statements are the fiscal years ended
August 02, 2024 (“2024”), July 28, 2023 (“2023”) and July 29, 2022 (“2022”), respectively. Each of these
periods has 52 weeks except for 2024, which consisted of 53 weeks. 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.
5
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 the Company expects will or may occur in the future are forward-
looking statements concerning matters that 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, ingredients,
transportation, distribution and labor; disruptions to our restaurant or retail supply chain; our ability to manage
retail inventory and merchandise mix; our ability to sustain or the effects of plans intended to improve
operational or marketing execution and performance, including the Company’s strategic transformation plan;
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; 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 a single distribution facility and certain significant
vendors, particularly for foreign-sourced retail products; information technology disruptions and data privacy
and information security breaches, whether as a result of infrastructure failures, employee or vendor errors, or
actions of third parties; our compliance with privacy and data protection laws; changes in or implementation of
additional governmental or regulatory rules, regulations and interpretations affecting tax, health and safety,
animal welfare, pensions, insurance or other undeterminable areas; the actual results of pending, future or
threatened litigation or governmental investigations; our ability to manage the impact of negative social media
attention and the costs and effects of negative publicity; 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 sales and customer
travel; discretionary income or personal expenditure activity of our customers; 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.
6
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. is principally engaged in the operation and development of the
Cracker Barrel Old Country Store® concept (“Cracker Barrel”). Originally founded in 1969, we are
headquartered in Lebanon, Tennessee and 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, 2024, we operated 658 Cracker Barrel stores in 44 states and 68 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 Cracker Barrel 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. As of September 13, 2024, no Cracker Barrel stores were franchised.
In 2024, we announced our strategic transformation plan. The strategic transformation plan is anchored on
three overarching business imperatives: driving relevancy, delivering food and an experience guests love, and
growing profitability. We have undertaken certain initiatives as part of these imperatives, including modifying
capital allocation to support increased investment in the business to drive organic growth. We launched our
loyalty program to leverage guest data to better understand consumer behavior and identify ways to drive
frequency and engagement. As part of the plan, we are redefining our brand, including by improving our stores’
designs and atmosphere. We are currently testing store remodel prototypes. Our store remodel program
includes two categories: full remodels and store refreshes. We expect that 25-30 stores will be fully remodeled
and we expect to complete 25-30 store refreshes in 2025.
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.
7
Products: Our restaurants, which generated approximately 80% of our total revenue in 2024, 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. Approximately 93%, of our Cracker Barrel restaurants serve an assortment of beer and
wine as of the end of 2024.
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 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 2024 was $14.05, which represents a 5.1% increase
over the prior year. We served an average of approximately 5,500 restaurant guests per week in a typical store
in 2024.
The following table highlights the price ranges for our meals in 2024:
Price Range
Breakfast
$ 6.99 to $ 20.99
Lunch and Dinner
$ 5.19 to $ 25.19
The following table highlights each day-part’s percentage of restaurant sales in 2024:
Percentage of
Restaurant
Sales in 2024
Breakfast Day-Part (until 11:00 a.m.)
25%
Lunch Day-Part (11:00 a.m. to 4:00 p.m.)
37%
Dinner Day-Part (4:00 p.m. to close)
38%
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 mix. 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
2024:
Percentage of
Retail Sales in
2024
Apparel and Accessories
32%
Food
18%
Décor
14%
Toys
13%
Media
7%
8
Our typical gift shop features approximately 4,300 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 $515 per square foot in 2024) 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.
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, three
to four associate managers and one retail manager. 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 630 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 2024:
Percentage of
Food Purchases
in 2024
Fruits and vegetables
14%
Poultry
13%
Dairy (including eggs)
13%
Beef
13%
Pork
10%
9
Each of these categories includes several individual items. Boneless chicken breast is the single food item
within these categories that accounted for the largest share of our food purchasing expense in 2024 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
seven vendors, poultry through nine vendors and beef through six 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.
The majority of our retail items (approximately 80% in 2024) are warehoused 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. The remaining retail items are drop-shipped directly by our vendors to individual
stores.
Approximately one-third of our 2024 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 drives our loyalty program, effectively enables 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 in-store guest experience is supported by systems that manage the dining room seating,
assist in facilitating customer orders of food and retail products, and routes food orders to our kitchen. Marketing
uses digital technology to provide more relevancy in customer messaging. 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 and assist in analytics and decision-making. Our help 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.
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, Third-Party Delivery and
Catering and Occasion. 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, e.g., Door Dash and Uber Eats, 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 2024,
Individual To Go, Third-Party Delivery and Catering and Occasion accounted for approximately 48%, 32% and
20% 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.
10
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 channels to reach and engage our guests. Outdoor advertising (e.g.,
billboards and state department of transportation signs) is one of our largest advertising vehicles we use to
reach our traveling and local guests. In 2024, we had over 1,300 billboards and this expenditure accounted for
approximately one-fourth 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. Additionally, in the first quarter of 2024, we launched our customer loyalty program, Cracker
Barrel Rewards.
Store Development: We opened two new Cracker Barrel stores in 2024. Currently, we plan to open two
new stores during 2025. As of September 13, 2024, approximately 83% of our stores are located along
interstate highways. Our remaining stores are located off-interstate or near tourist destinations.
Of the 658 stores open as of September 13, 2024, we own the land and buildings for 358, while the other
300 properties are either ground leases or ground and building leases. Building, site improvement, furniture,
equipment and related development costs for stores opened during 2024 averaged approximately $5,700 and
pre-opening costs averaged $835 per store in 2024.
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 also operate Maple Street Biscuit Company (“MSBC”) locations. 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, 2024, 68 MSBC locations were open, an increase from 59 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, 2024, no MSBC locations were franchised. We believe
that MSBC will serve as a long-term growth vehicle that complements Cracker Barrel while providing increased
exposure to urban and suburban markets. Currently, we plan to open three to four MSBC locations in 2025.
HUMAN CAPITAL
As of August 02, 2024, we employed approximately 77,600 people, of whom 350 were in advisory and
supervisory capacities, 3,385 were in-store management positions and 45 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.
11
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 August 02, 2024, 34% of our employee population is racially and/or ethnically diverse and 70% 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 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.
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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.
Quality Assurance and Food Safety
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:
•
Comprehensive food safety training for store employees and store managers;
•
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;
•
Regular unannounced food safety audits conducted on all Cracker Barrel locations several times
per year by a nationally recognized third party food safety organization;
•
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.
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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 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.
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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. Additionally, the fourth quarter of 2024 consisted of
14 weeks. 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 payments received on sales are made by credit card, debit card
or cash. Therefore, like many restaurant companies, we are able to, and often do, operate with negative working
capital. Restaurant inventories purchased through our principal food distributor are on terms of net zero days,
while other restaurant inventories purchased locally generally are financed through trade credit at terms of
30 days or less. Because of our gift shops, 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 once every week or every two weeks 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 are currently experiencing, and have in the past experienced, inflationary conditions with respect
to a variety of costs, including 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.
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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. We have
experienced and continue to experience inflationary pressures with respect to these costs. 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 limit their restaurant or retail purchases. 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 2025.
Risks Related to Our Business
Pandemics, epidemics, endemics, and other public health concerns, or government regulation relating
to the consumption of food products and widespread infectious diseases could reduce consumer
traffic and could have a material adverse effect on our results of operations.
The United States and other countries have experienced, and may experience in the future, outbreaks of
viruses, such as COVID-19, norovirus, the bird/avian flu or other diseases. We cannot predict whether such
infectious diseases, including future variants of COVID-19, may impact sales and traffic at our stores, create
staffing issues, increase commodity costs or result in store closures, which could subsequently damage or
could reduce consumer traffic and could have a material adverse effect on our results of operations. 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.
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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.
In 2024, we announced a strategic transformation plan 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.
Our strategic transformation plan is in various stages of testing, evaluation and implementation, aimed to
improve guest experience and increase profitability. These initiatives are generally aimed at enhancing menu
and retail options, reducing our costs, improving margins and increasing brand awareness, including through
expanding our footprint and investing in strategic relationships. Implementation of these initiatives across our
store base is inherently risky even when initiatives have been tested successfully on a more limited scale, and
customers may not be receptive to these changes, which may negatively impact our financial condition and
results of operations. 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 may adversely affect our business, financial condition and 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. We also compete with other restaurant chains and other
retail businesses for quality site locations, management and hourly employees, and other competitive pressures
may affect both the availability and cost of these important resources. 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.
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We anticipate that intense competition will continue with respect to all of these factors. 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, may adversely
affect public perception of the entire brand before we have the opportunity to respond to and address such
allegations. 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 and digital marketing strategies to maintain brand relevance 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.
18
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.
As part of our strategic transformation plan, we announced a reduction in quarterly dividends. Any future
determination to pay cash dividends on our common stock, or to pay cash dividends in an amount comparable
to historical cash dividends on our common stock, 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.
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.
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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.
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.
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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. We use a number of products that are or may be manufactured in a number of foreign
countries, which subjects us to certain risks, including possible long lead times to source products; 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; foreign
political and economic instability; and disruptions due to labor stoppages, strikes or slowdowns, or other
disruptions, involving our vendors or the transportation and handling industries.
In some cases, we may have only one supplier for a product or service, which 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.
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.
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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. From time to time, we experience unauthorized infiltration attempts and cyber-
attacks, which have not yet, but could in the future, materially impact our operations. Cyber-attacks are
increasingly common and sophisticated, including through use of developing technologies such as artificial
intelligence to identify and exploit weaknesses in business security systems, and we cannot guarantee such
attacks will not materially impact our business in the future.
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, including due to a cyber-attack or unauthorized infiltration attempt,
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.
If we fail or our vendors fail to comply with privacy and data protection laws or our systems are
compromised, our operations could be negatively impacted and we could be subject to litigation and
adverse publicity.
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 surrounding information security and privacy is increasingly demanding, with the frequent
imposition of new and constantly changing requirements. Compliance with these requirements may result in
cost increases due to necessary system changes and the development of new administrative processes.
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In addition, customers and employees have a high expectation that we will adequately protect their personal
information, including 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.
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, payroll payments, payroll taxes processing, 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 health care reform and environmental matters, and an insufficient or ineffective
response to government regulation may increase our costs and decrease our profit margins.
23
The restaurant industry is subject to extensive federal, state and local laws and regulations, including those
relating to food safety, 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.
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, online and digital
media and our loyalty program. These types of advertising, their effects upon our revenues and, in turn, our
profits, are uncertain. Additionally, if our competitors increased their spending on advertising and promotions,
we could be forced to substantially increase our advertising, media or marketing expenses. If we did so or if
our current advertising and promotion programs become less effective, we could experience a material adverse
effect on our results of operations.
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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, guest discrimination; food safety issues; personal injury claims; 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.
Activist shareholders have nominated candidates for election to our Board of Directors at our annual
meetings of shareholders multiple times, 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. The Lion Fund II, L.P., Biglari Capital
Corp., First Guard Insurance Company, Southern Pioneer Property and Casualty Insurance Company, Biglari
Holdings Inc., Biglari Reinsurance Ltd. and Biglari Insurance Group Inc. are affiliates of Sardar Biglari (“Biglari”),
and are the beneficial owners of approximately 9.3% of our outstanding common stock as of August 20, 2024.
We recently received notice from Biglari nominating five candidates for election to our Board of Directors at our
2024 Annual Meeting of shareholders. If a proxy contest ensues, or if we become engaged in a proxy contest
with another 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 agreement 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, our Board of Directors adopted a shareholder rights agreement, which
provides, among other things, that when specified events occur, our shareholders will be entitled to purchase
from us shares of junior preferred stock. If approved at the 2024 Annual Meeting, the shareholder rights
agreement will expire on February 27, 2027. If the shareholder rights agreement is not approved at the 2024
Annual Meeting, the shareholders rights agreement will expire promptly following the 2024 Annual Meeting.
25
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 agreement or are otherwise not approved by our Board of Directors.
These provisions, either alone or in combination with each other, give our current directors and executive
officers a substantial ability to influence the outcome of a proposed acquisition of the Company. These
provisions would apply even if an acquisition or other significant corporate transaction was considered
beneficial by some of our shareholders. If a change in control or change in management is delayed or prevented
by these provisions, the market price of our securities could decline.
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.
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 number of qualified store employees.
Many staff members are in entry-level or part-time positions, typically with high rates of turnover. High turnover
of store management and staff may 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. Competition for qualified employees exerts upward pressure on wages and benefits
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.
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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. 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.
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.
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. We have experienced
and may continue to experience challenges in recruiting and retaining team members in various locations.
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. 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, which 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.
27
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. 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.
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.
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. We cannot
guarantee that economic conditions will improve in 2025, in which case we may experience declines in
revenues and profits, and could face capital and liquidity constraints or other business challenges.
28
Further, the related impact on available credit, may affect us and our suppliers and other business partners,
landlords, and customers in an adverse manner, including, but not limited to, reducing access to liquid funds or
credit (including through the loss of one or more financial institutions that are a part of our revolving credit
facility), increasing the cost of credit, limiting our ability to manage interest rate risk, increasing the risk of
bankruptcy of our suppliers, landlords or counterparties to or other financial institutions involved in our revolving
credit facility and our derivative and other contracts, increasing the cost of goods to us, and other adverse
consequences which we are unable to fully anticipate.
We also cannot predict the effects of actual or threatened armed conflicts or terrorist attacks, efforts to
combat terrorism, military action against any foreign state or group located in a foreign state or heightened
security requirements on the economy or consumer confidence in the United States. Any of these events could
also affect consumer sentiment and confidence that in turn affect consumer spending patterns or result in
increased costs for us due to security measures.
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. Frequent or unusual 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.
In the event we increase menu prices or adjust menu offerings to offset such increases, we may experience
a negative consumer response. 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. 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.
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
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.
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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; and
•
volatility of our stock price.
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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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ITEM 1C. CYBERSECURITY
We are committed to securing and strengthening our information systems against cybersecurity threats and
protecting the privacy and security of our customer, employee, and company data. However, as outlined in
“Item 1A. Risk Factors — Risks Related to IT Systems, Cybersecurity and Data Privacy” of this Annual Report
on Form 10-K, we are acutely aware that cybersecurity threats are a persistent concern in today’s digital world.
Despite our investments in securing our information systems, we understand that cybersecurity incidents can
still occur, potentially causing material harm to our brand, business, operations, and financial condition. In light
of this, we have developed a cybersecurity risk management program to identify, assess, monitor and manage
cybersecurity risk.
Our Board of Directors oversees cybersecurity risk as part of its risk management function and has
delegated oversight of cybersecurity risk to the Audit Committee. The Audit Committee oversees management’s
implementation of our cybersecurity risk management program, including reviewing risk assessments from
management and outside consultants regarding our information systems and procedures and overseeing our
cybersecurity risk management processes.
The Audit Committee receives quarterly reports from management on our cybersecurity risks and is
updated on any cybersecurity incidents as necessary. The Audit Committee reports on cybersecurity matters
to the full Board on a regular basis. Additionally, the full Board regularly receives presentations from
management and third-parties on cybersecurity topics as part of the Board's ongoing education on issues that
affect public companies.
As a critical component of our cybersecurity risk management program, we have strategically integrated
cybersecurity risk management into our broader enterprise risk management function to cultivate a company-
wide culture of cybersecurity risk management. Our program has been designed and evaluated based on the
National Institute of Standards and Technology Cybersecurity Framework (NIST CSF). We use the NIST CSF
as a guide to identify, assess, and manage cybersecurity risks relevant to our business. Additionally, given that
we accept credit cards as a form of payment, we consider the requirements of the Payment Card Industry Data
Security Standards (PCI DSS) as part of our cybersecurity risk management program.
We place a high priority on cybersecurity within our organization. This includes regular cybersecurity
training for employees, focusing on relevant risks to their job duties (e.g. social engineering, ransomware, denial
of service, and other risks). As part of our cybersecurity risk management program, we conduct internal tests
to identify potential vulnerabilities. Additionally, we organize annual tabletop exercises led by third-party
consultants to enhance our readiness for different scenarios, assess our core information systems and
cybersecurity practices, improve decision-making and prioritization, and promote monitoring and reporting
across business functions.
We annually engage third parties to perform cybersecurity audits to identify opportunities and
enhancements to strengthen our policies and practices. We also annually engage an independent third party
to perform internal and external penetration testing of our systems.
As part of our overall cybersecurity risk management program, the Company maintains cyber insurance
coverage, and we periodically meet with our insurer to discuss emerging trends in cybersecurity. While we
believe our cyber insurance coverage provides commercially reasonable levels of coverage, such insurance
may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks
and other related breaches.
31
With respect to third-party service providers, our cybersecurity risk management program includes
conducting due diligence of relevant service providers’ information security programs prior to onboarding,
reassessing vendors using a risk-based approach, and performing off-boarding activities as relevant. We also
customarily require our financially significant third-party service providers and those third parties with access to
sensitive data to promptly notify us of any actual or suspected breach impacting our data or operations.
Additionally, we perform a formal System and Organization Controls (“SOC”) review process annually on our
financially significant third-party service providers.
We continuously monitor cybersecurity risks and adjust our cybersecurity risk management program and
practices as needed. As part of our program, we occasionally identify risks or threats to our systems, including
ransomware and attempts to obtain team member credentials through both phishing attacks or social
engineering. While these risks and threats require active and ongoing efforts to mitigate, we have not identified
any cybersecurity incidents that have materially affected or are reasonably likely to materially affect our
operations, business strategy, or financial condition.
Our Chief Information Officer (“CIO”) is directly responsible for the implementation of our cybersecurity risk
management program. Our CIO is additionally primarily responsible for our overall information security,
strategy, policy, security engineering, architecture, operations and cybersecurity threat detection and the
management of cybersecurity risk. Our CIO has over 30 years of experience in the fields of finance, technology
and cybersecurity, including relevant prior senior leadership positions held with Marriott International, where he
served as Global Chief Information Officer. The CIO meets with our Chief Executive Officer (“CEO”) on a weekly
basis and regularly reports to our senior management, as well as directly to our Board of Directors and the
Audit Committee, regarding our cybersecurity risk and risk management.
As a part of our cybersecurity risk management program, our cybersecurity team meets regularly to monitor
the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents. In the event of a
cybersecurity incident, we have a Cyber Incident Response Plan (“CIRP”) that governs our immediate
response, including detection, escalation, assessment, management, and remediation. As part of the CIRP
response, the cybersecurity team will coordinate with external advisors and other senior management as
needed. The cybersecurity team routinely tests the CIRP across the organization to validate the procedures for
appropriately escalating potentially material cybersecurity risks and incidents.
In the event of a cybersecurity incident, senior management, including our General Counsel, CIO, and Chief
Financial Officer (“CFO”), are tasked with conducting an assessment of the incident. This assessment involves
evaluating relevant quantitative and qualitative factors as well as considering SEC guidance. Depending on the
assessment results, the cybersecurity event may be escalated to involve our CEO, Board of Directors, and law
enforcement. Additionally, the Board of Directors in consultation with senior management will decide, based on
the assessment, whether the cybersecurity incident requires disclosure in a filing with the SEC.
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.
32
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 two 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 658 Cracker Barrel Old Country Store locations and 68 locations for our MSBC locations) as of
September 13, 2024:
State
Owned Leased State
Owned Leased
Tennessee
29
30 Oklahoma
6
2
Florida
31
52 California
0
5
Texas
19
48 New Jersey
0
6
Georgia
26
27 Kansas
3
2
North Carolina
17
26 Wisconsin
5
0
Kentucky
22
17 Colorado
3
1
Ohio
22
14 Massachusetts
0
4
Virginia
15
20 New Mexico
1
3
Alabama
19
15 Utah
4
0
Indiana
20
8 Idaho
2
1
South Carolina
13
15 Iowa
3
0
Pennsylvania
8
17 Nevada
0
3
Illinois
19
2 Connecticut
1
1
Missouri
13
4 Montana
2
0
Michigan
12
3 Nebraska
1
1
Arizona
2
12 Delaware
0
1
Mississippi
9
4 Maine
0
1
Arkansas
5
7 Minnesota
1
0
Louisiana
8
2 New Hampshire
1
0
Maryland
3
6 North Dakota
1
0
New York
8
1 Rhode Island
0
1
West Virginia
3
6 South Dakota
1
0
358
368
We believe that our properties are suitable, adequate, well-maintained and sufficient for the operations
contemplated. See “Operations” and “Store Development” in Item 1 of this Annual Report on Form 10-K for
additional information on our properties.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are party to various legal and regulatory proceedings and claims
incidental to their business in the ordinary course. In the opinion of management, based upon information
currently available, the ultimate liability with respect to these proceedings and claims will not materially affect
the Company’s consolidated results of operations or financial position.
Pursuant to Instruction to Item 401 of Regulation S‑K and General Instruction G(3) to Form 10‑K, the
information regarding legal proceedings is included in Part I of this Form 10‑K.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
33
Information about Our Executive Officers
The following table sets forth certain information concerning our executive officers:
Name
Age Position with the Company
Julie Masino
53
President and Chief Executive Officer
Laura A. Daily
60
Senior Vice President, Chief Merchant and Retail Supply
Chain
Christopher B. Edwards
51
Senior Vice President, Chief Strategy Officer
Bruce A. Hoffmeister
63
Senior Vice President, Chief Information Officer
Sarah O. Moore
41
Senior Vice President, Chief Marketing Officer
Craig A. Pommells
49
Senior Vice President and Chief Financial Officer
Donna L. Roberts
49
Senior Vice President, Chief Human Resources Officer
Cammie Spillyards-Schaefer
47
Senior Vice President, Restaurant and Retail Operations
J. Mark Spurgin
56
Senior Vice President, Chief Restaurant Supply Chain Officer
Richard M. Wolfson
58
Senior Vice President, General Counsel and Corporate
Secretary
Brian T. Vaclavik
58
Vice President, Corporate Controller and Principal
Accounting Officer
The following information summarizes the business experience of each of our executive officers for at least
the past five years:
Ms. Masino joined us as Chief Executive Officer-Elect in August 2023 and assumed her current position of
President and Chief Executive Officer in November 2023, when she also became a member of our Board of
Directors. 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.
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 30 years
of experience as a merchant with a number of retail organizations.
Mr. Edwards joined us in March 2024 in his current position. Prior to joining us, he served as Chief Strategy
Officer at Canopy Growth Corporation from 2020 to 2023. Prior to his service at Canopy Growth Corporation,
he served in various capacities including Senior Vice President of Strategy at Constellation Brands from 2010
to 2020. Prior to Constellation Brands, he served as a Principal at The Boston Consulting Group from 2001 to
2009. He has over 20 years of experience in serving as a strategy leader.
34
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. Moore joined us in July 2024 in her current position. Prior to joining us, she served in various capacities
including Senior Vice President of Marketing at MGM Resorts International from 2012 to 2024, including most
recently Senior Vice President of Marketing from 2021 to 2024 and Vice President Brand Marketing from 2019
to 2021. She has nearly 20 years of hospitality experience.
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 and two years of experience in
the retail industry.
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 from 2018 to 2020. Before joining us, she practiced law for ten years, most
recently as a partner focused on commercial litigation and employment law.
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 from 2021 to 2022 and Vice President of
Culinary from 2017 to 2021. Ms. Spillyards-Schaefer has over 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 from 2021
to 2023 and Senior Vice President for Restaurant Growth Services, Supply Chain from 2018 to 2021. Prior to
that, he was 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.
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. Vaclavik joined us in October 2023 as Vice President and Controller and assumed his current position in
November 2023. Prior to joining us, he most recently served as Vice President – Controller of Access TeleCare,
Inc. from July 2022 until May 2023. From April 2021 until July 2022, he served as Vice President, Controller and
Chief Accounting Officer of Tuesday Morning Corporation, and from February 2021 until April 2021, he served as
a consultant for Passion 4 People Consulting, LLC. He served as Senior Vice President and Chief Accounting
Officer of Tailored Brands, Inc. from June 2014 until April 2020. Mr. Vaclavik has over 20 years of experience in
the retail industry.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “CBRL.”
There were 6,229 shareholders of record as of September 13, 2024.
35
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 2024 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 August 02, 2024. On
June 02, 2023, our Board of Directors renewed our authorization to repurchase up to $200,000 of our common
stock for an additional year; this authorization expired on June 02, 2024.
ITEM 6. RESERVED
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 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.
The following MD&A includes a discussion of 2024 and 2023 items and year-to-year comparisons between
the years ended August 02, 2024 and July 28, 2023. Discussion of 2022 items and year-to-year comparisons
between the years ended July 28, 2023 and July 29, 2022 that are not included in this MD&A can be found in
“Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of
our annual report on Form 10-K for the year ended July 28, 2023, filed with the SEC on September 26, 2023.
36
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, 2024, the Company operated 658 Cracker Barrel stores located in 44 states. The
Company also owns Maple Street Biscuit Company (“MSBC”), a breakfast and lunch fast casual concept. As
of September 13, 2024, the Company operated 68 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
competitive component of our business strategy. Our long-term strategy is anchored on three overarching
business imperatives: driving relevancy, delivering food and experiences guests love, and growing profitability.
We believe there are significant challenges in the macroeconomic outlook for the coming quarters, including
continued inflationary pressures, higher interest rates, higher consumer debt levels and lower savings rates, as
well as the potential uncertainty associated with the geopolitical environment and the U.S. presidential election,
among other factors. However, despite these challenges, we remain focused on delivering long-term growth
and returns for shareholders. On May 16, 2024, we announced details of our strategic transformation plan,
which was already underway and is built on the following five pillars of our strategy:
•
Refining the brand: evolving the brand across all touchpoints including refining and strengthening our
positioning to best reach existing and new guests.
•
Enhancing the menu: introducing menu innovation focused on craveability and traffic drivers,
streamlining processes to improve execution, and optimizing strategic pricing to protect value and
improve profitability.
•
Evolving the store and guest experience: delivering an exceptional guest experience through
operational excellence and improved store design and atmosphere. We are in the process of testing
remodel prototypes and expect to complete 25-30 remodels in 2025 along with 25-30 store refreshes.
•
Winning in digital and off-premise: growing the off-premise business and leveraging technology such
as our Cracker Barrel Rewards loyalty program. We continue to leverage guest data to better
understand consumer behavior and identify ways to drive frequency and engagement.
•
Elevating the employee experience: upgrading training and development programs and tools,
simplifying job roles and utilizing technology to improve the employee experience.
The Board of Directors is committed to a balanced capital allocation approach focused on profitable growth.
Investing in the business continues to be the top priority followed by returning cash to shareholders through a
regular quarterly dividend. In conjunction with its strategic transformation plan, the Board of Directors modified
the Company’s capital allocation policy to increase investments in the business to drive organic growth and
reduce the quarterly dividend to facilitate these investments. The Board of Directors declared a dividend of
$0.25 per share that was subsequently paid on August 06, 2024 to shareholders of record on July 19, 2024.
37
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 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 restaurant and retail sales increase/(decrease): To calculate comparable store
restaurant and retail sales increase/(decrease), we determine total restaurant and 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 restaurant and 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 restaurant and retail sales increase/(decrease),
which we express as a percentage, we divide the absolute dollar change by the comparable store
restaurant and retail sales 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 restaurant guest traffic, as
described below. 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.
•
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.
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.
38
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 and/or volatile rates of inflation and unemployment adversely 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 the Board of Directors and management
team continually monitor and reexamine these considerations in light of ongoing trends.
We are currently experiencing, and have in the past experienced, inflationary conditions with respect to a
variety of costs, including the cost for food, ingredients, retail merchandise, transportation, distribution, labor
and utilities. While we continue to partially offset the impact of these inflationary pressures with menu price
increases and operational improvements, there can be no assurance that such conditions will not adversely
affect consumer demand or our cost structure in ways that we may be unable to manage without diminishing
our profitability.
39
RESULTS OF OPERATIONS
The following table highlights operating results over the past two years:
Relationship to Total Revenue
2024
2023
Total revenue
100.0 %
100.0 %
Cost of goods sold (exclusive of depreciation and rent)
31.3
32.8
Labor and other related expenses
36.6
35.1
Other store operating expenses
24.0
23.2
General and administrative expenses
6.0
5.0
Impairment and store closing costs
0.7
0.4
Goodwill impairment
0.1
—
Operating income
1.3
3.5
Interest expense, net
0.6
0.5
Income before income taxes
0.7
3.0
Provision for income taxes (income tax benefit)
(0.5)
0.1
Net income
1.2 %
2.9 %
The following table sets forth the change in the number of stores in operation for the past two years:
2024
2023
Net change in Company owned stores:
Cracker Barrel
(2)
(4)
MSBC
7
8
Stores in operation at end of the period:
Cracker Barrel
658
660
MSBC
66
59
Total stores at end of period
724
719
Total Revenue
The following table highlights the key components of revenue for the past two years:
2024
2023
Revenue in dollars: (1)
Restaurant
$ 2,794,128
$ 2,740,866
Retail
676,634
701,942
Total revenue
$ 3,470,762
$ 3,442,808
Total revenue percentage increase (1)
0.8 %
5.4 %
Total revenue by percentage relationships:
Restaurant
80.5 %
79.6 %
Retail
19.5 %
20.4 %
Average store volumes(1)(2):
Restaurant
$
4,133.0
$
4,040.2
Retail
1,024.3
1,058.2
Total revenue
$
5,157.3
$
5,098.4
Comparable store sales increase (decrease) (3):
Restaurant
(0.1)%
6.3 %
Retail
(5.5)%
(0.4)%
Restaurant and retail
(1.2)%
4.9 %
Average check increase
4.9 %
9.8 %
Comparable restaurant guest traffic decrease(3):
(5.0)%
(3.5)%
(1) 2024 consists of 53 weeks while the other periods consist of 52 weeks.
40
(2) Average store volumes include sales of 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 in 2024 increased 0.8% as compared to 2023. Total revenue in 2024 benefited from the
additional week of 2024, which resulted in an increase in revenue of $62,800. Our comparable store restaurant
sales decrease in 2024 as compared to 2023 resulted primarily from the guest traffic decrease partially offset
by the average check increase. The average check increase included an average menu increase of 4.9%. Off-
premise sales represented approximately 20% of restaurant sales volumes in 2024 and 2023.
Our retail sales are made primarily to our restaurant guests. The decrease in our comparable store retail
sales in 2024 as compared to 2023 resulted primarily from the decrease in guest traffic.
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 two years:
2024
2023
Cost of Goods Sold in dollars:
Restaurant
$ 743,390
$ 769,295
Retail
344,241
358,322
Total Cost of Goods Sold
$ 1,087,631
$ 1,127,617
The following table highlights restaurant cost of goods sold as a percentage of restaurant revenue for the
past two years:
2024
2023
Restaurant Cost of Goods Sold
26.6 %
28.1 %
The decrease in restaurant cost of goods sold as a percentage of restaurant revenue in 2024 as compared
to 2023 was primarily the result of our menu price increase referenced above. Commodity inflation was relatively
flat in 2024. We presently expect the rate of commodity inflation to be approximately 2% to 3% in 2025.
The following table highlights retail cost of goods sold as a percentage of retail revenue for the past
two years:
2024
2023
Retail Cost of Goods Sold
50.9 %
51.1 %
Retail cost of goods sold as a percentage of retail revenue remained relatively constant in 2024 as
compared to 2023.
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 two years:
2024
2023
Labor and related expenses
36.6 %
35.1 %
41
The year-to-year percentage change in 2024 as compared to 2023 resulted primarily from the following:
2024 Compared to 2023
Increase (Decrease) as a
Percentage of Total Revenue
Store hourly labor
1.1 %
Store management compensation
0.3 %
Employee health care expense
0.1 %
Other wages
(0.2)%
The increase in store hourly labor and store management compensation as a percentage of total revenue
in 2024 as compared to 2023 resulted primarily from higher staffing levels and the investment of additional
labor hours to improve the guest experience as well as wage inflation partially offset by higher average check.
We presently expect the rate of wage inflation to be approximately 3% to 4% in 2025.
The increase in employee health care expenses as a percentage of total revenue in 2024 as compared to
2023 resulted primarily from higher claims.
During 2024, we revised our employee benefits policy which resulted in a one-time reduction in other wages
expense for 2024 as compared to 2023.
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
two years:
2024 2023
Other store operating expenses
24.0 %
23.2 %
The increase in other store operating expenses as a percentage of total revenue in 2024 as compared to
2023 resulted primarily from the increase in advertising expense due to higher media spending and costs
associated with our new customer loyalty program, Cracker Barrel Rewards.
We presently expect higher depreciation expense in 2025 due to higher capital expenditures driven by
investments in our stores including our store remodeling program as well as other strategic initiatives.
General and Administrative Expenses
The following table highlights general and administrative expenses as a percentage of total revenue for the
past two years:
2024 2023
General and administrative expenses
6.0 %
5.0 %
42
The year-to-year percentage change in 2024 as compared to 2023 resulted primarily from the following:
2024 Compared to 2023
Increase as a Percentage
of Total Revenue
Professional fees
0.6 %
Payroll and related expense
0.2 %
Incentive compensation expense
0.1 %
The increase in professional fees as a percentage of total revenue in 2024 as compared to 2023 resulted
primarily from the costs associated with the Company’s strategic transformation plan.
The increase in payroll and related expense as a percentage of total revenue in 2024 as compared to 2023
resulted primarily from severance costs related to corporate restructuring and Chief Executive Officer transition
costs incurred in 2024.
The increase in incentive compensation as a percentage of total revenue in 2024 as compared to 2023
resulted primarily from Chief Executive Officer (“CEO”) transition costs incurred in 2024.
We presently expect our general and administrative expenses will be higher in 2025 primarily due to the
investments related to our strategic transformation initiatives and our proxy contest in connection with the
Company’s upcoming 2024 Annual Meeting.
Impairment and Store Closing Costs
During 2024 and 2023, we recorded impairment charges of $17,448 and $11,692, respectively, as a result
of the deterioration in operating performance of six Cracker Barrel locations and thirteen MSBC locations in
2024 and six Cracker Barrel locations in 2023. Additionally, during 2024 and 2023, we incurred costs of $5,494
and $2,307, respectively, in connection with the closure of four Cracker Barrel and two MSBC locations in 2024
and six Cracker Barrel and four MSBC locations in 2023 because of poor operating performance.
Impairment and store closing costs consisted of the following for the past two years:
2024
2023
Impairment
$ 17,448
$ 11,692
Store closing costs
5,494
2,307
Total
$ 22,942
$ 13,999
Goodwill Impairment
During 2024, we recorded a goodwill impairment charge of $4,690 related to MSBC because of declining
financial trends and changes in the macroeconomic environment, including interest rate and inflationary
pressures. This amount is recorded in the goodwill impairment line on the Consolidated Statements of Income.
Operating income
Operating income consisted of the following for the past two years:
2024
2023
Operating Income
$ 45,119
$ 120,617
As discussed above, the decrease in operating income in 2024 as compared to 2023 resulted primarily
from the investments made in 2024 related to labor, advertising and strategic transformation initiatives. We
also incurred higher impairments costs based on performance and CEO transition costs in 2024. Operating
income in 2024 benefited from lower commodity inflation.
43
Interest Expense, Net
The following table highlights interest expense for the past two years:
2024
2023
Interest expense, net
$ 20,933
$
17,006
The year-to-year increase in 2024 as compared to 2023 resulted primarily from higher weighted average
debt levels and higher weighted average interest rates under our revolving credit facility.
Provision for Income Taxes (Income Tax Benefit)
The following table highlights the provision for income taxes as a percentage of income before income
taxes (“effective tax rate”) for the past two years:
2024
2023
Effective tax rate
(69.2)%
4.4 %
Our effective tax rate is lower than statutory rates primarily due to the benefit of tax credits. The decrease
in our effective tax rate from 2023 to 2024 reflects the impact of tax credits on lower income before tax as well
as favorable audit settlements.
We presently expect our effective tax rate for 2025 to be approximately (7%) to (11%).
Net Income
Net income consisted of the following for the past two years:
2024
2023
Net income
$ 40,930
$
99,050
Our net income in 2024 decreased compared to 2023 primarily due to our decline in our operating income
discussed above partially offset by our income tax benefit for 2024 discussed above.
We presently expect total revenue in 2025 to be relatively flat to 2024 and the investments in our strategic
transformation plan discussed above to more than offset expected cost savings in 2025. The Company’s focus
for 2025 is to execute its strategic transformation plan while simultaneously remaining focused on operational
excellence in our day-to-day business.
LIQUIDITY AND CAPITAL RESOURCES
The following table presents a summary of our cash flows for the past two years:
2024
2023
Net cash provided by operating activities
$ 168,980
$ 250,457
Net cash used in investing activities
(124,327) (124,319)
Net cash used in financing activities
(57,765) (146,096)
Net decrease in cash and cash equivalents
$ (13,112)
$ (19,958)
44
Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under
our revolving credit facility. Our cash generated from our operations, together with our borrowing capacity under
our 2022 Revolving Credit Facility, were sufficient to finance all of our growth, dividend payments, working
capital needs, interest payments on long-term debt obligations and other cash payment obligations in 2024.
We believe that cash at August 02, 2024, along with cash expected to be generated from our operating activities
and the borrowing capacity under our revolving credit facility, will be sufficient to finance our continuing
operations, our strategic transformation initiative and continuing expansion plans, debt service, dividend
payments, capital expenditures and working capital needs for the next twelve months and thereafter for the
foreseeable future. Our ability to draw on our 2022 Revolving Credit Facility is subject to the satisfaction of the
provisions of the credit facility, as amended, and we believe we will be able to refinance our Revolving Credit
Facility and other debt instruments prior their maturity.
Cash Generated from Operations
The decrease in net cash flow provided by operating activities in 2024 as compared to 2023 resulted
primarily from lower net income and a lower decrease in retail inventory levels.
Purchase Obligations
We enter into 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 in the normal course of business. Our estimate as of August 02, 2024, for these purchase
obligations is $141,446, of which $107,485 is short-term. This estimate of our purchase obligations (i) excludes
contracts that do not contain minimum purchase obligations and long-term agreements for services and
operating needs that can be cancelled within 60 days without penalty, and (ii) includes long-term agreements
and certain retail purchase orders for services and operating needs that can be cancelled (A) with more than
60 days’ notice without penalty only through the term of the notice period and (B) only 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 estimated usage for food, supplies and other
operating needs and services is calculated ratably over either the termination notice period or the remaining
life of the contract, as applicable, unless we had better information available at the time related to each contract.
Leases
As of August 02, 2024, the total present value of our lease expenses (including variable lease costs) under
operating leases was $725,829, which had a weighted-average remaining lease term 15.88 years, of which
$86,318 is short-term. As of August 02, 2024, we have entered into leases that have not yet commenced with
future short-term and long-term lease payments of $12,615 that are not yet recorded on our Consolidated
Balance Sheets. These leases are expected to commence in 2025 and 2026. For additional information
regarding our operating leases, see Note 8 to the Consolidated Financial Statements included in Item 8 of this
Annual Report on Form 10-K.
Other Long-Term Obligations
At August 02, 2024, other long-term obligations include our Non-Qualified Savings Plan ($25,719, with a
corresponding long-term asset to fund the liability; see Note 11 to the Consolidated Financial Statements
included in Item 8 of this Annual Report on Form 10-K), Deferred Compensation Plan ($854) and our long-term
incentive plans ($3,015).
45
Taxes
At August 02, 2024, the entire liability of $15,317, 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. See Note 12 to the Consolidated Financial Statements included in Item 8 of this
Annual Report on Form 10-K for additional information on our uncertain tax positions.
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 past two years:
2024
2023
Capital expenditures, net of proceeds from insurance recoveries
$ 127,461
$ 125,387
Our capital expenditures consisted primarily of capital investments for existing stores, new store locations
and strategic initiatives. The increase in capital expenditures in 2024 from 2023 resulted primarily from higher
capital expenditures for strategic initiatives, including costs associated with our customer loyalty program,
Cracker Barrel Rewards.
As part of our strategic transformation plan, we have modified our capital allocation policy and currently
expect to increase our capital expenditures over the three-year period from 2025 to 2027 to
approximately $600,000 to $700,000, of which $160,000 to $180,000 is estimated for 2025. This increase
includes expansion of our maintenance and remodel initiatives as well as additional technology improvements.
This estimate also includes the acquisition of sites and construction costs of two new Cracker Barrel stores and
three to four MSBC locations that we plan to open during 2025. 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 past two years:
2024
2023
Proceeds from sale of property and equipment
$
3,134
$
1,068
The increase in proceeds from sale of property and equipment in 2024 from 2023 resulted primarily from
the sale of excess real property in 2024.
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”). The 2022 Revolving Credit Facility also contains an option for the Company to increase the revolving
credit facility by $200,000. Using our weighted average interest rate of 7.19% at August 02, 2024 and the
outstanding borrowings at August 02, 2024, we anticipate having interest payments of $13,080, in 2025.
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 August 02, 2024:
August 02,2024
Borrowing capacity under the 2022 Revolving Credit Facility
$
700,000
Less: Outstanding borrowings under the 2022 Revolving Credit Facility
180,000
Less: Standby letters of credit*
32,644
Borrowing availability under the 2022 Revolving Credit Facility
$
487,356
46
*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 2024, we borrowed $406,500 and repaid $346,500 under the 2022 Revolving Credit Facility. During
2023, we borrowed $180,000 and repaid $190,000 under the 2022 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 August 02, 2024,
and we expect to be in compliance with the 2022 Revolving Credit Facility’s financial covenants for the
remaining term of the facility.
Our $300,000 aggregate principal amount of 0.625% Convertible Senior Notes (the “Notes”) mature on
June 15, 2026, unless earlier converted, repurchased or redeemed. The Notes are senior, unsecured
obligations of the Company and bear cash interest at an annual rate of 0.625%, payable semi-annually in
arrears on June 15 and December 15 of each year. For additional information regarding our 2022 Revolving
Credit Facility and the Notes, see Note 4 to the Consolidated Financial Statements included in Item 8 of this
Annual Report on Form 10-K.
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 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 2024, we paid regular dividends of $5.20 per share. In connection with our strategic transformation
program, we modified our capital allocation policy to support increased investments in our business to drive
organic growth. As part of this shift to increase investment in our business, the Board of Directors reduced the
quarterly dividend and declared a dividend of $0.25 per share that was subsequently paid on August 6, 2024
to shareholders of record on July 19, 2024. Additionally, during the first quarter of 2025, the Board declared a
dividend of $0.25 per share payable on November 13, 2024 to shareholders of record as of October 18, 2024.
The following table highlights the dividends per share we paid for the past two years:
2024
2023
Dividends per share paid
$
5.20 $
5.20
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. On June 02, 2023, the Board of Directors renewed our
authorization to repurchase shares of the Company’s outstanding common stock at management’s discretion
up to a total value of $200,000, for an additional year; this authorization has expired. We did not repurchase
any shares of our common stock in 2024. In 2023, the Company repurchased 171,792 shares of its common
stock in the open market at an aggregate cost of $17,449.
47
Working Capital
In the restaurant industry, substantially all payments received are made by credit card, debit card or cash.
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 retail 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 once every week or every two weeks 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.
2024
2023
Working capital deficit
$ (175,993)
$ (206,679)
The change in working capital at August 02, 2024 compared to July 28, 2023 primarily reflected the
decrease in our dividend payable as a result of our reduction of our quarterly dividend and the timing of
payments for income taxes.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements.
RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
See Note 1 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K
for a discussion of recent accounting guidance not yet adopted. We are currently evaluating the impact of
adopting the accounting guidance.
CRITICAL ACCOUNTING ESTIMATES
We prepare our Consolidated Financial Statements in conformity with GAAP. The preparation of these
financial statements requires us to make estimates and assumptions about future events and apply judgments
that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We base our
estimates and judgments on historical experience, current trends, outside advice from parties believed to be
experts in such matters and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. However, because future events and their effects
cannot be determined with certainty, actual results could differ from those assumptions and estimates, and
such differences could be material.
Our significant accounting policies are discussed in Note 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.
48
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 the Board of Directors.
Impairment of Long-Lived Assets
We assess the impairment of long-lived assets whenever events or changes in circumstances indicate that
the carrying value of an asset may not be recoverable. Recoverability of assets is measured by comparing the
carrying value of the asset to the undiscounted future cash flows expected to be generated by the asset. If the
total expected future cash flows are less than the carrying amount of the asset, the carrying value is written
down, for an asset to be held and used, to the estimated fair value or, for an asset to be disposed of, to the fair
value, net of estimated costs of disposal. Any loss resulting from impairment is recognized by a charge to
income. Judgments and estimates that we make related to the expected useful lives of long-lived assets and
future cash flows are affected by factors such as changes in economic conditions and changes in operating
performance. The accuracy of such provisions can vary materially from original estimates and management
regularly monitors the adequacy of the provisions until final disposition occurs.
We have not made any material changes in our methodology for assessing impairments during the past
three years and we do not believe that there is a reasonable likelihood that there will be a material change in
the estimates or assumptions used by us to assess impairment of long-lived assets. However, if actual results
are not consistent with our estimates and assumptions used in estimating future cash flows and fair values of
long-lived assets, we may be exposed to losses that could be material. During 2024 and 2023, we recorded
impairment charges of $15,616 and $11,692, respectively, for long-lived assets due to the deterioration in
operating performance of six Cracker Barrel locations and thirteen MSBC locations in 2024 and six Cracker
Barrel locations in 2023. The impairment charges are included in the impairment and store closing costs line
item on the Consolidated Statements of Income. See the Lease Accounting section below for information
related to an impairment charge related to a right-of-use asset recorded in 2024.
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 during the fourth quarter and is adjusted by the
actuarially determined losses and actual claims payments made subsequent to this full scope actuarial study
during 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.
49
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
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.
50
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. In 2024, we recorded
an impairment charge of $1,832 related to a right-of-use asset for a Cracker Barrel location. This amount is
included in the impairment and store closing costs line item on the Consolidated Statement of Income.
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 August 02, 2024 and July 28, 2023, our outstanding borrowings totaled $180,000 and
$120,000, respectively (see Note 4 to our Consolidated Financial Statements). In accordance with the 2022
Revolving Credit Facility, outstanding borrowings bear interest, at our election, either at (1) the Term Secured
Overnight Financing Rate (SOFR) or (2) a base rate equal to the greatest of (i) the prime rate, (ii) a rate that is
0.5% in excess of the Federal Funds Rate, and (iii) Term SOFR plus 1.0%, in each case plus an applicable
margin based on the Company’s consolidated total leverage ratio. Our policy has been to manage interest cost
using a mix of fixed and variable rate debt (see Note 4 to our Consolidated Financial Statements). Additionally,
we have Notes, which bear cash interest at a fixed rate of 0.625% per annum.
At August 02, 2024, the weighted average interest rate of our outstanding $180,000 borrowings was 7.19%.
At July 28, 2023, the weighted average interest rate of our outstanding $120,000 borrowings was 6.79%. The
impact of a one-percentage point increase in the $180,000 of our outstanding borrowings at August 02, 2024,
is approximately $1,800.
Credit Risk. In 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.
The following table highlights the five food categories which accounted for the largest shares of our food
purchases in 2024 and 2023:
Percentage of Food Purchases
2024
2023
Fruits and vegetables
14 %
14 %
Poultry
13 %
14 %
Dairy (including eggs)
13 %
13 %
Beef
13 %
11 %
Pork
10 %
10 %
51
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. We
continue to partially offset commodity pressures through menu price increases and operational improvements.
52
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 August 2, 2024, and July 28, 2023, and the related consolidated statements of
income, consolidated statements of changes in shareholders’ equity, and consolidated statements of cash flows, for
each of the three years in the period ended August 2, 2024, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of August 2, 2024, and July 28, 2023, and the results of its operations and its cash flows for
each of the three years in the period ended August 2, 2024, in conformity with accounting principles generally accepted
in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of August 2, 2024, 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 27, 2024, expressed an unqualified opinion on the
Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
53
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 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
during the fourth quarter and are adjusted by the actuarially determined losses and actual claims payments made
subsequent to this full scope actuarial study during 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 August 2, 2024.
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.
54
-
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 27, 2024
We have served as the Company’s auditor since 1974.
55
CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
August 02,2024 July 28,2023
ASSETS
Current Assets:
Cash and cash equivalents
$
12,035
$
25,147
Accounts receivable
39,204
30,446
Income taxes receivable
9,882
2,062
Inventories
180,958
189,364
Prepaid expenses and other current assets
36,135
35,268
Total current assets
278,214
282,287
Property and equipment
Land
253,816
254,813
Buildings and improvements
823,561
807,585
Restaurant and other equipment
896,258
852,442
Leasehold improvements
449,507
438,495
Construction in progress
15,709
26,978
Total
2,438,851
2,380,313
Less: Accumulated depreciation and amortization
1,479,030
1,408,368
Property and equipment – net
959,821
971,945
Operating lease right-of-use assets, net
850,835
889,306
Goodwill
—
4,690
Intangible assets
24,425
23,426
Other assets
48,199
46,440
Total assets
$
2,161,494
$
2,218,094
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
$
162,288
$
165,484
Current portion of long-term debt
75
75
Current operating lease liabilities
49,837
46,336
Taxes withheld and accrued
41,433
38,835
Accrued employee compensation
60,385
64,821
Accrued employee benefits
28,476
24,417
Deferred revenues
87,488
95,016
Dividend payable
6,317
29,491
Other current liabilities
17,908
24,491
Total current liabilities
454,207
488,966
Long-term debt
476,581
414,904
Long-term operating lease liabilities
675,993
702,413
Other long-term obligations
46,852
53,730
Deferred income taxes
67,712
74,256
Commitments and Contingencies (Note 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; 2024 –
22,203,043 shares issued and outstanding; 2023– 22,153,625 shares issued
and outstanding
222
221
Additional paid-in capital
12,575
3,886
Retained earnings
427,352
479,718
Total shareholders’ equity
440,149
483,825
Total liabilities and shareholders’ equity
$
2,161,494
$
2,218,094
See Notes to Consolidated Financial Statements
56
CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share data)
Fiscal years ended
August 02, 2024 July 28, 2023 July 29, 2022
Total revenue
$
3,470,762 $ 3,442,808 $ 3,267,786
Cost of goods sold (exclusive of depreciation and rent)
1,087,631
1,127,617
1,049,884
Labor and other related expenses
1,271,555
1,208,669
1,149,077
Other store operating expenses
831,763
797,815
758,389
General and administrative expenses
207,062
174,091
157,433
Impairment and store closing costs
22,942
13,999
—
Goodwill impairment
4,690
—
—
Operating income
45,119
120,617
153,003
Interest expense, net
20,933
17,006
9,620
Income before income taxes
24,186
103,611
143,383
Provision for income taxes (income tax benefit)
(16,744)
4,561
11,503
Net income
$
40,930 $
99,050 $
131,880
Net income per share:
Basic
$
1.84 $
4.47 $
5.69
Diluted
$
1.83 $
4.45 $
5.67
Weighted average shares:
Basic
22,191,961 22,167,875 23,164,180
Diluted
22,319,894 22,265,399 23,246,010
See Notes to Consolidated Financial Statements.
57
CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands except share data)
Additional
Total
Common Stock
Paid-In
Retained Shareholders’
Shares
Amount Capital Earnings
Equity
Balances at July 31, 2021
23,497,166 $ 235 $
— $ 663,398 $
663,633
Net income
—
—
— 131,880
131,880
Total comprehensive income
—
—
— 131,880
131,880
Cash dividends declared - $5.20 per share
—
—
— (121,135)
(121,135)
Share-based compensation
—
—
8,198
—
8,198
Issuance of share-based compensation awards, net of shares
withheld for employee taxes
32,461
— (2,599)
—
(2,599)
Purchases and retirement of common stock
(1,248,184)
(12) (5,599) (125,931)
(131,542)
Cumulative-effect of change in accounting principle, net of taxes
—
—
—
(36,956)
(36,956)
Balances at July 29, 2022
22,281,443 $ 223 $
— $ 511,256 $
511,479
Net income
—
—
—
99,050
99,050
Total comprehensive income
—
—
—
99,050
99,050
Cash dividends declared - $5.20 per share
—
—
— (115,852)
(115,852)
Share-based compensation
—
— 9,045
—
9,045
Issuance of share-based compensation awards, net of shares
withheld for employee taxes
43,974
— (2,448)
—
(2,448)
Purchases and retirement of common stock
(171,792)
(2) (2,711) (14,736)
(17,449)
Balances at July 28, 2023
22,153,625 $ 221 $ 3,886 $ 479,718 $
483,825
Net income
—
—
—
40,930
40,930
Total comprehensive income
—
—
—
40,930
40,930
Cash dividends declared - $4.15 per share
—
—
— (93,296)
(93,296)
Share-based compensation
—
— 10,298
—
10,298
Issuance of share-based compensation awards, net of shares
withheld for employee taxes
49,418
1 (1,609)
—
(1,608)
Purchases and retirement of common stock
—
—
—
—
—
Balances at August 02, 2024
22,203,043 $ 222 $ 12,575 $ 427,352 $
440,149
See Notes to Consolidated Financial Statements
58
CRACKER BARREL OLD COUNTRY STORE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Fiscal years ended
August 02, 2024 July 28, 2023 July 29, 2022
Cash flows from operating activities:
Net income
$
40,930
$
99,050
$
131,880
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
111,746
104,485
103,568
Amortization of debt issuance costs
1,752
1,730
1,755
Loss on disposition of property and equipment
9,143
6,600
5,637
Impairment
17,448
11,692
—
Goodwill impairment
4,690
—
—
Share-based compensation
10,298
9,045
8,198
Noncash lease expense
59,523
59,767
58,498
Amortization of asset recognized from gain on sale and leaseback transactions
12,735
12,735
12,735
Changes in assets and liabilities:
Accounts receivable
(7,477)
3,404
(2,039)
Income taxes receivable
(7,820)
389
18,672
Inventories
8,406
23,885
(74,929)
Prepaid expenses and other current assets
(867)
(11,043)
(2,771)
Other assets
(3,566)
(848)
8,459
Accounts payable
(3,196)
(4,387)
34,695
Current operating lease liabilities
3,501
(8,235)
4,120
Taxes withheld and accrued
2,598
(21,377)
12,181
Accrued employee compensation
(4,448)
13,151
(13,129)
Accrued employee benefits
4,059
(585)
1,278
Deferred revenues
(7,528)
1,401
458
Other current liabilities
(6,583)
7,192
(6,591)
Long-term operating lease liabilities
(62,566)
(49,634)
(59,227)
Other long-term liabilities
(7,254)
(2,023)
(32,048)
Deferred income taxes
(6,544)
(5,937)
(6,147)
Net cash provided by operating activities
168,980
250,457
205,253
Cash flows from investing activities:
Purchase of property and equipment
(128,295)
(126,987)
(98,341)
Proceeds from insurance recoveries of property and equipment
834
1,600
1,237
Proceeds from sale of property and equipment
3,134
1,068
105
Acquisition of business, net of cash acquired
—
—
(1,500)
Net cash used in investing activities
(124,327)
(124,319)
(98,499)
Cash flows from financing activities:
Proceeds from issuance of long-term debt
406,500
180,000
230,000
Principal payments under long-term debt
(346,575)
(190,124)
(185,124)
Taxes withheld from issuance of share-based compensation awards
(1,608)
(2,448)
(2,599)
Purchases and retirement of common stock
—
(17,449)
(131,542)
Deferred financing costs
—
—
(2,148)
Dividends on common stock
(116,082)
(116,075)
(114,829)
Net cash used in financing activities
(57,765)
(146,096)
(206,242)
Net decrease in cash and cash equivalents
(13,112)
(19,958)
(99,488)
Cash and cash equivalents, beginning of period
25,147
45,105
144,593
Cash and cash equivalents, end of period
$
12,035
$
25,147
$
45,105
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized
$
18,484
$
13,596
$
7,698
Income taxes
9,212
6,486
25,948
Supplemental schedule of non-cash investing and financing activities*:
Capital expenditures accrued in accounts payable
$
9,499
$
9,633
$
7,421
Dividends declared but not yet paid
7,435
30,233
30,456
See Notes to Consolidated Financial Statements.
59
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. The periods presented in the Company’s financial statements are the
fiscal years ended August 02, 2024 (“2024”), July 28, 2023 (“2023”) and July 29, 2022 (“2022”), respectively.
Each of these periods has 52 weeks except for 2024, which consisted of 53 weeks. Similarly, references in
these Notes to a year or quarter are to the Company’s fiscal year or quarter unless expressly noted or the
context clearly indicates 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.
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 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.
60
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:
Years
Buildings and improvements
30-45
Restaurant and other equipment
2-10
Leasehold improvements
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:
2024
2023
2022
Total depreciation expense
$ 110,938
$ 103,691
$ 102,297
Depreciation expense related to store operations*
103,169
96,339
96,243
*Depreciation expense related to store operations is included in other store operating expenses in the
Consolidated Statements of Income.
Gain or loss is recognized upon disposal of property and equipment. The asset and related accumulated
depreciation and amortization amounts are removed from the accounts.
Maintenance and repairs, including the replacement of minor items, are charged to expense and major
additions to property and equipment are capitalized.
Impairment of long-lived assets – The Company assesses the impairment of long-lived assets whenever
events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
Recoverability of assets is measured by comparing the carrying value of the asset to the undiscounted future
cash flows expected to be generated by the asset. If the total expected future cash flows are less than the
carrying value of the asset, the carrying value is written down, for an asset to be held and used, to the estimated
fair value or, for an asset to be disposed of, to the fair value, net of estimated costs of disposal. Any loss
resulting from impairment is recognized by a charge to income. During 2024 and 2023, the Company recorded
impairment charges of $15,616 and $11,692, respectively, for long-lived assets which are included in the
impairment and store closing costs line on the Consolidated Statements of Income.
61
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. The Company’s goodwill consisted of its 100% ownership of Maple Street Biscuit Company (“MSBC”),
a breakfast and lunch fast casual concept. In 2024, the Company determined that the entire amount of the
goodwill was impaired and recorded an impairment charge of $4,690 which is recorded in the goodwill
impairment line on the Consolidated Statement of Income.
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 August 02, 2024 and July 28, 2023, 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 $3,365 and $2,290, respectively, at
August 02, 2024 and July 28, 2023.
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 6 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 and Note 7 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.
62
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. See Note 7 for additional information regarding revenue
recognition.
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 during the Company’s fourth quarter
and is adjusted by the actuarially determined losses and actual claims payments made subsequent to this full
scope actuarial study during the fourth quarter. Additionally, the Company performs limited scope actuarial
studies on a quarterly basis to verify and/or modify the Company’s reserves. The reserves and losses in the
actuarial study represent a range of possible outcomes within which no given estimate is more likely than any
other estimate. As such, the Company records the losses at the lower 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.
63
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.
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. See Note 8 for additional information regarding leases.
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:
2024
2023
2022
Advertising expense
$ 112,793
$ 89,798
$ 89,850
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,
if any, is recognized in an amount equal to the excess of the fair value of the modified award over the fair value
of the original award immediately before the modification. Incremental compensation expense for vested
awards is recognized immediately. For unvested awards, the sum of the incremental compensation expense
and the remaining unrecognized compensation expense for the original award on the modification date is
recognized over the modified service period.
Additionally, the Company’s policy is to issue shares of common stock to satisfy exercises of share-based
compensation awards. See Note 9 for additional information regarding share-based compensation.
64
Income taxes – The Company’s provision for income taxes (income tax benefit) includes employer tax
credits for FICA taxes paid on employee tip income and other employer tax credits which are accounted for
using 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 (income tax benefit). See Note 12
for additional information regarding income taxes.
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.
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 $159.46 as of
August 02, 2024. Warrants were excluded from the computation of diluted earnings per share since the
warrants’ strike price of $223.24 was greater than the average market price of the Company’s common stock
during the period. See Note 4 for additional information regarding the Company’s convertible senior notes and
Note 13 for additional information regarding additional information regarding net income per share.
Recent Accounting Pronouncements Not Yet Adopted
Segment Disclosures
In November 2023, the Financial Accounting Standards Board (“FASB”) issued new reportable segment
disclosure requirements which require incremental segment information related to measuring segment
performance on an annual and interim basis. These new disclosure requirements are effective for the fiscal
periods beginning after December 15, 2023 and interim periods within fiscal years beginning after
December 15, 2024. These disclosure requirements should be applied on a retrospective basis. The Company
is currently evaluating the effect of adopting these new disclosure requirements on its annual consolidated
financial statements and related disclosures in 2025 as well as interim disclosures beginning in the first quarter
of 2026.
Income Tax Disclosures
In December 2023, the FASB issued new income tax disclosure requirements which require disclosure of
disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate
reconciliation and modifies other income tax-related disclosures. These new disclosure requirements are
effective for annual periods beginning after December 15, 2024 and allow for adoption on a prospective basis,
with a retrospective option. The Company is currently evaluating the effect of adopting these new disclosure
requirements on its consolidated financial statements and related disclosures in 2026.
65
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.
The Company’s assets and liabilities measured at fair value on a recurring basis at August 02, 2024 were
as follows:
Total Fair
Level 1
Level 2
Level 3
Value
Cash equivalents*
$
1
$
—
$
—
$
1
Total
$
1
$
—
$
—
$
1
Deferred compensation plan assets**
25,719
Total assets at fair value
$ 25,720
The Company’s assets and liabilities measured at fair value on a recurring basis at July 28, 2023 were as
follows:
Total Fair
Level 1
Level 2
Level 3
Value
Cash equivalents*
$ 9,001
$
—
$ —
$
9,001
Total
$ 9,001
$
—
$ —
$
9,001
Deferred compensation plan assets**
27,129
Total assets at fair value
$ 36,130
*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 August 02, 2024
and July 28, 2023. 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 August 02, 2024 and July 28, 2023, approximate their carrying amounts because of their short
duration. The fair value of the Company’s variable rate debt, based on quoted market prices, which are
considered Level 1 inputs, approximates its carrying amounts at August 02, 2024 and July 28, 2023.
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 $267,939 and $259,311 as of August 02, 2024 and July 28, 2023, respectively.
66
Assets Measured at Fair Value on a Nonrecurring Basis
In 2024, six Cracker Barrel were determined to be impaired and thirteen MSBC locations were determined
to be impaired because of declining operating performance. In 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 impairment charges of $17,448 and $11,692, respectively, in
2024 and 2023, which is included in the impairment and store closing costs line on the Consolidated Statements
of Income.
In 2024, based on the Company’s analysis of MSBC’s goodwill, the Company concluded that the goodwill
was impaired based on changes in the macroeconomic environment, including interest rate and inflationary
pressures, and declining financial trends, which resulted in a calculated fair value lower than the goodwill’s
carrying value. As part of its analysis, the Company used the discounted cash flow method to estimate fair
value. Significant inputs for this method include projected cash flows, growth rate and discount rate. The
Company recorded an impairment of the entire goodwill amount of $4,690 in 2024; this amount is recorded in
the goodwill impairment line on the Consolidated Statement of Income.
3. Inventories
Inventories were comprised of the following at:
August 02, 2024 July 28, 2023
Retail
$
138,278
$
145,175
Restaurant
25,829
24,427
Supplies
16,851
19,762
Total
$
180,958
$
189,364
4. Debt
On June 17, 2022, the Company entered into a five-year $700,000 revolving credit facility (the “2022
Revolving Credit Facility”). The 2022 Revolving Credit Facility also contains an option to increase the revolving
credit facility by $200,000. At August 02, 2024 and July 28, 2023, the Company had $180,000 and $120,000,
respectively, in outstanding borrowings under the 2022 Revolving Credit Facility.
At August 02, 2024, the Company had $32,644 of standby letters of credit, which reduce the Company’s
borrowing availability under the 2022 Revolving Credit Facility (see Note 14). At August 02, 2024, the Company
had $487,356 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 (1) the Term Secured Overnight Financing Rate (SOFR) or (2) a base rate equal
to the greatest of (i) the prime rate, (ii) a rate that is 0.5% in excess of the Federal Funds Rate, and (iii) Term
SOFR plus 1.0%, in each case, plus an applicable margin based on the Company’s consolidated total leverage
ratio. At August 02, 2024, the weighted average interest rate on $180,000 of the Company’s outstanding
borrowings was 7.19%. At July 28, 2023, the weighted average interest rate on $120,000 of the Company’s
outstanding borrowings was 6.79%.
67
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 August 02, 2024, 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.
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 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 August 02, 2024, the conversion rate, as adjusted, was 6.2713 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 Notes offering were approximately $291,000, after deducting the initial purchasers’
discounts and commissions and the Company’s offering fees and expenses.
68
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 August 02, 2024 and July 28, 2023.
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 2024, 2023 or 2022.
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
August 02, 2024 and July 28, 2023, 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
periods indicated:
August 02, 2024 July 28, 2023
Liability component
Principal
$
300,000
$
300,000
Less: Debt issuance costs
3,419
5,171
Net carrying amount
$
296,581
$
294,829
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 each of the three years:
2024
2023
2022
Coupon interest
$
1,932
$
1,896
$
1,896
Amortization of issuance costs
1,752
1,730
1,755
Total interest expense
$
3,684
$
3,626
$
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 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 August 02, 2024, the strike price, as adjusted, of
the Warrant Transactions was adjusted to $223.24 per share as a result of dividends declared since the
Notes were issued.
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.
69
5. Share Repurchases
Subject to the limits imposed by the Company’s revolving credit facility, 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. On June 2, 2023, the Company’s Board of
Directors renewed this authorization for an additional year which expired on June 2, 2024. In 2024, the
Company did not repurchase any shares of its common stock. 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.
6. 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.
7. Revenue Recognition
Disaggregation of revenue
Total revenue was comprised of the following for each of the three years:
2024
2023
2022
Revenue:
Restaurant
$ 2,794,128
$ 2,740,866
$ 2,565,628
Retail
676,634
701,942
702,158
Total revenue
$ 3,470,762
$ 3,442,808
$ 3,267,786
Gift Card Breakage
For 2024, 2023 and 2022, gift card breakage was $11,397, $10,713, and $9,572, respectively. Revenue
recognized in the Consolidated Statements of Income for 2024, 2023 and 2022, respectively, for the redemption
of gift cards which were included in the deferred revenue balance at the beginning of the fiscal year was
$36,958, $40,103, and $42,169, respectively. Deferred revenue related to the Company’s gift cards was
$84,854 and $88,556, respectively, at August 02, 2024 and July 28, 2023.
Loyalty Program
During the first quarter of 2024, the Company launched its customer loyalty program, Cracker Barrel
Rewards, which allows members to earn points (“pegs”) for each qualifying purchase in store or online. Pegs
earned are then converted to rewards upon reaching certain thresholds. These rewards may be redeemed on
future restaurant or retail purchases in store or online.
The estimation of the standalone selling price of pegs and other rewards issued to customers involves
several assumptions, primarily the estimated value of the product for which the reward is expected to be
redeemed and the probability that the pegs or reward will expire. These inputs are subject to change over time
due to factors such as increased costs or changes in customer behavior.
70
The Company defers a portion of the revenue related to the pegs earned at the time of the original
transaction based on the estimated value of the item for which the reward is expected to be redeemed, net of
estimated unredeemed pegs. Pegs expire after twelve months. Revenue is recognized for these performance
obligations upon redemption of pegs or rewards earned by the customer. As of August 2, 2024, deferred
revenue related to the loyalty program was $1,544 and is included in deferred revenue on the Consolidated
Balance Sheet.
8. Leases
The Company has entered into two Cracker Barrel and three MSBC 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 2025 and 2026 with undiscounted future payments of $11,292 and $1,323,
respectively.
The following table summarizes the components of lease cost for operating leases for each of the
three years:
2024
2023
2022
Operating lease cost
$ 110,661 $ 109,908 $ 108,903
Short term lease cost
3,509
2,947
2,409
Variable lease cost
3,522
3,669
2,673
Total lease cost
$ 117,692 $ 116,524 $ 113,985
The following table summarizes supplemental cash flow information and non-cash activity related to the
Company’s operating leases for each of the three years:
2024
2023
2022
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities
$ 97,014 $ 95,294 $ 92,600
Noncash information:
Right-of-use assets obtained in exchange for new operating lease
liabilities
14,219 17,378 19,143
Lease modifications or reassessments increasing right-of-use assets
23,532 11,320 11,978
Lease modifications removing right-of-use assets
(2,133)
(413)
(670)
Right-of-use asset impairment*
(1,832)
—
—
*Included in the Impairment line on the Consolidated Statement of Cash Flows
The following table summarizes the weighted-average remaining lease term and the weighted-average
discount rate for operating leases as of August 02, 2024, July 28, 2023 and July 29, 2022:
2024
2023
2022
Weighted-average remaining lease term
15.88 Years
16.88 Years
17.38 Years
Weighted-average discount rate
5.38 %
5.09 %
4.90 %
71
The following table summarizes the maturities of undiscounted cash flows reconciled to the total operating
lease liability as of August 02, 2024:
Year
Total
2025
$
86,318
2026
74,542
2027
70,152
2028
67,654
2029
65,666
Thereafter
738,625
Total future minimum lease payments
1,102,957
Less imputed remaining interest
(377,127)
Total present value of operating lease liabilities
$
725,830
Sale and Leaseback Transactions
In 2009, the Company completed sale and leaseback transactions involving 15 of its Cracker Barrel stores
and its retail distribution center. Under the transactions, the land, buildings and building improvements at the
locations were sold and leased back for terms of 20 and 15 years, respectively. The leases include specified
renewal options for up to 20 additional years.
In 2020, the Company completed a sale and leaseback transaction involving 64 Cracker Barrel stores.
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.
In 2021, the Company completed a sale and leaseback transaction involving 62 Cracker Barrel stores.
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.
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”).
72
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 August 02, 2024, the number of shares authorized for future issuance under the Company’s
active plan is 982,523. At August 02, 2024, the number of outstanding awards under the 2020 Omnibus Plan
and the Prior Plan was 285,817 and 1,259, respectively.
The Company’s nonvested stock awards consist of the Company’s common stock, generally accrue
dividend equivalents and vest over one to three years. The fair value of the Company’s nonvested stock awards
which accrue dividends is equal to the market price of the Company’s stock at the date of the grant. Dividends
are forfeited for any nonvested stock awards that do not vest.
The Company’s nonvested stock awards include its long-term performance plans which were established
by the Committee for the purpose of rewarding certain officers with shares of the Company’s common stock if
the Company achieved certain performance targets. The stock awards under the long-term performance plans
are calculated or estimated based on achievement of financial performance measures.
The following table summarizes the performance periods and vesting periods for the Company’s nonvested
stock awards under its long-term performance plans at August 02, 2024:
Vesting Period
Long-Term Performance Plan (“LTPP”)
Performance Period
(in Years)
2024 LTPP
2024 – 2026
3
2023 LTPP
2023 – 2025
3
2022 LTPP
2022 – 2024
3
The following table summarizes the shares that have been accrued under the 2024 LTPP, 2023 LTPP and
2022 LTPP at August 02, 2024:
2024 LTPP
34,290
2023 LTPP
15,492
2022 LTPP
11,139
A summary of the Company’s nonvested stock activity as of August 02, 2024, and changes during 2024
are presented in the following table:
Weighted-Average Grant
Nonvested Stock
Shares
Date Fair Value
Unvested at July 28, 2023
180,657
$
114.47
Granted
129,674
70.66
Vested
(72,631)
118.01
Forfeited
(11,545)
120.18
Unvested at August 02, 2024
226,155
$
87.92
The following table summarizes the total fair value of nonvested stock that vested for each of the
three years:
2024
2023
2022
Total fair value of nonvested stock
$ 8,571
$ 4,947
$ 6,166
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Compensation Expense
The following table highlights the components of share-based compensation expense for each of the
three years:
2024
2023
2022
Total compensation expense
$ 10,298
$ 9,045
$ 8,198
The following table highlights the total unrecognized compensation expense related to the outstanding
nonvested stock awards and nonvested stock units and the weighted-average periods over which the expense
is expected to be recognized as of August 02, 2024:
Nonvested
Stock Awards
Total unrecognized compensation
$
5,752
Weighted-average period in years
1.43
During 2024, the Company issued 49,418 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 $1,608.
10. Shareholder Rights Agreement
On February 22, 2024, the Company’s Board of Directors unanimously determined to extend the
Company’s shareholder rights agreement for a further three-year term, subject to the approval of the
Company’s shareholders at the Company’s upcoming 2024 annual meeting. In connection with this
determination, the 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
agreement, as set forth in the Rights Agreement dated as of February 27, 2024 (the “Rights Agreement”), by
and between the Company and Equiniti Trust Company, LLC, as rights agent. The dividend was payable on
March 8, 2024 to the shareholders of record on March 8, 2024. The Rights Agreement replaced the Company’s
Rights Agreement, dated as of April 9, 2021 (the “2021 Rights Agreement”), and became effective 5:00 p.m.,
New York City time, on February 27, 2024 (the “Effective Time”). To facilitate the entry into the Rights
Agreement, the Board of Directors also approved an Amendment and Termination to the 2021 Rights
Agreement, which accelerated the expiration date of the 2021 Rights Agreement from the close of business on
April 9, 2024 to immediately prior to the Effective Time, at which the 2021 Rights Agreement expired and
became of no further force or effect. Other than extending the term, the Rights Agreement makes no changes
to the material terms and conditions of the 2021 Rights Agreement.
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 March 8, 2024 until the Distribution
Date (as defined 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.
74
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 August 02, 2024, 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.
•
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.
75
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.
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.
76
Expiration
If the Rights Agreement is approved by the shareholders at the 2024 annual meeting, the Rights will expire
on February 27, 2027. If shareholders do not approve the Rights Agreement, it will expire immediately following
certification of the vote at the 2024 annual meeting.
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 2024, 2023 and 2022, 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 $25,719 is
included in other assets and the related liability to the participants of $25,719 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:
2024
2023
2022
401(k) Savings Plan
$ 5,121
$ 4,963
$ 4,713
Non-Qualified Savings Plan
237
230
285
12. Income Taxes
The components of the provision for income taxes (income tax benefit) for each of the three years were as
follows:
2024
2023
2022
Current:
Federal
$ (10,448)
$ 6,925
$ 16,462
State
247
3,573
1,188
Deferred:
Federal
(3,526)
(4,902)
(4,543)
State
(3,017)
(1,035)
(1,604)
Total provision for income taxes (income tax benefit)
$ (16,744)
$ 4,561
$ 11,503
77
A reconciliation of the Company’s provision for income taxes (income tax benefit) and income taxes based
on the statutory U.S. federal rate of 21.0% in 2024, 2023 and 2022 was as follows:
2024
2023
2022
Provision computed at federal statutory income tax rate
$
5,079
$ 21,758
$ 30,110
State and local income taxes, net of federal benefit
874
2,069
1,452
Employer tax credits for FICA taxes paid on employee tip income
(16,926)
(16,772)
(15,395)
Other employer tax credits
(3,476)
(3,673)
(4,929)
Tax audit settlement
(2,718)
—
(1,939)
Carryback of federal tax credits
(1,545)
—
—
Non-deductible executive compensation
1,254
936
1,499
Share-based compensation
548
338
(47)
Other-net
166
(95)
752
Total provision for income taxes (income tax benefit)
$ (16,744)
$
4,561
$ 11,503
The decrease in the Company’s provision for income taxes in 2024 as compared to 2023 is primarily due
to the decrease in income before income taxes and favorable audit settlements in 2024. 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.
Significant components of the Company’s net deferred tax liability consisted of the following at:
August 02, 2024 July 28, 2023
Deferred tax assets:
Compensation and employee benefits
$
5,677
$
6,406
Accrued liabilities
14,202
15,843
Operating lease liabilities
181,094
186,813
Insurance reserves
8,760
7,360
Inventory
3,515
3,204
Deferred tax credits and carryforwards
33,979
30,720
Other
7,132
11,057
Deferred tax assets
$
254,359
$
261,403
Deferred tax liabilities:
Property and equipment
$
97,014
$
100,185
Inventory
6,217
6,028
Operating lease right-of-use asset
211,826
221,882
Other
7,014
7,564
Deferred tax liabilities
322,071
335,659
Net deferred tax liability
$
67,712
$
74,256
The Company has a deferred tax asset of $17,308 reflecting federal income tax credit carryforwards that
expire in 2044. The Company has state income tax net operating loss carryforwards (“NOL”) of $104,924 and
has recorded a deferred tax asset of $5,737 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 August 02, 2024 and July 28, 2023, the Company’s gross liability for uncertain tax positions,
exclusive of interest and penalties, was $7,404 and $9,675, respectively.
78
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:
August 02, 2024 July 28, 2023 July 29, 2022
Balance at beginning of year
$
9,675
$
10,858
$
14,477
Tax positions related to the current year:
Additions
276
710
1,152
Reductions
—
—
—
Tax positions related to the prior year:
Additions
43
52
17
Reductions
(674)
(298)
(1,241)
Settlements
(1,433)
—
(1,942)
Expiration of statute of limitations
(483)
(1,647)
(1,605)
Balance at end of year
$
7,404
$
9,675
$
10,858
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:
2024
2023
2022
Uncertain tax positions
$
5,849
$
7,644
$
8,578
The Company had $7,913, $7,896, and $7,133 in interest and penalties accrued as of August 02, 2024,
July 28, 2023, and July 29, 2022, respectively.
The Company recognized accrued interest and penalties related to unrecognized tax benefits of $17, $764
and $(622) in its provision for income taxes (income tax benefit) on August 02, 2024, July 28, 2023 and July 29,
2022, 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 August 02, 2024 by
approximately $1,000 to $2,000 within the next twelve months. At August 02, 2024, 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 2019.
13. Net Income Per Share and Weighted Average Shares
The following table reconciles the components of diluted earnings per share computations:
2024
2023
2022
Net income per share numerator
$
40,930
$
99,050
$
131,880
Net income per share denominator:
Basic weighted average shares
22,191,961
22,167,875
23,164,180
Add potential dilution:
Nonvested stock awards and units
127,933
97,524
81,830
Diluted weighted average shares
22,319,894
22,265,399
23,246,010
79
14. Commitments and Contingencies
The Company and its subsidiaries are party to various legal and regulatory proceedings and claims
incidental to their business in the ordinary course. In the opinion of management, based upon information
currently available, the ultimate liability with respect to these proceedings and claims will not materially affect
the Company’s consolidated results of operations or financial position.
The Company maintains insurance coverage for various aspects of its business and operations. The
Company has elected, however, to retain all or a portion of losses that occur through the use of various
deductibles, limits and retentions under its insurance programs. This situation may subject the Company to
some future liability for which it is only partially insured, or completely uninsured. The Company intends to
mitigate any such future liability by continuing to exercise prudent business judgment in negotiating the terms
and conditions of its contracts. See Note 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 August 02, 2024, the Company had $32,644 of standby letters
of credit related to securing reserved claims under workers’ compensation insurance and certain 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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Our management, with the participation of our principal executive and financial officers, including the Chief
Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of the end
of the period covered by this report. Based upon this evaluation, our Chief Executive Officer and Chief Financial
Officer each concluded that, as of August 02, 2024, our disclosure controls and procedures were effective.
There have been no changes (including corrective actions with regard to material weaknesses) during the
quarter ended August 02, 2024 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.
80
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 August 02, 2024, 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/Julie Masino
Julie Masino
President and Chief Executive Officer
/s/Craig A. Pommells
Craig A. Pommells
Senior Vice President and Chief Financial Officer
81
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 August 2, 2024, based on criteria established in Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of August 2, 2024, 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 August 2, 2024 of the Company and
our report dated September 27, 2024 expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
82
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.
/s/ Deloitte & Touche LLP
Nashville, Tennessee
September 27, 2024
83
ITEM 9B. OTHER INFORMATION
During the fiscal quarter ended August 02, 2024, 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 2024 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 2024 Proxy Statement: “Executive Compensation” and “Board of Directors and Committees—
Compensation of Directors.” The “Compensation Committee Report” set forth in the section of the 2024 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
2024 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
84
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 2024 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 2024 Proxy Statement. No other portion of the section of
the 2024 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.
PART IV
ITEM 15. EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES
(a) List of documents filed as part of this report:
1. All financial statements – see Item 8.
2. All schedules have been omitted since they are either not required or not applicable, or the
required information is included.
3. 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. (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)
3(II), 4(b)
Second Amended and Restated Bylaws of Cracker Barrel Old Country Store, Inc. (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)
4(c)
Rights Agreement, dated as of February 27, 2024, between Cracker Barrel Old Country
Store, Inc. and Equiniti Trust Company, LLC, which includes the Articles of Amendment to the
Amended and Restated Charter as Exhibit A, the form of Right Certificate as Exhibit B, and the
Summary of Rights to Purchase Preferred Shares as Exhibit C (incorporated by reference to
Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q filed under the Exchange Act on
February 27, 2024)
4(d)
Amendment and Termination of Rights Agreement dated as of February 27, 2024, between
Cracker Barrel Old Country store, Inc. and Equiniti Trust Company, LLC (incorporated by
reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q filed under the
Exchange Act on February 27, 2024)
4(e), 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 (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)
85
4(f)
Form of 0.625% Convertible Senior Note due 2026 (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)
4(g)
Description of Capital Stock (filed herewith)
10(b)
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 (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)
10(c)
Cracker Barrel Old Country Store, Inc. Corporate Policy—Severance Benefits Policy (as
amended to date)† (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report
on Form 10-Q filed under the Exchange Act on June 9, 2009) (Commission File No. 000-25225)
10(d)
Cracker Barrel Old Country Store, Inc. 2010 Omnibus Stock and Incentive Plan† (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)
10(e)
Cracker Barrel Old Country Store, Inc. 2020 Omnibus Stock and Incentive Plan† (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)
10(f)
Cracker Barrel Old Country Store, Inc. Form of Performance-Based Stock Unit Award†
(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)
10(g)
Cracker Barrel Old Country Store, Inc. Non-Qualified Savings Plan (as amended to date)†
(incorporated by reference to Exhibit 10(aa) to the Company’s Annual Report on Form 10-K filed
under the Exchange Act on September 27, 2011) (Commission File No. 000-25225)
10(h)
Cracker Barrel Old Country Store, Inc. Deferred Compensation Plan† (incorporated by reference
to Exhibit 10(bb) to the Company’s Annual Report on Form 10-K filed under the Exchange Act
on September 27, 2011) (Commission File No. 000-25225)
10(i)
Amendment to Deferred Compensation Plan† (incorporated by reference to Exhibit 10(cc) to the
Company’s Annual Report on Form 10-K filed under the Exchange Act on September 27, 2011)
(Commission File No. 000-25225)
10(j)
Cracker Barrel Old Country Store, Inc. Form of Restricted Stock Award Notice† (filed herewith)
10(k)
Form of Severance Agreement between Cracker Barrel Old Country Store, Inc., and certain of
its named executive officers† (incorporated by reference to Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q filed under the Exchange Act on May 29, 2018) (Commission
File No. 000-25225)
10(l)
Form of Change of Control Agreement between Cracker Barrel Old Country Store, Inc., and
certain of its named executive officers† (incorporated by reference to Exhibit 10.2 to the
Company’s Quarterly Report on Form 10-Q filed under the Exchange Act on May 29, 2018)
(Commission File No. 000-25225)
86
10(m)
Agreement for Purchase and Sale of Real Property, dated May 28, 2020 (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)
10(n)
First Amendment for Purchase and Sale of Real Property, dated July 29, 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)
10(o)
Amended and Restated Master Lease Agreement, dated as of August 4, 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)
10(p)
Master Lease Agreement, dated as of November 11, 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)
10(q)
First Amendment to Amended and Restated Master Lease Agreement, dated as of
November 11, 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)
10(r)
Form of Convertible Note Hedge Transactions Confirmation (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)
10(s)
Form of Warrant Transactions Confirmation (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)
10(t)
Employment Agreement dated as July 17, 2023, between the Company and Julie Masino†
*(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)
10(u)
Employment Agreement dated as of July 17, 2023, between the Company and Sandra B.
Cochran† (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)
10(v)
Form of Transitional Letter Agreement between the Company and certain executive officers of
the Company† (filed herewith)
10(w)
Form of Consulting Agreement between the Company and certain executives of the Company†
(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)
10(x)
Confidential Separation Agreement and Release, between Jennifer Tate and the Company,
dated as of August 28, 2023† (incorporated by reference to Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q filed under the Exchange Act on November 30, 2023)
10(y)
Supplemental Severance Agreement dated as of September 21, 2023, between the Company
and Craig Pommells† (incorporated by reference to Exhibit 10(y) to the Company’s Annual
Report on Form 10-K filed under the Exchange Act on September 26, 2023)
10(z)
Cracker Barrel Old Country Store, Inc. Form of Time-Based Restricted Stock Unit Award Notice†
(filed herewith)
87
10(aa)
Cracker Barrel Old Country Store, Inc. Form of Long-Term Performance Plan Notice† (filed
herewith)
19
Insider Trading Policy (filed herewith)
21
Subsidiaries of the Registrant (filed herewith)
23
Consent of Independent Registered Public Accounting Firm - Deloitte & Touche LLP (filed
herewith)
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 (filed herewith)
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 (filed herewith)
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith)
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith)
97
Cracker Barrel Old Country Store, Inc. Nasdaq Executive Compensation Recovery Policy
(incorporated by reference to Exhibit 97 to the Company’s Annual Report on Form 10-K filed
under the Exchange Act on September 26, 2023)
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
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
†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.
88
SIGNATURES
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 27th
day of September, 2024.
CRACKER BARREL OLD COUNTRY STORE, INC.
By:/s/Julie Masino
Julie Masino
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 27th day of September, 2024.
Name
Title
/s/Julie Masino
President, Chief Executive Officer and Director
Julie Masino
/s/Craig A. Pommells
Senior Vice President and Chief Financial Officer
Craig A. Pommells
/s/Brian T. Vaclavik
Vice President, Corporate Controller and Principal Accounting Officer
Brian T. Vaclavik
/s/Thomas H. Barr
Director
Thomas H. Barr
/s/Carl T. Berquist
Director and Independent Chairman of the Board
Carl T. Berquist
/s/Jody L. Bilney
Director
Jody L. Bilney
/s/Meg G. Crofton
Director
Meg G. Crofton
/s/Gilbert R. Dávila
Director
Gilbert R. Dávila
/s/John W. Garratt
Director
John W. Garratt
/s/Cheryl J. Henry
Director
Cheryl J. Henry
/s/Gisel Ruiz
Director
Gisel Ruiz
/s/Darryl L. Wade
Director
Darryl L. Wade
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 21, 2024, via a live
webcast, at www.cesonlineservices.com/cbrl24_vm.
To participate, you must pre-register at
www.cesonlineservices.com/cbrl24_vm by 10:00
a.m., Central Time, on November 20, 2024.
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 2024, 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.
©2024 CBOCS Properties, Inc
Comparison of Five-Year Total Return
Among Cracker Barrel Old Country Store, Inc., S&P 400
Restaurants Index, and S&P Small Cap Index. Assumes
$100 invested on 8/02/19 and includes reinvestment of
dividends. Copyright @ Standard and Poor’s, Inc.
Corporate Officers
Julie Masino
President and Chief Executive Officer
Laura A. Daily
Senior Vice President, Chief Merchant and Retail Supply
Chain
Chris Edwards
Senior Vice President, Chief Strategy Officer
Bruce A. Hoffmeister
Senior Vice President, Chief Information Officer
Sarah Moore
Senior Vice President, Chief Marketing Officer
Craig A. Pommells
Senior Vice President, Chief Financial Officer
Donna Roberts
Senior Vice President, Chief Human Resources Officer
Cammie 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
Daniel S. Agerton
Regional Vice President, Restaurant Operations
Matthew Banton
Vice President, Menu Strategy & Innovation
Amy Barnett
Vice President, Loyalty and CRM
Ashley V. Berland
Vice President, Strategic Sourcing
William C. Blondheim
Regional Vice President, Restaurant Operations
Barbara K. Brown
Regional Vice President, Restaurant Operations
Arthur T. Bushman
Vice President, Financial Planning and Analysis
Dottie F. Cervenka
Regional Vice President, Retail Operations
Derrick L. Collins
Regional Vice President, Retail Operations
Scott Corder
Vice President, Strategic Pricing
Heather A. Gammon
Vice President, Demand Planning
Scott A. Gardner
Vice President, Distribution and Logistics
Christie A. Hale
Vice President, Internal Audit
Joanne M. Hayes
Vice President, Merchandising
Douglas Hisel
Vice President, Field Operations
Jonathan W. Hussey
Vice President, Sales and Performance
Gabrielle T. Ivey
Vice President, Organizational Learning, Development
and Diversity
Kaleb Johannes
Vice President, Strategy
Jennifer M. Lankford
Vice President, Deputy General Counsel
Michael B. Liedberg
Vice President, Operations Systems and Support
John S. Melton
Vice President, Digital
Joe Mertes
Vice President, Business Intelligence
Sherri L. Moore
Regional Vice President, Restaurant Operations
Marion Morales
Regional Vice President, Restaurant Operations
Jacqualine L. Mumma
Regional Vice President, Retail Operations
Toni Novak Di Leo
Regional Vice President, Retail Operations
Julia C. Perry
Vice President, Marketing Communications
Robert Ramsey
Restaurant Regional Director
Ben Sapp
Vice President, Operations Services
Matthew Schaefer
Vice President, Innovation & Margin Transformation
Patrick R. Securcher
Regional Vice President, Restaurant Operations
Marci E. Sigmund
Vice President, Talent Acquisition
Andrew D. Simpson
Regional Vice President, Restaurant Operations
Andress R. Urteaga
Regional Vice President, Restaurant Operations
Brian Vaclavik
Vice President, Corporate Controller and Principal
Accounting Officer
Kevin K. Wales
Vice President, Application Development and Enterprise
Architecture
Michelle D. Wilson
Lead Regional Vice President, Retail Operations
89