Cracker Barrel’s turnaround hits early snags; CEO warns recovery will 'take time' after rebrand fiasco

Cracker Barrel warned during the company's earnings call on Tuesday that its turnaround is moving at a slower pace than hoped after the company was mired in controversy over the summer after an attempted rebrand angered consumers.

Cracker Barrel CEO Julie Masino acknowledged that first-quarter results "were below our expectations amid unique and ongoing headwinds" that "our recovery will take time," as the company's teams work to regain momentum.

"As you are all aware, the past few months have been difficult for Cracker Barrel and for our 70,000 team members around the country. And while many of our guests are enjoying our improved food and guest experience, we certainly have more work to do to regain the trust and confidence of others who have been slower to return," Masino said. 

"This will take time, but we are executing a plan and are confident we will get back to the trajectory we saw in fiscal '25," she added.

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Masino said that, "Our unique circumstances during the first quarter were exacerbated by a difficult macro and industry backdrop that saw choppy traffic patterns."

Cracker Barrel reported that sales were down 5.7% compared to the first quarter of fiscal 2025. It also had adjusted EBITDA of $7.2 million, while the same quarter in the prior fiscal year was $45.8 million.

"Our EBITDA was clearly impacted by our topline performance. But I also want to remind everyone that it included incremental costs related to advertising, marketing and our GM conference, which totaled approximately $14 million," Masino explained.

"Traffic was down 1% in the first half of August and was down approximately 9% for the remainder of the quarter. We are taking decisive actions to return our performance to a positive trajectory," she added.

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Masino said that Cracker Barrel is looking to improve its performance in three areas, with the first two centering "on our food and the guest experience and include evolving our operations and connecting with our guests through our menu, marketing and value proposition."

The third area is "pursuing cost savings to improve profitability" through operational changes. Cracker Barrel plans to optimize its back-of-house initiatives by stepping up training and making leadership changes as part of phase 1 of its plan to improve food quality and consistency, simplify operations and deliver cost savings.

Masino noted that the fourth quarter was the first full quarter in which the phase 1 changes were rolled out. While those changes were "delivering meaningful savings, it became clear during the quarter that the new processes at scale made consistent execution more challenging for our operators and impacted the consistency of our food."

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Cracker Barrel sparked controversy over the summer when it moved forward with a rebrand that involved removing the "old timer" from the company's logo, as well as changes to the interior layout of the restaurants that have long included a general store.

The rebrand controversy emerged in late August, and Cracker Barrel reversed its rebranding plans less than a week after the backlash began.

Masino said in an interview last month with The Blaze's Glenn Beck that she felt like she was "fired by America" over the controversial rebrand and ensuing backlash.

"I think a lot of people think that Doug and me and other people sit around and are like, ‘Let’s remodel Cracker Barrel.' Nothing could be further from the truth," Masino said. "The notion for some of that truly came out of the work that we were doing on how do we improve food and experience. When we were talking to our guests, they said, 'Stores could be a little bit more comfortable. They're real dark. I can't read the menu.'"

She admitted that they "missed the mark" and said they feel remorse over the disappointment customers expressed.

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"We're sorry that that's what people feel. That was not the intent," Masino said. "It hurts me, because I don't people to be mad at Cracker Barrel. Our job is to make people love Cracker Barrel the way that our guests do, right? And so, even trying to invite new people in, it was always about how do we show them the magic that is Cracker Barrel."

Fox News Digital's Lindsay Kornick contributed to this report.