Key Stats for CBRL Stock
- Pre-market Price Change for CBRL stock: -8%
- $CBRL Share Price as of Dec. 9 $27
- 52-Week High: $418
- $CBRL Stock Price Target: $102
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What Happened?
Cracker Barrel (CBRL) stock is down over 8% in pre-market after the restaurant chain reported disappointing first-quarter results. While the company posted a narrower-than-expected adjusted loss of $0.74 per share, revenue of $797.2 million fell short of Wall Street’s $800.3 million estimate.
The miss wasn’t just about dollars and cents as traffic collapsed during the quarter, dropping 7.3% overall. Things got worse as the quarter went on.
Traffic was down just 1% in early August but plummeted roughly 9% for the rest of the period. That pattern has continued into the second quarter, with traffic now running down about 11%.
CEO Julie Masino acknowledged the company is dealing with “unique and ongoing headwinds” that stem partly from operational missteps earlier this year.
CBRL had rolled out a back-of-house initiative designed to cut costs and improve consistency, but it backfired.
The new processes proved too complex for kitchen staff to execute reliably, leading to inconsistent food quality. Management decided to scrap the changes and retrain all managers and kitchen staff on the classic Cracker Barrel recipes.
The company also cut its full-year outlook AS Cracker Barrel now expects revenue between $3.2 billion and $3.3 billion, down from prior guidance. Adjusted EBITDA guidance dropped to just $70 million to $110 million for the fiscal year.
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What the Market Is Telling Us About CBRL Stock
The market’s reaction suggests investors are worried this isn’t just a short-term bump in the road. CBRL stock had already been struggling before these results, and the steep after-hours drop shows frustration with the company’s inability to turn things around quickly.
Management is trying to steady the ship with several moves. The company is slashing advertising spend by $12 million to $16 million over the rest of the year and implementing corporate restructuring that should save $20 million to $25 million annually. They’re also bringing back menu favorites that customers have been asking for, like Hamburger Steak and Eggs in a Basket.
The company’s Google star rating, which historically correlates strongly with traffic, has improved to its highest level since early 2020. Guest satisfaction metrics for food taste, service, and value all improved between 3% and 4% in October and accelerated further in November. The loyalty program continues growing rapidly and now has over 10 million members.
But here’s the problem: those improvements take time to translate into sales. Management expects traffic will range from down 8% to down 10% for the full year, with the high end of that range assuming conditions improve in the back half. The low end assumes things stay roughly where they are now.
Investors should watch whether CBRL stock can find a bottom as management works to rebuild trust with customers who felt the brand changed too much too fast.
The company still has a strong balance sheet with $485 million in available liquidity, giving it room to weather the storm.
But getting customers back through the doors will require consistent execution over multiple quarters, not just a few good weeks of data.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
