Restaurant company Cracker Barrel (NASDAQ: CBRL) reported Q2 CY2025 results exceeding the market’s revenue expectations, but sales fell by 2.9% year on year to $868 million. On the other hand, the company’s full-year revenue guidance of $3.4 billion at the midpoint came in 3.4% below analysts’ estimates. Its non-GAAP profit of $3.16 per share was significantly above analysts’ consensus estimates.

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Cracker Barrel President and Chief Executive Officer Julie Masino said, "We thank our guests for sharing their voices and their passion for Cracker Barrel in recent weeks, and we've listened, switching back to our 'Old Timer' logo, hitting pause on remodels, and placing an even bigger emphasis in the kitchen and other areas that enhance the guest experience. Many elements of our plan are working well and delivering results, as evidenced by five consecutive quarters of comparable store restaurant sales increases and 9% adjusted EBITDA growth in fiscal 2025. Looking ahead, there is much to be optimistic about, and our teams are focused on getting back to the momentum we created last fiscal year."

Company Overview

Known for its country-themed food and merchandise, Cracker Barrel (NASDAQ: CBRL) is a beloved American restaurant and retail chain that celebrates the warmth and charm of Southern hospitality.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $3.48 billion in revenue over the past 12 months, Cracker Barrel is one of the larger restaurant chains in the industry and benefits from a well-known brand that influences consumer purchasing decisions. However, its scale is a double-edged sword because there are only a finite of number places to build restaurants, making it harder to find incremental growth. To expand meaningfully, Cracker Barrel likely needs to tweak its prices, start new chains, or enter new markets.

As you can see below, Cracker Barrel’s sales grew at a weak 2.1% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as its restaurant footprint remained unchanged and it barely increased sales at existing, established dining locations.

This quarter, Cracker Barrel’s revenue fell by 2.9% year on year to $868 million but beat Wall Street’s estimates by 1.5%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection is underwhelming and implies its menu offerings will see some demand headwinds.

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Restaurant Performance

Number of Restaurants

The number of dining locations a restaurant chain operates is a critical driver of how quickly company-level sales can grow.

Cracker Barrel listed 725 locations in the latest quarter and has kept its restaurant count flat over the last two years while other restaurant businesses have opted for growth.

When a chain doesn’t open many new restaurants, it usually means there’s stable demand for its meals and it’s focused on improving operational efficiency to increase profitability.

Same-Store Sales

The change in a company's restaurant base only tells one side of the story. The other is the performance of its existing locations, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at restaurants open for at least a year.

Cracker Barrel’s demand within its existing dining locations has been relatively stable over the last two years but was below most restaurant chains. On average, the company’s same-store sales have grown by 1.7% per year. Given its flat restaurant base over the same period, this performance stems from a mixture of higher prices and increased foot traffic at existing locations.

In the latest quarter, Cracker Barrel’s same-store sales rose 5.4% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.

Key Takeaways from Cracker Barrel’s Q2 Results

It was good to see Cracker Barrel beat analysts’ same-store sales and EPS expectations this quarter. On the other hand, its full-year revenue guidance missed and its full-year EBITDA guidance fell short of Wall Street’s estimates. The outlook is weighing on shares and overshadowing the decent quarter. The stock traded down 8% to $45.60 immediately following the results.

So do we think Cracker Barrel is an attractive buy at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.