Cracker Barrel shares fell sharply on Wednesday after the Tennessee-based restaurant-and-retail chain cut its annual revenue forecast and posted weaker-than-expected quarterly results, weighed down by a brief but highly publicised logo controversy and softer store traffic.
The company also disclosed a significant drop in earnings, deepening concerns about its turnaround efforts as consumer spending weakens.
Shares of Cracker Barrel slid nearly 8% during premarket trading following the announcement.
Revenue outlook reduced as quarterly performance disappoints
For its latest fiscal quarter, Cracker Barrel reported revenue of $797.2 million, falling short of analysts’ expectations of $800 million and down 5.7% from the same period a year earlier.
The company posted a net loss of $24.6 million, compared with a profit of $4.8 million in the year-ago quarter.
Analysts surveyed by FactSet had anticipated a loss of 79 cents per share; Cracker Barrel reported a deeper loss on weaker sales.
The company also lowered its full-year revenue outlook for fiscal 2026 to between $3.2 billion and $3.3 billion, down from its earlier forecast of $3.35 billion to $3.45 billion.
Adjusted full-year EBITDA projections were reduced dramatically as well, now expected to range between $70 million and $110 million, compared with its previous range of $150 million to $190 million.
“First quarter results were below our expectations amid unique and ongoing headwinds,” President and CEO Julie Masino said.
She added that the company is adjusting operational initiatives, redesigning menus and marketing, and pursuing cost savings as part of efforts to regain momentum.
Logo controversy takes a toll on traffic
Cracker Barrel’s short-lived decision to simplify its logo by removing the iconic “Uncle Herschel” character sparked intense backlash earlier this year.
The rebrand, intended to modernise the chain’s image, instead became a flashpoint on social media, where critics labelled the logo change as politically driven.
President Donald Trump also weighed in, urging the company to revert to its old logo and calling the controversy an opportunity for “a billion dollars worth of free publicity.”
The company quickly scrapped the rebrand, acknowledging it had mishandled the rollout.
But the fallout appears to have strained customer sentiment, with Masino noting that restaurant traffic fell 9% following the episode.
Same-store sales declined 4.7% during the quarter at restaurants and 8.5% in retail outlets, both steeper than analysts had expected.
Traffic continued to weaken into the current quarter, including over the Thanksgiving period, though executives said the decline has since stabilised.
Menu changes and quality concerns add to pressure
Beyond the logo issue, some longtime customers say the company’s challenges run deeper, pointing to concerns over food quality and menu alterations.
According to a report by The Wall Street Journal, loyal patrons have complained that several popular items have been removed and that recent operational changes have compromised taste and freshness.
Efforts to streamline kitchen operations — such as making biscuits in large batches and chilling them, switching stovetop sides to oven-prepared versions, and reheating food — have not been well received.
These changes, designed to curb labour costs and improve efficiency, have drawn criticism for eroding the chain’s traditional home-style appeal.
Investor dissatisfaction grows as turnaround remains uncertain
Investor frustration has sharpened as the company struggles to reverse weakening trends.
At Cracker Barrel’s annual meeting last month, roughly 25% of shareholders voted against Masino, signalling waning confidence in management’s recovery strategy.
The company has already abandoned its new logo, postponed store remodels, and reversed some kitchen changes in response to customer pushback.
But the broader challenges — from shrinking traffic to cost pressures — have cast uncertainty over the pace of its turnaround.
Cracker Barrel shares have tumbled nearly 49% year-to-date through Tuesday’s close, underscoring the depth of investor concern as the chain navigates intensifying competitive and operational headwinds.
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