Cracker Barrel is the latest restaurant chain to signal trouble ahead as it sees fewer diners

By Claudia Assis

Restaurant chain slashes dividend, says it had to close stores this quarter

Cracker Barrel Old Country Store Inc. late Thursday called for lower profit and sales ahead as it welcomed fewer diners to its restaurants and slashed its dividend, saying it wants to focus on growing the business.

Cracker Barrel said it expects fiscal third- and fourth-quarter results to be below its expectations mostly "due to weaker-than-anticipated traffic," it said. It did not provide figures for the two upcoming quarters.

Shares of Cracker Barrel (CBRL) dropped 10.3% in the extended session Thursday, after ending the regular session up 1.2%

The company is scheduled to report its fiscal third-quarter results on May 30.

Analysts polled by FactSet expect the chain to report revenue of $835 million in the fiscal third quarter and of $913 million in the fiscal fourth quarter, which would compare with $833 million in the third quarter of 2023 and $837 million in the fourth quarter of 2023.

During the third quarter, Cracker Barrel said it completed a review of its portfolio, "which resulted in some store closures and related expenses and non-cash impairment charges that were incurred during the quarter."

That outlook reflects assumptions that are outside the company's control, it said, including "uncertainties created by macroeconomic conditions, such as ongoing inflation, low consumer confidence and high interest rates" that may impact consumer behavior.

The chain also cut its dividend to 25 cents a share, from $1.30 a share.

The company has reduced the dividend so that it can "allocate capital to generate organic growth and drive meaningful value creation over time," it said.

"Our board, our management and our teams are excited about our plans and are already hard at work to make them a reality," Chief Executive Officer Julie Masino said in a statement.

Cracker Barrel also said it expects fiscal 2025 to be "an investment year" with capital expenditures of about $160 million to $180 million, among other longer-term expectations through fiscal 2027.

-Claudia Assis

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05-16-24 2019ET

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