Wait times and turnover are improving, but the brand is still reeling from double-digit declines in customer traffic.

Cracker Barrel conducted extensive research—which cost $16 million in consulting fees—involving discussions with customers and employees from across the country and different backgrounds. The unfiltered truth is the brand has lost its relevancy. With traffic down nearly 20 percent since 2019, it’s been numerically proven customers aren’t choosing Cracker Barrel like they used to.

The chain’s third quarter fell below expectations. Same-store sales dropped 1.5 percent year-over-year, inclusive of 4 percent pricing. Restaurant revenue decreased 1.5 percent to $671.3 million. Net loss was $9.2 million in Q3 compared to net income of $14 million a year ago.

Cracker Barrel announced May 16 it planned to invest $600 million to $700 million in a multi-year transformational plan focused on five strategic pillars—enhancing the brand, upgrading the menu, evolving the store prototype and guest experience, winning in digital and off-premises, and boosting the employee experience. The company reduced its quarterly dividend to redirect capital to core operations.

Masino emphasized the need to revitalize rather than overhaul the brand, leveraging its iconic status. There are some positive signs as Cracker Barrel kicks off this plan. For example, hourly turnover improved 10 percentage points year-over-year, and seat-to-eat times (the time it takes for customers’ food to come after they’ve been seated) have improved 8 percent. Also, off-premises missing item scores have improved 18 percent, the average skill level for cooks and servers increased 3 percent, and Google star ratings have risen from 4.1 to 4.2. Masino applauded operators’ job of managing food waste as well.

“They want to eat, so we want to make sure that we get their food to them in a reasonable amount of time, but that it’s made properly,” Masino said during the company’s Q3 earnings call. “Hot food is hot, cold food is cold, made to our wonderful recipe. We’ve improved that time by 8 percent, which is actually really, really meaningful when you think about the average time somebody spends with us is a little less than an hour. So that’s a key metric in getting your food faster and getting you on your way. We want to be part of your life, but we also know you have other things going on too. So that was a key one.”

Cracker Barrel is moving forward with its comprehensive turnaround strategy during a harrowing time for the industry. Consumers are responding to inflation by walking away from dining occasions, and brands—both in quick and full service—are responding by adding value offers and blasting promotions through traditional and digital channels. Cracker Barrel itself has seen pressure from the under $60,000 income household; menu mix is slightly down because of guests reducing their add-ons.

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Masino believes the company is well-positioned for this era, not only because of its pricing, but also the quantity, quality, and experience customers receive in restaurants. In Q2, Cracker Barrel launched an early dinner program—a daypart that’s hurting the most—featuring items at $8.99 from 4 to 6 p.m., Monday through Friday. The brand brought it to market so fast it didn’t have any advertising around it in the second quarter. Now, the chain has started to put marketing behind the menu to make guests aware. Masino also pointed toward Cracker Barrel’s Sunrise Specials for breakfast at $7.99.

“We’re really evaluating our ability to kind of take price strategically, as I’ve talked about on the last couple of calls,” Masino said. “So we believe that we’re very well positioned. We’re starting to actually communicate this through our media channels. But Cracker Barrel has and always will be a great value proposition for our guests.”

Part of Cracker Barrel’s plan is building a more strategic pricing approach to better align with consumer expectations and market conditions. The brand identified that its current pricing tiers are too broad, with significant variations in household income within the same tier, leading to inconsistent pricing strategies. For example, stores with average household incomes of $55,000 and $90,000 are in the same tier, despite different consumer willingness to pay.

To address this, Cracker Barrel has initiated several tests to refine its pricing tiers and applied strategic price adjustments across different menu items. Early results from these tests, which involved a 3 percent price increase, have been promising. The goal is to develop a multi-year pricing roadmap that allows for careful, data-driven adjustments. This roadmap considers current consumer pressures, value perceptions, and planned menu changes, enabling Cracker Barrel to adapt its pricing strategy effectively over the next three years.

The company is also looking to increase traffic by remodeling restaurants, including brighter interiors and more comfortable seating. In addition to redesigns, the brand fell behind on proper maintenance of such things as parking lots, paints, and floors—something that came through anecdotally from guests but primarily from the company wanting to hold itself to a higher standard. Future plans involve expanding these upgrades systemwide and debuting a smaller store prototype in 2025. Two remodeled stores are currently under test. Cracker Barrel is looking to test 25 to 30 restaurants over the next year at a variety of investment levels.

“They are very much lab stores at the moment,” Masino said. “We’re seeing great guest feedback on the quick remodels that we did there and just the feeling of lighter, brighter, fresher, cleaner—a place where I do want to have dinner. … It’s feeling like a place that feels like they’re at a Cracker Barrel and just a better version of Cracker Barrel. So we believe we’re on the right track, and that’s what ’25 is all about—really taking a very disciplined approach to the capital deployment around this piece of the strategy, right? We know that we want to be careful and good stewards of the capital.”

Off-premises, another key growth area for Cracker Barrel, mixed 18.9 percent in Q3. Masino noted that in the second quarter of the previous year, it became evident that focusing heavily on growing the catering segment was putting undue pressure on the dine-in business. Catering, which is less profitable compared to other channels, was impacting guest satisfaction by causing delays in service due to the high volume and complexity of orders that the same kitchen staff were handling for both dine-in guests and catering events.

Cracker Barrel’s strategy involves making these off-premises businesses more profitable while ensuring they do not compromise the quality of the dine-in experience, which remains the priority. This includes improving the execution of orders to reduce issues such as missing items, particularly in third-party deliveries, where the error rate has been high. Masino said executing these off-premises segments with excellence is crucial for the company’s growth and maintaining guest satisfaction across all channels.

This ties in directly with the company’s rewards program, which has grown to nearly 5 million members since its mid-September launch.

“It’s an anchor for what we’re doing,” Masino said. “It’s a key program in our pillars because we believe this is how guests want to interact with us. It’s also a very great way for us to deliver value. So don’t forget that, right? This is a great program that helps us deliver value to guests who are really seeking value from us.”

Cracker Barrel is focusing on enhancing its loyalty program’s tech stack in the near term. This includes investments in personalization, customer data platforms (CDP), and customer relationship management (CRM) systems, which are currently lacking. The goal is to make the loyalty program an industry leader by improving the ability to monetize and personalize customer interactions. Additionally, the brand is continually evaluating its POS systems and other technological needs, recognizing the dual nature of its business that includes both restaurant and retail operations. Masino mentioned that more specific details about these investments will be provided in the upcoming Q4 earnings call in September, covering plans for 2025 through 2027.

Cracker Barrel finished Q3 with 658 restaurants nationwide.

Casual Dining, Chain Restaurants, Feature, Finance, Cracker Barrel