Cracker Barrel, the beloved Southern-themed restaurant chain, has announced plans to raise its menu prices despite reporting a revenue decline for the third quarter. This decision comes as the company grapples with its diminishing relevance and the challenges of maintaining profitability in an era of persistent inflation.
In a bold move to counteract declining sales, Cracker Barrel will increase menu prices by 5% through the end of the year. The Tennessee-based company, known for its home-style cooking and nostalgic decor, reported third-quarter total revenue of $817.1 million, a 1.9% decrease compared to the same period last year. Comparable store restaurant sales dipped by 1.5%, and retail sales fell by 3.8%.
The company’s recent financial struggles underscore the difficulty of maintaining relevance in a rapidly changing market. Cracker Barrel’s President and CEO, Julie Masino, acknowledged this in a recent earnings call. “As we indicated in our recent business update call, our third quarter results came in below expectations due to softer traffic than we originally anticipated, which underscores the importance of executing our strategic transformation,” Masino told investors.
Masino assured stakeholders that the company is committed to its transformation plans while continuing to deliver an exceptional guest experience. Despite the financial report, Cracker Barrel’s stock traded 3% higher on Thursday, as its $0.88 earnings per share beat analyst estimates. However, the company lowered its revenue guidance for the full year from $3.55 billion to $3.49 billion, marking a 1.7% decrease.
Cracker Barrel, which operates over 700 locations nationwide, plans to invest up to $700 million over the next three years to revamp its restaurants. This overhaul includes updating its menu, revamping marketing strategies, and refreshing the interior and exterior color palettes. Additionally, the company aims to improve lighting and replace wooden chairs with more comfortable booths and banquettes.
Part of the menu update includes the removal of 20 items and the introduction of new dishes such as premium savory chicken and rice, slow-braised pot roast, and hash brown casserole Shepherd’s Pie. These changes are aimed at attracting younger customers while retaining the traditional base of older diners.
Cracker Barrel’s stock has fallen nearly 40% since the start of the year. In July 2019, the stock was trading at an all-time high of nearly $180. Since then, it has plummeted by more than 73%. The company’s efforts to modernize and attract a broader customer base have not been without controversy. Last year, the introduction of rainbow-colored rocking chairs during Pride Month sparked backlash and accusations of “rainbow washing.”
The challenge for Cracker Barrel lies in striking the right balance between modernizing its brand to appeal to younger customers and maintaining the traditional charm that its loyal older customers cherish. The planned price hikes and rebranding efforts are bold steps toward this goal, but only time will tell if they will be enough to restore the company’s financial health and market relevance.
As Cracker Barrel navigates these turbulent waters, its ability to adapt while staying true to its roots will be crucial. The company’s commitment to transformation, coupled with its storied history, provides a foundation for potential recovery. However, the path forward requires careful execution and a deep understanding of its diverse customer base.
