Cracker Barrel Old Country Store, Inc.

Company Overview

Business Model: Cracker Barrel Old Country Store, Inc. is principally engaged in the operation and development of the Cracker Barrel Old Country Store® concept, which combines a full-service restaurant offering home-style country food with a gift shop selling decorative and functional items. In 2025, restaurants generated approximately 81% of total revenue. The Company also operates Maple Street Biscuit Company, a breakfast and lunch fast casual concept.

Market Position: Cracker Barrel Old Country Store, Inc. aims to appeal to both travelers and local customers, emphasizing consistent quality, value, and friendly service. The Company differentiates itself through a unique brand and guest experience, a diversified full-service menu, and a wide variety of nostalgic and unique retail items. It operates in intensely competitive restaurant and retail industries, facing national and regional chains, local establishments, and growing competition from supermarkets, fast casual, and quick-service restaurants, as well as off-premise meal replacement offerings.

Recent Strategic Developments: In 2024, Cracker Barrel Old Country Store, Inc. announced a multi-year strategic plan focused on three imperatives: driving relevancy, delivering food and an experience guests love, and growing profitability. Key initiatives in 2025 included modifying capital allocation to increase investment in organic growth, refining the brand (though an updated logo introduced in Q1 2026 received unfavorable consumer feedback), enhancing the menu, evolving the store and guest experience, furthering digital and off-premise capabilities, and elevating the employee experience. Off-premise channels (Individual To Go, Third-Party Delivery, and Catering and Occasion) accounted for approximately 20% of restaurant sales in 2025. The Company launched its customer loyalty program, Cracker Barrel Rewards, in the first quarter of 2024.

Geographic Footprint: As of September 12, 2025, Cracker Barrel Old Country Store, Inc. operated 657 Cracker Barrel stores in 43 states, with approximately 83% located along interstate highways. Additionally, it operated 68 Maple Street Biscuit Company stores in 10 states: Alabama, Florida, Georgia, Kentucky, Ohio, North Carolina, South Carolina, Tennessee, Texas, and Virginia. All Maple Street Biscuit Company locations are leased properties.

Financial Performance

Revenue Analysis

Note: 2024 consisted of 53 weeks, while 2025 consisted of 52 weeks. Excluding the impact of the 53rd week in 2024, total revenue increased 2.2% in 2025.

Profitability Metrics:

• Gross Margin: 69.0%
• Operating Margin: 1.6%
• Net Margin: 1.3%

Investment in Growth:

• Capital Expenditures: $158,647 (2025), primarily for existing store maintenance, remodel initiatives, new store sites, and construction.
• Strategic Investments: Capital allocation modified to support increased investments in the business to drive organic growth as part of the multi-year strategic plan.

Business Segment Analysis

(The Company operates as a single reportable segment. However, it provides disaggregated financial information for its primary business lines: Restaurant Operations, Retail Operations, and the Maple Street Biscuit Company concept.)

Restaurant Operations

Financial Performance:

• Revenue: $2,831,289 (+1.3% YoY from $2,794,128 in 2024)
• Cost of Goods Sold as % of Restaurant Revenue: 26.4% (2025), a decrease from 26.6% in 2024, primarily due to menu pricing partially offset by commodity inflation of 2.1%.
• Key Growth Drivers: Average check increase of 6.5% (including an average menu price increase of 5.3%), partially offset by a comparable restaurant guest traffic decrease of 3.0%.
• Off-premise sales: Approximately 20% of restaurant sales volumes in 2025.
  • Individual To Go: ~50% of off-premise sales.
  • Third-Party Delivery: ~32% of off-premise sales.
  • Catering and Occasion: ~18% of off-premise sales.

Product Portfolio:

• Offers home-style country cooking, emphasizing authenticity and quality, with many proprietary recipes.
• Serves breakfast, lunch, and dinner daily, with approximately 93% of restaurants also serving beer and wine.
• Menu includes a variety of items such as eggs, pancakes, meats, biscuit specialties, fried and grilled chicken, meatloaf, and vegetable plates.
• Average check per guest was $15.23 in 2025, a 6.8% increase over the prior year.
• Day-part sales in 2025: Breakfast (until 11:00 a.m.) 28%, Lunch (11:00 a.m. to 4:00 p.m.) 40%, Dinner (4:00 p.m. to close) 32%.

Market Dynamics:

• Operates primarily in the full-service segment of the restaurant industry.
• Product development department continuously develops new and improved menu items in response to customer preferences, utilizing guest research and in-store market tests.

Retail Operations

Financial Performance:

• Revenue: $652,395 (-3.6% YoY from $676,634 in 2024)
• Cost of Goods Sold as % of Retail Revenue: 51.0% (2025), an increase from 50.9% in 2024, primarily due to lower initial margin (+0.5%) and markdowns (+0.3%), partially offset by vendor allowances (-0.7%).
• Key Growth Drivers: Decrease in comparable store retail sales primarily resulted from a decrease in guest traffic.
• Retail sales per square foot of retail selling space: Approximately $489 in 2025.

Product Portfolio:

• Features a broad selection of decorative and functional items, including rocking chairs, seasonal gifts, apparel, toys, cookware, and food items inspired by the restaurant menu (e.g., pies, cornbread mix, coffee).
• As of August 01, 2025, gift shops featured approximately 3,100 stock keeping units (SKUs), a decrease from historical levels due to a SKU rationalization initiative.
• Top five retail sales categories in 2025: Apparel and Accessories (33%), Food (18%), Toys (13%), Décor (13%), and Media (7%).

Market Dynamics:

• The merchandising department focuses on selecting and developing products to drive retail sales by converting restaurant guests.
• Assortment includes both core and seasonal themes to create customer interest.

Maple Street Biscuit Company (MSBC)

Financial Performance:

• Number of stores: 68 locations as of September 12, 2025.
• Impairment charges: In 2025, 25 MSBC locations were impaired due to declining operating performance. In 2024, 13 MSBC locations were impaired.
• Store closings: Two MSBC locations were closed in 2025 and two in 2024. An additional 14 MSBC locations were closed in the first quarter of 2026.
• Goodwill impairment: A $4,690 goodwill impairment charge was recorded in 2024 related to MSBC, attributed to declining financial trends and changes in the macroeconomic environment.

Product Portfolio:

• A breakfast and lunch fast casual concept.
• Offers biscuit-inspired entrées, freshly roasted coffee with a proprietary blend, and a limited selection of beer and wine in certain locations.

Market Dynamics:

• Operates in a smaller footprint than the Cracker Barrel Old Country Store concept.
• Operating hours are limited to the breakfast and lunch day parts.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Cracker Barrel Old Country Store, Inc. did not repurchase any shares of its common stock in 2025 or 2024. In the first quarter of 2026, the Board of Directors authorized a share repurchase program of up to $100,000.
• Dividend Payments: Total dividend payments were $22,780 in 2025, representing $1.00 per share. In the fourth quarter of 2024, the quarterly dividend was reduced to $0.25 per share as part of a shift in capital allocation policy to support increased investments in the business.
• Future Capital Return Commitments: A dividend of $0.25 per share was declared in the first quarter of 2026, payable on November 12, 2025.

Balance Sheet Position:

• Cash and Equivalents: $39,643 as of August 01, 2025.
• Total Debt: $484,635 as of August 01, 2025, comprising $149,178 in current portion of long-term debt and $335,457 in long-term debt.
• Net Cash Position: -$444,992 (Net Debt) as of August 01, 2025.
• Debt Maturity Profile:
  • 0.625% Convertible Senior Notes due 2026 (the "2026 Notes"): $150,000 aggregate principal amount outstanding, maturing on June 15, 2026. Classified as a current liability as of August 01, 2025.
  • 1.75% Convertible Senior Notes due 2030 (the "2030 Notes"): $345,000 aggregate principal amount outstanding, maturing on September 15, 2030.
  • 2025 Revolving Credit Facility: A $550,000 revolving credit facility maturing on May 16, 2030. No outstanding borrowings at August 01, 2025.

Cash Flow Generation:

• Operating Cash Flow: $218,899 in 2025, an increase from $168,980 in 2024, primarily driven by higher operating income and timing of cash receipts and payments.
• Free Cash Flow: $60,252 in 2025 (Operating Cash Flow less Capital Expenditures).

Operational Excellence

Production & Service Model: Cracker Barrel Old Country Store, Inc. emphasizes employee development and training to deliver high service levels and hospitality, which are vital to its brand appeal. The Company uses a formal product development and testing process, including guest research and in-store market tests, for new menu items. Its merchandising department selects and develops products for the gift shops, focusing on converting restaurant guests.

Supply Chain Architecture: Key Suppliers & Partners:

• Food Distributor: An unaffiliated distributor manages the majority of food product and restaurant supply purchases on a cost-plus basis, with custom distribution centers across seven states.
• Produce Suppliers: A national program sources produce through approximately fifty independent suppliers, with deliveries two to three times per week.
• Fluid Dairy Suppliers: Approximately fifty regional dairies, majority under two unaffiliated companies, deliver two to three times per week.
• Meat Suppliers: Pork is sourced from six vendors, poultry from eleven, and beef from six.
• Beer and Wine Distributors: Approximately 616 distributors handle beer and wine, with deliveries ranging from weekly to monthly.
• Retail Product Sourcing: Approximately one-third of 2025 retail items were purchased directly from vendors in the People’s Republic of China, supported by relationships with several foreign buying agencies for sourcing and quality control.
• Freight Lines: Two dedicated third-party freight lines are used for weekly retail product shipments to individual stores.

Facility Network:

• Home Office Headquarters: Located in Lebanon, Tennessee, utilizing approximately 260,000 square feet of office space.
• Decorative Fixtures Warehouse: Also in Lebanon, Tennessee, co-located with the home office headquarters.
• Retail Distribution Center: A leased facility in Lebanon, Tennessee, comprising approximately 370,000 square feet of warehouse space and 10,000 square feet of office and maintenance space.
• Additional Distribution Center: A leased 52,000 square foot facility in Lebanon, Tennessee, primarily for e-commerce fulfillment and overflow retail storage.
• Overflow Storage: A leased 105,000 square foot facility in Mount Juliet, Tennessee, for overflow retail merchandise and supplies.
• MSBC Headquarters: Leased office space of approximately 15,000 square feet.

Operational Metrics:

• Restaurant sales accounted for 81.3% of total revenue in 2025, with retail sales at 18.7%.
• The five largest food purchasing expense categories in 2025 were Beef (17%), Poultry (12%), Fruits and vegetables (12%), Dairy (11%), and Pork (10%). Bacon was the single largest food item at approximately 5% of total food purchases.
• Approximately 80% of retail items in 2025 were warehoused at the retail distribution center in Lebanon, Tennessee.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Includes dine-in services, Individual To Go orders picked up directly by guests, and Catering and Occasion offerings for large parties.
• Channel Partners: Utilizes third-party delivery aggregators such as DoorDash® and Uber Eats.
• Digital Platforms: Leverages a mobile application for a digital waitlist and mobile payments, an e-commerce platform for individual-to-go and catering shopping, and a presence on multiple social media sites and food delivery apps.
• Marketing: Employs a diverse media mix, with outdoor advertising (over 1,300 billboards) accounting for approximately one-fourth of total advertising spend in 2025. Other channels include television (increasingly digital), digital display and video, mobile, social media, and search marketing.
• Customer Relationship Management (CRM): A program utilizing email, text messages, push notifications, and personalization to enhance guest engagement.

Customer Portfolio: Enterprise Customers:

• Catering and Occasion offerings are designed for large parties, including Heat n’ Serve meals for holidays.
• Customer loyalty program: Cracker Barrel Rewards allows members to earn points for qualifying purchases, redeemable for future restaurant or retail purchases.
• Guest Satisfaction: Monitored through regular guest surveys, store visits by district managers and operational vice presidents, and a guest-relations call center.

Geographic Revenue Distribution:

• All of the Company’s operations are located within the United States. No further geographic disaggregation of revenue is provided.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The restaurant and retail industries are intensely competitive, driven by factors such as food and merchandise quality, price, service, location, personnel, concept, facility attractiveness, carryout/delivery options, digital ordering capabilities, and advertising effectiveness. The industries are sensitive to changes in consumer taste, economic conditions, demographic trends, traffic patterns, and discretionary purchasing power. Inflation, rising food, labor, and benefits costs, and a shortage of experienced employees are significant industry challenges. Competition is increasing from the supermarket industry's "convenient meals," fast casual and quick-service restaurants, and expanding home delivery services.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• A significant number of national and regional restaurant and retail chains, some possessing greater resources.
• Locally owned restaurants and retail stores.
• The supermarket industry, offering "convenient meals."
• Fast casual restaurants and quick-service restaurants.
• Various off-premise meal replacement offerings, including home meal kits and third-party meal delivery services.

Emerging Competitive Threats:

• Improving product offerings and expansion of home delivery services by fast casual and quick-service restaurants.
• The potential for new entrants and disruptive technologies in the market.

Competitive Response Strategy: Cracker Barrel Old Country Store, Inc.'s multi-year strategic plan is designed to maintain competitive advantage by driving relevancy, delivering food and experiences guests love, and growing profitability. This includes initiatives to enhance menu and retail options, reduce costs, improve margins, increase brand awareness, expand its footprint, and invest in strategic relationships. The Company also uses menu price increases and operational improvements to mitigate cost pressures.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Purchase price volatility and inflationary conditions: Ongoing inflationary pressures on food, ingredients, retail merchandise, transportation, distribution, labor, and utilities. Attempts to offset these costs through menu price increases and operational improvements may not be fully effective, potentially leading consumers to lower-priced competitors. Expected commodity inflation for 2026 is 2.5% to 3.5%, and wage inflation is expected to be 3.0% to 4.0%.
• Technology Disruption: The evolving nature of social media and digital platforms presents risks of negative publicity and immediate impacts on consumer behavior, requiring continuous innovation in marketing strategies.
• Unfavorable Publicity: Multi-unit businesses are vulnerable to negative publicity from complaints or litigation, which can harm brand perception even if allegations are unfounded. The updated logo introduced in Q1 2026 received unfavorable consumer feedback and negative publicity.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on certain significant vendors, particularly for foreign-sourced retail products (approximately one-third from the People’s Republic of China), creates risks related to long lead times, tariffs, trade barriers, fluctuating currency exchange rates, political instability, and labor disruptions. The Company also has single suppliers for some products.
• Geographic Concentration: The majority of retail inventory and all decorative fixtures are shipped into, stored at, and shipped out of single warehouses in Lebanon, Tennessee. A major disaster affecting these facilities or their personnel could materially disrupt business operations. Corporate systems and support are also centralized in Tennessee.
• Third-Party Vendor Reliance: Outsourcing of critical business processes (e.g., food/retail distribution, payment processing, payroll) subjects the Company to risks of service disruptions and increased costs if third-party providers fail to meet standards or experience breaches.

Financial & Regulatory Risks

Market & Financial Risks:

• Demand Volatility: Business results are highly dependent on general economic factors such as consumer income, interest rates, inflation, credit availability, debt levels, and unemployment. A protracted economic downturn or increased energy prices could reduce consumer confidence and discretionary spending, impacting sales and profitability.
• Foreign Exchange: Fluctuating currency exchange rates for foreign-sourced retail products could increase costs.
• Credit & Liquidity: Indebtedness and restrictions within the 2025 Revolving Credit Facility could limit financial and operating flexibility. There is a risk of failing to comply with debt covenants, which could trigger defaults. The Company cannot guarantee future cash dividend payments or share repurchases.
• Credit Risk (Derivatives): Exposure to counterparty credit risk with financial institutions related to convertible note hedge and capped call transactions, which are unsecured.

Regulatory & Compliance Risks:

• Industry Regulation: Subject to extensive federal, state, and local laws concerning food safety, minimum wage, health care, zoning, alcohol sales, information security, and environmental matters. Compliance can be costly and increase exposure to litigation or governmental investigations.
• Trade & Export Controls: Changes in trade policies, tariffs, trade barriers, sanctions, and import limitations, particularly affecting products from the People’s Republic of China, could materially increase costs and affect supply.
• Data Privacy: Subject to laws and standards for information security and privacy (e.g., Payment Card Industry Data Security Standard). Failure to comply or security breaches could lead to data loss, regulatory investigations, penalties, litigation, and reputational harm.
• Advertising Regulation: Heavy reliance on billboards, which are highly regulated in many states, poses a risk to visibility and customer attraction if restrictions are imposed or existing signage is lost.

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: Reliance on foreign-sourced retail products, particularly from the People’s Republic of China, exposes the Company to risks from changes in U.S. trade policies and international relations.
• External Events: Outbreaks of infectious diseases (e.g., COVID-19, foodborne illnesses), product recalls, actual or threatened armed conflicts, terrorist attacks, and extreme weather conditions can reduce consumer traffic, create staffing issues, increase commodity costs, or force store closures.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Guest Experience: Digital platforms for loyalty programs, to-go and catering orders, mobile payments, and digital waitlists.
• In-Store Operations: Systems to manage dining room seating, facilitate customer orders for food and retail products, and route food orders to kitchens.
• Marketing: Digital technology for relevant customer messaging.
• Employee Tools: Systems for store employees to manage inventory, labor, forecasting, and orders.
• Supply Chain: Retail management solutions for merchandise planning, purchasing, warehousing, and distribution in the distribution center.
• Data Analytics: Solutions providing daily reports for cost-effective store operations, analytics, and decision-making.
• Support Services: Technology solutions for the Service Center to efficiently resolve Technology, Human Resources, Operations, Facilities, and other corporate concerns.

Innovation Pipeline:

• The product development department is responsible for developing new and improved menu items, utilizing guest research and in-store market tests.
• The merchandising department selects and develops gift shop products, including core and seasonal themes.
• The Company continuously enhances its technology in line with its strategic vision.

Intellectual Property Portfolio:

• Patent Strategy: Relies on trademark, unfair competition, trade secret, and copyright laws. The policy is to obtain federal registration of trademarks and other intellectual property and vigorously pursue infringement.
• Licensing Programs: Not explicitly detailed.
• IP Litigation: The Company actively pursues infringement of its trademarks and service marks and faces the risk of third parties claiming infringement of their intellectual property rights.

Technology Partnerships:

• Strategic Alliances: Maintains relationships with third-party delivery apps and services, such as DoorDash® and Uber Eats.
• Research Collaborations: Not explicitly detailed.
• Outsourced Processes: Utilizes third-party vendors for various business processes, including food and retail product distribution, credit and debit card authorization and processing, gift card tracking, payroll, and externally hosted business software applications.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company designs its compensation programs to attract and retain key personnel and facilitate effective succession plans.

Board Composition: The Board of Directors oversees cybersecurity risk, delegating oversight to the Audit Committee. The Audit Committee receives quarterly reports on cybersecurity risks and updates on incidents, reporting regularly to the full Board. The full Board also receives presentations on cybersecurity topics. Activist shareholders have previously nominated candidates for the Board, and Sardar Biglari intends a "vote-no" campaign against certain directors for the 2025 annual meeting.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 76,730 as of August 01, 2025.
• Geographic Distribution: Employees are distributed across the 43 states where Cracker Barrel stores operate and the 10 states with Maple Street Biscuit Company locations.
• Skill Mix: Includes 364 in advisory and supervisory capacities, 3,446 in-store management positions, and 45 officers. Many store personnel are employed on a part-time basis.

Talent Management: Acquisition & Retention:

• Hiring Strategy: The Company faces challenges in recruiting and retaining team members in various locations.
• Retention Metrics: Entry-level and part-time positions typically experience high rates of turnover.
• Employee Value Proposition: Cracker Barrel Old Country Store, Inc. offers comprehensive and competitive benefits, including medical, dental, vision, prescription drug, and life insurance, short and long-term disability, an Employee Assistance Program, paid parental leave, adoption benefits, a 401(k) savings plan, an employee discount policy, an employee stock purchase plan, and a competitive vacation policy. Compensation and performance evaluation systems are designed to maintain pay equity and retain a highly productive workforce.

Diversity & Development:

• Development Programs: Emphasizes employee development and training, particularly for store managers, to enhance leadership skills and commitment to operational excellence. Training is delivered through a blended learning approach, including hands-on, traditional classroom, written, and cloud-based eLearning programs.
• Culture & Engagement: The Company's mission statement, "Pleasing People," extends to both guests and employees, fostering a culture of mutual respect.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Not explicitly detailed in terms of specific emissions targets, carbon neutrality commitments, or renewable energy adoption strategies. However, the Company acknowledges increasing governmental focus on climate change and related environmental matters, which could lead to new regulations and increased costs.

Supply Chain Sustainability:

• Not explicitly detailed.

Social Impact Initiatives:

• Community Investment: Not explicitly detailed.
• Product Impact: Not explicitly detailed.
• Quality Assurance and Food Safety: Cracker Barrel Old Country Store, Inc. incorporates robust quality assurance and food safety processes, including comprehensive food safety training for store employees, extensive requirements for food supplier approval, ongoing third-party food safety audits, periodic internal food product audits, rigid processes for new or alternative sourcing, third-party testing of retail non-food products, regular unannounced food safety audits, pest control, and monitoring of national and local food safety laws and health department inspections. The Company also monitors and responds to foodborne illness outbreaks, product recalls, and pandemic situations.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Revenue and profits historically exhibit seasonality, being lower in the first and third fiscal quarters and higher in the second and fourth fiscal quarters. This is primarily attributed to the holiday shopping season (Q2, strongest retail sales) and the summer vacation and travel season (Q4, higher interstate tourist traffic and dining out).
• Economic Sensitivity: Business results are highly dependent on general economic factors such as consumer income, interest rates, inflation, consumer credit availability, debt levels, tax rates, and unemployment trends. Discretionary consumer spending is critical to the Company's success. A protracted economic downturn, worsening economy, increased energy prices, or rising interest rates can reduce consumer confidence and spending.
• Industry Cycles: The restaurant and retail industries are affected by changes in consumer taste and preference, economic conditions, demographic trends, traffic and weather patterns, and competitive landscape.

Planning & Forecasting:

• Inventory Management: Retail inventory is reviewed quarterly for obsolescence and adjusted based on inventory aging and future promotional activities. Inventory shrinkage is estimated and adjusted based on cyclical physical inventory counts.
• Capacity Planning: Not explicitly detailed.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Cracker Barrel Old Country Store, Inc. is subject to extensive federal, state, and local laws and regulations, including those pertaining to food safety, minimum wage, health care, zoning, preparation and sale of food and alcoholic beverages, information security, and environmental matters.
• Compliance with licensing requirements from various governmental authorities is necessary for store operations.
• The Company is also subject to federal and state laws governing employee relations, such as the Fair Labor Standards Act of 1938, the Immigration Reform and Control Act of 1986, the Patient Protection and Affordable Care Act, and the Americans With Disabilities Act of 1990.
• New and changing laws related to gift cards, nutritional content, product safety, and menu labeling also impact operations.

Trade & Export Controls:

• The Company faces risks from tariffs, trade barriers, sanctions, import limitations, and other trade restrictions imposed by the U.S. government on products or components shipped from foreign sources, particularly the People’s Republic of China, which accounts for approximately one-third of its retail items.

Legal Proceedings:

• Cracker Barrel Old Country Store, Inc. is party to various legal and regulatory proceedings and claims in the ordinary course of business. Management believes the ultimate liability from these will not materially affect consolidated results or financial position.
• In 2025, the Company incurred an approximate $3,300 charge in connection with the settlement of wage-related disputes.
• Risks include litigation related to employment practices, guest discrimination, food safety, personal injury, "dram shop" laws, and intellectual property infringement.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The effective tax rate was (22.9)% in 2025 and (69.2)% in 2024. These rates are lower than statutory rates primarily due to the benefit of employer tax credits for FICA taxes paid on employee tip income and other employer tax credits.
• Geographic Tax Planning: Not explicitly detailed.
• Tax Reform Impact: H.R.1., also known as the One Big Beautiful Bill Act (OBBBA), was enacted on July 4, 2025, with effective dates in 2025 and continuing through 2027. The provisions effective in 2025 did not materially impact the Company’s 2025 financial condition. The Company is currently evaluating the potential impact of OBBBA provisions effective after 2025.
• Deferred Tax Assets: Totaled $263,397 in 2025, including $28,556 in federal income tax credit carryforwards expiring in 2044, and a $5,737 deferred tax asset reflecting state net operating loss carryforwards of $110,534, generally expiring in 2037 and after.
• Deferred Tax Liabilities: Totaled $311,988 in 2025.
• Net Deferred Tax Liability: $48,591 in 2025.
• Uncertain Tax Positions: The gross liability for uncertain tax positions (exclusive of interest and penalties) was $6,703 in 2025. Approximately $5,296 of this amount would affect the effective tax rate if recognized. Accrued interest and penalties related to uncertain tax positions totaled $8,672 in 2025. The Company is subject to U.S. federal income tax examinations after 2018 and state and local income tax examinations generally after 2019. A decrease of approximately $300 to $1,200 in uncertain tax positions is reasonably possible within the next twelve months.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: The Company's insurance programs are structured with deductibles, self-insured retentions, limits of liability, and stop loss limits. There are certain types of losses, such as acts of terrorism and some natural disasters, against which the Company may not be insured or deems economically unreasonable to insure.
• Self-Insurance: Cracker Barrel Old Country Store, Inc. self-insures a significant portion of its workers’ compensation and general liability programs. Individual workers’ compensation claims exceeding $750 or $1,000 (depending on the state) are insured, as are individual general liability claims exceeding $500. Group health plans combine self-insured and fully-insured programs, with limits on benefits for individuals in the self-insured portion.
• Reserves: Reserves for workers’ compensation and general liability claims, including incurred but not reported (IBNR) claims, are based on annual full-scope actuarial studies (performed in Q4) and quarterly limited-scope studies. Losses are recorded at the lower half of the actuarially determined range and discounted to present value. A liability for the self-insured portion of group health programs is recorded based on loss development analysis and historical experience.
• Risk Transfer Mechanisms: The Company had $34,004 in standby letters of credit as of August 01, 2025, serving as credit guarantees for workers’ compensation insurance and certain sale and leaseback transactions. These letters of credit reduce borrowing availability under the 2025 Revolving Credit Facility. The Company also enters into indemnification agreements in the ordinary course of business.
• Cyber Insurance: The Company maintains cyber insurance coverage and periodically meets with its insurer to discuss emerging cybersecurity trends. While coverage is believed to be commercially reasonable, it may not be sufficient to cover all claims related to security breaches or cyberattacks.