Cracker Barrel Old Country Store, Inc.

Good day and welcome to the Cracker Barrel Fiscal 2026 Second Quarter Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Adam Hannon, Director of Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to Cracker Barrel's second quarter fiscal 2026 conference call and webcast. This afternoon, we issued a press release announcing our second quarter results. In this press release and on this call, we will refer to non-GAAP financial measures such as adjusted EBITDA for the second quarter into January 30th, 2026. Please refer to the footnotes in our press release for further details about these metrics. The company believes these measures provide investors with an enhanced understanding of the company's financial performance. This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP. The last pages of the press release include reconciliations from the non-GAAP information to the GAAP financials. On the call with me are Cracker Barrel's President and CEO, and CFO, Craig Pimels. Julie and Craig will provide a review of the business, financials, and outlook. We will then open up the call for questions. On this call, statements may be made by management of their beliefs and expectations regarding the company's future operating results or expected future events. These are known as forward-looking statements, which involve risks and uncertainties that in many cases are beyond management's control and may cause actual results to differ materially from expectations. We caution our listeners and readers in considering forward-looking statements and information. Many of the factors that could affect your results are summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnish to the SEC. Finally, the information shared on this call is valid as of today's date and the company undertakes no obligation to update it except as may be required under applicable law. I'll now turn the call over to Cracker Barrel's President and CEO, Julie Messina. Julie?

Good afternoon, and thank you for joining us. Q2 total sales were 874.8 million, and adjusted EBITDA was 38.2 million. Our entire team is executing our plan to, one, improve our operations, two, connect with guests through our menu, marketing, and value proposition, and three, deliver cost savings to improve profitability. We're gaining traction and are encouraged by some important guest metrics and green shoots around traffic, and we're energized in terms of driving improved performance. I'd like to start by thanking our store teams for their hard work every day. Operationally, we're pleased with the improvements we are seeing following the leadership changes we made in October. Our Google Star rating, which over the long run is strongly correlated with traffic, was 4.28 in Q2. This represents the highest quarterly score since Q2 in fiscal year 20. We've also seen gains in food taste, service, and value scores, all of which increased 4% to 5% in Q2 compared to the prior year. And these positive trends have continued into Q3. Additionally, we're making progress with turnover. As we saw improvements in both our hourly and manager turnover trend, including a 10% improvement in management turnover in Q2 year over year. We view all of these metrics as important leading indicators and are confident that these gains will translate into improved traffic over time. Turning to our menu, our multi-pronged strategy continues to include bringing back guest favorites, introducing new offerings, enhancing quality, and leaning into value. We are incorporating elements from these tactics with each of our seasonal menus, and all of this is being done with the overarching goal of improving guest satisfaction and driving traffic. We're continuing to reintroduce favorites, both to our core menu and as part of our limited time only promotions. Our holiday menu promotion featured our country fried turkey. This fan favorite continues to resonate with guests, and we again sold out of product. In January, we reintroduced hamburger steak and eggs in a basket. Then with our spring menu that launched in mid-February, sugar cured and country ham dinners returned to the core menu. We also brought back carrot cake as an LTO. We continue to use front porch feedback, our guest feedback mechanism, and there are more returning favorites in the pipeline. And as we bring back items, we are doing so through the lens of improving taste, consistency, and ease of execution. We also continue to innovate and close menu gaps with the introduction of new items. In the fall, we added the breakfast burger. Topped with our signature hash brown casserole, this delicious burger is the ultimate combination of country cooking and a breakfast for dinner entree. Our spring menu provides additional examples. Guests have been asking for omelets and scrambles for years. and we recently debuted our new garden and farmhouse scrambles. We also added smoky southern salmon, and this LTO offering provides a more premium, lighter fish option. Collectively, these items, both the new offerings and returning favorites, have been well-received, and we've been particularly pleased with the breakfast burger and carrot cake, both of which have outperformed our expectations on preference. In addition to introducing items, we're also evaluating food quality improvements to existing offerings as part of our targeted efforts to drive greater guest satisfaction across the menu. We're testing improvements to several signature items and have additional tests planned in the coming months. Finally, as it relates to our menu, we're also leaning into value. We already have a strong everyday value foundation, which we've strengthened with our barbell pricing strategy. and we've been layering in new constructs and targeted promotional offers. This has allowed us to evolve the way that we talk about value by amplifying our communications around compelling price points to drive traffic while reinforcing affordability as a hallmark of the brand. This fall, we launched Meals for Two starting at $19.99. This offer, available for dine-in on weekdays, includes two full-size entrees and one choice of shareable or dessert. We continue to evolve this platform, and we've seen a meaningful lift in guest preference since launch. Our approach to value also includes pulsing short window offers to create urgency and trial. In the weeks leading up to Christmas, we ran a promotion for our free toy up to $5 with the purchase of a kid's meal. We were pleased with the results and impressed by the team's agility in quickly creating and implementing this offer. It delivered incremental margin dollars and contributed to outperformance of the toys category during the promo window. Our ability to connect restaurant and retail in a single experience is a real point of differentiation. We're exploring additional ways to capitalize on this advantage and believe that by lengthening the lead times for planning and execution, we can make these integrated promotions even more impactful. In fiscal 25, we were pleased with the positive mix we delivered, and the team has been focused on developing menu enhancements to build margin while reinforcing our value proposition. We introduced several changes in January. For example, guests can now upgrade to three sides for a modest upcharge and add a soup and salad to their meal for just $5. They could also choose bundled shareable duos and trios. Early results from these actions are encouraging, as we've seen an improvement in our mixed trend following these additions. Another important way we are driving traffic and delivering value is through our loyalty program, Cracker Barrel Rewards. After a little over two years since the program launched, we now have over 11 million members, and they account for over 40% of tracked sales. That scale gives us a meaningful way to understand guest behavior and directly engage with guests to reinforce value and drive frequency. It's a tremendous benefit for guests and an increasingly important tool in improving traffic. Engagement in the program remains strong and traffic among loyalty members has held up better than non-members since August. From a marketing perspective, our guest connection strategy remains centered on food, value, and the heritage that makes Cracker Barrel distinct. And every campaign is designed with a clear objective, drive traffic and strengthen brand affinity. We are seeing early signs this is working, as evidenced by our improving traffic trend and the fact that our brand sentiment scores improved 2% over Q2 compared to Q1. As part of this, We have deepened our storytelling and leveraged key partnerships to reinforce emotional connection, expand reach, and drive visitation. We continue to highlight our scratch-cooked food made with care through the Our Country Friends series on social media. We are emphasizing and expanding our long-standing commitment to the military community. We again offered a complimentary sunrise pancake special for military members on Veterans Day. This contributed to a strong traffic comp performance for the day, and we also helped support 30 worthy veterans organizations throughout November. Most significantly, we launched an ongoing 10% military discount, available all day, every day, in both restaurant and retail. This discount is available through Cracker Barrel Rewards and is helping to drive continued growth and loyalty membership while also recognizing this important group. We are building on our efforts from the past year and continuing our successful partnership with Speedway Motorsports. We are once again sponsoring the Cracker Barrel 400 in May, as well as increasing our on-site activations at races across the country, which kicked off at Daytona last month. Last year, our partnership with Speedway Motorsports gave us cultural moments to amplify our story in ways that guests loved and that supported traffic and brand trust. We are looking forward to leveraging similar opportunities this year. We're also excited to feature our Campfire Meals platform again this summer. Campfire is one of our strongest nostalgia anchors and a clear expression of Cracker Barrel, Americana, travel, and gathering. Turning to retail. As a reminder, Q2 is our biggest quarter for retail sales due to the holidays. Overall, our retail results remain pressured due to traffic. but we were encouraged by the guest response to our seasonal holiday assortment. We were also encouraged that retail attachment was flat versus prior year, given that it has generally declined in recent quarters and that our average order value increased slightly. We're excited about our upcoming assortment. Looking ahead, the team remains focused on effectively managing inventories, mitigating tariffs, and enhancing the shopping experience. Finally, In addition to our efforts to drive traffic by improving consistency of food and the guest experience, we are also focused on cost savings. In Q2, we continued the restructuring of our corporate office that began in Q1. We remain committed to returning G&A closer to historical levels as a percentage of sales and are continuing to closely manage our expense structure to protect our balance sheet. As we look ahead to the back half of our fiscal year, we are encouraged that we continue to welcome back more guests. Our number one focus is serving delicious food and delivering experiences guests love. We have a number of tactics to support this, and we're confident in our team's ability to execute. We're engaging our guests through our menu, messaging, and continued commitment to value. We're committed to operating with excellence, and we're implementing actions to improve profitability, all to strengthen the business and to return to positive momentum. I'll now turn it over to Craig to review our results and discuss our outlook.