What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-09-26 compared with 2024-09-27 · 127 added, 88 removed, 290 unchanged (43% of the section changed)

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● Critical Accounting Estimates – a discussion of accounting policies that require critical judgments and estimates.

The following MD&A includes a discussion of 2024 and 2023 items and year-to-year comparisons between the years ended August 02, 2024 and July 28, 2023.

Discussion of 2022 items and year-to-year comparisons between the years ended July 28, 2023 and July 29, 2022 that are not included in this MD&A can be found in “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended July 28, 2023, filed with the SEC on September 26, 2023.

The following MD&A includes a discussion of 2025 and 2024 items and year-to-year comparisons between the years ended August 01, 2025 and August 02, 2024.

Discussion of 2023 items and year-to-year comparisons between the years ended August 02, 2024 and July 28, 2023 that are not included in this MD&A can be found in “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended August 02, 2024, filed with the SEC on September 27, 2024.

EXECUTIVE OVERVIEW

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driving relevancy, delivering food and experiences guests love, and growing profitability.

We believe there are significant challenges in the macroeconomic outlook for the coming quarters, including continued inflationary pressures, higher interest rates, higher consumer debt levels and lower savings rates, as well as the potential uncertainty associated with the geopolitical environment and the U.S.

presidential election, among other factors.

We believe there are significant challenges in the macroeconomic outlook for the coming quarters, including continued volatility of inflation and interest rates, higher consumer debt levels and lower savings rates, as well as the potential uncertainty associated with the geopolitical environment and global trade among other factors.

However, despite these challenges, we remain focused on delivering long-term growth and returns for shareholders.

On May 16, 2024, we announced details of our strategic transformation plan, which was already underway and is built on the following five pillars of our strategy:

In 2024, we announced our multi-year strategic plan.

The multi-year strategic plan is built on five pillars which have progressed over 2025.

The five pillars are as follows:

● Refining the brand :

evolving the brand across all touchpoints including refining and strengthening our positioning to best reach existing and new guests.

We established an updated brand identity anchored on “the goodness of country hospitality”, which has been applied in our marketing, products (food and retail) and physical content and assets.

We have also refined our partnership strategy – partnering with NASCAR, for example – and expanded our use of additional marketing channels.

● Enhancing the menu :

introducing menu innovation focused on craveability and traffic drivers, streamlining processes to improve execution, and optimizing strategic pricing to protect value and improve profitability.

We developed a robust product pipeline and introduced new craveable menu items such as Hashbrown Casserole Shepard’s Pie and a refined and reintroduced Campfire Meals platform.

● Evolving the store and guest experience :

delivering an exceptional guest experience through operational excellence and improved store design and atmosphere.

We are in the process of testing remodel prototypes and expect to complete 25-30 remodels in 2025 along with 25-30 store refreshes.

We improved several operational speed metrics and implemented a new allocation software package to improve retail product management.

Additionally, numerous retail floor layouts and store remodel packages were tested to enhance guests’ browsing and shopping experience.

The Remodel Program has been suspended based on guest feedback gathered through this testing.

● Winning in digital and off-premise :

growing the off-premise business and leveraging technology such as our Cracker Barrel Rewards loyalty program.

We continue to leverage guest data to better understand consumer behavior and identify ways to drive frequency and engagement.

We further leveraged our loyalty program by employing advanced technologies to deliver offers tailored to individual guests and optimized and expanded our off-premise business by updating our holiday and catering programs and improving our third-party sales strategies.

● Elevating the employee experience :

upgrading training and development programs and tools, simplifying job roles and utilizing technology to improve the employee experience.

The Board of Directors is committed to a balanced capital allocation approach focused on profitable growth.

Investing in the business continues to be the top priority followed by returning cash to shareholders through a regular quarterly dividend.

In conjunction with its strategic transformation plan, the Board of Directors modified the Company’s capital allocation policy to increase investments in the business to drive organic growth and reduce the quarterly dividend to facilitate these investments.

The Board of Directors declared a dividend of $0.25 per share that was subsequently paid on August 06, 2024 to shareholders of record on July 19, 2024.

We rolled out a new Employee Value Proposition that we believe will drive better recruiting and retention and rolled out technology designed to improve the store manager experience.

Trade Policy and Tariffs

In the fourth quarter of 2025, we incurred approximately $2,400 related to newly imposed tariffs and recent changes in trade policy.

This impact was partially offset by proactive mitigation efforts, including vendor negotiations, alternative sourcing strategies, pricing adjustments and accelerating initiatives such as stock keeping unit (“SKU”) reduction.

These measures have proven effective, and we currently expect to nearly offset the impact of tariffs in 2026.

However, any further changes in tariff rates or trade policy could materially affect our operating results and financial condition, and the ongoing uncertainty introduces additional volatility and risk to our operations and financial condition and may affect consumer demand in ways that are difficult to predict.

Key Performance Indicators

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Additionally, there are many segments within the restaurant industry, such as family dining, casual dining, full-service, fast casual and quick service, which often overlap and provide competition for widely diverse restaurant concepts.

Cracker Barrel primarily operates in the full-service segment of the restaurant industry, and our growing MSBC concept operates in the fast casual segment.

Cracker Barrel primarily operates in the full-service segment of the restaurant industry, and our MSBC concept operates in the fast casual segment.

Competition also exists in securing prime real estate locations for new stores, in hiring qualified employees, in advertising, in the attractiveness of facilities and with competitors having similar menu offerings or convenience features.

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Operating income

Other income:

Gain on extinguishment of debt

Interest expense, net

Income before income taxes

Provision for income taxes (income tax benefit)

Income tax benefit

The following table sets forth the change in the number of stores in operation for the past two years:

Net change in Company owned stores:

Opened during the period:

Cracker Barrel

Closed during the period:

Cracker Barrel

Stores in operation at end of the period:

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Total revenue in 2025 increased 0.4% as compared to 2024.

Total revenue in 2024 benefited from the additional week of 2024, which resulted in an increase in revenue of $62,800.

Our comparable store restaurant sales decrease in 2024 as compared to 2023 resulted primarily from the guest traffic decrease partially offset by the average check increase.

The average check increase included an average menu increase of 4.9%.

Off-premise sales represented approximately 20% of restaurant sales volumes in 2024 and 2023.

Total revenue in 2024 includes a benefit of $62,800 due to the 53 rd week of 2024.

Excluding the impact of the 53 rd week in the prior year, total revenue increased 2.2%.

Our comparable store restaurant sales increase in 2025 as compared to 2024 resulted primarily from the average check increase partially offset by the guest traffic decrease.

The average check increase included an average menu price increase of 5.3%.

Off-premise sales represented approximately 20% of restaurant sales volumes in both 2025 and 2024.

Our retail sales are made primarily to our restaurant guests.

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Restaurant Cost of Goods Sold

The decrease in restaurant cost of goods sold as a percentage of restaurant revenue in 2024 as compared to 2023 was primarily the result of our menu price increase referenced above.

Commodity inflation was relatively flat in 2024.

The decrease in restaurant cost of goods sold as a percentage of restaurant revenue in 2025 as compared to 2024 was primarily the result of our menu pricing partially offset by commodity inflation of 2.1% in 2025.

We presently expect the rate of commodity inflation to be approximately 2.5% to 3.5% in 2026.

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Retail Cost of Goods Sold

Retail cost of goods sold as a percentage of retail revenue remained relatively constant in 2024 as compared to 2023.

The year-to-year percentage change in 2025 as compared to 2024 resulted primarily from the following:

2025 Compared to 2024

Increase (Decrease) as a

Retail Revenue

Lower initial margin

Vendor allowances

Labor and Other Related Expenses

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2025 Compared to 2024

Increase (Decrease) as a

(Decrease) Increase as a

Percentage of Total Revenue

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Store management compensation

Store bonus expense

Employee health care expense

The increase in store hourly labor and store management compensation as a percentage of total revenue in 2024 as compared to 2023 resulted primarily from higher staffing levels and the investment of additional labor hours to improve the guest experience as well as wage inflation partially offset by higher average check.

Workers' compensation expense

The decreases in store hourly labor and store management compensation as a percentage of total revenue in 2025 as compared to 2024 resulted primarily from menu price increases exceeding wage inflation.

Additionally, store hourly labor benefited from improved productivity, driven by our back-of-house optimization initiatives.

We presently expect the rate of wage inflation to be approximately 3.0% to 4.0% in 2026.

The increase in employee health care expenses as a percentage of total revenue in 2024 as compared to 2023 resulted primarily from higher claims.

During 2024, we revised our employee benefits policy which resulted in a one-time reduction in other wages expense for 2024 as compared to 2023.

The increase in store bonus expense as a percentage of total revenue in 2025 as compared to 2024 resulted from higher bonus payouts due to better performance against financial objectives in 2025 as compared to 2024.

The increase in other wages as a percentage of total revenue in 2025 as compared to 2024 resulted primarily from revisions to our employee benefits policy which resulted in a one-time reduction in other wages in 2024.

The increase in employee health care expense as a percentage of total revenue in 2025 as compared to 2024 resulted primarily from unfavorable claim experience as well as an increase in medical claim reserves driven by higher enrollment.

The increase in workers’ compensation expense as a percentage of total revenue in 2025 as compared to 2024 resulted primarily from unfavorable claim development.

Other Store Operating Expenses

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Other store operating expenses

The increase in other store operating expenses as a percentage of total revenue in 2024 as compared to 2023 resulted primarily from the increase in advertising expense due to higher media spending and costs associated with our new customer loyalty program, Cracker Barrel Rewards.

We presently expect higher depreciation expense in 2025 due to higher capital expenditures driven by investments in our stores including our store remodeling program as well as other strategic initiatives.

The year-to-year percentage change in 2025 as compared to 2024 resulted primarily from the following:

2025 Compared to 2024

Increase as a Percentage

of Total Revenue

Store occupancy costs

Advertising expense

General insurance expense

Other store expenses

The increase in store occupancy costs as a percentage of total revenue in 2025 as compared to 2024 resulted primarily from higher depreciation expense due to higher capital expenditures.

The increase in advertising expense as a percentage of total revenue in 2025 as compared to 2024 resulted primarily from higher media spending and investments related to our strategic initiatives.

The increase in general insurance expense as a percentage of total revenue in 2025 as compared to 2024 resulted primarily from unfavorable claim experience.

The increase in other store operating expenses as a percentage of total revenue in 2025 as compared to 2024 resulted primarily from costs associated with our off-premise business.

General and Administrative Expenses

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Professional fees

Payroll and related expense

Incentive compensation expense

The increase in professional fees as a percentage of total revenue in 2024 as compared to 2023 resulted primarily from the costs associated with the Company’s strategic transformation plan.

The increase in payroll and related expense as a percentage of total revenue in 2024 as compared to 2023 resulted primarily from severance costs related to corporate restructuring and Chief Executive Officer transition costs incurred in 2024.

The increase in incentive compensation as a percentage of total revenue in 2024 as compared to 2023 resulted primarily from Chief Executive Officer (“CEO”) transition costs incurred in 2024.

We presently expect our general and administrative expenses will be higher in 2025 primarily due to the investments related to our strategic transformation initiatives and our proxy contest in connection with the Company’s upcoming 2024 Annual Meeting.

The increase in professional fees as a percentage of total revenue in 2025 as compared to 2024 primarily resulted from proxy contest expenses and higher legal fees.

The Company incurred expenses of $8,220 in 2025 related to a proxy contest in connection with the Company’s 2024 annual shareholders meeting held on November 21, 2024.

Higher legal fees for 2025 included an approximate $3,300 charge in connection with our settlement of wage related disputes.

These fees were partially offset by lower costs associated with the Company’s multi-year strategic plan in 2025 as compared to 2024.

The increase in incentive compensation expense as a percentage of total revenue in 2025 as compared to 2024 was primarily the result of higher bonus payouts due to better performance against financial objectives in 2025 as compared to 2024.

Impairment and Store Closing Costs

During 2024 and 2023, we recorded impairment charges of $17,448 and $11,692, respectively, as a result of the deterioration in operating performance of six Cracker Barrel locations and thirteen MSBC locations in 2024 and six Cracker Barrel locations in 2023.

Additionally, during 2024 and 2023, we incurred costs of $5,494 and $2,307, respectively, in connection with the closure of four Cracker Barrel and two MSBC locations in 2024 and six Cracker Barrel and four MSBC locations in 2023 because of poor operating performance.

During 2025 and 2024, we recorded impairment charges of $19,772 and $17,448, respectively, as a result of the deterioration in operating performance of seven Cracker Barrel locations and twenty-five MSBC locations in 2025 and six Cracker Barrel locations and thirteen MSBC locations in 2024.

Additionally, during 2025 and 2024, we incurred costs of $287 and $5,494, respectively, in connection with the closure of two Cracker Barrel and two MSBC locations in 2025 and four Cracker Barrel and two MSBC locations in 2024 because of poor operating performance.

Impairment and store closing costs consisted of the following for the past two years:

Store closing costs

In the first quarter of 2026, we closed fourteen MSBC locations.

Goodwill Impairment

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Operating Income

As discussed above, the decrease in operating income in 2024 as compared to 2023 resulted primarily from the investments made in 2024 related to labor, advertising and strategic transformation initiatives.

We also incurred higher impairments costs based on performance and CEO transition costs in 2024.

Operating income in 2024 benefited from lower commodity inflation.

In 2025, the increase in operating income was primarily attributable to strategic pricing, labor efficiencies and lower impairment and store closing costs partially offset by investments to support our multi-year strategic plan.

Gain on Extinguishment of Debt

In 2025, contemporaneously with the issuance of $345,000 aggregate principle amount of 1.75% Convertible Senior Notes due 2030 (the “2030 Notes”), we used approximately $145,900 of the net proceeds from the 2030 Notes for the repurchase of $150,000 aggregate principal amount of $300,000 aggregate principal amount of 0.625% Convertible Senior Notes (the “2026 Notes”) in separate and privately negotiated transactions and recorded a gain on extinguishment of debt of $3,186.

This amount is recorded in the gain on extinguishment of debt line on the Consolidated Statements of Income.

For additional information regarding our debt, see Note 4 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Interest Expense, Net

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Interest expense, net

The year-to-year increase in 2024 as compared to 2023 resulted primarily from higher weighted average debt levels and higher weighted average interest rates under our revolving credit facility.

Provision for Income Taxes (Income Tax Benefit)

The following table highlights the provision for income taxes as a percentage of income before income taxes (“effective tax rate”) for the past two years:

The year-to-year decrease in 2025 as compared to 2024 resulted primarily from lower weighted average debt levels and lower weighted average interest rates under the revolving credit facility partially offset by costs associated with refinancing the revolving credit facility and interest related to the 2030 Notes.

See “Borrowing Capacity, Debt Covenants and Notes” section below for further information related to the 2025 Revolving Credit Facility and the 2030 Notes.

Income Tax Benefit

The following table highlights the income tax benefit as a percentage of income before income taxes (“effective tax rate”) for the past two years:

Effective tax rate

Our effective tax rate is lower than statutory rates primarily due to the benefit of tax credits.

The decrease in our effective tax rate from 2023 to 2024 reflects the impact of tax credits on lower income before tax as well as favorable audit settlements.

We presently expect our effective tax rate for 2025 to be approximately (7%) to (11%).

The increase in our effective tax rate in 2025 is primarily due to higher income before tax as well as fewer favorable audit settlements as compared to 2024.

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 legislation includes provisions that impact the timing and magnitude of certain tax deductions.

Key provisions include the permanent extension of several business tax benefits originally introduced under the 2017 Tax Cuts and Jobs Act.

The provisions effective during 2025 did not materially impact our 2025 financial condition.

We are currently evaluating the potential impact of the OBBBA provisions effective after 2025 to our financial condition.

Net income consisted of the following for the past two years:

Our net income in 2024 decreased compared to 2023 primarily due to our decline in our operating income discussed above partially offset by our income tax benefit for 2024 discussed above.

We presently expect total revenue in 2025 to be relatively flat to 2024 and the investments in our strategic transformation plan discussed above to more than offset expected cost savings in 2025.

The Company’s focus for 2025 is to execute its strategic transformation plan while simultaneously remaining focused on operational excellence in our day-to-day business.

Our net income in 2025 increased as compared to 2024 primarily due to our increase in our operating income discussed above partially offset by a lower income tax benefit in 2025 as compared to 2024 as discussed above.

LIQUIDITY AND CAPITAL RESOURCES

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Net cash used in financing activities

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under our revolving credit facility.

Our cash generated from our operations, together with our borrowing capacity under our revolving credit facility, were sufficient to finance all of our growth, dividend payments, working capital needs, interest payments on long-term debt obligations and other cash payment obligations in 2025.

We believe that cash at August 02, 2024, along with cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility, will be sufficient to finance our continuing operations, our strategic transformation initiative and continuing expansion plans, debt service, dividend payments, capital expenditures and working capital needs for the next twelve months and thereafter for the foreseeable future.

Our ability to draw on our 2022 Revolving Credit Facility is subject to the satisfaction of the provisions of the credit facility, as amended, and we believe we will be able to refinance our Revolving Credit Facility and other debt instruments prior their maturity.

On May 16, 2025, we entered into a five-year credit facility (the “2025 Credit Facility”), which replaced our previous revolving credit facility that we entered into in 2022 (the “2022 Revolving Credit Facility”).

The 2025 Credit Facility consists of a $550,000 revolving credit facility (the “2025 Revolving Credit Facility”), which includes a $25,000 swingline subfacility and $75,000 letter of credit subfacility.

We believe that cash at August 01, 2025, along with cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility, will be sufficient to finance our continuing operations, our multi-year strategic plan initiatives, our continuing expansion plans, debt service, dividend payments, capital expenditures and working capital needs for the next twelve months and thereafter for the foreseeable future.

Our ability to draw on our 2025 Revolving Credit Facility is subject to the satisfaction of the provisions of the credit facility, as amended, and we believe we will be able to refinance and/or pay off our 2025 Revolving Credit Facility and other debt instruments prior their maturity.

Cash Generated from Operations

The decrease in net cash flow provided by operating activities in 2024 as compared to 2023 resulted primarily from lower net income and a lower decrease in retail inventory levels.

The increase in net cash flow provided by operating activities in 2025 as compared to 2024 was primarily driven by higher operating income, reflecting improved profitability, as well as the timing of cash receipts for accounts receivable and timing of payments for accounts payable.

Purchase Obligations

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Our estimate as of August 01, 2025, for these purchase obligations is $145,900, of which $104,917 is short-term.

This estimate of our purchase obligations (i) excludes contracts that do not contain minimum purchase obligations and long-term agreements for services and operating needs that can be cancelled within 60 days without penalty, and (ii) includes long-term agreements and certain retail purchase orders for services and operating needs that can be cancelled (A) with more than 60 days’ notice without penalty only through the term of the notice period and (B) only in the event of an uncured material breach or with a penalty through the entire term of the contract.

This estimate of our purchase obligations (i) includes long-term agreements and certain retail purchase orders for services and operating needs that can be cancelled (A) with more than 60 days’ notice without penalty only through the term of the notice period and (B) only in the event of an uncured material breach or with a penalty through the entire term of the contract, (ii) excludes contracts that do not contain minimum purchase obligations and long-term agreements for services and operating needs that can be cancelled within 60 days without penalty.

Because of the uncertainties of seasonal demands and promotional calendar changes, our estimated usage for food, supplies and other operating needs and services is calculated ratably over either the termination notice period or the remaining life of the contract, as applicable, unless we had better information available at the time related to each contract.

As of August 01, 2025, the total present value of our lease expenses (including variable lease costs) under operating leases was $694,974, which had a weighted-average remaining lease term 15.20 years, of which $86,208 is short-term.

As of August 02, 2024, we have entered into leases that have not yet commenced with future short-term and long-term lease payments of $12,615 that are not yet recorded on our Consolidated Balance Sheets.

These leases are expected to commence in 2025 and 2026.

As of August 01, 2025, we have not entered into any leases that have not yet commenced.

For additional information regarding our operating leases, see Note 8 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

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Our capital expenditures consisted primarily of capital investments for existing stores, new store locations and strategic initiatives.

The increase in capital expenditures in 2024 from 2023 resulted primarily from higher capital expenditures for strategic initiatives, including costs associated with our customer loyalty program, Cracker Barrel Rewards.

As part of our strategic transformation plan, we have modified our capital allocation policy and currently expect to increase our capital expenditures over the three-year period from 2025 to 2027 to approximately $600,000 to $700,000, of which $160,000 to $180,000 is estimated for 2025.

This increase includes expansion of our maintenance and remodel initiatives as well as additional technology improvements.

This estimate also includes the acquisition of sites and construction costs of two new Cracker Barrel stores and three to four MSBC locations that we plan to open during 2025.

We intend to fund our capital expenditures with cash generated by operations and cash on hand as the result of borrowings under our revolving credit facility, as necessary.

The increase in capital expenditures in 2025 from 2024 resulted primarily from our maintenance and remodel initiatives as part of our multi-year strategic plan.

We currently expect capital expenditures to be approximately $135,000 to $150,000 in 2026.

This estimate includes our maintenance and technology initiatives and no spending on new remodels.

This estimate also includes the acquisition of sites and construction costs of locations that we plan to open during 2026.

We intend to fund our capital expenditures with cash generated by operations, cash on hand and borrowings under our 2025 Revolving Credit Facility, as necessary.

The following table presents our proceeds from sale of property and equipment for the past two years:

Proceeds from sale of property and equipment

The increase in proceeds from sale of property and equipment in 2024 from 2023 resulted primarily from the sale of excess real property in 2024.

The decrease in proceeds from sale of property and equipment in 2025 from 2024 resulted primarily from the sale of excess real property in 2024.

Borrowing Capacity, Debt Covenants and Notes

On June 17, 2022, we entered into a five-year $700,000 revolving credit facility (the “2022 Revolving Credit Facility”).

The 2022 Revolving Credit Facility also contains an option for the Company to increase the revolving credit facility by $200,000.

Using our weighted average interest rate of 7.19% at August 02, 2024 and the outstanding borrowings at August 02, 2024, we anticipate having interest payments of $13,080, in 2025.

The following table highlights our borrowing capacity and outstanding borrowings under the 2022 Revolving Credit Facility, our standby letters of credit and our borrowing availability under the 2022 Revolving Credit Facility as of August 02, 2024:

August 02,2024

On May 16, 2025, the Company entered into the 2025 Credit Facility, which replaced the 2022 Revolving Credit Facility.

The 2025 Credit Facility consisted of a $550,000 revolving credit facility (the “2025 Revolving Credit Facility”), which includes a $25,000 swingline subfacility and a $75,000 letter of credit subfacility, and a $250,000 delayed draw term loan facility (the “Delayed Draw Term Facility”).

The Delayed Draw Term Facility was terminated on June 13, 2025 in connection with the Company’s issuance and sale of the 2030 Notes.

The 2025 Credit Facility also contains an option for the Company to increase the 2025 Credit Facility by $200,000.

At August 01, 2025, we did not have any borrowings outstanding under the 2025 Revolving Credit Facility.

The following table highlights our borrowing capacity and outstanding borrowings under the 2025 Revolving Credit Facility, our standby letters of credit and our borrowing availability under the 2025 Revolving Credit Facility as of the year ended August 01, 2025:

Borrowing capacity under the 2025 Revolving Credit Facility

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Our standby letters of credit reduce our borrowing availability under the 2025 Revolving Credit Facility.

During 2024, we borrowed $406,500 and repaid $346,500 under the 2022 Revolving Credit Facility.

During 2025, we borrowed $548,500 and repaid $728,500 under the 2022 Revolving Credit Facility and 2025 Revolving Credit Facility.

During 2024, we borrowed $406,500 and repaid $346,500 under the 2022 Revolving Credit Facility.

Our 2022 Revolving Credit Facility contains customary financial covenants, which include maintenance of a maximum consolidated total senior secured leverage ratio and a minimum consolidated interest coverage ratio.

Our 2025 Revolving Credit Facility contains customary financial covenants, which include maintenance of a maximum consolidated total leverage ratio and a minimum consolidated interest coverage ratio.

We were in compliance with the 2025 Revolving Credit Facility’s financial covenants at August 01, 2025, and we expect to be in compliance with the 2025 Revolving Credit Facility’s financial covenants for the remaining term of the facility.

Our $300,000 aggregate principal amount of 0.625% Convertible Senior Notes (the “Notes”) mature on June 15, 2026, unless earlier converted, repurchased or redeemed.

On June 13, 2025, we issued the 2030 Notes.

The 2030 Notes are senior, unsecured obligations of the Company and bear cash interest at a rate of 1.75% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2026.

The 2030 Notes mature on September 15, 2030, unless earlier converted, repurchased or redeemed.

Net proceeds from the 2030 Notes were approximately $335,000, after deducting the initial purchasers’ discounts and commissions and the Company’s offering fees and expenses.

Additionally, on June 13, 2025, we used approximately $145,900 of the net proceeds from the 2030 Notes for the repurchase of $150,000 aggregate principal amount of the 2026 Notes.

The remaining $150,000 aggregate principal amount of the 2026 Notes matures on June 15, 2026, unless earlier converted, repurchased or redeemed.

The 2026 Notes are senior, unsecured obligations of the Company and bear cash interest at an annual rate of 0.625%, payable semi-annually in arrears on June 15 and December 15 of each year.

For additional information regarding our 2022 Revolving Credit Facility and the Notes, see Note 4 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

For additional information regarding our 2025 Revolving Credit Facility, the 2026 Notes and the 2030 Notes, see Note 4 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Dividends, Share Repurchases and Share-Based Compensation Awards

Our 2025 Revolving Credit Facility imposes restrictions on the amount of dividends we are permitted to pay and the amount of shares we are permitted to repurchase.

Under the 2022 Revolving Credit Facility, provided there is no default existing and the total of our availability under the 2022 Revolving Credit Facility plus our cash and cash equivalents on hand is at least $100,000 (the “Cash Availability”), we may declare and pay cash dividends on shares of our common stock and repurchase shares of our common stock (1) in an unlimited amount if at the time the dividend or the repurchase is made our consolidated total senior secured leverage ratio is 2.75 to 1.00 or less and (2) in an aggregate amount not to exceed $100,000 in any fiscal year if our consolidated total leverage ratio is greater than 2.75 to 1.00 at the time the dividend or repurchase is made;

Under the 2025 Revolving Credit Facility, provided there is no default existing and the total of our availability under the 2025 Revolving Credit Facility plus our cash and cash equivalents on hand is at least $100,000 (the “Cash Availability”), we may declare and pay cash dividends on shares of our common stock and repurchase shares of our common stock (1) in an unlimited amount if at the time the dividend or the repurchase is made our consolidated total leverage ratio is 3.50 to 1.00 or less and (2) in an aggregate amount not to exceed $100,000 in any fiscal year if, at the time such dividend or repurchase is made, our consolidated total leverage ratio is greater than 3.50 to 1.00;

notwithstanding (1) and (2), so long as immediately after giving effect to the payment of any such dividends, Cash Availability is at least $100,000, we may declare and pay cash dividends on shares of our common stock in an aggregate amount not to exceed in any fiscal year the product of the aggregate amount of dividends declared in the fourth quarter of the immediately preceding fiscal year multiplied by four.

In 2025, we paid regular dividends of $1.00 per share.

In connection with our strategic transformation program, we modified our capital allocation policy to support increased investments in our business to drive organic growth.

As part of this shift to increase investment in our business, the Board of Directors reduced the quarterly dividend and declared a dividend of $0.25 per share that was subsequently paid on August 6, 2024 to shareholders of record on July 19, 2024.

In connection with our multi-year strategic plan, we modified our capital allocation policy to support increased investments in our business to drive organic growth.

As part of this shift to increase investment in our business, in the fourth quarter of 2024, the Board of Directors reduced the quarterly dividend to $0.25 per share.

Additionally, during the first quarter of 2026, the Board declared a dividend of $0.25 per share payable on November 12, 2025 to shareholders of record as of October 17, 2025.

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Our criteria for share repurchases are that they be accretive to expected net income per share and are within the limits imposed by our debt commitments.

On June 02, 2023, the Board of Directors renewed our authorization to repurchase shares of the Company’s outstanding common stock at management’s discretion up to a total value of $200,000, for an additional year;

this authorization has expired.

We did not repurchase any shares of our common stock in 2024.

In 2023, the Company repurchased 171,792 shares of its common stock in the open market at an aggregate cost of $17,449.

We did not repurchase any shares of our common stock in 2025 or 2024.

In the first quarter of 2026, our Board of Directors approved a share repurchase authorization to repurchase shares of the Company’s outstanding common stock at management’s discretion up to a total value of $100,000.

Working Capital

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Working capital deficit

The change in working capital at August 02, 2024 compared to July 28, 2023 primarily reflected the decrease in our dividend payable as a result of our reduction of our quarterly dividend and the timing of payments for income taxes.

The change in working capital at August 01, 2025 compared to August 02, 2024 primarily reflected the reclassification of the 2026 Notes from long-term debt to a current liability in respect of their maturity date in 2026 and the timing of payments for accounts payable partially offset by the increase in cash.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements.

RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

See Note 1 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting guidance not yet adopted.

We are currently evaluating the impact of adopting the accounting guidance.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting guidance adopted and not yet adopted.

The adoption of accounting for debt and segments did not have an impact on our consolidated financial position or results of operations.

We are currently evaluating the impact of adopting the accounting guidance not yet adopted.

CRITICAL ACCOUNTING ESTIMATES

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However, if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and fair values of long-lived assets, we may be exposed to losses that could be material.

During 2024 and 2023, we recorded impairment charges of $15,616 and $11,692, respectively, for long-lived assets due to the deterioration in operating performance of six Cracker Barrel locations and thirteen MSBC locations in 2024 and six Cracker Barrel locations in 2023.

During 2025 and 2024, we recorded impairment charges of $18,391 and $15,616, respectively, for long-lived assets due to the deterioration in operating performance of seven Cracker Barrel locations and twenty-five MSBC locations in 2025 and six Cracker Barrel locations and thirteen MSBC locations in 2024.

The impairment charges are included in the impairment and store closing costs line item on the Consolidated Statements of Income.

See the Lease Accounting section below for information related to an impairment charge related to a right-of-use asset recorded in 2024.

See the Lease Accounting section below for information related to impairment charges related to right-of-use assets recorded in 2025 and 2024.

Insurance Reserves

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Additionally, any loss resulting from an impairment of the right-of-use assets is recognized by a charge to income, which could be material.

In 2024, we recorded an impairment charge of $1,832 related to a right-of-use asset for a Cracker Barrel location.

This amount is included in the impairment and store closing costs line item on the Consolidated Statement of Income.

In 2025 and 2024, we recorded impairment charges of $1,381 and $1,832, respectively, each related to the right-of-use assets of one Cracker Barrel location.

These amounts are included in the impairment and store closing costs line item on the Consolidated Statement of Income.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis