CRACKER BARREL OLD COUNTRY STORE, INC 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ Cracker Barrel Old Country Store, Inc., and its subsidiaries (collectively, the “Company,” “our” or “we”) are principally engaged in the operation and development in the United States of the Cracker Barrel Old Country Store Ò (“Cracker Barrel”) concept. As of May 01, 2026, we operated 657 Cracker Barrel stores in 43 states and 52 Maple Street Biscuit Company (“MSBC”) locations in ten states. All dollar amounts reported or discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are shown in thousands, except per share amounts and certain statistical information (e.g., number of stores). References to years in MD&A are to our fiscal year unless otherwise noted. MD&A provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. MD&A should be read in conjunction with the (i) condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and (ii) audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 01, 2025 (the “2025 Form 10-K”). Except for specific historical information, many of the matters discussed in this report may express or imply projections of items such as revenues or expenditures, estimated capital expenditures, compliance with debt covenants, plans and objectives for future operations, store economics, inventory shrinkage, growth or initiatives, expected future economic performance or the expected outcome or impact of pending or threatened litigation. These and similar statements regarding events or results which we expect will or may occur in the future are forward-looking statements concerning matters that involve risks, uncertainties and other factors which may cause our actual results and performance to differ materially from those expressed or implied by such statements. All forward-looking information is provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these risks, uncertainties and other factors. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “trends,” “assumptions,” “target,” “guidance,” “outlook,” “opportunity,” “future,” “plans,” “goals,” “objectives,” “expectations,” “near-term,” “long-term,” “projection,” “may,” “will,” “would,” “could,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “potential,” “regular,” “should,” “projects,” “forecasts” or “continue” (or the negative or other derivatives of each of these terms) or similar terminology. We believe the assumptions underlying any forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected in or implied by the forward-looking statements. In addition to the risks of ordinary business operations, and those discussed or described in this report or in information incorporated by reference into this report, factors and risks that may result in actual results differing from this forward-looking information include, but are not limited to risks and uncertainties associated with inflationary conditions with respect to the price of commodities, ingredients, transportation, distribution and labor; disruptions to our restaurant or retail supply chain; effects of changes in international, national, regional and local economic and market conditions (such as the imposition of trade barriers or other changes in trade policy) on our business; our ability to manage retail inventory and merchandise mix; our ability to sustain or the effects of plans intended to improve operational or marketing execution and performance or liquidity; the impact of adverse or extreme weather events on sales and customer travel; the effects of increased competition at our locations on sales and on labor recruiting, cost, and retention; consumer behavior based on negative publicity or changes in consumer health or dietary trends or safety aspects of our food or products or those of the restaurant industry in general, including concerns about outbreaks of infectious disease; the effects of our indebtedness and associated restrictions on our financial and operating flexibility and ability to execute or pursue our operating plans and objectives; changes in interest rates, increases in borrowed capital or capital market conditions affecting our financing costs and ability to refinance our indebtedness, in whole or in part; our reliance on a single distribution facility and certain significant vendors, particularly for foreign-sourced retail products; information technology, disruptions and data privacy and information security breaches, whether as a result of infrastructure failures, employee or vendor errors, or actions of third parties; our compliance with privacy and data protection laws; changes in or implementation of additional governmental or regulatory rules, regulations and interpretations affecting tax, health and safety, animal welfare, pensions, insurance or other undeterminable areas; the actual results of pending, future or threatened litigation or governmental investigations; our ability to manage the impact of negative social media attention and the costs and effects of negative publicity; the impact of activist shareholders; our ability to achieve aspirations, goals and projections related to our sustainability initiatives; our ability to enter successfully into new geographic markets that may be less familiar to us; changes in land, building materials and construction costs; the availability and cost of suitable sites for restaurant development and our ability to identify those sites; our ability to retain key personnel; the ability of and cost to us to recruit, train, and retain qualified hourly and management employees; uncertain performance of acquired businesses, strategic investments and other initiatives that we may pursue from time to time; the effects of business trends on the outlook for individual restaurant locations and the effect on the carrying value of those locations; general or regional economic weakness, business and societal conditions; discretionary income or personal expenditure activity of our customers; implementation of new or changes in interpretation of existing accounting principles generally accepted in the United States of America (“GAAP”), and those factors contained in Part I, Item 1A of the 2025 Form 10-K, as well as other factors described from time to time in our filings with the Securities and Exchange Commission (“SEC”), press releases and other communications. 21 Table of Contents Readers are cautioned not to place undue reliance on forward-looking statements made in this report because the statements speak only as of the report’s date. Except as may be required by law, we have no obligation or intention to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events. Readers are advised, however, to consult any future public disclosures that we may make on related subjects in reports that we file with or furnish to the SEC or in our other public disclosures. Overview We believe that Cracker Barrel’s brand remains one of the strongest and most differentiated brands in the restaurant industry, and we plan to continue to leverage and build on that strength as a core competitive component of our business strategy. Our long-term strategy is anchored on three overarching business imperatives: 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 inflation volatility, high consumer debt levels and lower savings rates, as well as the potential uncertainty associated with the geopolitical environment and global trade, among other factors. During 2026, we have faced challenges related to negative publicity from brand initiatives, including the launch of a new logo and modern test store remodels, to which we responded by returning to our former logo and discontinuing the modern test store remodels during the first quarter of 2026. Our strategy is focused on improving the guest experience to drive an improvement in our traffic and includes enhancing our operations, deepening our connection with guests through our menu, marketing and value proposition, and improving profitability. Key Performance Indicators Management uses a number of key performance measures to evaluate our operational and financial performance, including the following: ● Comparable store restaurant sales increase/(decrease) : To calculate comparable store restaurant sales increase/(decrease), we determine total restaurant sales of stores open at least six full quarters before the beginning of the applicable period, measured on comparable calendar weeks. We then subtract total comparable store restaurant sales for the current year period from total comparable store restaurant sales for the applicable historical period to calculate the absolute dollar change. To calculate comparable store restaurant sales increase/(decrease), which we express as a percentage, we divide the absolute dollar change by the comparable store restaurant sales for the historical period. ● Comparable store retail sales increase/(decrease) : To calculate comparable store retail sales increase/(decrease), we determine total retail sales of stores open at least six full quarters before the beginning of the applicable period, measured on comparable calendar weeks. We then subtract total comparable store retail sales for the current year period from total comparable store retail sales for the applicable historical period to calculate the absolute dollar change. To calculate comparable store retail sales increase/(decrease), which we express as a percentage, we divide the absolute dollar change by the comparable store retail sales for the historical period. ● Comparable store restaurant and retail sales increase/(decrease) : To calculate comparable store restaurant and retail sales increase/(decrease), we determine total restaurant and retail sales of stores open at least six full quarters before the beginning of the applicable period, measured on comparable calendar weeks. We then subtract total comparable store restaurant and retail sales for the current year period from total comparable store restaurant and retail sales for the applicable historical period to calculate the absolute dollar change. To calculate comparable store restaurant and retail sales increase/(decrease), which we express as a percentage, we divide the absolute dollar change by the comparable store restaurant and retail sales for the historical period. 22 Table of Contents ● Average check increase per guest : To calculate average check per guest, we determine comparable store restaurant sales, as described above, and divide by comparable guest traffic (as described below). We then subtract average check per guest for the current year period from average check per guest for the applicable historical period to calculate the absolute dollar change. The absolute dollar change is divided by the prior year average check number to calculate average check increase per guest, which we express as a percentage. ● Comparable restaurant guest traffic increase/(decrease) : To calculate comparable restaurant guest traffic increase/(decrease), we determine the number of entrees sold in our dine-in and off-premise business from stores open at least six full quarters at the beginning of the applicable period, measured on comparable calendar weeks. We then subtract total entrees sold for the current year period from total entrees sold for the applicable historical period to calculate the absolute numerical change. To calculate comparable restaurant guest traffic increase/(decrease), which we express as a percentage, we divide the absolute numerical change by the total entrees sold for the historical period. These performance indicators exclude the impact of new store openings and sales related to MSBC. We use comparable store sales metrics as indicators of sales growth to evaluate how our established stores have performed over time. We use comparable restaurant guest traffic increase/(decrease) to evaluate how established stores have performed over time, excluding growth achieved through menu price and sales mix change. Finally, we use average check per guest to identify trends in guest preferences, as well as the effectiveness of menu changes. We believe these performance indicators are useful for investors by providing a consistent comparison of sales results and trends across comparable periods within our core, established store base, unaffected by results of store openings, closings, and other transitional changes. Results of Operations The following table highlights our operating results by percentage relationships to total revenue for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ ​ ​ ​ Nine Months Ended ​ ​ ​ ​ ​ ​ ​ May 01, ​ May 02, ​ ​ ​ ​ May 01, ​ May 02, ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Total revenue 100.0 % 100.0 % ​ 100.0 % 100.0 % Cost of goods sold (exclusive of depreciation and rent) 30.2 30.1 ​ 31.7 31.2 Labor and other related expenses 37.9 37.1 ​ 37.2 35.9 Other store operating expenses 24.9 25.3 ​ 26.1 24.4 General and administrative expenses 6.2 5.6 ​ 5.9 6.4 Impairment and store closing costs — 0.1 ​ 0.1 0.1 Operating income (loss) 0.8 1.8 ​ (1.0) 2.0 Other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Litigation settlement income ​ (5.9) ​ — ​ ​ (1.9) ​ — ​ Interest expense, net 0.4 0.6 ​ 0.5 0.7 Income before income taxes 6.3 1.2 ​ 0.4 1.3 Provision for income taxes (income tax benefit) 0.9 (0.3) ​ (0.4) (0.2) Net income 5.4 % 1.5 % ​ 0.8 % 1.5 % ​ ​ 23 Table of Contents The following table sets forth the change in the number of units in operation for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ ​ ​ Nine Months Ended ​ ​ May 01, ​ May 02, ​ May 01, ​ May 02, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 Opened during the period: ​ ​ ​ ​ Cracker Barrel 1 1 1 1 MSBC — 1 — 4 Closed during the period: ​ ​ ​ ​ ​ ​ ​ ​ Cracker Barrel ​ — ​ — ​ (1) ​ (1) MSBC ​ (2) ​ — ​ (16) ​ — Units in operation at end of the period: ​ ​ ​ ​ Cracker Barrel 657 658 657 658 MSBC 52 70 52 70 Total units at end of the period 709 728 709 728 ​ Total Revenue ​ Total revenue for the third quarter and first nine months of 2026 decreased 2.9% and 5.6%, respectively, as compared to the same periods in the prior year. The following table highlights the key components of revenue for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ ​ Nine Months Ended ​ ​ ​ ​ ​ ​ ​ ​ May 01, ​ May 02, ​ ​ May 01, ​ May 02, ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ Revenue in dollars: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restaurant $ 658,399 ​ $ 679,341 ​ ​ $ 2,003,325 ​ $ 2,113,090 ​ Retail ​ 138,968 ​ 141,806 ​ ​ ​ 466,047 ​ 502,585 ​ Total revenue $ 797,367 ​ $ 821,147 ​ ​ $ 2,469,372 ​ $ 2,615,675 ​ Total revenue by percentage relationships: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restaurant ​ 82.6 % 82.7 % ​ ​ 81.1 % 80.8 % Retail ​ 17.4 % 17.3 % ​ ​ 18.9 % 19.2 % Average store volumes (1) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restaurant ​ $ 980.7 ​ $ 1,006.0 ​ ​ $ 2,984.2 ​ $ 3,134.8 ​ ​ Retail ​ ​ 211.4 ​ ​ 215.3 ​ ​ ​ 709.5 ​ ​ 763.4 ​ ​ Total revenue ​ $ 1,192.1 ​ $ 1,221.3 ​ ​ $ 3,693.7 ​ $ 3,898.2 ​ ​ Comparable store sales increase (decrease) (2) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restaurant ​ (2.6) % ​ 1.0 % ​ ​ (4.9) % ​ 2.9 % Retail ​ (1.8) % (3.8) % ​ ​ (6.9) % (1.5) % Restaurant and retail ​ (2.5) % ​ 0.1 % ​ ​ (5.3) % ​ 2.0 % Average check increase ​ 4.3 % 6.6 % ​ ​ 3.5 % 6.6 % Comparable restaurant guest traffic decrease (2) : ​ (6.7) % (5.6) % ​ ​ (8.1) % (3.7) % ​ (1) Average store volumes include sales of all stores except for MSBC. (2) Comparable store sales and traffic consist of sales of stores open at least six full quarters at the beginning of the period and are measured on comparable calendar weeks. Comparable store sales and traffic exclude MSBC. 24 Table of Contents For the third quarter and first nine months of 2026, our comparable store restaurant sales decreases resulted primarily from the guest traffic decreases partially offset by the average check increases. For the third quarter and first nine months of 2026, the average check increases included average menu price increases of 4.4% and 4.2%, respectively. Our retail sales are made substantially to our restaurant guests. For the third quarter and first nine months of 2026, our comparable store retail sales decreases resulted primarily from the guest traffic decreases. The decreases in guest traffic are primarily the result of negative publicity and customer reactions to certain recent brand initiatives, including the launch of a new logo and modern test store remodels in the first quarter of 2026, and lower consumer demand arising from multiple macroeconomic factors, including inflationary pressures, higher consumer debt levels and lower savings rates as well as the potential uncertainty associated with the geopolitical environment and global trade. Cost of Goods Sold (Exclusive of Depreciation and Rent) The following table highlights the components of cost of goods sold (exclusive of depreciation and rent) in dollar amounts and as percentages of revenues for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ ​ Nine Months Ended ​ ​ ​ May 01, ​ May 02, ​ ​ May 01, ​ May 02, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Cost of Goods Sold in dollars: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restaurant ​ $ 171,832 ​ $ 177,896 ​ ​ $ 535,149 ​ $ 559,873 ​ Retail ​ 69,141 ​ 69,384 ​ ​ 246,889 ​ 256,140 ​ Total Cost of Goods Sold ​ $ 240,973 ​ $ 247,280 ​ ​ $ 782,038 ​ $ 816,013 ​ Cost of Goods Sold by percentage of revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restaurant ​ ​ 26.1 % ​ 26.2 % ​ ​ 26.7 % ​ 26.5 % Retail ​ ​ 49.8 % ​ 48.9 % ​ ​ 53.0 % ​ 51.0 % ​ The decrease in restaurant cost of goods sold as a percentage of restaurant revenue for the third quarter of 2026 as compared to the same period in the prior year was primarily driven by menu pricing increases partially offset by commodity inflation. The increase in restaurant cost of goods sold as a percentage of restaurant revenue for the first nine months of 2026 as compared to the same period in the prior year was primarily driven by higher food waste, commodity inflation, increased discounts and a shift to higher cost menu items partially offset by menu pricing increases. Commodity inflation was 2.5% and 2.0%, respectively, in the third quarter and first nine months of 2026. We presently expect the rate of commodity inflation to be in the low 2.0% range in 2026. The increase in retail cost of goods sold as a percentage of retail revenue in the third quarter of 2026 as compared to the same period in the prior year resulted primarily from lower initial margin which was driven primarily by tariffs, higher discounts and lower vendor allowances partially offset by lower inventory shrinkage. ​ 25 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Third Quarter ​ ​ ​ ​ Increase (Decrease) ​ ​ ​ ​ as a Percentage of ​ ​ ​ ​ Total Retail Revenue ​ ​ Lower initial margin ​ 0.7 % ​ Discounts ​ 0.2 % ​ Vendor allowances ​ 0.2 % ​ Inventory shrinkage ​ (0.3) % ​ ​ The increase in retail cost of goods sold as a percentage of retail revenue in the first nine months of 2026 as compared to the same period in the prior year resulted primarily from lower initial margin which was driven primarily by tariffs, higher discounts, higher markdowns, the change in the provision for obsolete inventory and inventory shrinkage. ​ ​ ​ ​ ​ ​ ​ ​ ​ First Nine Months ​ ​ ​ Increase as a Percentage ​ ​ ​ of Total Retail Revenue ​ Lower initial margin ​ 1.1 % Discounts ​ 0.4 % Markdowns ​ 0.2 % Provision for obsolete inventory ​ 0.1 % Inventory shrinkage ​ 0.1 % Additional changes in tariff rates or trade policy could materially affect our operating results and financial condition, and this ongoing uncertainty introduces additional volatility and risk and may affect consumer demand in ways that are difficult to predict. Labor and Related Expenses Labor and related expenses include all direct and indirect labor and related costs incurred in store operations. The following table highlights labor and related expenses as a percentage of total revenue for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ ​ Nine Months Ended ​ ​ ​ May 01, ​ May 02, ​ ​ May 01, ​ May 02, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Labor and related expenses 37.9 % 37.1 % ​ 37.2 % 35.9 % ​ The percentage changes for the third quarter and first nine months of 2026 as compared to the same periods in the prior year resulted primarily from the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ Third Quarter ​ ​ First Nine Months ​ ​ ​ Increase as a Percentage ​ ​ Increase as a Percentage ​ ​ ​ ​ ​ Total Revenue ​ Total Revenue ​ Store hourly labor ​ 0.6 % ​ 0.6 % Store management compensation ​ 0.1 % ​ 0.6 % The increases in store hourly labor and store management compensation as a percentage of total revenue for the third quarter and first nine months of 2026 as compared to the same periods in the prior year resulted primarily from lower productivity and the deleverage associated with the decreases in total revenue in the third quarter and first nine months of 2026 as compared to the same periods in the prior year. 26 Table of Contents We presently expect the rate of wage inflation to be in the low 2.0% range in 2026. Other Store Operating Expenses Other store operating expenses include all store-level operating costs, the major components of which are occupancy costs, advertising, operating supplies, third-party delivery fees, credit and gift card fees, real and personal property taxes, general insurance and manager conference expenses. Occupancy costs include maintenance, utilities, depreciation and rent. The following table highlights other store operating expenses as a percentage of total revenue for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ ​ Nine Months Ended ​ ​ ​ May 01, ​ May 02, ​ ​ ​ ​ May 01, ​ May 02, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Other store operating expenses 24.9 % 25.3 % ​ 26.1 % 24.4 % ​ The percentage change for the third quarter of 2026 as compared to the same period in the prior year resulted primarily from the following: ​ ​ ​ ​ ​ ​ Third Quarter ​ ​ ​ (Decrease) Increase ​ ​ ​ ​ ​ of Total Revenue Advertising ​ (0.7) % Supplies ​ (0.2) % Store occupancy costs 0.6 % ​ ​ ​ ​ The percentage change for the first nine months of 2026 as compared to the same period in the prior year resulted primarily from the following: ​ ​ ​ ​ ​ ​ First Nine Months ​ ​ ​ Increase as a Percentage ​ ​ ​ ​ ​ of Total Revenue ​ ​ ​ Store occupancy costs ​ 1.3 % Advertising ​ 0.3 % The decrease in advertising expense as a percentage of total revenue for the third quarter of 2026 as compared to the same period in the prior year is due to the Company’s previously announced planned reduction in advertising spend for the second half of 2026. The decrease in supplies expense as a percentage of total revenue for the third quarter of 2026 as compared with the same period in the prior year resulted primarily from the Company’s cost savings programs. The increases in store occupancy costs as a percentage of total revenue for the third quarter and the first nine months of 2026 as compared to the same periods in the prior year resulted primarily from the decreases in total revenue and increases in maintenance expenses in the third quarter and first nine months of 2026 as compared to the same periods in the prior year. The increase in advertising expense as a percentage of total revenue for the first nine months of 2026 as compared to the same period in the prior year resulted primarily from higher media spending in the first nine months of 2026 as compared to the same period in the prior year. 27 Table of Contents General and Administrative Expenses The following table highlights general and administrative expenses as a percentage of total revenue for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ ​ Nine Months Ended ​ ​ ​ May 01, ​ May 02, ​ ​ ​ ​ May 01, ​ May 02, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ General and administrative expenses 6.2 % 5.6 % ​ 5.9 % 6.4 % ​ These percentage changes for the third quarter and first nine months of 2026 as compared to the same periods in the prior year resulted primarily from the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ Third Quarter ​ ​ First Nine Months ​ ​ ​ Increase (Decrease) ​ ​ (Decrease) Increase ​ ​ ​ as a Percentage ​ ​ as a Percentage ​ ​ ​ of Total Revenue ​ ​ of Total Revenue ​ Incentive compensation expense ​ 0.4 % ​ (0.5) % Professional fees ​ 0.4 % ​ (0.3) % Payroll and related expense ​ (0.1) % ​ 0.2 % The increase in incentive compensation expense as a percentage of total revenue in the third quarter of 2026 as compared to the same period in the prior year resulted primarily from better performance against financial objectives in 2026 as compared to the same period in the prior year. The decrease in incentive compensation expense as a percentage of total revenue in the first nine months of 2026 as compared to the same period in the prior year resulted primarily from lower performance against financial objectives in 2026 as compared to the same period in the prior year. The increase in professional fees as a percentage of total revenue in the third quarter of 2026 as compared to the same period in the prior year resulted primarily from higher legal fees. The decrease in professional fees as a percentage of total revenue in the first nine months of 2026 as compared to the same period in the prior year resulted primarily from lower proxy contest expenses and lower costs associated with the Company’s strategic initiatives. In the first nine months of 2026, we incurred $4,072 in costs related to a proxy contest in connection with the Company’s 2025 annual shareholders meeting held on November 20, 2025. In the first nine months of 2025, we incurred $8,220 in costs related to a proxy contest in connection with the Company’s 2024 annual shareholders meeting held on November 21, 2024. Costs associated with the Company’s strategic initiatives decreased by approximately $7,300 in the first nine months of 2026 as compared to the same period in the prior year. The decrease in payroll and related expense as a percentage of total revenue in the third quarter of 2026 as compared to the same period in the prior year was primarily driven by lower headcount. The increase in payroll and related expense as a percentage of total revenue in the first nine months of 2026 as compared to the same period in the prior year resulted primarily from severance costs related to a corporate restructuring. Impairment and Store Closing Costs During the first nine months of 2026, impairment charges of $418 were recorded for three Maple Street Biscuit Company (“MSBC”) locations as a result of the Company’s decision not to extend the leases for these locations. During the first nine months of 2026, one Cracker Barrel store and sixteen MSBC locations were closed because of poor operating performance, resulting in closing costs of $3,473 which included lease termination costs. 28 Table of Contents During the third quarter of 2025, we recorded impairment charges of $718 as a result of the deterioration in operating performance of two MSBC locations. During the first nine months of 2025, we recorded impairment charges of $3,581 as a result of the deterioration in operating performance of five MSBC locations and two Cracker Barrel locations. One Cracker Barrel store was closed in the first nine months of 2025 resulting in closing costs of $288. Operating Income (Loss) Operating income (loss) consisted of the following for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ Nine Months Ended ​ ​ ​ May 01, ​ ​ May 02, ​ ​ May 01, ​ ​ May 02, ​ ​ ​ ​ ​ 2026 ​ ​ ​ ​ 2025 ​ ​ ​ ​ 2026 ​ ​ ​ ​ 2025 Operating income (loss) ​ $ 6,720 ​ $ 14,857 ​ $ (25,614) ​ $ 51,051 In the third quarter of 2026, operating income decreased from the same period in the prior year primarily due to the decrease in total revenue partially offset by lower labor expenses and lower advertising expense. In the first nine months of 2026, operating income (loss) decreased primarily due to the decrease in total revenue partially offset by lower cost of goods sold expenses, lower labor expenses, lower incentive compensation expense and lower professional fees. Litigation Settlement Income In the third quarter of 2026, the Company received and recorded $47,422, net of legal fees, pursuant to a settlement agreement resolving interchange fee litigation. Interest Expense, Net The following table highlights interest expense in dollars for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ Nine Months Ended ​ ​ May 01, ​ May 02, ​ May 01, ​ May 02, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 Interest expense, net ​ $ 3,668 ​ $ 4,984 ​ $ 11,425 ​ $ 15,784 ​ The decreases in interest expense for the third quarter and first nine months of 2026 as compared to the same periods in the prior year resulted primarily from lower weighted average debt levels under our revolving credit facility partially offset by the interest related to the 2030 Notes. Provision for Income Taxes (Income Tax Benefit) The following table highlights the provision for income taxes (income tax benefit) as a percentage of income before income taxes (“effective tax rate”) for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ ​ Nine Months Ended ​ ​ ​ May 01, ​ May 02, ​ ​ ​ ​ May 01, ​ May 02, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ Effective tax rate ​ 15.2 % (27.4) % ​ (87.5) % (12.4) % ​ 29 Table of Contents The increase in the effective tax rate in the third quarter of 2026 as compared to the same period in the prior year is primarily due to a reduced benefit from employment-related tax credits on higher income before income taxes in the third quarter of 2026. The decrease in the effective tax rate in the first nine months of 2026 as compared to the same period in the prior year is primarily due to a greater benefit from employment-related tax credits on lower income before income taxes in the first nine months of 2026. H.R. 1., also known as the One Big Beautiful Bill Act (the “OBBBA”), was enacted on July 4, 2025, with effective dates in 2025 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 for the first nine months of 2026 did not have a material impact on our financial position. We will continue to assess the potential impacts on our financial position as additional guidance related to the OBBBA is released. ​ The Company records its interim income tax benefit using the discrete-period computation method, as of May 01, 2026 and May 02, 2025, as allowed under Accounting Standards Codification 740-270, Accounting for Income Taxes – Interim Reporting. Use of the annualized effective tax rate (“AETR”) method would have resulted in an unreliable tax rate as small changes in the projected ordinary annual income would have resulted in significant changes in the AETR. Net Income Net income consisted of the following for the specified periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ Nine Months Ended ​ ​ ​ May 01, ​ ​ May 02, ​ ​ May 01, ​ ​ May 02, ​ ​ ​ ​ ​ 2026 ​ ​ ​ ​ 2025 ​ ​ ​ ​ 2026 ​ ​ ​ ​ 2025 Net income ​ $ 42,811 ​ $ 12,574 ​ $ 19,471 ​ $ 39,625 ​ The increase in net income in the third quarter of 2026 as compared to the same period in the prior year resulted primarily from the litigation settlement income of $47,422 received during the period. The decrease in net income in the first nine months of 2026 as compared to the same period in the prior year resulted primarily from the decrease in operating income (loss) discussed above partially offset by the litigation settlement income received during the third quarter of 2026. Liquidity and Capital Resources Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under the 2025 Revolving Credit Facility. Cash generated from operations, together with our borrowing capacity under the 2025 Revolving Credit Facility, were sufficient to finance all of our dividend payments, working capital needs, interest payments on long-term debt obligations and other cash payment obligations in the first nine months of 2026. We believe that cash on hand at May 01, 2026, along with cash expected to be generated from our operating activities and the borrowing capacity under our 2025 Revolving Credit Facility, will be sufficient to finance our continuing operations, debt service, dividend payments, capital expenditures and working capital needs for the next twelve months and thereafter. 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 our 2025 Revolving Credit Facility and other debt instruments prior to maturity. ​ 30 Table of Contents Cash Generated From Operations Our operating activities provided net cash of $92,506 for the first nine months of 2026 as compared to $116,677 net cash provided during the same period in the prior year. This decrease was primarily driven by the operating loss in the first nine months of 2026. Capital Expenditures Capital expenditures (purchase of property and equipment) net of proceeds from insurance recoveries were $87,896 for the first nine months of 2026 as compared to $113,214 for the same period in the prior year. Our capital expenditures consisted primarily of capital investments for existing stores, capital expenditures for strategic initiatives and new store locations. The decrease in capital expenditures in the first nine months of 2026 compared to the same period in the prior year resulted primarily from lower capital investments in existing stores and reduced spending on strategic initiatives. We currently expect capital expenditures to be approximately $105,000 to $115,000 in 2026. This estimate includes our maintenance and technology initiatives as well as the acquisition of sites and construction costs of new locations that we plan to open during 2026. We intend to fund our capital expenditures with cash generated by operations and borrowings under our 2025 Revolving Credit Facility, as necessary. Borrowing Capacity, Debt Covenants and Notes On May 16, 2025, the Company entered into a five-year $800,000 credit facility (the “2025 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 a $75,000 letter of credit subfacility. The 2025 Credit Facility also provides for an uncommitted accordion feature that allows the Company to increase the 2025 Revolving Credit Facility by up to $200,000, plus any additional amount that would not cause the Company to exceed a consolidated total leverage ratio of 3:50:1:00 (subject to securing additional commitments from existing lenders or new lending institutions). The 2025 Credit Facility also provided for a $250,000 delayed draw term loan facility (the “Delayed Draw Term Facility”) which was terminated on June 13, 2025 in connection with the Company’s issuance and sale of the 2030 Notes. At May 01, 2026, we did not have any borrowings outstanding under the 2025 Revolving Credit Facility. At May 01, 2026, we had $8,703 of standby letters of credit related to securing reserved claims under our workers’ compensation insurance, which reduce our borrowing availability under the 2025 Revolving Credit Facility. At May 01, 2026, we had $541,297 in borrowing availability under our 2025 Revolving Credit Facility. During the first nine months of 2026, we borrowed $238,000 and repaid $238,000 under the 2025 Revolving Credit Facility. Our 2025 Revolving Credit Facility contains customary financial covenants, which include maintenance of a maximum consolidated senior secured leverage ratio and a minimum consolidated interest coverage ratio. We were in compliance with the 2025 Revolving Credit Facility’s financial covenants at May 01, 2026. We currently expect to be in compliance with the 2025 Revolving Credit Facility’s financial covenants for the term of the facility. 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. 31 Table of Contents 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 a rate of 0.625% per annum, payable semi-annually with the final interest payment on June 15, 2026. For additional information regarding our 2025 Revolving Credit Facility, the 2026 Notes and the 2030 Notes, see Note 4 to the Condensed Consolidated Financial Statements. 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 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. During the first nine months of 2026, we paid a regular dividend of $0.75 per share and declared a dividend of $0.25 per share that was subsequently paid on May 13, 2026, to shareholders of record on April 10, 2026. In addition, in the fourth quarter of 2026, our Board of Directors approved a regular dividend payable on August 12, 2026 to shareholders of record as of July 17, 2026 of $0.25 per share. 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. 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. We did not repurchase any shares of our common stock in the first nine months of 2026. During the first nine months of 2026, we issued 83,736 shares of our common stock resulting from the vesting of share-based compensation awards. Related tax withholding payments on these share-based compensation awards resulted in a net use of cash of $1,943. Working Capital In the restaurant industry, substantially all payments received on sales are made by credit card, debit card or cash. Restaurant inventories purchased through our principal food distributor are on terms of net zero days, while restaurant inventories purchased locally are generally financed from normal trade credit. Because of our retail gift shops, which have a lower product turnover than the restaurants, we carry larger inventories than many other companies in the restaurant industry. Retail inventories are generally financed through trade credit. These various trade terms are aided by the rapid turnover of the restaurant inventory. Employees generally are paid once every week or every two weeks except for bonuses that are paid either quarterly or annually in arrears. Many other operating expenses have normal trade terms and certain expenses, such as certain taxes and some benefits, are deferred for longer periods of time. 32 Table of Contents Like many other restaurant companies, we are able to, and often do, operate with negative working capital. We had negative working capital of $289,503 at May 01, 2026 as compared to negative working capital of $312,491 at August 01, 2025. The change in working capital at May 01, 2026 as compared to August 01, 2025 primarily resulted from lower accounts payable due to timing of payments partially offset by the decrease in cash. Off-Balance Sheet Arrangements We have no material off-balance sheet arrangements. Material Commitments There have been no material changes in our material commitments other than in the ordinary course of business since the end of 2025. Refer to the section entitled “Liquidity and Capital Resources” presented in the MD&A of our 2025 Form 10-K for additional information regarding our material commitments. Recent Accounting Pronouncements Not Yet Adopted See Note 1 to the accompanying Condensed Consolidated Financial Statements for a discussion of recent accounting guidance not yet adopted. We are currently evaluating the impact of adopting this accounting guidance. Critical Accounting Estimates We prepare our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We base our estimates and judgments on historical experience, current trends, outside advice from parties believed to be experts in such matters, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. However, because future events and their effects cannot be determined with certainty, actual results could differ from those assumptions and estimates, and such differences could be material. Our critical accounting estimates are described under the heading “Critical Accounting Estimates” in Part II, Item 7 of the 2025 Form 10-K. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. Critical accounting estimates are those that: ● management believes are most important to the accurate portrayal of both our financial condition and operating results, and ● require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. ​ We consider the following accounting estimates to be most critical in understanding the judgments that are involved in preparing our Consolidated Financial Statements: ● Impairment of Long-Lived Assets ● Insurance Reserves ● Retail Inventory Valuation ● Lease Accounting 33 Table of Contents Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors. There have been no material changes in our critical accounting estimates from those described in the 2025 Form 10-K.