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Item 7. Management’s Discussion and Analysis

2026-09-25 compared with 2025-09-26 · 122 added, 127 removed, 290 unchanged (46% 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 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.

The following MD&A includes a discussion of 2026 and 2025 items and year-to-year comparisons between the years ended July 31, 2026 and August 01, 2025.

Discussion of 2024 items and year-to-year comparisons between the years ended August 01, 2025 and August 02, 2024 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 01, 2025, filed with the SEC on September 26, 2025.

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As of September 11, 2026, the Company operated 655 Cracker Barrel stores located in 43 states.

The Company also owns Maple Street Biscuit Company (“MSBC”), a breakfast and lunch fast casual concept.

As of September 12, 2025, the Company operated 68 MSBC locations in ten states.

During 2026, the Company completed the divestiture of its Maple Street Biscuit Company (“MSBC”) business, including the MSBC tradename and the assets used in 35 MSBC locations.

Simultaneously with the completion of this transaction, the Company closed the remaining 16 MSBC locations.

During 2026 and the first quarter of 2027, the Company undertook a number of strategic, leadership and financing actions intended to support its long-term business objectives, which are discussed further below in MD&A.

Strategic Priorities

Management believes that the Cracker Barrel 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 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.

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 :

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 :

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 :

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 :

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 :

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.

Our long-term strategy is anchored on the following priorities:

food, experience, people, and profitability.

We believe there are significant challenges in the macroeconomic outlook for the coming quarters, including continued inflation volatility, 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.

Additionally, during 2026, we faced challenges related to negative publicity from brand initiatives related to our previously-announced strategic plan, 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.

Key Performance Indicators

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Our stores operate in both the restaurant and retail industries in the United States.

The restaurant and retail industries are highly competitive with respect to quality, variety and price of the food products, availability of carryout and home delivery, internet and mobile ordering capabilities and retail merchandise offered.

We compete with a significant number of national and regional restaurant and retail chains.

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 MSBC concept operates in the fast casual segment.

The restaurant and retail industries are highly competitive with respect to quality, variety and price of food and retail merchandise, service, availability of carryout and home delivery, internet and mobile ordering capabilities, effectiveness of marketing and advertising, and overall guest experience.

We compete with a significant number of national and regional restaurant and retail chains, as well as locally owned restaurants and retailers.

Competition also comes from family dining, casual dining, full-service, fast casual and quick-service restaurants, as well as supermarkets and other food providers that offer convenient meal alternatives.

Cracker Barrel primarily operates in the full-service segment of the restaurant industry.

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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In general, we believe that the geographic dispersion of our stores and multiple sources of distribution adequately mitigate the potential impact of severe weather and changing weather patterns on our stores, but the Board of Directors and management team continually monitor and reexamine these considerations in light of ongoing trends.

We are currently experiencing, and have in the past experienced, inflationary conditions with respect to a variety of costs, including the cost for food, ingredients, retail merchandise, transportation, distribution, labor and utilities.

While we continue to partially offset the impact of these inflationary pressures with menu price increases and operational improvements, there can be no assurance that such conditions will not adversely affect consumer demand or our cost structure in ways that we may be unable to manage without diminishing our profitability.

We are currently experiencing, and have in the past experienced, inflationary pressures with respect to a variety of costs, including food, ingredients, retail merchandise, transportation, distribution, labor and utilities.

While inflationary trends have fluctuated over time, cost increases in these areas may continue to affect our operating expenses.

While we have partially offset the impact of these inflationary pressures with menu price increases and operational improvements, there can be no assurance that such conditions will not adversely affect consumer demand or our cost structure in ways that we may be unable to manage without diminishing our profitability.

RESULTS OF OPERATIONS

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General and administrative expenses

Gain on sale and leaseback transaction, net

Impairment and store closing costs

Goodwill impairment

Operating income

Loss on sale of business assets

Operating income (loss)

Other income:

Gain on extinguishment of debt

Litigation settlement income

Interest expense, net

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Cracker Barrel

Sold during the period:

Stores in operation at end of the period:

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Total revenue

Total revenue percentage increase (1)

Total revenue percentage increase (decrease)

Total revenue by percentage relationships:

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Comparable restaurant guest traffic decrease (2) :

(1) 2024 consists of 53 weeks while the other periods consist of 52 weeks.

(1) Average store volumes include sales of all stores except for MSBC.

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Comparable store sales and traffic exclude MSBC.

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

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.

Total revenue in 2026 decreased 4.7% as compared to 2025.

Our comparable store restaurant sales decrease in 2026 as compared to 2025 resulted primarily from the guest traffic decrease partially offset by the average check increase.

The average check increase included an average menu price increase of 4.3%.

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Our retail sales are made primarily to our restaurant guests.

The decrease in our comparable store retail sales in 2025 as compared to 2024 resulted primarily from the decrease in guest traffic.

The decrease in our comparable store retail sales in 2026 as compared to 2025 resulted primarily from the guest traffic decrease.

The decrease in guest traffic in 2026 as compared to 2025 is primarily the result of negative publicity and customer reactions to certain changes in 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)

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Restaurant Cost of Goods Sold

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.

The increase in restaurant cost of goods sold as a percentage of restaurant revenue in 2026 as compared to 2025 was primarily driven by higher food waste, commodity inflation, increased discounts and a shift to higher cost menu items partially offset by the menu pricing increase.

Commodity inflation was 2.3% in 2026.

We presently expect the rate of commodity inflation to be approximately 3.0% in 2027.

The following table highlights retail cost of goods sold as a percentage of retail revenue for the past two years:

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2026 Compared to 2025

Increase (Decrease) as a

Retail Revenue

(Decrease) Increase as a

Percentage of Total

Tariff refunds

Lower initial margin

Vendor allowances

The decrease in retail cost of goods sold as a percentage of retail revenue in 2026 as compared to 2025 resulted primarily from tariff refunds of $15,033 partially offset by higher markdowns, higher discounts and lower initial margin.

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 Other Related Expenses

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2026 Compared to 2025

(Decrease) Increase as a

Percentage of Total Revenue

Increase as a Percentage

of Total Revenue

Store hourly labor

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Employee health care expense

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.

The increases in store hourly labor and store management compensation as a percentage of total revenue in 2026 as compared to 2025 resulted primarily from lower productivity and the deleverage associated with the decrease in total revenue in 2026 as compared to 2025.

We presently expect the rate of wage inflation to be approximately 2.5% to 3.0% in 2027.

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.

The increase in store bonus expense as a percentage of total revenue in 2026 as compared to 2025 resulted primarily from the deleverage associated with the decrease in total revenue in 2026 as compared to 2025.

The increase in employee health care expense as a percentage of total revenue in 2026 as compared to 2025 resulted primarily from unfavorable claim experience.

Other Store Operating Expenses

Other store operating expenses include all store-level operating costs, the major components of which are occupancy costs, operating supplies, advertising, third-party delivery fees, credit card and gift card fees, real and personal property taxes and general insurance.

Other store operating expenses include all store-level operating costs, the major components of which are occupancy costs, operating supplies, advertising, credit card and gift card fees, third-party delivery fees, real and personal property taxes, general insurance and manager conference expenses.

Occupancy costs include maintenance, utilities, depreciation and rent.

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2026 Compared to 2025

Increase as a Percentage

of Total Revenue

Increase (Decrease) 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.

Other store expense, net

General insurance

The increase in store occupancy costs as a percentage of total revenue in 2026 as compared to 2025 resulted primarily from higher maintenance expense and the deleverage associated with the decrease in total revenue.

The decrease in other store expense, net as a percentage of total revenue in 2026 as compared to 2025 resulted primarily from the receipt of $12,596 in settlement proceeds related to litigation matters involving our poultry and pork suppliers.

This favorable impact was partially offset by costs associated with our biennial general manager conference, which was not held in 2025.

The decrease in supplies expense as a percentage of total revenue in 2026 as compared to 2025 resulted primarily from the Company’s cost savings programs.

The decrease in general insurance as a percentage of total revenue in 2026 as compared to 2025 resulted primarily from lower expense in 2026 due to unfavorable claims in 2025 that did not recur in 2026.

General and Administrative Expenses

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2026 Compared to 2025

Increase as a Percentage

of Total Revenue

Increase (Decrease) as a

Percentage of Total Revenue

Payroll and related expense

Professional fees

Incentive compensation expense

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.

The increase in payroll and related expense as a percentage of total revenue in 2026 as compared to 2025 resulted primarily from severance costs from a corporate restructuring and Chief Executive Officer (“CEO”) transition costs incurred in 2026 partially offset by lower headcount.

The increase in professional fees as a percentage of total revenue in 2026 as compared to 2025 primarily resulted from higher legal fees partially offset by lower proxy contest expenses and lower costs associated with the Company’s strategic initiatives.

In 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 2025, we incurred expenses of $8,220 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 2026 as compared to 2025.

The decrease in incentive compensation expense as a percentage of total revenue in 2026 as compared to 2025 resulted primarily from lower performance against financial objectives in 2026 as compared to 2025 partially offset by CEO transition costs incurred in 2026.

Gain on Sale and Leaseback Transaction, Net

In the fourth quarter of 2026, we entered into a sale and leaseback transaction involving 26 of our owned Cracker Barrel properties and recorded a net gain of $47,421.

This amount is recorded in the gain on sale and leaseback transaction, net line on the Consolidated Statements of Income.

See Note 8 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information regarding this sale and leaseback transaction.

Impairment and Store Closing Costs

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.

During 2026 and 2025, we recorded impairment charges of $21,968 and $19,772, respectively.

The increase in impairment and store closing costs in 2026 as compared to 2025 was primarily driven by costs associated with the Company’s divestiture of the MSBC business and the impairment of underperforming locations.

The 2026 charges consisted of impairments related to nine Cracker Barrel locations and sixteen MSBC locations, compared with seven Cracker Barrel locations and twenty-five MSBC locations in 2025.

In addition, during 2026 and 2025, we incurred store closing costs of $9,266 and $287, respectively.

The 2026 store closing costs primarily related to the closure of four Cracker Barrel and thirty-three MSBC locations, compared with two Cracker Barrel and two MSBC locations in 2025.

For additional information regarding the divestiture of the MSBC business, see MSBC Divestiture section below and Note 13 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

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

During 2024, we recorded a goodwill impairment charge of $4,690 related to MSBC because of declining financial trends and changes in the macroeconomic environment, including interest rate and inflationary pressures.

This amount is recorded in the goodwill impairment line on the Consolidated Statements of Income.

Operating income

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

Operating Income

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.

MSBC Divestiture

On July 20, 2026, the Company completed the sale of certain assets used in its MSBC business to a third party, including the MSBC tradename and other intellectual property and the assets used in thirty-five MSBC restaurant locations.

As a result of the transaction, the Company recognized a loss of $27,039 which is recorded in the loss on sale of business assets line on the Consolidated Statements of Income in 2026.

Simultaneously with the asset sale, the Company closed its remaining sixteen MSBC restaurant locations on July 20, 2026 as part of its focus on its core Cracker Barrel brand and improve profitability.

In connection with exiting the MSBC business, the Company recognized an impairment charge of $8,523 and store closing and other exit-related costs of $5,430, consisting primarily of severance, contract termination and other closure-related costs.

Impairment, store closing costs and other exit-related charges were recorded in the impairment and store closing costs line on the Consolidated Statements of Income.

For additional information regarding the exit of the MSBC business, see Note 13 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Operating Income (Loss)

Operating income (loss) consisted of the following for the past two years:

Operating income (loss)

Our operating results declined in 2026 as compared to 2025 primarily due to the decrease in total revenue, the loss on sale of business assets associated with the divestiture of the MSBC business and the impairment and store closing costs discussed above partially offset by the gain recognized on the 2026 sale and leaseback transaction.

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.

In 2025, contemporaneously with the issuance of $345,000 aggregate principal 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.

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.

This amount is recorded in the litigation settlement income line on the Consolidated Statements of Income.

Interest Expense, Net

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Interest expense, net

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.

The year-to-year decrease in 2026 as compared to 2025 resulted primarily from lower weighted average debt levels under the revolving credit facility partially offset by the 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.

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

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 decrease in our effective tax rate in 2026 is primarily due to lower income before income taxes as compared to 2025.

We presently expect an income tax benefit of approximately $4,000 to $8,000 for 2027.

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 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.

The Company has evaluated the impacts of OBBBA, and the effects of these provisions have been incorporated into the accompanying financial statements.

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

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.

Our net income in 2026 decreased as compared to 2025 primarily due to our decrease in our operating income (loss) discussed above partially offset by the litigation settlement income related to the credit card interchange fee litigation recognized in 2026 and lower interest expense, net as discussed above.

LIQUIDITY AND CAPITAL RESOURCES

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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.

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.

Our cash generated from our operations, together with our borrowing capacity under our revolving credit facility, were sufficient to finance all of our capital expenditures, dividend payments, working capital needs, interest payments on long-term debt obligations and other cash payment obligations in 2026.

We believe that cash at July 31, 2026, 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, 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 $550,000 revolving credit facility (the “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 credit facility and other debt instruments prior their maturity.

Cash Generated from Operations

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.

The decrease in net cash flow provided by operating activities in 2026 as compared to 2025 was primarily driven by lower earnings as well as the timing of certain payments partially offset by the receipt of income tax refunds.

Purchase Obligations

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and commitments under contracts for maintenance needs and other services in the normal course of business.

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

Our estimate as of July 31, 2026, for these purchase obligations is $151,527, of which $125,681 is short-term.

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

As of July 31, 2026, the total present value of our lease expenses (including variable lease costs) under operating leases was $698,826, which had a weighted-average remaining lease term of 15.22 years.

In addition, as of July 31, 2026, total short-term future minimum lease payments were $86,141.

We have not entered into any leases that have not yet commenced as of July 31, 2026.

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.

Other Long-Term Obligations

At August 01, 2025, other long-term obligations include our Non-Qualified Savings Plan ($22,700, with a corresponding long-term asset to fund the liability;

see Note 11 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K), Deferred Compensation Plan ($1,143) and our long-term incentive plans ($2,444).

At August 01, 2025, the entire liability of $15,375, for uncertain tax positions (including penalties and interest) is classified as a long-term liability.

At July 31, 2026, other long-term obligations include our Non-Qualified Savings Plan ($25,193, with a corresponding long-term asset to fund the liability;

see Note 11 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K) and Deferred Compensation Plan ($1,127).

At July 31, 2026, the entire liability of $16,301, for uncertain tax positions (including penalties and interest) is classified as a long-term liability.

At this time, we are unable to make a reasonably reliable estimate of the amounts and timing of payments in individual years because of uncertainties in the timing of the effective settlement of tax positions.

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Capital expenditures, net of proceeds from insurance recoveries

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

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.

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

The decrease in capital expenditures in 2026 from 2025 resulted primarily from lower capital investments in existing stores, reduced spending on strategic initiatives and fewer store openings.

We currently expect capital expenditures to be approximately $110,000 to $125,000 in 2027.

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.

This estimate includes our maintenance and technology initiatives.

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.

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Proceeds from sale of property and equipment

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.

The increase in proceeds from sale of property and equipment in 2026 from 2025 resulted primarily from the sale and leaseback transaction in 2026.

See Note 8 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information regarding this sale and leaseback transaction.

Borrowing Capacity, Debt Covenants and Notes

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

On May 16, 2025, the Company entered into 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 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”).

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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:

At July 31, 2026 and August 01, 2025, we did not have any borrowings outstanding under the 2025 Revolving Credit Facility.

Borrowing capacity under the 2025 Revolving Credit Facility

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Borrowing availability under the 2025 Revolving Credit Facility

*Our standby letters of credit relate to securing reserved claims under workers’ compensation insurance and securing certain sale and leaseback transactions.

*Our standby letters of credit relate to securing reserved claims under workers’ compensation insurance.

Our standby letters of credit reduce our borrowing availability under the 2025 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 2026, we borrowed $407,000 and repaid $407,000 under the 2025 Revolving Credit Facility.

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.

During 2025, we borrowed $548,500 and repaid $728,500 under the 2022 Revolving Credit Facility and 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 July 31, 2026, and we expect to be in compliance with the 2025 Revolving Credit Facility’s financial covenants for the remaining term of the facility.

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

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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.

The remaining $150,000 aggregate principal amount of the 2026 Notes was paid 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 Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

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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 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.

In 2026 and 2025, we paid regular dividends of $1.00 per share.

Additionally, during the first quarter of 2027, the Board declared a dividend of $0.25 per share payable on November 12, 2026 to shareholders of record as of October 16, 2026.

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We did not repurchase any shares of our common stock in 2026 or 2025.

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 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.

The change in working capital at July 31, 2026 compared to August 01, 2025 primarily reflected the payment of 2026 Notes in 2026 and the timing of payments for accounts payable partially offset by a lower income tax receivable due to the receipt of income tax refunds during 2026 and lower inventory levels.

Off-Balance Sheet Arrangements

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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.

The adoption of accounting for income tax disclosures 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.

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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 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.

During 2026, we recorded impairment charges of $16,024 for long-lived assets due to the deterioration in operating performance of six Cracker Barrel locations and thirteen MSBC locations due to the divestiture of the MSBC business.

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

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

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The reserves and losses in the actuarial study represent a range of possible outcomes within which no given estimate is more likely than any other estimate.

As such, we record the losses in the lower half of that range and discount them to present value using a risk-free interest rate based on projected timing of payments.

As such, we record the losses at the midpoint of that range and discount them to present value using a risk-free interest rate based on projected timing of payments.

We also monitor actual claims development, including incurrence or settlement of individual large claims during the interim periods between actuarial studies as another means of estimating the adequacy of our 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 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.

In 2026, we recorded impairment charges of $5,944 which primarily related to the right-of-use assets due to the divestiture of the MSBC business.

In 2025, we recorded impairment charges of $1,381 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