What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-30 compared with 2024-02-27 · 184 added, 127 removed, 334 unchanged (48% of the section changed)

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Cracker Barrel Old Country Store® (“Cracker Barrel”) concept.

As of January 26, 2024, we operated 662 Cracker Barrel stores in 45 states and 63 Maple Street Biscuit Company (“MSBC”) locations in ten states.

As of April 26, 2024, we operated 658 Cracker Barrel stores in 44 states and 63 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

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strength as a core competitive component of our business strategy.

Our long-term strategy remains centered on driving sustainable sales growth, continued business model improvements, building profitable Cracker Barrel and MSBC stores, and driving

shareholder returns.

During the second quarter of 2024, we continued to make progress in key areas of the business, such as store-level operational excellence, improving the guest experience, enhancing our menu and

marketing, maintaining a strong value proposition, growing our off-premise business, leveraging our Cracker Barrel Rewards loyalty program, providing unique retail merchandise and thoughtfully expanding MSBC.

Additionally, we continued to make

progress on the strategic transformation initiative that began during the first quarter of 2024.

This data-driven initiative includes a comprehensive review of the business and a wide-ranging assessment of near-term and long-term opportunities and

strategic objectives.

We believe there is significant uncertainty surrounding the macroeconomic outlook for the coming quarters, but we remain focused on delivering long-term growth and returns for shareholders.

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 inflationary pressures, higher interest rates, higher consumer debt levels and

lower savings rates, as well as the potential uncertainty associated with the geopolitical environment and the U.S.

presidential election, among other factors.

However, despite these challenges, we remain focused on delivering long-term growth and

returns for shareholders.

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

Refining the brand :

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

Enhancing the menu :

introducing menu innovation focused on craveability and traffic drivers, streamlining processes to improve execution, and

optimizing strategic pricing to protect value and improve profitability.

Evolving the store and guest experience :

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

We are in the process of testing remodel prototypes and expect to complete 25-30 remodels in fiscal 2025.

Winning in digital and off-premise :

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

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

Elevating the employee experience :

upgrading training and development programs and tools and simplifying job roles and utilizing technology to improve

the employee experience.

Key Performance Indicators

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Quarter Ended

Six Months Ended

Nine Months Ended

Total revenue

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General and administrative expenses

Operating income

Impairment and store closing costs

Goodwill impairment

Operating income (loss)

Interest expense, net

Income before income taxes

Income (loss) before income taxes

Provision for income taxes (income tax benefit)

Net income (loss)

The following table sets forth the change in the number of units in operation for the specified periods:

Quarter Ended

Six Months Ended

Nine Months Ended

Net change in units:

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Total Revenue

Total revenue for the second quarter and the first six months of 2024 increased 0.2% and decreased 0.8%, respectively, as compared to the same periods in the prior year.

Total revenue for the third quarter and the first nine months of 2024 decreased 1.9% and 1.1%, 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

Six Months Ended

Nine Months Ended

Revenue in dollars:

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Comparable store sales and traffic exclude MSBC.

For the second quarter and first six months of 2024, our comparable store restaurant sales increases resulted from the average check increases partially offset by the guest traffic decreases as

compared to the prior year periods.

For the second quarter and first six months of 2024, the average check increases included average menu price increases of 4.8% and 5.8%, respectively.

For the third quarter and first nine months of 2024, our comparable store restaurant sales decreases resulted primarily from the guest traffic decreases partially offset by the average check

increases as compared to the prior year periods.

For the third quarter and first nine months of 2024, the average check increases included average menu price increases of 4.0% and 5.2%, respectively.

Our retail sales are made substantially to our restaurant guests.

For the second quarter and the first six months of 2024, our comparable store retail sales decreases resulted primarily from the

For the third quarter and the first nine months of 2024, our comparable store retail sales decreases resulted primarily from the

guest traffic decreases during these periods.

The decreases in guest traffic are primarily the result of lower consumer demand due to the impact of macroeconomic factors, including inflationary pressures, higher interest rates, higher consumer

debt levels, lower savings rates and the risk of recession.

The decreases in guest traffic are primarily the result of lower consumer demand arising from multiple macroeconomic factors, including inflationary pressures, higher interest rates, higher

consumer debt levels and lower savings rates.

Cost of Goods Sold (Exclusive of Depreciation and Rent)

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Quarter Ended

Six Months Ended

Nine Months Ended

Cost of Goods Sold in dollars:

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Cost of Goods Sold by percentage of revenue:

The decreases in restaurant cost of goods sold as a percentage of restaurant revenue in the second quarter and first six months of 2024 as compared to the same periods in the prior year were

The decreases in restaurant cost of goods sold as a percentage of restaurant revenue in the third quarter and first nine months of 2024 as compared to the same periods in the prior year were

primarily the result of lower commodity inflation and our menu price increases referenced above.

Commodity inflation was 1.4% in the second quarter of 2024 and commodity deflation was 0.4% in first six months of 2024 as compared to significant

commodity inflation of 12.5% and 14.5% in the second quarter and first six months of 2023, respectively.

We presently expect the rate of commodity inflation to be flat to 2% in 2024.

The decrease in retail cost of goods sold as a percentage of retail revenue in the second quarter of 2024 as compared to the same period in the prior year resulted primarily from higher initial

margin partially offset by higher markdowns.

Second Quarter

Commodity deflation was 0.6% and 0.5% in the third quarter and first nine months of 2024, respectively, as compared to significant commodity inflation

of 4.3% and 11.0% in the third quarter and first nine months of 2023, respectively.

We presently expect the rate of commodity inflation to be flat in 2024.

The decrease in retail cost of goods sold as a percentage of retail revenue in the third quarter of 2024 as compared to the same period in the prior year resulted primarily from higher initial

margin partially offset by higher discounts, the change in the provision for obsolete inventory and higher inventory shrinkage.

Third Quarter

(Decrease) Increase

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Higher initial margin

The decrease in retail cost of goods sold as a percentage of retail revenue in the first six months of 2024 as compared to the same period in the prior year resulted primarily from higher initial

margin partially offset by higher discounts, higher markdowns, higher inventory shrinkage and higher freight expense.

First Six Months

Provision for obsolete inventory

Inventory shrinkage

The decrease in retail cost of goods sold as a percentage of retail revenue in the first nine months of 2024 as compared to the same period in the prior year resulted primarily from higher initial

margin partially offset by higher discounts, higher markdowns and higher freight expense.

First Nine Months

(Decrease) Increase

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Higher initial margin

Inventory shrinkage

Freight expense

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Quarter Ended

Six Months Ended

Nine Months Ended

Labor and related expenses

This percentage change for the second quarter of 2024 as compared to the same period in the prior year resulted primarily from the following:

Second Quarter

Increase (Decrease)

as a Percentage

of Total Revenue

This percentage change for the third quarter of 2024 as compared to the same period in the prior year resulted primarily from the following:

Third Quarter Increase

as a Percentage of

Total Revenue

Store hourly labor

Store management compensation

This percentage change for the first six months of 2024 as compared to the same period in the prior year resulted from the following:

First Six Months

Employee health care expense

This percentage change for the first nine months of 2024 as compared to the same period in the prior year resulted from the following:

First Nine Months

Increase (Decrease)

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Employee health care expense

The increases in store hourly labor and store management compensation as a percentage of total revenue for the second quarter and first six months of 2024 as compared to the same periods in the

prior year resulted primarily from wage inflation, higher staffing levels and the investment of additional labor hours to improve the guest experience.

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 2024 as compared to the same periods in the

prior year resulted primarily from higher staffing levels and the investment of additional labor hours to improve the guest experience as well as wage inflation partially offset by higher average check.

We presently expect the rate of wage inflation to be approximately 5% in 2024.

During 2024, we revised our employee benefits policy which resulted in a one-time reduction in other wages expense for the second quarter and first six months of 2024 as compared to the same

periods in the prior year.

The increase in payroll taxes as a percentage of total revenue for the first six months of 2024 as compared to the same period in the prior year resulted primarily from the increases in store

The increases in employee health care expenses as a percentage of total revenue for the third quarter and first nine months of 2024 as compared to the same periods in the prior year resulted

primarily from higher claims.

The increase in payroll taxes as a percentage of total revenue for the first nine months of 2024 as compared to the same period in the prior year resulted primarily from the increases in store

hourly labor and store management compensation as compared to the same period in the prior year.

The increase in employee health care expenses as a percentage of total revenue for the first six months of 2024 as compared to the same period in the prior year resulted primarily from higher

During 2024, we revised our employee benefits policy which resulted in a one-time reduction in other wages expense for the first nine months of 2024 as compared to the same period in the prior

Other Store Operating Expenses

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Quarter Ended

Six Months Ended

Nine Months Ended

Other store operating expenses

This percentage change for the second quarter of 2024 as compared to the same period in the prior year resulted primarily from the following:

Second Quarter

Increase (Decrease)

as a Percentage

This percentage changes for the third quarter and first nine months of 2024 as compared to the same periods in the prior year resulted primarily from the following:

Third Quarter

Increase as a Percentage

of Total Revenue

First Nine Months

Increase as a Percentage

of Total Revenue

Advertising expense

Store occupancy costs

The percentage change for the first six months of 2024 as compared to the same period in the prior year resulted primarily from an increase in advertising expense.

The increases in advertising expense as a percentage of total revenue for the second quarter and first six months of 2024 as compared to the same periods in the prior year resulted primarily from

The increases in advertising expense as a percentage of total revenue for the third quarter and first nine months of 2024 as compared to the same periods in the prior year resulted primarily from

higher media spending and costs associated with our new customer loyalty program, Cracker Barrel Rewards.

The decrease in store occupancy costs as a percentage of total revenue for the second quarter of 2024 as compared to the same period in the prior year resulted primarily from a decrease in

utilities expense due to general rate deflation for natural gas and electricity.

The increases in store occupancy costs as a percentage of total revenue for the third quarter and the first nine months of 2024 as compared to the same periods in the prior year resulted primarily

from higher depreciation expense partially offset by lower utilities expense.

The increases in depreciation expense for the third quarter and first nine months of 2024 as compared to the prior year periods resulted primarily from higher capital

expenditures with accelerated depreciation methods.

The decreases in utilities expense for the third quarter and first nine months of 2024 as compared to the prior year periods resulted primarily from general rate deflation for natural gas and

lower electricity usage attributable to cost savings initiatives and guest traffic decreases.

Additionally, the decrease in utilities expense for the first nine months of 2024 as compared to the prior year period benefited from general rate

deflation for electricity.

General and Administrative Expenses

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Quarter Ended

Six Months Ended

Nine Months Ended

General and administrative expenses

This percentage change for the second quarter of 2024 as compared to the same period in the prior year resulted primarily from the following:

Second Quarter

This percentage change for the third quarter of 2024 as compared to the same period in the prior year resulted primarily from the following:

Third Quarter

Increase as a Percentage

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Incentive compensation expense

This percentage change for the first six months of 2024 as compared to the same period in the prior year resulted primarily from the following:

First Six Months

Payroll and related expense

This percentage change for the first nine months of 2024 as compared to the same period in the prior year resulted primarily from the following:

First Nine Months

Increase as a Percentage

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Payroll and related expense

The increases in professional fees as a percentage of total revenue in the second quarter and first six months of 2024 as compared to the same periods in the prior year resulted primarily from

costs associated with the Company’s strategic transformation initiative.

The increase in incentive compensation as a percentage of total revenue in the second quarter of 2024 as compared to the same period in the prior year resulted primarily from Chief Executive

Officer transition costs incurred in 2024.

The increase in payroll and related expense as a percentage of total revenue in the first six months of 2024 as compared to the same period in the prior year resulted primarily from severance costs

related to corporate restructuring.

Incentive compensation expense

The increases in professional fees as a percentage of total revenue in the third quarter and first nine months of 2024 as compared to the same periods in the prior year resulted primarily from

costs associated with the Company’s strategic transformation plan.

The increases in incentive compensation as a percentage of total revenue in the third quarter and first nine months of 2024 as compared to the same periods in the prior year resulted primarily from

Chief Executive Officer transition costs incurred in 2024.

The increases in payroll and related expense as a percentage of total revenue in the first nine months of 2024 as compared to the same periods in the prior year resulted primarily from severance

costs related to corporate restructuring and Chief Executive Officer transition costs incurred in 2024.

Impairment and Store Closing Costs

During the third quarter of 2024, we recorded impairment charges of $17,448 due to the deterioration in operating performance of six Cracker Barrel and thirteen MSBC locations.

Additionally,

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

During the third quarter of 2023, we recorded impairment charges of $11,692 due to the deterioration in operating performance of six Cracker Barrel locations.

Additionally, during the third

quarter of 2023, we incurred costs of $2,198 in connection with the closure of four Cracker Barrel and three MSBC locations because of poor operating performance.

Goodwill Impairment

In the third quarter of 2024, we recorded a goodwill impairment 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 Condensed Consolidated Statement of Income (Loss).

Interest Expense, Net

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Quarter Ended

Six Months Ended

Nine Months Ended

Interest expense, net

The increases in interest expense for the second quarter and the first six months of 2024 as compared to the same periods in the prior year resulted primarily from higher average weighted interest

rates under our 2022 Revolving Credit Facility (as defined below).

Provision for Income Taxes

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

The increases in interest expense for the third quarter and the first nine months of 2024 as compared to the same periods in the prior year resulted primarily from higher average weighted interest

rates and higher weighted average debt levels under our 2022 Revolving Credit Facility (as defined below).

Provision for Income Taxes (Income Tax Benefit)

The following table highlights the provision for income taxes as a percentage of income (loss) before income taxes (“effective tax rate”) for the specified periods:

Quarter Ended

Six Months Ended

Nine Months Ended

Effective tax rate

The decreases in the effective tax rate in the second quarter and first six months of 2024 as compared to the same periods in the prior year were primarily due to state audit settlements and the

disproportionate benefit of employment credits in relation to income before taxes in the current year periods.

The increase in the effective tax rate from the third quarter of 2023 to the third quarter of 2024 and the decrease from the first nine months of 2023 to the first nine months of 2024 are primarily

due to the disproportionate benefit of employment credits in relation to income (loss) before taxes in the current year periods.

The Company’s quarterly provision (benefit) for income taxes has historically been calculated using the annualized effective tax rate method (“AETR method”) which applies an estimated annual

effective tax rate to pre-tax income or loss.

However, the Company recorded its interim income tax provision (benefit) using the discrete-period computation method as of April 26, 2024, as allowed under Accounting Standards Codification 740-240, Accounting for Income Taxes – Interim Reporting.

Use of the 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.

We presently expect our effective tax rate for 2024 to be approximately (55%) to (60%).

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at July 28, 2023 and borrowings under our revolving credit facility, were sufficient to finance all of our growth, dividend payments, working capital needs, interest payments under our revolving credit facility and other cash payment obligations in

the first six months of 2024.

We believe that cash on hand at January 26, 2024, along with cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility, will be sufficient to finance

our continuing operations, our continuing expansion plans and working capital needs over the next twelve months.

We believe that 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, dividend payments, capital expenditures, interest expense on long-term debt obligations, operating lease obligations, continuing expansion plans and working capital needs beyond the

next twelve months.

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

the first nine months of 2024.

We believe that cash on hand at April 26, 2024, along with cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility, will be sufficient to finance our

continuing operations, our continuing expansion plans and working capital needs over the next twelve months.

We believe that 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, dividend payments, capital expenditures, interest expense on long-term debt obligations, operating lease obligations, continuing expansion plans and working capital needs beyond the next

twelve months.

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

debt instruments prior to their maturity.

Cash Provided By Operations

Our operating activities provided net cash of $61,879 for the first six months of 2024 as compared to $100,822 net cash provided during the first six months of 2023.

Our operating activities provided net cash of $99,456 for the first nine months of 2024 as compared to $151,236 net cash provided during the first nine months of 2023.

This decrease resulted

primarily from lower net income, lower decrease in retail inventory levels and higher bonus payments made in the first quarter of 2024 as a result of the prior year’s performance.

primarily from lower net income and lower decrease in retail inventory levels partially offset by the timing of payments for accounts payable and higher bonus payments made in the first quarter of 2024 as a result of the prior year’s performance.

Borrowing Capacity, Debt Covenants and Notes

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increase the revolving credit facility by $200,000.

At January 26, 2024, we had $156,500 of outstanding borrowings under the 2022 Revolving Credit Facility and $32,466 of standby letters of credit related to securing reserved claims under our

workers’ compensation insurance and certain sale and leaseback transactions, which reduce our borrowing availability under the 2022 Revolving Credit Facility.

At January 26, 2024, we had $511,034 in borrowing availability under our 2022 Revolving

Credit Facility.

During the first six months of 2024, we borrowed $243,500 and repaid $207,000 under the 2022 Revolving Credit Facility.

At April 26, 2024, we had $176,000 of outstanding borrowings under the 2022 Revolving Credit Facility and $32,466 of standby letters of credit related to securing reserved claims under our workers’

compensation insurance and certain sale and leaseback transactions, which reduce our borrowing availability under the 2022 Revolving Credit Facility.

At April 26, 2024, we had $491,534 in borrowing availability under our 2022 Revolving Credit

During the first nine months of 2024, we borrowed $326,500 and repaid $270,500 under the 2022 Revolving Credit Facility.

See Note 4 to our Condensed Consolidated Financial Statements for further information on our long-term debt.

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interest coverage ratio.

We were in compliance with the 2022 Revolving Credit Facility’s financial covenants at January 26, 2024, and we expect to be in compliance with the 2022 Revolving Credit Facility’s financial covenants for the remaining

term of the facility.

We were in compliance with the 2022 Revolving Credit Facility’s financial covenants at April 26, 2024, and we expect to be in compliance with the 2022 Revolving Credit Facility’s financial covenants for the remaining term

of the facility.

On June 18, 2021, the Company entered into an issuance and sale of $300,000 aggregate principal amount of 0.625% Convertible Senior Notes due 2026.

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Capital Expenditures and Proceeds from Sale of Property and Equipment

Capital expenditures (purchase of property and equipment) net of proceeds from insurance recoveries were $51,080 for the first six months of 2024 as compared to $48,369 for the same period in the

Capital expenditures (purchase of property and equipment) net of proceeds from insurance recoveries were $80,081 for the first nine months of 2024 as compared to $86,898 for the same period in the

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

The increase in capital expenditures in the first six months of 2024 as

compared to the first six months of 2023 resulted primarily from increased capital expenditures for existing stores.

The decrease in capital expenditures in the first nine months of 2024 as

compared to the first nine months of 2023 resulted primarily from the timing of capital expenditures for new store openings as compared to the prior year.

We estimate that our capital expenditures during 2024 will be approximately $120,000 to

This estimate includes the

acquisition of sites and construction costs of new Cracker Barrel and MSBC locations that have opened or that we expect to open during 2024, as well as for acquisition and construction costs for new Cracker Barrel and MSBC locations that we plan to

open in 2025.

We intend to fund our capital expenditures with cash generated by operations and borrowings under our 2022 Revolving Credit Facility, as necessary.

This estimate includes the acquisition of sites and construction costs of new Cracker Barrel and MSBC locations that have opened or that we expect to open during 2024, as well as for acquisition and construction costs for new Cracker

Barrel and MSBC locations that we plan to open in 2025.

As part of our strategic transformation plan, we are modifying our capital allocation policy and currently expect to increase our capital expenditures over the three-year period from 2025 to

2027 to approximately $600,000 to $700,000.

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

We intend to fund our capital expenditures with cash generated by operations

and borrowings under our 2022 Revolving Credit Facility, as necessary.

Dividends, Share Repurchases and Share-Based Compensation Awards

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dividends declared in the fourth quarter of the immediately preceding fiscal year multiplied by four.

During the first six months of 2024, we paid a regular dividend of $2.60 per share and declared a dividend of $1.30 per share that was subsequently paid on February 13, 2024, to shareholders of

record on January 19, 2024.

In addition, during the third quarter of 2024, our Board of Directors approved a regular dividend payable on May 7, 2024 to shareholders of record as of April 12, 2024 of $1.30 per share.

On June 2, 2023, our Board of Directors renewed our authorization to repurchase shares of the Company’s outstanding common stock at management’s discretion up to a total value of $200,000 until

June 2, 2024.

We did not repurchase any shares of our common stock in the first six months of 2024.

During the first six months of 2024, we issued 47,461 shares of our common stock resulting from the vesting of share-based compensation awards.

During the first nine months of 2024, we paid a regular dividend of $3.90 per share and declared a dividend of $1.30 per share that was subsequently paid on May 7, 2024, to shareholders of record

on April 12, 2024.

In conjunction with our strategic transformation program, we are modifying 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, we are reducing our quarterly dividend.

During the fourth quarter of 2024, our Board of Directors approved a regular dividend payable on August 6, 2024 to the shareholders of recorded as of July 19, 2024 of $0.25 per share.

On June 2, 2023, our Board of Directors renewed our authorization to repurchase shares of the Company’s outstanding common stock at management’s discretion up to a total value of $200,000, of which

approximately $138,000 is remaining.

We did not repurchase any shares of our common stock in the first nine months of 2024.

During the first nine months of 2024, we issued 48,671 shares of our common stock resulting from the vesting of share-based compensation awards.

Related tax withholding payments on these

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Working Capital

In the restaurant industry, virtually all sales are either for third-party credit or 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 restaurant business, we carry larger inventories than

many other companies in the restaurant industry.

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 restaurant business, we carry larger

inventories than many other companies in the restaurant industry.

Retail inventories purchased domestically are generally financed from normal trade credit, while imported retail inventories are generally purchased through wire transfers.

These various trade

terms are aided by the rapid turnover of the restaurant inventory.

Employees generally are paid on weekly or semi-monthly schedules in arrears for hours worked except for bonuses that are paid either quarterly or annually in arrears.

operating expenses have normal trade terms and certain expenses, such as certain taxes and some benefits, are deferred for longer periods of time.

We had negative working capital of $191,037 at January 26, 2024 as compared to negative working capital of $206,679 at July 28, 2023.

The change in working capital at January 26, 2024 as compared

to July 28, 2023 primarily resulted from the timing of payments for accounts payable partially offset by the decrease in retail inventory levels.

various trade terms are aided by the rapid turnover of the restaurant inventory.

Employees generally are paid on weekly or semi-monthly schedules in arrears for hours worked except for bonuses that are paid either quarterly or annually in

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.

We had negative working capital of $167,204 at April 26, 2024 as compared to negative working capital of $206,679 at July 28, 2023.

The change in working capital at April 26, 2024 as compared to

July 28, 2023 primarily resulted from the timing of payments for accounts payable and certain taxes partially offset by the decrease in retail inventory levels.

Off-Balance Sheet Arrangements

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the section entitled “Liquidity and Capital Resources” presented in the MD&A of our 2023 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 the

accounting guidance.

Critical Accounting Estimates

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materially from original estimates and management regularly monitors the adequacy of the provisions until final disposition occurs.

We have not made any material changes in our methodology for assessing impairments during the first six months of 2024, and we do not believe that there is a reasonable likelihood that there will

We have not made any material changes in our methodology for assessing impairments during the first nine months of 2024, and we do not believe that there is a reasonable likelihood that there will

be a material change in the estimates or assumptions used by us in the future to assess impairment of long-lived assets.

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values of long-lived assets, we may be exposed to losses that could be material.

In the third quarter of 2024, we recorded impairment charges of $15,616 for long-lived assets due to the deterioration in operating performance of certain Cracker

Barrel and MSBC locations.

This amount is included in the Impairment and store closing costs line item on the Condensed Consolidated Statement of Income (Loss).

See the Lease Accounting section below for information related to an impairment

charge related to a right-of-use asset recorded in the third quarter of 2024.

Insurance Reserves

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development history and settlement practices.

We have not made any material changes in the methodology used to establish our insurance reserves during the first six months of 2024 and do not believe there is a reasonable likelihood that there will

be a material change in the estimates or assumptions used to calculate the insurance reserves.

However, changes in these actuarial assumptions, management judgments or claims experience in the future may produce materially different amounts of

expense that would be reported under these insurance programs.

We have not made any material changes in the methodology used to establish our insurance reserves during the first nine months of 2024 and do not believe there is a reasonable likelihood that there

will be a material change in the estimates or assumptions used to calculate the insurance reserves.

However, changes in these actuarial assumptions, management judgments or claims experience in the future may produce materially different amounts

of expense that would be reported under these insurance programs.

Retail Inventory Valuation

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store-by-store basis.

We have not made any material changes in the methodologies, estimates or assumptions related to our merchandise inventories during the first six months of 2024 and do not believe there is a

We have not made any material changes in the methodologies, estimates or assumptions related to our merchandise inventories during the first nine months of 2024 and do not believe there is a

reasonable likelihood that there will be a material change in the estimates or assumptions in the future.

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evaluate our leases to estimate their expected term which includes renewal options that we are reasonably assured that we will exercise, and the classification of the lease as either an operating lease or a finance lease.

Additionally, as our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the time of commencement or modification date in determining the present value of lease

Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data.

We assess the impairment of the right-of-use asset

whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

We assess the impairment of the right-of-use asset whenever

events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

Changes in these assumptions and management judgments may produce materially different amounts in the recognition of the right-of-use assets and lease liabilities.

1 unchanged sentence

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

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

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

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-Q

Item 2. Management’s Discussion and Analysis