What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-09-27 compared with 2023-09-26 · 241 added, 1486 removed, 137 unchanged (93% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information which management believes is relevant to an assessment and

understanding of our consolidated results of operations and financial condition.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“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 Consolidated Financial Statements and notes thereto.

Readers should also carefully review the information presented

under the section entitled “Risk Factors” and other cautionary statements in this report.

Readers should also carefully review the information presented under the section entitled “Risk Factors” and other cautionary statements in this report.

All dollar amounts (other than per share amounts) reported or discussed in this MD&A are shown in thousands.

References in MD&A to a year or quarter

are to our fiscal year or quarter unless expressly noted or the context clearly indicates otherwise.

References in MD&A to a year or quarter are to our fiscal year or quarter unless expressly noted or the context clearly indicates otherwise.

This overview summarizes the MD&A, which includes the following sections:

● Executive Overview – a general description of our business, the restaurant and retail industries, our strategic priorities and our key performance indicators.

Results of Operations – an analysis of our consolidated statements of income for the three years presented in our Consolidated Financial Statements.

● Results of Operations – an analysis of our consolidated statements of income presented in our Consolidated Financial Statements.

● Liquidity and Capital Resources – an analysis of our primary sources of liquidity, capital expenditures and material commitments.

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

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

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

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

EXECUTIVE OVERVIEW

1 unchanged sentence

(the “Company,” “our” or “we”) is a publicly traded (Nasdaq:

CBRL) company that, through its operations and those of certain subsidiaries, is principally

engaged in the operation and development of the Cracker Barrel Old Country Store® (“Cracker Barrel”) concept.

CBRL) company that, through its operations and those of certain subsidiaries, is principally engaged in the operation and development of the Cracker Barrel Old Country Store® (“Cracker Barrel”) concept.

Each Cracker Barrel store consists of a restaurant with a gift shop.

The restaurants serve breakfast, lunch and dinner.

The gift shop

offers a variety of decorative and functional items specializing in rocking chairs, holiday gifts, toys, apparel and foods.

The gift shop offers a variety of decorative and functional items specializing in rocking chairs, holiday gifts, toys, apparel and foods.

As of September 13, 2024, the Company operated 658 Cracker Barrel stores located in 44 states.

On October 19, 2019, the

Company acquired 100% ownership of Maple Street Biscuit Company (“MSBC”), a breakfast and lunch fast casual concept.

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

As of September 13, 2024, the Company operated 68 MSBC locations in ten states.

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 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 ultimately driving

shareholder returns.

Our strategic priorities include the following:

Delivering an exceptional guest experience;

Emphasizing and protecting our strong value proposition;

Accelerating frequency of visits among our growth segments;

Enhancing our business model through our cost savings program and investing in technology.

Additionally, during 2023, we continued our focus on generating shareholder returns by paying $5.20 per share in dividends for fiscal 2023 and declaring a dividend of $1.30 per share that was

subsequently paid on August 8, 2023 to shareholders of record on July 21, 2023, totaling $144,302 dividends declared or paid in 2023, and repurchasing $17,449 in shares of our common stock.

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 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 and 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 guests.

● 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 atmosphere.

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

● Winning in digital and off-premise :

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

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

● Elevating the employee experience :

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

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

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

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

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

Key Performance Indicators

1 unchanged sentence

● 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), 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 average restaurant sales :

To calculate comparable store average restaurant sales, 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, and divide by the number of comparable stores for the applicable 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

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 retail average weekly sales :

To calculate comparable store average retail sales, 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, and divide by the number of comparable stores for the applicable 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 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.

● Average check increase per guest :

To calculate average check per guest, we determine comparable store restaurant sales, as described above, and divide by comparable restaurant 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), 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.

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 above.

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.

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

We believe these key performance indicators are useful for investors to provide 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.

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.

Restaurant and Retail Industries

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.

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 growing MSBC concept operates in the fast casual segment.

Competition also exists in securing prime real estate locations for new stores, in hiring qualified employees, in advertising, in

the attractiveness of facilities and with competitors having similar menu offerings or convenience features.

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

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

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.

The restaurant and retail industries are often affected by changes in consumer taste and preference;

national, regional or local economic

national, regional or local economic conditions;

demographic trends;

3 unchanged sentences

Additionally, economic, seasonal and weather conditions affect the restaurant and retail industries.

Adverse economic conditions, such as elevated inflation, and higher unemployment rates affect

consumer discretionary income and dining and shopping habits.

Adverse economic conditions, such as elevated and/or volatile rates of inflation and unemployment adversely affect consumer discretionary income and dining and shopping habits.

Historically, interstate tourist traffic and the propensity to dine out have been much higher during the summer months, thereby contributing to higher profits in our fourth quarter.

Retail sales, which are made substantially to our restaurant guests, are historically strongest in the second quarter, which includes the holiday shopping season.

Severe weather events such as hurricanes, floods, tornadoes, and winter storms may prevent or dissuade guests from visiting our stores, impair our ability to staff our stores or

force us to temporarily close affected stores, adversely impacting our restaurant and retail sales.

Additionally, severe drought conditions and associated restrictions on water use may impair restaurant operations or increase costs in locations

affected by such conditions.

Severe weather events such as hurricanes, floods, tornadoes, and winter storms may prevent or dissuade guests from visiting our stores, impair our ability to staff our stores or force us to temporarily close affected stores, adversely impacting our restaurant and retail sales.

Additionally, severe drought conditions and associated restrictions on water use may impair restaurant operations or increase costs in locations affected by such conditions.

Climate change, changing weather patterns or unpredictable weather patterns may increase the incidence of any of these events and otherwise also impact guest visitation patterns on a macro scale.

In addition to its

impact on store operations, severe weather may also disrupt our supply chain, both in distribution to ports and central warehouses and in distribution to local stores.

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 our Board of Directors and management team

continually monitor and reexamine these considerations in light of ongoing trends.

External Impacts to Our Operating Environment

Our operating results have been impacted by the COVID-19 pandemic and other macroeconomic conditions.

During 2021, our business began recovering from the COVID-19 pandemic, but we continued to see

negative impacts on our sales and traffic as a result of both changes in consumer behavior and federal, state and local governmental authorities’ continuation of various restrictions on travel, group gatherings and dine-in services.

service was operational to varying degrees, yet most locations were impacted at times by capacity restrictions, social distancing guidelines and decreased consumer demand for in-person dining.

In 2022, the Company continued to recover from the

COVID-19 pandemic;

however, we believe outbreaks of new variants adversely impacted consumer demand in 2022.

While our dining rooms operated without COVID-related restrictions in 2023, it is possible that renewed outbreaks, increases in cases and/or

new variants of the disease, either as part of a national trend or on a more localized basis, could result in COVID-19-related restrictions including capacity restrictions or otherwise limit our dine-in services, or negatively affect consumer demand.

In 2023 and 2022, we experienced inflationary conditions with respect to the cost for food, ingredients, retail merchandise, transportation, distribution, labor and utilities resulting, in part, from economic pressures related to the COVID-19

In addition to its impact on store operations, severe weather may also disrupt our supply chain, both in distribution to ports and central warehouses and in distribution to local stores.

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.

RESULTS OF OPERATIONS

The following table highlights operating results over the past three years:

The following table highlights operating results over the past two years:

Relationship to Total Revenue

3 unchanged sentences

Other store operating expenses

General and administrative

Gain on sale and leaseback transactions

General and administrative expenses

Impairment and store closing costs

Goodwill impairment

Operating income

Interest expense

Interest expense, net

Income before income taxes

Provision for income taxes

Provision for income taxes (income tax benefit)

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

Net change in Company owned stores:

Cracker Barrel

Stores in operation at end of the period:

Cracker Barrel

Total stores at end of period

Total Revenue

The following table highlights the key components of revenue for the past three years:

The following table highlights the key components of revenue for the past two years:

Revenue in dollars:

2 unchanged sentences

Total revenue by percentage relationships:

Comparable number of stores

Comparable store sales averages per store:

Restaurant average weekly sales (2)

Retail average weekly sales (2)

Average store volumes (1)(2) :

Total revenue

Comparable store sales increase (decrease) (3) :

Restaurant and retail

Average check increase

Comparable restaurant guest traffic increase/(decrease) (3)

(1) Comparable store averages exclude MSBC.

(2) Average weekly sales are calculated by dividing net sales by operating weeks and include all stores except for MSBC.

(3) 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 restaurant guest traffic decrease (3) :

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

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

(3) 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.

Total revenue benefited from the opening of two new Cracker Barrel and 12 new MSBC units in 2023, the opening of seven new MSBC units in 2022 and two new units for both Cracker Barrel and MSBC in

2021, partially offset by the closing of six Cracker Barrel and four MSBC units in 2023 and one Cracker Barrel unit in 2021.

Additionally, in the fourth quarter of 2022, the Company acquired direct ownership of MSBC’s seven franchised units from

their respective franchisees.

The following table highlights comparable store sales* results over the past two years:

Period to Period

Increase (Decrease)

Restaurant & Retail

*Comparable store sales consist of sales of stores open at least six full quarters at the beginning of the year, are measured on comparable calendar weeks and exclude MSBC.

Our comparable store restaurant sales increase in 2023 as compared to 2022 resulted from an average check increase of 9.8% (including an 8.6% average menu price increase) partially offset by a

decrease in guest traffic of 3.5%.

Off-premise sales represented approximately 20% of restaurant sales volumes in both 2023 and 2022.

Our comparable store restaurant sales increase in 2022 as compared to 2021 resulted from an average check increase

of 7.0% (including a 5.9% average menu price increase) and an increase in guest traffic of 8.0%.

Off-premise sales represented approximately 24% of restaurant sales volumes in 2021 when a large number of restaurants were operating with limitations

on or full prohibitions of dine-in services due to the COVID-19 pandemic.

Total revenue in 2024 increased 0.8% as compared to 2023.

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

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

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

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

Our retail sales are made primarily to our restaurant guests.

The decrease in our comparable store retail sales in 2023 as compared to 2022 resulted

primarily from the decrease in guest traffic partially offset by strong performance in the apparel merchandise category.

The increase in our comparable store retail sales in 2022 as compared to 2021 resulted primarily from the increase in guest

traffic and strong performance in the apparel and accessories, food and convenience, toys, décor, and bed and bath merchandise categories.

The decrease in our comparable store retail sales in 2024 as compared to 2023 resulted primarily from the decrease in guest traffic.

Cost of Goods Sold (Exclusive of Depreciation and Rent)

The following table highlights the components of cost of goods sold in dollar amounts for the past three years:

Cost of Goods Sold:

The following table highlights the components of cost of goods sold in dollar amounts for the past two years:

Cost of Goods Sold in dollars:

Total Cost of Goods Sold

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

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

Restaurant Cost of Goods Sold

The increase in restaurant cost of goods sold as a percentage of restaurant revenue in 2023 as compared to 2022 was primarily the result of higher cost menu items.

The increase in restaurant cost of

goods sold as a percentage of restaurant revenue in 2022 as compared to 2021 was primarily the result of commodity inflation of 13.1% partially offset by our menu price increase referenced above.

We presently expect the rate of commodity deflation to be approximately 1% to 2% in the first quarter of 2024.

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

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

Commodity inflation was relatively flat in 2024.

We presently expect the rate of commodity inflation to be approximately 2% to 3% in 2025.

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

Retail Cost of Goods Sold

The year-to-year percentage change in 2023 as compared to 2022 resulted primarily from the following:

2023 Compared to 2022

Increase as a Percentage

of Total Retail Revenue

Freight expense

The increase in retail cost of goods sold as a percentage of retail revenue in 2023 as compared to 2022 resulted primarily from higher markdowns and higher freight expense.

The year-to-year percentage change in 2022 as compared to 2021 resulted from the following:

2022 Compared to 2021

(Decrease) Increase as

a Percentage of Total

Retail Revenue

Provision for obsolete inventory

The decrease in retail cost of goods sold as a percentage of retail revenue in 2022 as compared to 2021 resulted primarily from lower markdowns partially offset by the change in the provision for

obsolete inventory.

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

Labor and Other Related Expenses

Labor and other related expenses include all direct and indirect labor and related costs incurred in store operations.

The following table highlights labor and other related expenses as a percentage

of total revenue for the past three years:

Labor and other related expenses

The year-to-year percentage change in 2023 as compared to 2022 resulted from the following:

2023 Compared to 2022

(Decrease) Increase as a

Percentage of Total Revenue

Employee health care expense

Store management compensation

Store hourly labor

The decrease in employee health care expenses as a percentage of total revenue in 2023 as compared to 2022 resulted primarily from lower enrollment.

The decrease in store management compensation as a percentage of total revenue in 2023 as compared to 2022 was primarily driven by the increase in total revenue in 2023 partially offset by wage

The increase in store hourly labor expense as a percentage of total revenue in 2023 as compared to 2022 resulted primarily from wage inflation exceeding menu price increases and investments in

additional labor hours to support the guest experience.

In addition to menu price increases, we continue to partially offset inflationary pressures through labor productivity initiatives, and we presently expect the rate of wage inflation to be

approximately 4.0% to 5.0% in the first quarter of 2024.

The year-to-year percentage change in 2022 as compared to 2021 resulted from the following:

The following table highlights labor and other related expenses as a percentage of total revenue for the past two years:

Labor and related expenses

The year-to-year percentage change in 2024 as compared to 2023 resulted primarily from the following:

2024 Compared to 2023

3 unchanged sentences

Store management compensation

The increase in store hourly labor in 2022 as compared to 2021 as a percentage of total revenue resulted primarily from wage inflation exceeding menu price increases and lower productivity, i.e.,

fewer guests served per labor hours incurred.

The decrease in store management compensation as a percentage of total revenue in 2022 as compared to 2021 was primarily driven by lower bonus expense in 2022 and the increase in total revenue in

2022 partially offset by wage inflation.

The lower bonus expense resulted from lower performance against financial objectives for certain components of the incentive plan in 2022 as compared to 2021.

Employee health care expense

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

We presently expect the rate of wage inflation to be approximately 3% to 4% in 2025.

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

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

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, third-party delivery fees, credit card and gift card fees, real and personal property taxes and general insurance.

Occupancy costs include maintenance, utilities, depreciation and rent.

The following table highlights other store operating expenses as a percentage of total revenue for the past three years:

The following table highlights other store operating expenses as a percentage of total revenue for the past two years:

Other store operating expenses

Other store operating expenses as a percentage of total revenue in 2023 as compared to 2022 remained flat at 23.2%.

The year-to-year percentage change in 2022 as compared to 2021 resulted primarily from the following:

2022 Compared to 2021

(Decrease) Increase as a

Percentage of Total Revenue

Store occupancy costs

Other store expenses

The decreases in store occupancy costs and advertising expenses as a percentage of total revenue for 2022 as compared to 2021 were primarily driven by the increase in total revenue in 2022.

Additionally, the decrease in store occupancy costs was partially offset by higher maintenance expenditures, which were the result of increased repair costs associated with limited availability of replacement equipment.

The increase in other store expenses as a percentage of total revenue for 2022 as compared to the same period in the prior year resulted primarily from costs associated with the expansion of our

off-premise business.

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

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

General and Administrative Expenses

The following table highlights general and administrative expenses as a percentage of total revenue for the past three years:

The following table highlights general and administrative expenses as a percentage of total revenue for the past two years:

General and administrative expenses

The year-to-year percentage change in 2023 as compared to 2022 resulted from higher corporate-level incentive compensation resulting from better performance against financial objectives in 2023 as

The year-to-year percentage change in 2024 as compared to 2023 resulted primarily from the following:

2024 Compared to 2023

The year-to-year percentage change in 2022 as compared to 2021 resulted from lower incentive compensation.

The decrease in incentive compensation as a percentage of total revenue in 2022 as compared

to 2021 was primarily the result of lower performance against financial objectives in 2022 as compared to 2021.

Gain on Sale and Leaseback Transactions

On July 29, 2020, we entered into a sale and leaseback transaction involving 64 of our owned Cracker Barrel properties and recorded a gain of $69,954.

On August 4, 2020, we entered into a second

sale and leaseback transaction involving 62 of our owned Cracker Barrel stores and recorded a gain of $217,722.

See Note 8 to the Consolidated Financial Statements for additional information regarding these sale and leaseback transactions.

Increase as a Percentage

of Total Revenue

Professional fees

Payroll and related expense

Incentive compensation expense

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

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

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

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

Impairment and Store Closing Costs

During 2023, we recorded impairment charges of $11,692 as a result of the deterioration in operating performance of six Cracker Barrel locations.

Additionally, during 2023, we incurred costs of

$2,307 in connection with the closure of six Cracker Barrel and four MSBC locations because of poor operating performance.

Impairment and store closing costs consisted of the following:

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

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

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

Store closing costs

Interest Expense

The following table highlights interest expense for the past three years:

Interest expense

The year-to-year increase in 2023 as compared to 2022 resulted primarily from higher weighted average debt levels during 2023 and higher weighted average interest rates under our revolving credit

The year-to-year decrease in 2022 as compared to 2021 resulted primarily from lower weighted average debt levels, lower weighted average interest rates and the prior year including costs associated

with the termination of the Company’s interest rate swaps.

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 past three years:

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

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

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

Operating income in 2024 benefited from lower commodity inflation.

Interest Expense, Net

The following table highlights interest expense for the past two years:

Interest expense, net

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

Provision for Income Taxes (Income Tax Benefit)

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

Effective tax rate

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

The decreases in our effective tax rate in 2023 as compared to 2022 and in 2022 as compared to 2021 reflect the impact

of higher tax credits on lower income before income tax.

We presently expect our effective tax rate for 2024 to be approximately 6%.

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

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

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

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

The following table presents a summary of our cash flows for the last three years:

The following table presents a summary of our cash flows for the past two years:

Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash used in investing activities

Net cash used in financing activities

1 unchanged sentence

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

Our internally generated cash, along with cash on hand at July

29, 2022 and borrowings under our revolving credit facility, were sufficient to finance all of our growth, share repurchases, dividend payments, working capital needs, interest payments on long-term debt obligations and other cash payment obligations

We believe that cash at July 28, 2023, 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, debt service, dividend payments and working capital needs for the next twelve months.

Furthermore, 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, capital expenditures, interest expense on long-term debt obligations, operating lease obligations, continuing expansion plans and working capital needs beyond the next twelve

A summary of our contractual cash obligations and commitments as of July 28, 2023, is as follows:

Payments due by Years

Contractual Obligations (a)

2022 Revolving Credit Facility (b)

Convertible Debt (c)

Purchase obligations (e)

Other long-term obligations (f)

Total contractual cash obligations

Amount of Commitment Expirations by Years

2022 Revolving Credit Facility (b)

Convertible Debt (c)

Standby letters of credit (g)

Total commitments

At July 28, 2023, the entire liability 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.

As such, the liability for uncertain tax positions of $17,572 is not included in the contractual cash obligations and

commitments table above.

Our 2022 Revolving Credit Facility expires on June 17, 2027.

Using our weighted average interest rate of 6.79% at July 28, 2023 and the outstanding borrowings at July 28, 2023, we anticipate having interest payments of $8,398, $16,478 and

$7,243 in 2024, 2025-2026 and 2027, respectively.

Based on our outstanding borrowings and our standby letters of credit at July 28, 2023 and our current unused commitment fee as defined in the 2022 Revolving Credit Facility, our unused

commitment fees in 2024, 2025-2026 and 2027 would be $1,694, $3,325 and $1,462, respectively;

however, the actual amount will differ based on actual usage of the 2022 Revolving Credit Facility.

Our $300,000 aggregate principal amount of 0.625% Convertible Senior Notes mature on June 15, 2026.

The Notes bear cash interest at an annual rate of 0.625%, payable semi-annually in arrears on June 15 and

December 15 of each year.

Includes base lease terms and certain optional renewal periods for which, at the inception of the lease, it is reasonably certain that we will exercise.

Purchase obligations consist of purchase orders for food and retail merchandise;

purchase orders for capital expenditures, supplies, other operating needs and other services;

and commitments under contracts for maintenance needs and other

We have excluded contracts that do not contain minimum purchase obligations.

We excluded long-term agreements for services and operating needs that can be cancelled within 60 days without penalty.

We included long-term agreements

and certain retail purchase orders for services and operating needs that can be cancelled with more than 60 days’ notice without penalty only through the term of the notice.

We included long-term agreements for services and operating needs

that only can be cancelled in the event of an uncured material breach or with a penalty through the entire term of the contract.

Because of the uncertainties of seasonal demands and promotional calendar changes, our best estimate of usage

for food, supplies and other operating needs and services is ratably over either the notice period or the remaining life of the contract, as applicable, unless we had better information available at the time related to each contract.

Other long-term obligations include our Non-Qualified Savings Plan ($27,129, with a corresponding long-term asset to fund the liability;

see Note 11 to the Consolidated Financial Statements), Deferred Compensation Plan ($2,450) and our

long-term incentive plans ($2,787).

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 reduce our borrowing availability under our

revolving credit facility.

Our cash generated from our operations, together with our borrowing capacity under our 2022 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 2024.

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

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

Cash Generated from Operations

The increase in net cash flow provided by operating activities in 2023 as compared to 2022 primarily reflected lower retail inventory partially offset by the timing of payments for accounts payable

and certain taxes.

The decrease in net cash flow provided by operating activities in 2022 as compared to 2021 primarily reflected higher retail inventory, the timing of payments for certain taxes and higher bonus

payments made in 2022 as a result of the prior year’s performance.

The higher retail inventory in 2022 as compared to 2021 was driven by unusually low retail inventory in 2021 resulting from market constraints on the availability of goods.

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

Purchase Obligations

We enter into purchase orders for food and retail merchandise;

purchase orders for capital expenditures, supplies, other operating needs and other services;

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

Our estimate as of August 02, 2024, for these purchase obligations is $141,446, of which $107,485 is short-term.

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

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 02, 2024, the total present value of our lease expenses (including variable lease costs) under operating leases was $725,829, which had a weighted-average remaining lease term 15.88 years, of which $86,318 is short-term.

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

These leases are expected to commence in 2025 and 2026.

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 02, 2024, other long-term obligations include our Non-Qualified Savings Plan ($25,719, 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 ($854) and our long-term incentive plans ($3,015).

At August 02, 2024, the entire liability of $15,317, 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.

See Note 12 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information on our uncertain tax positions.

Capital Expenditures and Proceeds from Sale of Property and Equipment

The following table presents our capital expenditures (purchase of property and equipment), net of proceeds from insurance recoveries, for the last three years:

The following table presents our capital expenditures (purchase of property and equipment), net of proceeds from insurance recoveries, for the past two years:

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 2023 from 2022

resulted primarily from higher capital expenditures for existing stores and higher capital expenditures for strategic initiatives, including investments in digital and technology infrastructure and the development of a loyalty program.

in capital expenditures in 2022 from 2021 resulted primarily from higher capital expenditures for existing stores and an increase in the number of new store locations partially offset by lower capital expenditures for strategic initiatives.

We estimate that our capital expenditures during the first quarter of 2024 will be approximately $27,000 to $32,000.

This estimate includes existing store maintenance and aging equipment

replacement, the acquisition of sites and construction costs of one to two new Cracker Barrel stores and approximately four to five MSBC locations that we plan to open during the first quarter of 2024.

We intend to fund our capital expenditures with

cash generated by operations and cash on hand as the result of borrowings under our revolving credit facility, as necessary.

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

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

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

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

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

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

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

Proceeds from sale of property and equipment

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

In 2021, we completed a sale and leaseback

The decrease in proceeds from sale of property and equipment in 2022 from 2021 resulted from the sale and leaseback transaction in 2021.

See Note 8 to the Consolidated Financial Statements for additional information regarding the sale

and leaseback transaction.

Borrowing Capacity, Debt Covenants and Notes

On June 17, 2022, we entered into a five-year $700,000 revolving credit facility (the “2022 Revolving Credit Facility”) with substantially the same terms and financial covenants as our previous

amended $800,000 revolving credit facility (the “2019 Revolving Credit Facility”).

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

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

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

Revolving Credit Facility as of July 28, 2023:

July 28, 2023

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

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

August 02,2024

Borrowing capacity under the 2022 Revolving Credit Facility

3 unchanged sentences

*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 reduce our borrowing

availability under the 2022 Revolving Credit Facility.

Our standby letters of credit reduce our borrowing availability under the 2022 Revolving Credit Facility.

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

During 2022, in addition to the refinancing of the revolving credit facility, we borrowed $100,000 and

repaid $55,000 of borrowings under the 2019 Revolving Credit Facility.

During 2021, we repaid $924,395 under the 2019 Revolving Credit Facility and borrowed an additional $60,000 under the 2019 Revolving Credit Facility.

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

coverage ratio.

We were in compliance with the 2022 Revolving Credit Facility’s financial covenants at July 28, 2023, and we expect to be in compliance with the 2022 Revolving Credit Facility’s financial covenants for the remaining term of the

On June 18, 2021, the Company issued and sold $300,000 in aggregate principal amount of 0.625% Convertible Senior Notes due 2026.

The Notes are senior, unsecured obligations of the Company and

bear cash interest at a rate of 0.625% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021.

The Notes mature on June 15, 2026, unless earlier converted, repurchased or redeemed.

proceeds from the Notes were $291,125, after deducting the initial purchasers’ discounts and commissions and the Company’s offering fees and expenses.

In connection with the issuance of the Notes, the Company entered into privately negotiated convertible note hedge transactions (the “Convertible Note Hedge Transactions”) with certain of the

initial purchasers of the Notes and/or their respective affiliates and other financial institutions (in this capacity, the “Hedge Counterparties”), which cover, subject to customary anti-dilution adjustments, the aggregate number of shares of the

Company’s common stock that initially underlie the Notes.

Concurrently with the Company’s entry into the Convertible Note Hedge Transactions, the Company also entered into separate, privately negotiated warrant transactions with the Hedge

Counterparties collectively relating to the same number of shares of the Company’s common stock underlying the Notes, subject to customary anti-dilution adjustments, and for which the Company received premiums that partially offset the cost of

entering into the Convertible Note Hedge Transactions (the “Warrant Transactions”).

The portion of the net proceeds to the Company from the offering of the Notes that was used to pay the premium on the Convertible Note Hedge Transactions, net of

the proceeds to the Company from the Warrant Transactions, was approximately $30,300.

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

During 2023, we borrowed $180,000 and repaid $190,000 under the 2022 Revolving Credit Facility.

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

We were in compliance with the 2022 Revolving Credit Facility’s financial covenants at August 02, 2024, and we expect to be in compliance with the 2022 Revolving Credit Facility’s financial covenants for the remaining term of the facility.

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

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

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

Dividends, Share Repurchases and Share-Based Compensation Awards

Our 2022 Revolving Credit Facility imposes restrictions on the amount of dividends we are permitted to pay and the amount of shares we are permitted to repurchase.

Under the 2022 Revolving Credit

Facility, provided there is no default existing and the total of our availability under the 2022 Revolving Credit Facility plus our cash and cash equivalents on hand is at least $100,000 (the “Cash Availability”), we may declare and pay cash

dividends on shares of our common stock and repurchase shares of our common stock (1) in an unlimited amount if at the time the dividend or the repurchase is made our consolidated total senior secured leverage ratio is 2.75 to 1.00 or less and (2) in

an aggregate amount not to exceed $100,000 in any fiscal year if our consolidated total leverage ratio is greater than 2.75 to 1.00 at the time the dividend or repurchase is made;

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 2023, we paid regular dividends of $5.20 per share and declared a dividend of $1.30 per share that was subsequently paid on August 8, 2023 to shareholders of record on July 21, 2023.

Additionally, on August 29, 2023, our Board of Directors declared a dividend of $1.30 per share payable on November 7, 2023 to shareholders of record on October 20, 2023.

In 2022, we paid regular dividends of $4.90 per share and declared a dividend

of $1.30 per share that was subsequently paid on August 5, 2022 to shareholders of record on July 15, 2022.

In 2021, in order to preserve available cash during the COVID-19 pandemic and in light of the uncertainties as to its duration and economic

impact, we deferred the payment of the dividend of $1.30 per share declared in the third quarter of 2020 until the first quarter of 2021 and temporarily suspended future dividend payments.

In the fourth quarter of 2021, in light of the ongoing

recovery from the COVID-19 pandemic, our Board of Directors resumed our dividend program.

The following table highlights the dividends per share we paid for the last three years:

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

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 2024, we paid regular dividends of $5.20 per share.

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

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

Additionally, during the first quarter of 2025, the Board declared a dividend of $0.25 per share payable on November 13, 2024 to shareholders of record as of October 18, 2024.

The following table highlights the dividends per share we paid for the past two years:

Dividends per share paid

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.

Subject to the limits

imposed by our revolving credit facility, in September 2021, we were authorized by our Board of Directors to repurchase shares at the discretion of management up to $100,000.

In the fourth quarter of 2022, we were authorized by our Board of

Directors to repurchase shares of the Company’s outstanding common stock at management’s discretion up to a total value of $200,000 with such authorization to expire on June 2, 2023;

this authorization replaced the previous unused portion of the

previous $100,000 authorization and expired on June 2, 2023.

On June 2, 2023, our Board of Directors extended this repurchase authorization for an additional year.

The following table highlights our share repurchases for the last three years:

Shares of common stock repurchased

Cost of shares repurchased

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

this authorization has expired.

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

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

Working Capital

In the restaurant industry, substantially all sales are either for cash or third-party credit card.

Like many other restaurant companies, we are able to, and often do, operate with negative working

In the restaurant industry, substantially all payments received are made by credit card, debit card or cash.

Like many other restaurant companies, we are able to, and often do, operate with negative working capital.

Restaurant inventories purchased through our principal food distributor are on terms of net zero days, while other restaurant inventories purchased locally are generally financed through trade credit at terms of 30 days or less.

our gift shop, which has a lower product turnover than the restaurant, we carry larger inventories than many other companies in the restaurant industry.

Because of our retail gift shop, which has a lower product turnover than the restaurant, we carry larger inventories than many other companies in the restaurant industry.

Retail inventories are generally financed through trade credit at terms of 60 days or less.

These various trade terms are aided by 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

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.

The following table highlights our working capital deficit:

Working capital deficit

The change in working capital at July 28, 2023 compared to July 29, 2022 primarily reflected the decrease in retail inventory levels and the decrease in cash partially offset by the timing of

payments for certain taxes.

The decrease in cash resulted primarily from share repurchases during 2023.

The change in working capital at July 29, 2022 compared to July 30, 2021 primarily reflected the decrease in cash, higher accounts payable and the timing of payments for income taxes partially offset

by higher inventory levels.

The decrease in cash resulted primarily from higher share repurchases partially offset by net borrowings under of revolving credit facility.

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

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements.

RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

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

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

CRITICAL ACCOUNTING ESTIMATES

We prepare our Consolidated Financial Statements in conformity with GAAP.

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

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 significant accounting policies are discussed in Note 1 to the Consolidated Financial Statements.

Judgments and uncertainties affecting the application of those policies may result in materially

different amounts being reported under different conditions or using different assumptions.

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:

6 unchanged sentences

● Lease Accounting

Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.

Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of the Board of Directors.

Impairment of Long-Lived Assets

We assess the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Recoverability of assets is measured by

comparing the carrying value of the asset to the undiscounted future cash flows expected to be generated by the asset.

If the total expected future cash flows are less than the carrying amount of the asset, the carrying value is written down, for an

asset to be held and used, to the estimated fair value or, for an asset to be disposed of, to the fair value, net of estimated costs of disposal.

Recoverability of assets is measured by comparing the carrying value of the asset to the undiscounted future cash flows expected to be generated by the asset.

If the total expected future cash flows are less than the carrying amount of the asset, the carrying value is written down, for an asset to be held and used, to the estimated fair value or, for an asset to be disposed of, to the fair value, net of estimated costs of disposal.

Any loss resulting from impairment is recognized by a charge to income.

Judgments and estimates that

we make related to the expected useful lives of long-lived assets and future cash flows are affected by factors such as changes in economic conditions and changes in operating performance.

The accuracy of such provisions can vary 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 past three years 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 to assess impairment of long-lived assets.

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 2023, we recorded impairment charges of $11,692 as a result of the deterioration in operating performance of six Cracker Barrel locations.

Judgments and estimates that we make related to the expected useful lives of long-lived assets and future cash flows are affected by factors such as changes in economic conditions and changes in operating performance.

The accuracy of such provisions can vary 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 past three years 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 to assess impairment of long-lived assets.

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

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

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

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

Insurance Reserves

We self-insure a significant portion of our expected workers’ compensation and general liability programs.

We purchase insurance for individual workers’ compensation claims that exceed $750 or

$1,000 depending on the state in which the claim originated.

We purchase insurance for individual workers’ compensation claims that exceed $750 or $1,000 depending on the state in which the claim originated.

We purchase insurance for individual general liability claims that exceed $500.

We record a reserve for workers’ compensation and general liability for all unresolved claims and for an

estimate of incurred but not reported (“IBNR”) claims.

These reserves and estimates of IBNR claims are based upon a full scope actuarial study which is performed annually at the end of our third quarter and is adjusted by the actuarially determined

losses and actual claims payments for the fourth quarter.

We record a reserve for workers’ compensation and general liability for all unresolved claims and for an estimate of incurred but not reported (“IBNR”) claims.

These reserves and estimates of IBNR claims are based upon a full scope actuarial study which is performed annually during the fourth quarter and is adjusted by the actuarially determined losses and actual claims payments made subsequent to this full scope actuarial study during the fourth quarter.

Additionally, we perform limited scope actuarial studies on a quarterly basis to verify and/or modify our reserves.

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

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.

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.

1 unchanged sentence

Benefits for any individual (employee or dependents) in the self-insured group health program are limited.

record a liability for the self-insured portion of our group health program for all unpaid claims based upon a loss development analysis derived from actual group health claims payment experience.

We also record a liability for unpaid prescription

drug claims based on historical experience.

Our accounting policies regarding insurance reserves include certain actuarial assumptions and management judgments regarding economic conditions, the frequency and severity of claims and claim

development history and settlement practices.

We have not made any material changes in the methodology used to establish our insurance reserves during the past three years 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 or management judgments in the future may produce materially different amounts of expense that would be

reported under these insurance programs.

We record a liability for the self-insured portion of our group health program for all unpaid claims based upon a loss development analysis derived from actual group health claims payment experience.

We also record a liability for unpaid prescription drug claims based on historical experience.

Our accounting policies regarding insurance reserves include certain actuarial assumptions and management judgments regarding economic conditions, the frequency and severity of claims and claim development history and settlement practices.

We have not made any material changes in the methodology used to establish our insurance reserves during the past three years 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 or management judgments in the future may produce materially different amounts of expense that would be reported under these insurance programs.

Retail Inventory Valuation

Cost of goods sold includes the cost of retail merchandise sold at our stores utilizing the retail inventory method (“RIM”).

Under RIM, the valuation of our retail inventories is determined by

applying a cost-to-retail ratio to the retail value of our inventories.

Inherent in the RIM calculation are certain inputs, including initial markons, markups, markdowns and shrinkage, which may significantly impact the gross margin calculation as

well as the ending inventory valuation.

Under RIM, the valuation of our retail inventories is determined by applying a cost-to-retail ratio to the retail value of our inventories.

Inherent in the RIM calculation are certain inputs, including initial markons, markups, markdowns and shrinkage, which may significantly impact the gross margin calculation as well as the ending inventory valuation.

Inventory valuation provisions are included for retail inventory obsolescence and retail inventory shrinkage.

Retail inventory is reviewed on a quarterly basis for obsolescence and adjusted as

appropriate based on assumptions made by management and judgment regarding inventory aging and future promotional activities.

Retail inventory is reviewed on a quarterly basis for obsolescence and adjusted as appropriate based on assumptions made by management and judgment regarding inventory aging and future promotional activities.

Retail inventory also includes an estimate of shrinkage that is adjusted upon physical inventory counts.

Annual physical

inventory counts are conducted based upon a cyclical inventory schedule.

An estimate of shrinkage is recorded for the time period between physical inventory counts by using a two-year average of the physical inventories’ results on a store-by-store

We have not made any material changes in the methodologies, estimates or assumptions related to our merchandise inventories during the past three years and do not believe there is a reasonable

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

Annual physical inventory counts are conducted based upon a cyclical inventory schedule.

An estimate of shrinkage is recorded for the time period between physical inventory counts by using a two-year average of the physical inventories’ results on a store-by-store basis.

We have not made any material changes in the methodologies, estimates or assumptions related to our merchandise inventories during the past three years and do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions in the future.

However, actual obsolescence or shrinkage recorded may produce materially different amounts than we have estimated.

1 unchanged sentence

We have ground leases for our leased stores and office space leases that are recorded as operating leases under various non-cancellable operating leases.

Additionally, we lease our retail

distribution center, advertising billboards, vehicle fleets, and certain equipment under various non-cancellable operating leases.

Additionally, we lease our retail distribution center, advertising billboards, vehicle fleets, and certain equipment under various non-cancellable operating leases.

We evaluate our leases at contract inception to determine whether we have the right to control use of the identified asset for a period of time in exchange for consideration.

If we determine that we

have the right to obtain substantially all of the economic benefit from use of the identified asset and the right to direct the use of the identified asset, we recognize a right-of-use asset and lease liability.

Also, at contract inception, we

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 payments.

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 at the asset group level whenever events or changes in

circumstances indicate that the carrying value of the asset may not be recoverable.

If we determine that we have the right to obtain substantially all of the economic benefit from use of the identified asset and the right to direct the use of the identified asset, we recognize a right-of-use asset and lease liability.

Also, at contract inception, we 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 payments.

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 at the asset group level 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.

Additionally, any loss resulting

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, such as changes in interest rates and commodity prices.

We do not hold or use derivative financial instruments for trading purposes.

Interest Rate Risk.

We have interest rate risk relative to our outstanding borrowings under our revolving credit facility.

At July 28, 2023 and July 29, 2022, our outstanding borrowings totaled

$120,000 and $130,000, respectively (see Note 4 to our Consolidated Financial Statements).

Loans under the 2022 Revolving Credit Facility bear interest, at our election, either at the prime rate or a rate 0.5% in excess of the Federal Funds Rate or

a rate 1.0% in excess of one-month Term Secured Overnight Financing Rate (SOFR), in each case plus an applicable margin, or the one-, three-, or six-month per annum Term SOFR plus an applicable margin.

Our policy has been to manage interest cost

using a mix of fixed and variable rate debt (see Notes 4, 5 and 8 to our Consolidated Financial Statements).

Additionally, in the fourth quarter of 2021, we issued and sold the Notes, which bear cash interest at a fixed rate of 0.625% per annum.

At July 28, 2023, the weighted average interest rate of our outstanding $120,000 borrowings was 6.79%.

At July 29, 2022, the weighted average interest rate of our outstanding $130,000 borrowings was

The impact of a one-percentage point increase in the $120,000 of our outstanding borrowings at July 28, 2023 is approximately $1,200.

In June 2021, the Company issued the Notes and entered into the Convertible Note Hedge Transactions and the Warrant Transactions with the Hedge Counterparties.

Subject to the movement

in the Company’s common stock price, the Company could be exposed to credit risk arising out of the net settlement of the Convertible Note Hedge Transactions and the Warrant Transactions in its favor.

Based on the Company’s review of the possible

net settlements and the creditworthiness of the Hedge Counterparties and their affiliates, the Company believes it does not have a material exposure to credit risk as a result of these transactions at this time.

Commodity Price Risk.

Many of the food products that we purchase are affected by commodity pricing and are, therefore, subject to price volatility caused by market conditions, weather, production

problems, delivery difficulties and other factors which are outside our control and which are generally unpredictable.

The following table highlights the five food categories which accounted for the largest shares of our food purchases in 2023 and 2022:

Percentage of Food Purchases

Fruits and vegetables

Dairy (including eggs)

Other categories affected by the commodities markets, such as grains and seafood, may each account for as much as 8% of our food purchases.

While some of our food items are produced to our

proprietary specifications, our food items are based on generally available products, and if any existing suppliers fail, or are unable to deliver in quantities required by us, we believe that there are sufficient other quality suppliers in the

marketplace that our sources of supply can be replaced as necessary to allow us to avoid any material adverse effects that could be caused by such unavailability.

We also recognize, however, that commodity pricing is extremely volatile and can

change unpredictably even over short periods of time.

Changes in commodity prices would affect us and our competitors generally and depending on the terms and duration of supply contracts, sometimes simultaneously.

We enter into contracts for

certain of our products in an effort to minimize volatility of supply and pricing.

In many cases, or over the longer term, we believe we will be able to pass through some or much of the increased commodity costs by adjusting our menu pricing.

time to time, competitive circumstances, or judgments about consumer acceptance of price increases, may limit menu price flexibility, and in those circumstances, increases in commodity prices can result in lower margins.

In 2022 and 2023, we

continued to partially offset commodity pressures through menu price increases and operational improvements.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Cracker Barrel Old Country Store, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cracker Barrel Old Country Store, Inc.

and subsidiaries (the "Company") as of July 28,

2023, and July 29, 2022, and the related consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes in shareholders' equity, and consolidated statements of cash flows, for each of the three

years in the period ended July 28, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July

28, 2023, and July 29, 2022, and the results of its operations and its cash flows for each of the three years in the period ended July 28, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's

internal control over financial reporting as of July 28, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring

Organizations of the Treadway Commission and our report dated September 26, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for debt with conversion options as of July 31,

2021, due to adoption of Accounting Standards Update No.

2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity

(Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity .

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial

statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting

principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be

communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which

Commitments and Contingencies –

Insurance Reserves – Refer to Notes 1 and 14 to the financial statements

Critical Audit Matter Description

The Company self-insures a significant portion of its workers’ compensation and general liability program and records a reserve for all unresolved

claims and an estimate of incurred but not reported (IBNR) claims.

These reserves and estimates of IBNR claims are based upon a full-scope actuarial study performed annually by management’s specialist at the end of the third quarter and are adjusted by

the actuarially determined losses and actual claims payments for the fourth quarter.

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.

information, the Company records the expected losses in the lower half of the range, which is discounted to present value using a risk-free interest rate.

The Company also monitors actual claims development as another means of estimating the adequacy

of the historical reserves.

We identified insurance reserves as a critical audit matter because estimating the reserve for all unresolved claims and IBNR claims involves

significant estimation by management.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists, when performing audit procedures to evaluate whether insurance reserves

were appropriately recorded as of July 28, 2023 .

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the insurance reserves included the following, among others:

We tested the effectiveness of controls related to insurance reserves, including management’s controls over the claims data provided to the actuary and those over the estimation of unresolved

claims and IBNR claims.

We evaluated the methods and assumptions used by management to estimate the insurance reserves by:

Reconciling the claims data to the actuarial analysis .

Comparing management’s selected insurance reserve estimates within the range provided by their third-party actuary to historical trends.

Performing a retrospective review by comparing the prior - year recorded amounts to the subsequent claim emergence.

Developing, with the assistance of our actuarial specialists, an independent range of estimates of the insurance reserves, utilizing paid and reported loss development factors from the

Company’s historical data and industry loss development factors as deemed necessary, and comparing our estimated range to management’s estimates.

/s/ Deloitte & Touche LLP

Nashville, Tennessee

September 26, 2023

We have served as the Company's auditor since 1974.

CRACKER BARREL OLD COUNTRY STORE, INC.

BALANCE SHEETS

(In thousands except share data)

July 28, 2023

July 29, 2022

Current Assets:

Cash and cash equivalents

Accounts receivable

Income taxes receivable

Prepaid expenses and other current assets

Total current assets

Property and Equipment:

Buildings and improvements

Restaurant and other equipment

Leasehold improvements

Construction in progress

Accumulated depreciation and amortization

Property and equipment – net

Operating lease right-of-use assets, net

Intangible assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

Current portion of long-term debt

Current operating lease liabilities

Taxes withheld and accrued

Accrued employee compensation

Accrued employee benefits

Deferred revenues

Dividend payable

Other current liabilities

Total current liabilities

Long-term debt

Long-term operating lease liabilities

Other long-term obligations

Deferred income taxes

Commitments and Contingencies (Notes 8 and 14)

Shareholders’ Equity:

Preferred stock – 100,000,000 shares of $ 0.01 par value authorized;

300,000 shares designated as Series A Junior Participating Preferred Stock;

no shares issued

Common stock – 400,000,000 shares of $ 0.01 par value authorized;

2023 – 22,153,625 shares

issued and outstanding;

2022 – 22,281,443

shares issued and outstanding

Additional paid-in capital

Retained earnings

Total shareholders’ equity

See Notes to Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.

CONSOLIDATED STATEMENTS OF

(In thousands except share data)

Fiscal years ended

July 28, 2023

July 29, 2022

July 30, 2021

Total revenue

Cost of goods sold (exclusive of depreciation and rent)

Labor and other related expenses

Other store operating expenses

General and administrative expenses

Gain on sale and leaseback transactions

Impairment and store closing costs

Operating income

Interest expense

Income before income taxes

Provision for income taxes

Net income per share – basic

Net income per share – diluted

Basic weighted average shares outstanding

Diluted weighted average shares outstanding

See Notes to Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(In thousands)

Fiscal years ended

July 28, 2023

July 29, 2022

July 30, 2021

Other comprehensive income before income tax expense:

Change in fair value of interest rate swaps

Income tax expense

Other comprehensive income, net of tax

Comprehensive income

See Notes to Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’

(In thousands except share data)

Comprehensive

Shareholders’

Income (Loss)

Balances at July 31 , 2020

Comprehensive Income:

Other comprehensive income, net of tax

Total comprehensive income

Cash dividends declared - $ 1.00 per share

Share-based compensation

Issuance of share-based compensation awards, net of shares withheld for employee taxes

Purchases and retirement of common stock

Equity component value of convertible note issuance, net of tax

Sale of common stock warrant

Purchase of convertible note hedge

Balances at July 30 , 2021

Other comprehensive income, net of tax

Total comprehensive income

Cash dividends declared - $ 5.20 per share

Share-based compensation

Issuance of share-based compensation awards, net of shares withheld for employee taxes

Purchases and retirement of common stock

Cumulative-effect of change in accounting principle, net of taxes

Balances at July 29 , 2022

Other comprehensive income, net of tax

Total comprehensive income

Cash dividends declared - $ 5.20 per share

Share-based compensation

Issuance of share-based compensation awards, net of shares withheld for employee taxes

Purchases and retirement of common stock

Balances at July 28 , 2023

See Notes to Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.

CONSOLIDATED STATEMENTS OF

(In thousands)

Fiscal years ended

July 28, 2023

July 29, 2022

July 30, 2021

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Amortization of debt discount and issuance costs

Loss on disposition of property and equipment

Gain on sale and leaseback transactions

Share-based compensation

Noncash lease expense

Amortization of asset recognized from gain on sale and leaseback transactions

Changes in assets and liabilities:

Accounts receivable

Income taxes receivable

Prepaid expenses and other current assets

Accounts payable

Current operating lease liabilities

Taxes withheld and accrued

Accrued employee compensation

Accrued employee benefits

Deferred revenues

Other current liabilities

Long-term operating lease liabilities

Other long-term obligations

Deferred income taxes

Net cash provided by operating activities

Cash flows from investing activities:

Purchase of property and equipment

Proceeds from insurance recoveries of property and equipment

Proceeds from sale of property and equipment

Acquisition of business, net of cash acquired

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from issuance of long-term debt

Proceeds from issuance of convertible senior notes

Taxes withheld from issuance of share-based compensation awards

Principal payments under long-term debt

Proceeds from issuance of warrants

Purchase of convertible note hedge

Purchases and retirement of common stock

Deferred financing costs

Dividends on common stock

Net cash used in financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Interest, net of amounts capitalized

Supplemental schedule of non-cash investing and financing activities:

Capital expenditures accrued in accounts payable

Change in fair value of interest rate swaps

Change in deferred tax asset for interest rate swaps

Dividends declared but not yet paid

See Notes to Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except share data)

Nature of Operations and Summary of Significant Accounting Policies

Cracker Barrel Old Country Store, Inc.

and its affiliates (collectively, in the Notes, the “Company”) are principally engaged in the

operation and development in the United States (“U.S.”) of the Cracker Barrel Old Country Store® (“Cracker Barrel”) concept.

Basis of Presentation

Fiscal year – The Company’s fiscal

year ends on the Friday nearest July 31st and each quarter consists of thirteen weeks unless noted otherwise.

References in these Notes to a year or quarter are to the Company’s fiscal year or quarter unless noted otherwise.

GAAP – The accompanying Consolidated Financial Statements have been prepared in accordance with generally accepted

accounting principles in the U.S.

Principles of consolidation – The Consolidated Financial Statements include the accounts of the Company and its

subsidiaries, all of which are wholly owned.

All significant intercompany transactions and balances have been eliminated.

Use of estimates – Management of the Company has made certain estimates and assumptions relating to the reporting of

assets and liabilities and the disclosure of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods to prepare these Consolidated Financial Statements

in conformity with GAAP.

Management believes that such estimates have been based on reasonable and supportable assumptions and that the resulting estimates are reasonable for use in the preparation of the Consolidated Financial Statements.

results, however, could differ from those estimates.

External impacts to the Company’s operating environment – The Company’s operating results have been impacted by the

COVID-19 pandemic and other macroeconomic conditions.

During 2021, the Company’s business began recovering from the COVID-19 pandemic, but the Company continued to see negative impacts on the Company’s sales and traffic as a result of both

changes in consumer behavior and federal, state and local governmental authorities’ continuation of various restrictions on travel, group gatherings and dine-in services.

Dining room service was operational to varying degrees, yet most locations

were impacted at times by capacity restrictions, social distancing guidelines, and decreased consumer demand for in-person dining.

In 2022, the Company continued to recover from the COVID-19 pandemic;

however, the Company believes outbreaks of

new variants adversely impacted consumer demand in 2022.

While the Company’s dining rooms operated without COVID-related restrictions in 2023, it is possible that renewed outbreaks, increases in cases and/or new variants of the disease, either

as part of a national trend or on a more localized basis, could result in COVID-19-related restrictions including capacity restrictions or otherwise limit the Company’s dine-in services, or negatively affect consumer demand.

In 2023 and 2022,

the Company experienced inflationary conditions with respect to the cost for food, ingredients, retail merchandise, transportation, distribution, labor and utilities resulting, in part, from economic pressures related to the COVID-19 pandemic.

Summary of Significant Accounting Policies

Cash and cash equivalents – The Company’s policy is to consider all highly liquid investments purchased with an original

maturity of three months or less to be cash equivalents.

Accounts receivable – Accounts receivable represent their estimated net realizable value.

Accounts receivable are

written off when they are deemed uncollectible.

Inventories – Cost of restaurant inventory is determined by the first-in, first-out (“FIFO”) method.

Retail inventories

are valued using the retail inventory method (“RIM”) except at the retail distribution center which are valued using moving average cost.

Approximately 60 %

of retail inventories are valued using RIM.

Retail inventories valued using RIM are stated at the lower of cost or market.

Cost of restaurant inventory and retail inventory valued using moving average cost are stated at the lower of cost and net

realizable value.

See Note 3 for additional information regarding the components of inventory.

Valuation provisions are included for retail inventory obsolescence, retail inventory shrinkage, returns and

amortization of certain items.

The estimate of retail inventory shrinkage is adjusted upon physical inventory counts.

Annual physical inventory counts are conducted based upon a cyclical inventory schedule.

An estimate of shrinkage is recorded for

the time period between physical inventory counts by using a two-year average of the physical inventories’ results on a store-by-store

Property and equipment – Property and equipment are stated at cost.

For financial reporting purposes, depreciation and

amortization on these assets are computed by use of the straight-line and double-declining balance methods over the estimated useful lives of the respective assets, as follows:

Buildings and improvements

Restaurant and other equipment

Leasehold improvements

Accelerated depreciation methods are generally used for income tax purposes.

Total depreciation expense and depreciation expense related to store operations for each of the three years are as

Total depreciation expense

Depreciation expense related to store operations*

* Depreciation

expense related to store operations is included in other store operating expenses in the Consolidated Statements of Income.

Gain or loss is recognized upon disposal of property and equipment.

The asset and related accumulated depreciation and

amortization amounts are removed from the accounts.

Maintenance and repairs, including the replacement of minor items, are charged to expense and major additions to

property and equipment are capitalized.

Impairment of long-lived assets – T he Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be

Recoverability of assets is measured by comparing the carrying value of the asset to the undiscounted future cash flows expected to be generated by the asset.

If the total expected future cash flows are less than the carrying value of

the asset, the carrying value is written down, for an asset to be held and used, to the estimated fair value or, for an asset to be disposed of, to the fair value, net of estimated costs of disposal.

Any loss resulting from impairment is recognized

by a charge to income.

During 2023, six Cracker Barrel locations were determined to be impaired and the Company recorded an impairment

charge of $ 11,692 , which is included in the impairment and store closing costs line on the Consolidated Statement of Income .

Goodwill and other intangible assets – The Company accounts for all transactions that represent business combinations using the

acquisition method of accounting, where the identifiable assets acquired and the liabilities assumed are recognized and measured at their fair values on the date the Company obtains control in the acquiree.

Such fair values that are not finalized

for reporting periods following the acquisition date are estimated and recorded as estimated amounts.

Adjustments to these estimated amounts during the measurement period (defined as the date through which all information required to identify and

measure the consideration transferred, the assets acquired and the liabilities assumed has been obtained, limited to one year from the acquisition date) are recorded when identified.

Goodwill is determined as the excess of the fair value of the

consideration conveyed in the acquisition over the fair value of the net assets acquired.

Goodwill and other intangibles are evaluated for impairment annually on June 1 or more frequently if events occur or circumstances change that, more likely

than not, reduce the fair value of the reporting unit below its carrying value.

At July 28, 2023 and July 29, 2022, the Company does not have any reporting units that are at risk of failing step one of the impairment test.

At both July 28, 2023 and

July 29, 2022, goodwill of $ 4,690 consisted of the Company’s acquisition of its 100 % ownership of Maple Street Biscuit Company (“MSBC”), a breakfast and lunch fast casual concept.

Other intangibles primarily consist of the MSBC tradename and liquor licenses.

The MSBC tradename was capitalized as an

indefinite-lived intangible asset and, at both July 28, 2023 and July 29, 2022, was $ 20,960 .

The costs of obtaining non-transferable

liquor licenses that are directly issued by local government agencies for nominal fees are expensed as incurred.

The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor

licenses are capitalized as indefinite-lived intangible assets.

Liquor licenses capitalized as intangible assets were $ 2,290 and $ 105 , respectively, at July 28, 2023 and July 29, 2022.

Convertible Senior Notes – In June 2021, the Company completed a $ 300,000 principal aggregate amount private offering of 0.625 % convertible Senior

Notes due in 2026 (the “Notes”).

In accordance with accounting guidance on embedded conversion features indexed to and settled in equity, the Company valued and bifurcated the conversion option associated with the Notes from the respective host debt

The carrying amount of the equity is recorded as a debt discount and represents the difference between the proceeds from the issuance of the Notes and the fair value of the liability component of the Notes.

The significant assumptions

used in the fair value of the liability component of the Notes were risk-free rate, discount rate based on the Company’s implied credit spread and term of the Notes, expected volatility of the Company’s stock price and dividend yield.

The resulting

debt discount on the Notes is amortized to interest expense using the effective interest method over the contractual term of the Notes.

In addition, the debt issuance costs related to the issuance of the Notes were allocated between the liability and

equity components based on their relative values.

Debt issuance costs attributable to the liability component were recorded as a contra-liability and are presented net against the Notes balance on the Company’s consolidated balance sheets.

costs are amortized to interest expense using the effective interest method over the term of the Notes.

Due to the Company’s adoption of new accounting guidance for convertible instruments on July 31, 2021, the Company no longer bifurcates the Notes into a liability and an equity component in the Company’s Consolidated Balance Sheets.

Upon adoption of this new accounting guidance, the Notes are accounted for entirely as a liability, and the issuance costs of the Notes are accounted for wholly as debt issuance costs.

The equity conversion feature that was recorded to equity, as

well as the unamortized debt discount and amortization expense attributable to equity, have been derecognized.

D e rivative instruments and hedging activities – The Company is exposed to market risk, such as changes in interest rates and commodity prices.

The Company has interest rate

risk relative to its outstanding borrowings under the revolving credit facility (see Note 4).

The Company’s policy has been to manage interest cost using a mix of fixed and variable rate debt.

To manage this risk in a cost-efficient manner, prior

to 2022, the Company used derivative instruments, specifically interest rate swaps.

In the fourth quarter of 2021, the Company terminated all of its interest rate swaps and issued the Notes (see discussion above under “Convertible Senior Notes”

and Note 5 for further information).

Prior to the termination of the interest rate swaps in the fourth quarter of 2021, all of the Company’s interest rate swaps were accounted for as cash flow hedges.

For derivative instruments that were designated

and qualify as a cash flow hedge, the gain or loss on the derivative instrument was reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affected earnings and

was presented in the same statement of income line item as the earnings effect of the hedged item.

Gains and losses on the derivative instrument representing hedge components excluded from the assessment of effectiveness, if any, are recognized

currently in earnings in the same statement of income line item as the earnings effect of the hedged item.

The Company did not elect to reclassify income tax effects resulting from the Tax Cuts and Jobs Act to retained earnings;

income tax effects

are released on an individual basis to income tax expense.

Companies may elect whether or not to offset related assets and liabilities and report the net amount on their financial

statements if the right of setoff exists.

Under a master netting agreement, the Company has the legal right to offset the amounts owed to the Company against amounts owed by the Company under a derivative instrument that exists between the Company

and a counterparty.

When the Company is engaged in more than one outstanding derivative transaction with the same counterparty and also has a legally enforceable master netting agreement with that counterparty, its credit risk exposure is based on

the net exposure under the master netting agreement.

If, on a net basis, the Company owes the counterparty, the Company regards its credit exposure to the counterparty as being zero .

The Company does not hold or use derivative instruments for trading purposes.

The Company also does not have any

derivatives not designated as hedging instruments and has not designated any non-derivatives as hedging instruments.

See Note 5 for additional information on the Company’s derivative and hedging activities.

Segment reporting – Operating segments are components of an enterprise about which separate financial information is

available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

Using these criteria, the Company manages its business on the basis of one reportable operating segment (see Note 7 for additional information regarding segment reporting).

Unredeemed gift cards and certificates – Unredeemed gift cards and certificates represent a liability of the Company

related to unearned income and are recorded at their expected redemption value.

No revenue is recognized in connection with the point-of-sale transaction when gift cards or gift certificates are sold.

Any amounts remitted to states under escheat or

similar laws reduce the Company’s deferred revenue liability and have no effect on revenue or expense while any amounts that the Company is permitted to retain are recorded as revenue.

See “Revenue recognition” section in this Note for information

regarding breakage.

Revenue recognition – Revenue consists primarily of sales from restaurant and retail operations.

The Company recognizes

revenue when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest, retail customer or other customer.

The Company recognizes revenues from restaurant sales when payment is tendered at the

point of sale, as the Company’s performance obligation to provide food and beverages is satisfied.

The Company recognizes revenues from retail sales when payment is tendered at the point of sale, as the Company’s performance obligation to provide

merchandise is satisfied.

Ecommerce sales, including shipping revenue, are recorded upon delivery to the customer.

Additionally, the Company provides for estimated returns based on return history and sales levels.

The Company’s policy is to

present sales in the Consolidated Statements of Income on a net presentation basis after deducting sales tax.

Included in restaurant and retail revenue is gift card breakage.

Customer purchases of gift cards, to be utilized at

the Company’s stores, are not recognized as sales until the card is redeemed and the customer purchases food and/or merchandise.

Gift cards do not carry an expiration date;

therefore, customers can redeem their gift cards indefinitely.

number of gift cards will not be fully redeemed.

Management estimates unredeemed balances and recognizes gift card breakage revenue for these amounts in the Company’s Consolidated Statements of Income over the expected redemption period.

breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote and the Company determines that there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction.

determination of the gift card breakage rate is based upon the Company’s specific historical redemption patterns.

The Company recognizes gift card breakage by applying its estimate of the rate of gift card breakage over the period of estimated

For 2023, 2022 and 2021, gift card breakage was $ 10,713 , $ 9,572 , and $ 6,349 , respectively.

Revenue recognized in the Consolidated

Statements of Income for 2023, 2022 and 2021, respectively, for the redemption of gift cards which were included in the deferred revenue balance at the beginning of the fiscal year was $ 40,103 , $ 42,169 , and $ 42,266 , respectively.

Deferred revenue related to the Company’s gift cards was $ 88,566

and $ 93,569 , respectively, at July 28, 2023 and July 29, 2022.

Insurance – The Company self-insures a significant portion of its workers’ compensation and general liability programs.

The Company purchases insurance for individual workers’ compensation claims that exceed $ 750 or $ 1,000 depending on the state in which the claim originates.

The Company purchases insurance for individual general liability claims that exceed $ 500 .

The Company records a reserve for workers’ compensation and general liability for all unresolved claims and for an

estimate of incurred but not reported claims (“IBNR”).

These reserves and estimates of IBNR claims are based upon a full scope actuarial study which is performed annually at the end of the Company’s third quarter and is adjusted by the actuarially

determined losses and actual claims payments for the fourth quarter.

Additionally, the Company performs limited scope actuarial studies on a quarterly basis to verify and/or modify the Company’s reserves.

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, the Company records the losses at the lower half of that range and discounts them to present value using a risk-free

interest rate based on projected timing of payments.

The Company also monitors 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 its reserves.

The Company’s group health plans combine the use of self-insured and fully-insured programs.

Benefits for any

individual (employee or dependents) in the self-insured program are limited.

The Company records a liability for the self-insured portion of its group health program for all unpaid claims based upon a loss development analysis derived from actual

group health claims payment experience.

The Company also records a liability for unpaid prescription drug claims based on historical experience.

Store pre-opening costs – Start-up costs of a new store are expensed when incurred.

Leases – The Company’s leases are

classified as either finance or operating leases.

The Company has ground leases for its leased stores and office space leases that are recorded as operating leases under various non-cancellable operating leases.

The Company also leases its

advertising billboards, vehicle fleets and certain equipment under various non-cancellable operating leases.

To determine whether a contract is or contains a lease, the Company determines at contract inception whether it contains the right to

control the use of an identified asset for a period of time in exchange for consideration.

If the contract has the right to obtain substantially all of the economic benefit from use of the identified asset and the right to direct the use of the

identified asset, the Company recognizes a right-of-use asset and lease liability.

The Company’s leases all have varying terms and expire at various dates through 2058.

Restaurant leases typically have base terms of ten years with four to five optional renewal periods of five years

The Company uses a lease life that generally begins on the commencement date, including the rent holiday periods, and generally extends through certain renewal periods that can be exercised at the Company’s option.

During rent holiday

periods, which include the pre-opening period during construction, the Company has possession of and access to the property, but is not obligated to, and normally does not, make rent payments.

The Company has included lease renewal options in the

lease term for calculations of the right-of-use asset and liability for which at the commencement of the lease it is reasonably certain that the Company will exercise those renewal options.

Additionally, some of the leases have contingent rent

provisions and others require adjustments for inflation or index.

Contingent rent is determined as a percentage of gross sales in excess of specified levels.

The Company records a contingent rent liability and corresponding rent expense when it is

probable sales have been achieved in amounts in excess of the specified levels.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants .

Advertising – The Company expenses the costs of producing advertising the first time the advertising takes place.

advertising costs are expensed as incurred.

Advertising expense for each of the three years was as follows:

Advertising expense

Share-based compensation – The Company’s share-based compensation consists of nonvested stock awards and units.

Share-based compensation is recorded in general and administrative expenses in the Consolidated Statements of Income.

Share-based compensation expense is recognized based on the grant date fair value and the achievement of performance conditions for

certain awards.

The Company recognizes share-based compensation expense on a straight-line basis over the requisite service period, which is generally the award’s vesting period, or to the date on which retirement eligibility is achieved, if

Certain nonvested stock awards and units contain performance conditions.

Compensation expense for performance-based

awards is recognized when it is probable that the performance criteria will be met.

If any performance goals are not met, no compensation expense is ultimately recognized and, to the extent previously recognized, compensation expense is reversed.

If a share-based compensation award is modified after the grant date, incremental compensation expense is recognized in

an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.

Incremental compensation expense for vested awards is recognized immediately.

For unvested awards,

the sum of the incremental compensation expense and the remaining unrecognized compensation expense for the original award on the modification date is recognized over the modified service period.

Additionally, the Company’s policy is to issue shares of common stock to satisfy exercises of share-based compensation

Income taxes – The Company’s provision for income taxes includes employer tax credits for FICA taxes paid on employee

tip income and other employer tax credits are accounted for by the flow-through method.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for income tax purposes.

The Company recognizes (or derecognizes) a tax position taken or expected to be taken in a tax return in the financial statements when it is more likely than not (i.e., a likelihood of more than

fifty percent) that the position would be sustained (or not sustained) upon examination by tax authorities.

A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon

ultimate settlement.

The Company recognizes, net of tax, interest and estimated penalties related to uncertain tax positions in its provision for income taxes.

See Note 12 for additional information regarding income taxes.

Comprehensive income – Comprehensive income includes net income and the effective unrealized portion of the changes in

the fair value of the Company’s interest rate swa ps .

The Company terminated all of its interest rate swaps in 2021 .

N et income per share – Basic consolidated net income

per share is computed by dividing consolidated net income available to common shareholders by the weighted average number of common shares outstanding for the reporting period.

Diluted consolidated net income per share reflects the potential

dilution that could occur if securities, options or other contracts to issue common stock were exercised or converted into common stock and is based upon the weighted average number of common and common equivalent shares outstanding during the

reporting period.

Common equivalent shares related to nonvested stock awards and units issued by the Company are calculated using the treasury stock method.

The outstanding nonvested stock awards and units issued by the Company represent the only

dilutive effects on diluted consolidated net income per share.

Prior to the adoption of new accounting guidance for convertible instruments in 2022, the Company’s convertible senior notes and related warrants were calculated using the treasury

stock method.

Beginning in 2022, the convertible senior notes and related warrants are calculated using the net share settlement option under the if-converted method.

Because the principal amount of the convertible senior notes will be settled in

cash with any excess conversion value settled in cash or shares of common stock, the convertible senior notes have been excluded from the computation of diluted earnings per share because the average market price of the Company’s common stock

during the reporting period did not exceed the conversion price of $ 169.80 as of July 28, 2023.

Warrants were excluded from the

computation of diluted earnings per share since the warrants’ strike price of $ 237.73 was greater than the average market price of the

Company’s common stock during the period.

See Note 13 for additional information regarding net income per share and Note 4 for additional information regarding the Company’s convertible senior notes .

Fair Value Measurements

Fair value for certain of the Company’s assets and liabilities is defined as the price that would be received to sell an

asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

In determining fair value, a three-level hierarchy for inputs is used.

These levels are:

Quoted Prices in Active Markets for Identical Assets (“Level 1”) – quoted prices (unadjusted) for an identical asset or liability in an active market.

Significant Other Observable Inputs (“Level 2”) – quoted prices for a similar asset or liability in an active market or model-derived valuations in

which all significant inputs are observable for substantially the full term of the asset or liability.

Significant Unobservable Inputs (“Level 3”) – unobservable and significant to the fair value measurement of the asset or liability.

The Company’s assets and liabilities measured at fair value on a recurring basis at July 28, 2023 were as follows:

Cash equivalents*

Deferred compensation plan assets** measured at net asset value

Total assets at fair value

The Company’s assets and

liabilities measured at fair value on a recurring basis at July 29, 2022 were as follows :

Cash equivalents*

Deferred compensation plan assets** measured at net asset value

Total assets at fair value

* Consists of money market

fund investments.

** Represents plan assets

invested in mutual funds established under a Rabbi Trust for the Company’s non-qualified savings plan and is included in the Consolidated Balance Sheets as other assets (see Note 11).

The Company did no t have any liabilities measured at fair value on a recurring basis at July 28, 2023 and July 29, 2022.

The Company’s money market fund investments are measured at fair value using quoted market prices.

T he Company’s deferred compensation plan assets are measured based on net asset value per share as a practical expedient to

estimate fair value.

The fair values of accounts receivable and accounts payable at July 28, 2023 and July 29, 2022, approximate their carrying

amounts because of their short duration.

The fair value of the Company’s variable rate debt, based on quoted market prices, which are considered Level 1 inputs, approximates its

carrying amounts at July 28, 2023 and July 29, 2022.

The Company’s financial instruments that are not remeasured at fair value include the 0.625 % convertible Senior Notes (see Note 4).

The Company estimates the fair value of the Notes through consideration of quoted market prices of similar instruments, classified

as Level 2 as described above.

The estimated fair value of the Notes was $ 259,311 and $ 255,894 as of July 28, 2023 and July 29, 2022, respectively.

Assets Measured at Fair Value on a Nonrecurring Basis

During 2023, six

Cracker Barrel locations were determined to be impaired because of declining operating performance.

Fair value of these locations was determined by sales prices of comparable assets or estimates of discounted future cash flows considering their

highest and best use.

Assumptions used in the cash flow model included projected annual revenue growth rates and projected cash flows, which can be affected by economic conditions and management’s expectations.

Additionally, changes in the local

and national economies and markets for real estate and other assets can impact the sales prices of the assets.

The Company has determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs,

and thus, are considered Level 3 inputs.

Based on its analysis, the Company recorded an impairment charge of $ 11,692 , which is included

in the impairment and store closing costs line on the Consolidated Statement of Income.

Inventories were comprised of the following at:

July 28, 2023

July 29, 2022

On June 17, 2022, the Company entered

into a five-year $ 700,000 revolving credit facility (the “2022 Revolving Credit Facility”) with substantially the same

terms and financial covenants as our previous amended $ 800,000 revolving

credit facility (the “2019 Revolving Credit Facility”) , which it replaced.

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

At July 28, 2023 and July 29, 2022, the Company had $ 120,000 and $ 130,000 , respectively, in outstanding borrowings under the 2022 Revolving Credit Facility and 2019 Revolving Credit Facility .

At July 28, 2023, the Company had $ 31,896 of standby letters of credit, which reduce the Company’s borrowing availability under the 2022 Revolving Credit

Facility (see Note 14) .

At July 28, 2023, the Company had $ 548,104 in borrowing availability under the 2022 Revolving Credit Facility.

In accordance with the 2022 Revolving Credit Facility, outstanding borrowings bear interest, at the Company’s election, either at Term SOFR or prime plus or a rate of

0.5 % in excess of the Federal Funds Rate plus an applicable margin based on certain specified financial ratios.

At July 28, 2023, the weighted average interest rate on $ 120,000 of the Company’s outstanding borrowings was 6.79 %.

At July 29, 2022, the weighted average interest rate on $ 130,000 of the Company’s outstanding borrowings was 3.49 %.

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

28, 2023, the Company was in compliance with all debt covenants under the 2022 Revolving Credit Facility.

The 2022 Revolving Credit Facility also

imposes restrictions on the amount of dividends the Company is permitted to pay and the amount of shares the Company is permitted to repurchase.

Under the 2022 Revolving Credit

Facility, provided there is no default existing and the total of the Company’s availability under the 2022 Revolving Credit Facility plus the Company’s cash and cash equivalents on hand is at least

$ 100,000 (the “Cash Availability”), the Company may declare and pay cash

dividends on shares of its common stock and repurchase shares of its common stock (1) in an unlimited amount if, at the time such dividend or repurchase is made, the Company’s consolidated total senior secured leverage ratio is 2.75 to 1.00 or less and (2) in an aggregate amount not to exceed $ 100,000 in any fiscal year if the Company’s consolidated total leverage ratio is greater than 2.75 to 1.00 at the time the dividend or repurchase is made;

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 , the Company may declare and pay cash dividends on shares of its 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 .

Convertible Senior Notes

On June 18, 2021, the Company completed a $ 300,000 principal aggregate amount private offering

of 0.625 % convertible Senior Notes due in 2026 (the “Notes”) which included the exercise in

full of the initial purchasers’ option to purchase up to an additional $ 25,000 principal amount

of the Notes.

The Notes are governed by the terms of an indenture between the Company and U.S.

Bank National Association as the Trustee.

The Notes will mature on June 15, 2026 , unless earlier converted, repurchased or redeemed.

The Notes bear cash interest at an annual rate of 0.625 % , payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021.

The Notes are unsecured obligations and do

not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries.

In an event of default, the

principal amount of, and all accrued and unpaid interest on, all of the notes then outstanding will immediately become due and payable.

However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an

event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture will consist exclusively of the right of the noteholders to receive special interest on the Notes for up to 180 calendar days during which such event of default

has occurred and is continuing, at a specified rate for the first 90 days of 0.25 % per annum, and thereafter at a rate of 0.50 % per annum, on the

principal amount of the Notes.

The initial conversion rate applicable to

the Notes was 5.3153 shares of the

Company’s common stock per $ 1,000 principal amount of Notes, which represented an initial

conversion price of approximately $ 188.14 per share of the Company’s common stock, a premium of

25.0 % over the last reported sale price of $ 150.51 per share on June 15, 2021, the date on which the Notes were priced.

The conversion rate is subject to customary adjustments upon the

occurrence of certain events, including for the payment of dividends to holders of the Company’s common stock.

On July 28, 2023, the conversion rate, as adjusted, was 5.8892 shares of the Company’s common stock per $ 1,000 principal amount of Notes.

In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” occur, then the conversion rate will, in certain circumstances, be increased for a specified period

Net proceeds from the 2026 Notes offering

were $ 291,125 , after deducting the

initial purchasers’ discounts and commissions and the Company’s offering fees and expenses.

The Notes are accounted for

entirely as a liability, and the issuance costs of the Notes are accounted for wholly as debt issuance costs in the Consolidated Balance Sheets as of July 28, 2023 and July 29, 2022.

The equity conversion feature that was recorded to equity,

as well as the unamortized debt discount and amortization expense attributable to equity, have been derecognized.

During any calendar quarter preceding September 30, 2021, in which the closing price of the Company’s common stock exceeds 130 % of the applicable conversion price of the Notes on at least 20 of the last 30

consecutive trading days of the quarter, holders may in the immediate quarter following, convert all of a portion of their Notes.

The holders of the Notes were not eligible to convert their Notes during 2023, 2022 or 2021.

When a conversion notice is received, the Company has the option to pay or deliver the conversion amount entirely in cash

or a combination of cash and shares of the Company’s common stock.

Accordingly, as of July 28, 2023 and July 29, 2022,

the Company could not be required to settle the Notes in cash and, therefore, the Notes are classified as long-term debt .

The following table includes the outstanding principal amount and carrying value of the Notes as of the period

July 28, 2023

July 29, 2022

Liability component

Debt issuance costs

Net carrying amount

The effective rate of the Notes over their

expected life is 1.23 % .

The following is a summary of interest expense for the Notes for the year ended July 28, 2023 and July 29, 2022 :

July 28, 2023

July 29, 2022

Coupon interest

Amortization of issuance costs

Total interest expense

Convertible Note Hedge and Warrant Transactions

In connection with the offering of the

Notes, the Company entered into convertible note hedge transactions (the “Convertible Note Hedge Transactions”) with certain of the initial purchasers of the Notes and/or their respective affiliates and other financial institutions (in this

capacity, the “Hedge Counterparties”).

Concurrently with the Company’s entry into the Convertible Note Hedge Transactions, the Company also entered into separate, warrant transactions with the Hedge Counterparties collectively relating to the

same number of shares of the Company’s common stock, which initially is approximately 1,600,000 shares, subject to customary anti-dilution adjustments, and for which the Company received proceeds that partially offset the cost of entering into the Convertible Note Hedge Transactions (the “Warrant Transactions”).

The Convertible Note Hedge

Transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock that initially underlie the Notes, and are expected generally to reduce the potential equity dilution, and/or offset any cash

payments in excess of the principal amount due, as the case may be, upon conversion of the Notes.

By default, the Warrant Transactions are net share settled and the Company has the option to settle in cash or shares.

The Warrant Transactions could have a dilutive effect on the Company’s common stock to the extent that the price of its common stock exceeds the strike price of the Warrant

Transactions.

The strike price was initially $ 263.39 per share and is subject to certain adjustments under the terms of the Warrant Transactions.

On July 28, 2023, the strike price, as adjusted, of the Warrant Transactions was adjusted to $ 237.73 per share as a result of dividends declared since the Notes were issued.

The portion of the net proceeds to the Company from the offering of the Notes that was used to pay the premium on the

Convertible Note Hedge Transactions, net of the proceeds to the Company from the Warrant Transactions, was approximately $ 30,310 .

The net costs incurred in connection with the Convertible Note Hedge Transactions and Warrant Transactions were recorded as a reduction to additional

paid-in capital on the Company’s Consolidated Balance Sheet during 2021.

As these transactions meet certain accounting criteria, the Convertible Note Hedge Transactions and Warrant Transactions

were recorded in stockholders’ equity, not accounted for as derivatives and are not remeasured each reporting period.

Derivative Instruments and Hedging Activities

During the fourth quarter of 2021, in conjunction with paying down debt under the revolving credit facility, the Company

terminated all of its interest rate swap agreements which resulted in the reclassification of the remaining losses from accumulated other comprehensive loss (“AOCL”) to the Consolidated Statements of Income as part of interest expense.

determination of the amounts reclassified from AOCL to interest expense was based on the Company’s assessment that the forecasted transactions under the hedging relationships were no longer probable.

Prior to the termination of the interest

rate swaps, for each of the Company’s interest rate swaps, the Company had agreed to exchange with a counterparty the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount.

interest rates on the portion of the Company’s outstanding debt covered by its interest rate swaps were fixed at the rates specified in the interest rate swap agreements plus the Company’s credit spread.

All of the Company’s interest rate

swaps were accounted for as cash flow hedges.

The following table summarizes the pre-tax effects of the Company’s derivative instruments on AOCL for 2021:

Amount of Income Recognized in AOCL

on Derivatives (Effective Portion)

Cash flow hedges:

Interest rate swaps

The following table summarizes the pre-tax effects of the Company’s derivative instruments on income for 2021:

Location of Loss Reclassified from

AOCL into Income (Effective Portion)

Amount of Loss Reclassified from AOCL

into Income (Effective Portion)

Cash flow hedges:

Interest rate swaps

Interest expense

The following table summarizes the amounts reclassified out of AOCL related to the Company’s interest rate swaps for the

years ended July 30, 2021:

Details about AOCL

July 30, 2021

Affected Line Item in

the Consolidated

Statement of Income

Loss on cash flow hedges:

Interest rate swaps

Interest expense

Provision for income taxes

or losses representing amounts excluded from the assessment of effectiveness were recognized in earnings in 2021.

Share Repurchases

Subject to the limits imposed by the Company’s revolving credit facility, in September 2021, the Company was authorized by its Board of Directors to repurchase shares at the discretion of management up to $ 100,000 .

In the fourth quarter of 2022, the Company was authorized by its Board of Directors to repurchase shares of the Company’s outstanding common

stock at management’s discretion up to a total value of $ 200,000 ;

this authorization replaced the previous unused portion of the previous

$ 100,000 authorization.

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

Company repurchased 1,248,184 shares of its common stock in the open market at an aggregate cost of $ 131,542 .

In 2021, the Company repurchased 232,543

shares of its common stock in conjunction with the Company’s offering and sale of the Notes (see Note 4 for further information regarding the Notes) at an aggregate cost of $ 35,000 .

Segment Information

Cracker Barrel stores represent a single, integrated operation with two related and substantially integrated product lines.

The operating expenses of the restaurant and retail product lines of a Cracker Barrel store are shared and are

indistinguishable in many respects.

Accordingly, the Company manages its business on the basis of one reportable operating segment.

of the Company’s operations are located within the United States.

Disaggregation of revenue

Total revenue was comprised of the following at:

Total revenue

In 2020 , the Company adopted new accounting guidance for leases.

As part of the adoption of this accounting guidance for leases, the Company elected to not separate lease and non-lease

Additionally, the Company elected to apply the short term lease exemption to all asset classes and the short term lease expense for the period reasonably reflects the short term lease commitments.

As the Company’s leases do not

provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at the time of commencement or modification date in determining the present value of lease payments.

For operating leases that commenced

prior to the date of adoption of the new lease accounting guidance, the Company used the incremental borrowing rate as of the adoption date.

Assumptions used in determining the Company’s incremental borrowing rate include the Company’s implied

credit rating and an estimate of secured borrowing rates based on comparable market data.

The Company has entered into agreements for real estate leases that are not recorded as right-of-use assets or lease liabilities as it

has not yet taken possession.

These leases are expected to commence in 2024 and 2025 with undiscounted future payments of $ 15,714 and $ 21,673 , respectively.

The following table summarizes the components of lease cost for operating leases for the years ended July 28, 2023,

July 29, 2022 and July 30, 2021:

Operating lease cost

Short term lease cost

Variable lease cost

Total lease cost

The following table summarizes

supplemental cash flow information and non-cash activity related to the Company’s operating leases for the years ended July 28, 2023, July 29, 2022 and July 30, 2021 :

Operating cash flow information:

Gain on sale and leaseback transactions

Cash paid for amounts included in the measurement of lease liabilities

Noncash information:

Right-of-use assets obtained in exchange for new operating lease liabilities

modifications or reassessments increasing or decreasing right-of-use assets

Lease modifications removing right-of-use assets

The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate for

operating leases as of July 28, 2023, July 29, 2022 and July 30, 2021:

Weighted-average remaining lease term

Weighted-average discount rate

The following table summarizes the maturities of undiscounted cash flows reconciled to the total operating lease

liability as of July 28, 2023:

Total future minimum lease payments

Less imputed remaining interest

Total present value of operating lease liabilities

Sale and Leaseback Transactions

In 2009, the Company completed sale and leaseback transactions involving 15 of its owned stores and its retail distribution center.

Under the transactions, the land, buildings and improvements at the locations were sold and leased back for terms of 20 and 15 years, respectively.

was not included.

The leases include specified renewal options for up to 20 additional years.

In 2000, the Company completed a sale and leaseback transaction involving 65 of its owned Cracker Barrel stores.

Under the transaction, the land, buildings and building improvements at the locations were sold and leased back for a term of 21 years.

The leases for these stores included specified renewal options for up to 20 additional years.

On July 29, 2020, the Company entered into an agreement with the original lessor and a third-party financier to obtain ownership of 64 of the 65 Cracker Barrel properties and

simultaneously entered into a sale and leaseback transaction with the financier for an aggregate purchase price, net of closing costs, of $ 198,083 .

The Company purchased the remaining property for approximately $ 3,200 .

In connection with the sale and leaseback transaction, the Company

entered into lease agreements for each of the properties for initial terms of 20 years and renewal options up to 50 years.

The aggregate initial annual rent payment for the properties is approximately $ 14,379 and includes 1 % annual rent increases over the initial lease

All the properties qualified for sale and leaseback and operating lease accounting classification and the Company recorded a gain on the sale and leaseback transaction of $ 69,954 which is recorded in the gain on sale and leaseback transactions line in the Consolidated Statements of Income.

The Company also recorded operating lease right-of-use

assets and corresponding operating lease liabilities of $ 261,698 and $ 182,649 , respectively.

On August 4, 2020, the Company completed a subsequent sale and leaseback transaction involving 62 of its owned Cracker Barrel stores for an aggregate purchase price, net of closing costs, of $ 146,357 .

Under the transaction, the land, buildings and building improvements at the locations were sold and leased back for initial terms of 20 years and renewal options up to 50 years.

The aggregate initial

annual rent payment for the properties is approximately $ 10,393 and includes 1 % annual rent increases over the initial lease terms.

All of the properties qualified for sale and leaseback and operating lease accounting classification, and the Company

recorded a gain of $ 217,722 which is recorded in the gain on sale and leaseback transaction line in the Consolidated Statement of Income in

the first quarter of 2021.

The Company also recorded operating lease right-of-use assets, including a non-cash asset recognized as part of accounting for the transaction of $ 175,960 , and corresponding operating lease liabilities of $ 309,624

and $ 133,663 , respectively .

Share-Based Compensation

Stock Compensation Plans

The Company’s employee compensation plans are administered by the Compensation Committee of the Company’s Board of

Directors (the “Committee”).

The Committee is authorized to determine, at time periods within its discretion and subject to the direction of the Board of Directors, which employees will be granted awards, the number of shares covered by any awards

granted, and within applicable limits, the terms and provisions relating to the exercise and vesting of any awards.

On November 19, 2020, the Company’s shareholders approved the 2020 Omnibus Incentive Plan (the “2020 Omnibus Plan”)

which became effective on that date.

The 2020 Omnibus Plan authorizes the following types of awards for employees and non-employee directors:

stock options, stock appreciation rights, nonvested stock, restricted stock units, other share-based awards

and performance awards.

After the effective date of the 2020 Omnibus Plan, no additional awards could be granted under the Company’s 2010

Omnibus Incentive Stock and Incentive Plan (the “Prior Plan”).

The 2020 Omnibus Plan allows the Committee to grant awards for an aggregate of 1,033,441 shares, the number of shares that were available for issuance as of September 24, 2020 (the “Cutoff Date”) pursuant to the Prior Plan, plus the number of shares that

became available for issuance pursuant to the terms of the Prior Plan following the Cutoff Date and prior to the effective date.

However, this share reserve is increased by shares awarded under this and the Prior Plan which are forfeited, expired,

settled for cash and shares withheld by the Company in payment of a tax withholding obligation after the effective date of the 2020 Omnibus Plan.

Additionally, this share reserve was decreased by shares granted from the 2020 Omnibus Plan after the

effective date.

At July 28, 2023, the number of shares authorized for future issuance under the Company’s active plan is 1,016,341 .

July 28, 2023, the number of outstanding awards under the 2020 Omnibus Plan and the Prior Plan was 161,738 and 37,464 , respectively.

Types of Share-Based Awards

Nonvested Stock Awards

Nonvested stock awards consist of the Company’s common stock, generally accrue dividend equivalents and vest over one to five years .

The fair value of the

Company’s nonvested stock awards which accrue dividends is equal to the market price of the Company’s stock at the date of the grant.

Dividends are forfeited for any nonvested stock awards that do not vest.

The Company’s nonvested stock awards include its long-term performance plans which were established by the Committee for

the purpose of rewarding certain officers with shares of the Company’s common stock if the Company achieved certain performance targets.

The stock awards under the long-term performance plans are calculated or estimated based on achievement of

financial performance measures.

The following table summarizes the performance periods and vesting periods for the Company’s nonvested stock awards

under its long-term performance plans at July 28, 2023:

Long-Term Performance Plan (“LTPP”)

Performance Period

Vesting Period

The following table summarizes the shares that have been accrued under the 2023 LTPP and 2022 LTPP at July 28, 2023:

A summary of the Company’s nonvested stock activity as of July 28, 2023, and changes during 2023 are presented in the

following table:

Nonvested Stock

Weighted-Average Grant

Date Fair Value

Unvested at July 29,

Unvested at July 28,

The following table summarizes the total fair value of nonvested stock that vested for each of the three years:

Total fair value of nonvested stock

The following table highlights the components of share-based compensation expense for each of the three years:

Total compensation expense

The following table highlights the total unrecognized compensation expense related to the outstanding nonvested stock

awards and nonvested stock units and the weighted-average periods over which the expense is expected to be recognized as of July 28, 2023:

Total unrecognized compensation

Weighted-average period in years

During 2023, the Company issued 43,974 shares of its 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 reduction to shareholders’

equity of $ 2,448 .

Shareholder Rights Plan

On April 9, 2021, the Company’s Board of

Directors declared a dividend of one

preferred share purchase right (a “Right”) for each outstanding share of common stock, par value $ 0.01 per share, and adopted a shareholder rights plan, as set forth in the Rights Agreement dated as of April 9, 2021 (the “Rights Agreement”), by and between the Company and American Stock Transfer

& Trust Company, LLC, as rights agent.

The dividend was payable on April 19, 2021 to the shareholders of record on April 19, 2021 .

The Rights Agreement replaced the Company’s previous shareholder rights plan adopted in 2018 (the “2018 Plan”), and it became effective immediately following the expiration

of the 2018 Plan at the close of business on April 9, 2021 .

The 2018 Plan and the preferred share

purchase rights issued thereunder expired by their own terms and shareholders of the Company were not entitled to any payment as a result of the expiration of the 2018 Plan.

The Rights initially trade with,

and are inseparable from, the Company’s common stock.

The Rights are evidenced only by certificates or book entries that represent shares of common stock.

New Rights will accompany any new shares of common stock the Company issues after April 19,

2021 until the Distribution Date described below .

Exercise Price

Each Right will allow its holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock (“Preferred Share”) for $ 600.00 (the “Exercise Price”) once the Rights become exercisable.

This portion of a Preferred Share will give the shareholder approximately the same dividend and liquidation rights as would one share of common stock.

Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights.

Exercisability

The Rights will not be exercisable until ten days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 20 % or more of the Company’s outstanding common stock.

Certain synthetic interests in securities created by derivative positions – whether or not such interests are considered to be ownership

of the underlying common stock or are reportable for purposes of Regulation 13D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) – are treated as beneficial ownership of the number of shares of the Company’s common stock

equivalent to the economic exposure created by the derivative .

The date when the Rights become exercisable is the “Distribution Date.” Until the Distribution Date, the common stock

certificates will also evidence the Rights, and any transfer of shares of common stock will constitute a transfer of Rights.

After that date, the Rights will separate from the common stock and will be evidenced by book-entry credits or by Rights

certificates that the Company will mail to all eligible holders of common stock.

Any Rights held by an Acquiring Person will be void and may not be exercised.

At July 28, 2023, none

of the Rights were exercisable.

Consequences of a Person or Group Becoming an Acquiring Person

If a person or group becomes an Acquiring Person, all

holders of Rights except the Acquiring Person may, for $ 600.00 , purchase shares of the Company’s common stock with a market value

of $ 1,200.00 , based on the market price of the common stock prior to such acquisition.

If the Company is later acquired in a merger or

similar transaction after the Distribution Date, all holders of Rights except the Acquiring Person may, for $ 600.00 , purchase

shares of the acquiring corporation with a market value of $ 1,200.00 , based on the market price of the acquiring corporation’s

stock prior to such transaction.

Notional Shares .

Shares held by affiliates and associates of an

Acquiring Person, and Notional Common Shares (as defined in the Rights Agreement) held by counterparties to a Derivatives Contract (as defined in the Rights Agreement) with an Acquiring Person, will be deemed to be beneficially owned by the

Acquiring Person.

Preferred Share Provisions

Each one one-hundredth

of a Preferred Share, if issued:

will not be redeemable;

will entitle holders to quarterly dividend payments of $ 0.01

per share, or an amount equal to the dividend paid on one share of common stock, whichever is greater;

will entitle holders upon liquidation either to receive $ 1.00

per share or an amount equal to the payment made on one share of common stock, whichever is greater;

will have the same voting power as one share of common stock;

if shares of the Company’s common stock are exchanged via merger, consolidation, or a similar transaction, will entitle holders to a per share payment

equal to the payment made on one share of common stock.

The value of one one-hundredth of a Preferred Share will generally approximate the value of one share of common stock.

The Board of Directors may redeem the Rights for $ 0.01 per Right at any time before any person or group becomes an Acquiring Person.

If the Board of Directors redeems any Rights, it must redeem all of the Rights.

Once the Rights are

redeemed, the only right of the holders of Rights will be to receive the redemption price of $ 0.01 per Right.

The redemption price will be

adjusted if the Company has a stock split or stock dividends of its common stock.

Qualifying Offer Provision

The Rights would also not interfere with any all-cash, fully financed tender offer, exchange offer of common stock of the offeror

meeting certain terms and conditions further described below, or a combination thereof, in each case for all shares of common stock that remain open for a minimum of 60 business days and subject to a minimum condition of a majority of the outstanding shares and provide for a 20 -business day “subsequent offering period” after consummation (such offers are referred to as “qualifying offers”).

If an offer includes shares of common stock of the offeror, the Rights

would not interfere with such offer if such consideration consists solely of freely-tradeable common stock of a publicly-owned United States corporation;

such common stock is listed or admitted to trading on the New York Stock Exchange, Nasdaq Global

Select Market or Nasdaq Global Market;

the offeror has already received stockholder approval to issue such common stock prior to the commencement of such offer or no such approval is or will be required;

the offeror has no other class of voting stock

no person (including such person’s affiliated and associated persons) beneficially owns twenty percent ( 20 %) or more of the

shares of common stock of the offeror then outstanding at the time of commencement of the offer or at any time during the term of the offer;

and the offeror meets the registrant eligibility requirements for use of a registration statement on Form S-3

for registering securities under the Securities Act of 1933, as amended, including the filing of all reports required to be filed pursuant to the Exchange Act in a timely manner during the twelve (12) calendar months prior to the date of

commencement, and throughout the term, of such offer.

In the event the Company receives a qualifying offer and the Board of Directors has not redeemed the Rights prior to the consummation of such offer, the consummation of the qualifying offer will

not cause the offeror or its affiliates to become an Acquiring Person, and the Rights will immediately expire upon consummation of the qualifying offer .

After a person or group becomes an Acquiring Person, but before an Acquiring Person owns 50 % or more of the Company’s outstanding common stock, the Board of Directors may extinguish the Rights by exchanging one share of common stock or an equivalent security for each Right, other than Rights held by the Acquiring Person.

Anti-Dilution Provisions

The Board of Directors may adjust the purchase price of the Preferred Shares, the number of Preferred Shares issuable

and the number of outstanding Rights to prevent dilution that may occur from a stock dividend, a stock split, a reclassification of the Preferred Shares or common stock.

No adjustments to the Exercise Price of less than 1 % will be made.

The terms of the Rights Agreement may be amended by the Board of Directors without the consent of the holders of the

After a person or group becomes an Acquiring Person, the Board of Directors may not amend the agreement in a way that adversely affects holders of the Rights.

The Rights will expire on April 9, 2024 .

Employee Savings Plans

The Company sponsors a qualified defined contribution retirement plan (“401(k) Savings Plan”) covering salaried and hourly employees who have completed ninety days of service and have attained the age of twenty-one .

This plan allows eligible employees to defer receipt of up to 50 % of their compensation, as defined in the plan.

The Company also

sponsors a non-qualified defined contribution retirement plan (“Non-Qualified Savings Plan”) covering highly compensated employees, as defined in the plan.

This plan allows eligible employees to defer receipt of up to 50 % of their base compensation and 100 % of their eligible bonuses,

as defined in the plan.

Contributions under both plans may be

invested in various investment funds at the employee’s discretion.

Such contributions, including the Company’s matching contributions described below, may not be invested in the Company’s common stock.

In 2023, 2022 and 2021, the Company matched

50 % of employee contributions for

each participant in the 401(k) Savings Plan up to a total of 5 % of the employee’s compensation and matched 25 % of employee contributions in the Non-Qualified Savings Plan up to a total of 6 % of the employee’s compensation .

Employee contributions vest

immediately while Company contributions vest 20 % annually beginning on the first anniversary of a contribution date and are vested 100 % on the fifth anniversary of such contribution date.

At the inception of the Non-Qualified Savings Plan, the Company established a Rabbi Trust to fund the plan’s

The market value of the trust assets for the Non-Qualified Savings Plan of $ 27,129 is included in other assets and the

related liability to the participants of $ 27,129 is included in other long-term obligations in the Consolidated Balance Sheets.

contributions under both plans are recorded as either labor and other related expenses or general and administrative expenses in the Consolidated Statements of Income.

The following table summarizes the Company’s contributions for each plan for each of the three years:

401(k) Savings Plan

Non-Qualified Savings Plan

The components of the provision for income

taxes for each of the three years were as follows:

Total provision for income taxes

A reconciliation of the Company’s

provision for income taxes and income taxes based on the statutory U.S.

federal rate of 21.0 % in 2023, 2022 and 2021 was as follows:

Provision computed at federal statutory income tax rate

State and local income taxes, net of federal benefit

Federal net operating loss benefit

Employer tax credits for FICA taxes paid on employee tip income

Other employer tax credits

Tax audit settlement

Total provision for income taxes

The decrease in the Company’s provision for income taxes in 2023 as compared to 2022 is primarily due to the decrease in income before

income taxes.

The decrease in the Company’s provision for income taxes in 2022 as compared to 2021 is primarily due to the decrease in income before income taxes and the benefit of higher income tax credits.

Significant components of the Company’s net deferred tax liability consisted of the following at:

July 28, 2023

July 29, 2022

Deferred tax assets:

Compensation and employee benefits

Accrued liabilities

Operating lease liabilities

Insurance reserves

Deferred tax credits and carryforwards

Deferred tax assets

Deferred tax liabilities:

Property and equipment

Operating lease right-of-use asset

Deferred tax liabilities

Net deferred tax liability

The Company has a deferred tax asset of $ 20,508

reflecting federal income tax credit carryforwards that expire in 2043.

The Company has state income tax net operating loss carryforwards (“NOL”) of $ 84,630

and has recorded a deferred tax asset of $ 4,762 reflecting this benefit.

These state NOLs generally expire in years beginning 2037 and

The Company believes that adequate

amounts of tax, interest and penalties have been provided for potential tax uncertainties;

these amounts are included in other long-term liabilities in the Consolidated Balance Sheets.

As of July 28, 2023 and July 29, 2022, the Company’s gross

liability for uncertain tax positions, exclusive of interest and penalties, was $ 9,675 and $ 10,858 , respectively.

Summarized below is a tabular

reconciliation of the beginning and ending balance of the Company’s total gross liability for uncertain tax positions exclusive of interest and penalties:

July 28, 2023

July 29, 2022

July 30, 2021

Balance at beginning of year

Tax positions related to the current year:

Tax positions related to the prior year:

Expiration of statute of limitations

Balance at end of year

If the Company were to prevail on

all uncertain tax positions, the reversal of this accrual would be a tax benefit to the Company and impact the effective tax rate.

The following table highlights the amount of uncertain tax positions, exclusive of interest and penalties, which, if

recognized, would affect the effective tax rate for each of the three years :

Uncertain tax positions

The Company had $ 7,896 , $ 7,133 , and $ 7,755 in interest and penalties accrued as of July 28, 2023, July 29, 2022,

and July 30, 2021, respectively .

The Company recognized accrued

interest and penalties related to unrecognized tax benefits of $ 764 , $ ( 622 ) and $ 545 in its provision for income taxes on July 28, 2023, July 29, 2022 and July 30, 2021, respectively .

In many cases, the Company’s

uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities.

Based on the outcome of these examinations or as a result of the expiration of the statutes of limitations for specific taxing

jurisdictions, it is reasonably possible that the related uncertain tax positions taken regarding previously filed tax returns could decrease from those recorded as liabilities for uncertain tax positions in the Company’s financial statements at

July 28, 2023 by approximately $ 3,000 to $ 5,000 within the next twelve months.

At July 28, 2023, the Company was subject to income tax examinations for its U.S.

federal income taxes after 2018 and for state and local

income taxes generally after 2018 .

Net Income Per Share and Weighted Average Shares

The following table reconciles the components of diluted earnings per share computations:

Net income per share numerator

Net income per share denominator:

Basic weighted average shares outstanding

Add potential dilution:

Nonvested stock awards and units

Diluted weighted average shares outstanding

Commitments and Contingencies

The Company and its subsidiaries are party to various legal and regulatory proceedings and claims incidental to their

business in the ordinary course.

In the opinion of management, based upon information currently available, the ultimate liability with respect to these proceedings and claims will not materially affect the Company’s consolidated results of

operations or financial position.

The Company maintains insurance coverage for various aspects of its business and operations.

The Company has elected,

however, to retain all or a portion of losses that occur through the use of various deductibles, limits and retentions under its insurance programs.

This situation may subject the Company to some future liability for which it is only partially

insured, or completely uninsured.

The Company intends to mitigate any such future liability by continuing to exercise prudent business judgment in negotiating the terms and conditions of its contracts.

See Note 1 for a further discussion of

insurance and insurance reserves.

Related to its insurance coverage, the Company is contingently liable pursuant to standby letters of credit as credit

guarantees to certain insurers.

As of July 28, 2023, the Company had $ 31,896 of standby letters of credit related to securing reserved

claims under workers’ compensation insurance and the July 29, 2020 and August 4, 2021 sale and leaseback transactions.

All standby letters of credit are renewable annually and reduce the Company’s borrowing availability under its Revolving Credit

facility (see Note 4).

The Company enters into certain indemnification agreements in favor of third parties in the ordinary course of

The Company believes that the probability of incurring an actual liability under other indemnification agreements is sufficiently remote so that no liability has been recorded in the Consolidated Balance Sheet.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

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

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

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