CBRL 10-K & 10-Q changes, risk factors and insider trading

The United States and other countries have experienced, and may experience in the future, outbreaks of viruses, such as COVID-19, norovirus, the bird/avian flu or other diseases. We cannot predict whether such infectious diseases, including future variants of COVID-19,diseases may impact sales and traffic at our stores, create staffing issues, increase commodity costs or result in store closures, which could subsequently damage or could reduce consumer traffic and could have a material adverse effect on our results of operations. In recent years there has been publicity concerning E. coli bacteria, hepatitis A, “mad cow” disease, “foot-and-mouth” disease, salmonella, African swine fever, peanut and other food allergens, and other public health concerns affecting the food supply, including beef, chicken, pork, dairy and eggs. Food safety concerns, widespread outbreaks of livestock and poultry diseases, and product recalls, all of which are out of our control, and, in many instances, unpredictable, could also increase our costs and possibly affect the supply of livestock and poultry products.

The sale of food and prepared food products for human consumption involves the risk of injury to our customers. Such injuries may result from tampering by unauthorized third parties, product contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents, or residues introduced during the growing, storage, handling and transportation phases. Additionally, many of the food items on our menu contain beef and chicken. The preferences of our customers toward beef and chicken could be affected by changes in consumer health or dietary trends and preferences regarding meat consumption or health concerns and publicity concerning food quality, illness and injury generally. Changes in consumer dietary preferences and weight-management medications or treatments may cause consumers to avoid our products in favor of alternative restaurants, to consume less of our products or to decrease the amount they eat at restaurants in general which may impact our menu offerings. Further, consumers may change their dining-in preferences, such as during the COVID-19 pandemic, when consumers often chose to order food to go or for delivery. In addition, government regulations or the likelihood of government regulation could increase the costs of obtaining or preparing food products. Failure to respond and adapt to changing consumer preferences could have a material adverse effect on our results of operation and financial condition. A decrease in guest traffic to our stores, a change in our mix of products sold or an increase in costs as a result of these health concerns either in general or specific to our operations, could result in a decrease in sales or higher costs to our stores that would materially harm our business.

Multi-unit businesses such as ours can be adversely affected by publicity resulting from complaints or litigation alleging poor food quality, poor service, guest discrimination, food-borne illness, viruses, product defects, personal injury, adverse health effects (including obesity), employee relations or other concerns stemming from one or a limited number of our stores. Even when the allegations or complaints are not accurate or valid, unfavorable publicity relating to our multi-year strategic plan,strategy or customer experiences or perceptions relating to one or more of our stores may adversely affect public perception of the entire brand before we have the opportunity to respond to and address such allegations. Additionally, social media canhas beat times been utilized to target specific companies or brandsbrands, including ours, as a result of a variety of actual or perceived actions or inactions that are disfavored by our customers, employees, or interest groups, which can materially and immediately impact consumer behavior. Social media allows users to organize collective actions and engage in other brand-damaging behaviors that, if targeted at us, could impact our business. Adverse publicity and its effect on overall consumer perceptions of food safety or customer service could have a material adverse effect on our business, financial condition and results of operations.

Failure to achievesuccessfully the goals or sustain the results ofimplement our multi-year strategic planpriorities and initiatives may have an adverse effect on our business, results of operations and financial condition.

Our multi-year strategic planpriorities isand initiatives are aimed to improve the guest experience and increase profitability and are in various stages of testing, evaluation and implementation, aimed to improve guest experience and increase profitability. These initiatives of our multi-year strategic plan are generally aimed at enhancing menu and retail options, reducing our costs, improving margins and increasing brand awareness, including through expanding our footprint and investing in strategic relationships.implementation. Implementation of these priorities and initiatives across our store base is inherently risky even when initiatives have been tested successfully on a more limited scale, and customers have not always been receptive to these changes and may not be receptive to theseour changes,strategic priorities and initiatives in the future. We have experienced negative reactions to certain of our strategic priorities and initiatives, including efforts related to our branding, by consumers and interest groups, which mayhas negativelyadversely impactimpacted our business, financial condition and results of operations. InEven thewhere firstsuch quarter of 2026, we introduced an updated logo, which received unfavorable consumer feedbackpriorities and generated negative publicity. Other initiatives contemplatedare underpositively ourreceived, multi-year strategic plan may elicit similar adverse reactions, which could adversely affect consumer perceptions of our brand, our operational and financial performance, and the market price for our common stock. Successfulsuccessful system-wide implementation across hundreds of stores and involving tens of thousands of employees relies on consistency of training, stability of workforce, ease of execution and the absence of offsetting factors that can adversely influence results. Failure to achieve successful implementation of our strategic priorities and initiatives mayhad adverselyand affectcould in the future have an adverse effect on our business, financial condition and results of operations.

The restaurant and retail industries are intensely competitive, and we face many well-established competitors. We compete with national and regional restaurant and retail chains and locally owned restaurants and retailers within each market. Competition from other regional or national restaurant and retail chains typically representrepresents the more important competitive influence, principally because of their significant marketing and financial resources. We face competition as a result of the convergence of grocery, deli, retail and restaurant services, particularly in the supermarket industry. We also face competition from various off-premise meal replacement offerings including, but not limited to, home meal kits delivery, third-party meal delivery and catering and the rapid growth of these channels by our competitors. Moreover, our competitors can harm our business even if they are not successful in their own operations by taking away customers or employees through aggressive and costly advertising, promotions or hiring practices. We compete primarily on the quality, variety and perceived value of menu and retail items. We also compete with other restaurant chains and other retail businesses for quality site locations, management and hourly employees,employees and other competitive pressures may affect both the availability and cost of these important resources. The number and location of stores, the growth of e-commerce, type of concept, quality and efficiency of service, attractiveness of facilities and effectiveness of advertising and marketing programs also are important factors. We anticipate that intense competition will continue with respect to all of these factors. If we are unable to continue to compete effectively, our business, financial condition and results of operations would be adversely affected.

The performance of our business as affected by the level of our indebtedness could prevent us from meeting the obligations under our revolving credit facility or the indentures governing the 2026 Notes and the 2030 Notes or maintaining sufficient liquidity to operate our business or service our debt obligations, and we cannot provide any guarantee of future cash dividend payments or that we will be able to actively repurchase our common stock pursuant to a share repurchase program.

Our consolidated indebtedness and restrictions in our revolving credit facility may have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions and increasing borrowing costs. Given the significant uncertainty relating to the macroeconomic environment, there are potential scenarios under which we could fail to comply with these covenants, which would result in an event of default that, if not waived, could have a material adverse effect on our financial condition, results of operations or ability to continue to service our debt obligations. A default under our credit agreement or under the indentures governing the 2026 Notes and the 2030 Notes may also significantly affect our ability to obtain additional or alternative financing. For example, the lenders’ ongoing obligation to extend credit under the revolving credit facility is dependent upon our compliance with certain covenants and restrictions, as set forth in our credit agreement.

Depending on the impact of macroeconomic environment, we may seek other sources of liquidity and other ways of preserving liquidity. No assurance can be made that sources of additional liquidity will be readily available or that we will be successful in obtaining or preserving such liquidity. Further, no assurance can be made that sources of additional liquidity will be available on terms that are favorable to us.

In 2024, as part of our multi-year strategic plan, we made the decision to reduce our quarterly dividends. Any future determination to pay cash dividends on our common stock, or to pay cash dividends in an amount comparable to historical cash dividends on our common stock, will be based primarily upon our financial condition, prospects, results of operations and business requirements and our Board of Directors’ conclusion that the declaration of cash dividends is in the best interest of our shareholders and is in compliance with all laws and agreements applicable to the payment of dividends. Furthermore, there can be no assurance that we will be able to actively repurchase our common stock, and we may discontinue plans to repurchase common stock at any time.

We may be unable to raise the funds necessary to repurchase the 2026 Notes or the 2030 Notes for cash following a fundamental change, or to pay the cash amounts due upon conversion, and our other indebtedness may limit our ability to repurchase the 2026 Notes or the 2030 Notes or pay cash upon their conversion.

Noteholders may require us to repurchase their 2026 Notes or 2030 Notes following a fundamental change at a cash repurchase price generally equal to the principal amount of the 2026 Notes or the 2030 Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, all conversions of the 2026 Notes or the 2030 Notes will be settled partially or entirely in cash. We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the 2026 Notes or the 2030 Notes or pay the cash amounts due upon conversion. In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the 2026 Notes or the 2030 Notes or pay the cash amounts due upon conversion.

Our failure to repurchase the 2026 Notes or the 2030 Notes or to pay the cash amounts due upon conversion when required will constitute a default under the indentures governing the 2026 Notes or the 2030 Notes. A default under the indentures governing the 2026 Notes or the 2030 Notes or the fundamental change itself could also lead to a default under agreements governing our other indebtedness (including, for the avoidance of doubt, the indentures governing the 2026 Notes and the 2030 Notes), which may result in that other indebtedness becoming immediately payable in full. We may not have or be able to secure financing for sufficient funds to satisfy all amounts due under the other indebtedness and the indentures governing the 2026 Notes or the 2030 Notes.

Provisions in the indentures governing the 2026 Notes or the 2030 Notes could delay or discourage a takeover of us.

Certain provisions in the 2026 Notes and the 2030 Notes and the indentures governing the 2026 Notes and the 2030 Notes could make a third party attempt to acquire us more difficult or expensive. For example, if a takeover constitutes a fundamental change, then noteholders will have the right to require us to repurchase their 2026 Notes or 2030 Notes for cash. In addition, if a takeover constitutes a make-whole fundamental change, then we may be required to temporarily increase the conversion rate for the 2026 Notes or the 2030 Notes. In either case, and in other cases, our obligations under the 2026 Notes or the 2030 Notes and the indentures governing the 2026 Notes or the 2030 Notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that noteholders or holders of our common stock may view as favorable.

We are subject to counterparty risk with respect to the convertible note hedge transactions and capped call transactions.

The hedge counterparties and the option counterparties are financial institutions, and we are subject to the risk that one or more of the hedge counterparties might default under their respective convertible note hedge transactions, or that one or more of the option counterparties might default under their respective capped call transactions. Our exposure to the credit risk of the hedge counterparties and the option counterparties is not secured by any collateral. Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions. If a hedge counterparty or an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with such hedge counterparty or option counterparty.

Our exposure will depend on many factors, but, generally, the increase in our exposure will be correlated to the increase in the market price and in the volatility of our common stock. In addition, upon a default by any hedge or option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of any of the hedge or option counterparties.

At our election, if applicable, we may settle 2026 Notes or 2030 Notes tendered for conversion partly in shares of our common stock.stock, Furthermore,which the warrants evidenced by the warrant transactions are expected to be settled on a net-share basis. As a result, the conversion of some or all of the 2026 Notes or the exercise of some or all of such warrants maycould dilute the ownership interests of existing shareholders. Any sales in the public market of the shares of our common stock issuableissued upon such conversion of the 20262030 Notes or such exercise of the warrants could adversely affect prevailingthe market prices of our common stock. In addition, the existence of the 2026 Notes may encourage short selling by market participants because the conversion of the 2026 Notes could depress the price of our common stock.

Our information technology systems are subject to damage or interruption from power outages, computer, network, cable system, internet and telecommunications failures, computer viruses, security breaches, catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war or terrorism, and usage errors by our employees. If our information technology and telecommunication systems are damaged or cease to function properly, or become outdated, we may have to make a significant investment to repairrepair, upgrade or replace them, and we could suffer loss of critical data and interruptions or delays in our operations in the interim. In addition, from time to time, our systems may become obsolete or require attention and could result in interruptions in our services and non-compliance with certain laws or regulations. Any material interruption in our information technology and telecommunication systems, including due to a cyber-attack or unauthorized infiltration attempt, could have a material adverse effect on our business or results of operations. In addition, some of these essential technology-based business systems are outsourced to third parties. While we make efforts to ensure that our outsourced providers are observing proper standards and controls, we cannot guarantee that breaches, disruptions or failures caused by these providers will not occur.

Some of our business processes are currently outsourced to third parties. Such processes include distribution of food and retail products to our store locations and customers, credit and debit card authorization and processing, gift card tracking and authorization, payroll payments, payroll taxes processing, employee payroll card services, health care and workers’ compensation insurance claims processing, wage and related tax credit documentation and approval, our loyalty program, guest satisfaction survey programs, employee engagement surveys and externally hosted business software applications. We cannot ensure that all providers of outsourced services are observing proper internal control practices, such as redundant processing facilities, and there are no guarantees that failures will not occur. Failure of third parties to provide adequate services could have an adverse effect on our financial condition and results of operations.

We use third parties to authorize and process credit and debit card payments, which requires the collection and retention of customer data, including sensitive financial data and other personally identifiable information. Such personal information is maintained by third parties who provide payment processing services. A weakness in such third party’s systems or software products (or in the systems or software products in the service providers of those third parties) may lead to a data breach or pose cybersecurity risks. If we, or one of our third party service providers experience a cyber attackcyber-attack or security data breach, our results of operations and brand may suffer. Additionally, we may have to make a significant investment to remedy or replace such systems.

ThereRegulatory also has been increasing focus by U.S.requirements and foreign governmental authoritiespriorities onrelating to environmental matters,matters suchcontinue asto climateevolve change,in the reductionUnited of greenhouse gasesStates and waterinternationally. consumption.Future This increased focus may lead to new initiatives directed at regulating an as yet unspecified array of environmental matters. Legislative,legislative, regulatory or otherpolicy effortschanges, as well as differing approaches among jurisdictions, could increase our compliance, operating and capital costs, affect the availability or cost of raw materials and utilities, or require changes to combatour climatebusiness changepractices. orAny othersuch environmental concernsdevelopments could result in future increases in taxes,increase the cost of raw materials, transportation and utilities, which could decrease our operating profits and necessitate future investments in facilities and equipment.

Our advertising is heavily dependent on billboards, which are highly regulated, and our evolving marketing strategy involvesmay increasedbe advertisingineffective, and marketing costs thatwhich may have an adverse effect on our business, results of operations and financial condition.

Historically, we have relied upon billboards as our principal method of advertising. A number of states in which we operate restrict highway signage and billboards. Because many of our stores are located on the interstate highway system, our business is highly related to highway travel. Thus, signage or billboard restrictions or loss of existing signage or billboards could adversely affect our visibility and ability to attract customers. Additionally, as we continue to evolve our marketing strategy,However, we are increasingly utilizing more traditional and higher cost methods of advertising, such as national cable television, radio, online and digital media and our loyalty program. These types of advertising, their effects upon our revenues and, in turn, our profits, are uncertain. Additionally, our marketing strategy or changes in our marketing strategy may not achieve the desired results or otherwise may be ineffective, and consequently, we may experience lower volumes of guest traffic, which may adversely impact our business, results of operations and financial condition. Further, if our competitors increased their spending on advertising and promotions, we could be forced to substantially increase our advertising, media or marketing expenses. If we did so or if our current advertising and promotion programs become less effective, we could experience a material adverse effect on our results of operations.

ActivistIn the past, activist shareholders have nominated candidates for election to our Board of Directors at our annual meetings of shareholders multiple times, resulting in proxy contests, and called publicly for special meetings of shareholders to consider other proposals relating to corporate policies of the Company, including on matters such as our dividend policy, capital structure and strategic alternatives. The Lion Fund II, L.P., Biglari Capital Corp., First Guard Insurance Company, Southern Pioneer Property and Casualty Insurance Company, Biglari Holdings Inc., Biglari Reinsurance Ltd. and Biglari Insurance Group Inc. are affiliates of Sardar Biglari (“Biglari”), and are the beneficial owners of approximately 2.9% of our outstanding common stock as of September 18, 2025. We recently received notice that Biglari intends to engage in a “vote-no” campaign against certain of our directors and proposals in connection with our 2025 annual meeting of shareholders. If a proxy contest ensues, or if we become engaged in a proxy contest or other public engagement with anotheran activist shareholder in the future, our business could be adversely affected because:

We have assembled a senior management team which has substantial background and experience in the restaurant and retail industries. Our future growth and success depend substantially on the contributions and abilities of our senior management and other key personnel, and we design our compensation programs to attract and retain key personnel and facilitate our ability to develop effective succession plans. If we fail to attract or retain senior management or other key personnel, our succession planning and operations could be materially and adversely affected. We must continue to recruit, retain and motivate management and other employees sufficiently to maintain our current business and support our projected growth. We have experienced and may continue to experience challenges in recruiting and retaining team members in various locations. Additionally, David Deno began serving as Chief Executive Officer on August 10, 2026, replacing Julie Masino. Leadership transitions can create risks as individuals are integrated into new roles, including that onboarding shifts management’s attention away from business operations, failure to retain other key personnel, or loss of institutional knowledge.

There has been increasing public focus by investors, environmental activists, the media and governmental and regulatory agencies on sustainability matters, including packaging and waste, animal health and welfare, human rights, climate change, greenhouse gases and land, energy and water use. In response to shareholders’ heightened level of expectation for expanded sustainability disclosure, we publish a SustainabilityCorporate Responsibility Report annually describing our sustainability efforts and goals. Execution of the strategies and achievement of the goals outlined in the SustainabilityCorporate Responsibility Report are subject to risks and uncertainties, including our ability to meet our goals within the currently projected costs and the expected timeframes; unforeseen design, operational and technological difficulties; the outcome of research efforts and future technology developments; and the actions of competitors and competitive pressures. There is no assurance that we will be able to successfully execute our strategies and achieve our goals. Failure, or perceived failure, to achieve these goals could damage our reputation and relationships with customers, government agencies and investors. Such conditions could have an adverse effect on our business, results of operations and financial condition.

Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement of our financial statements or fraud. Any failure to maintain an effective system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud. The identification of a material weakness could indicate a lack of controls adequate to generate accurate financial statements that, in turn, could cause a loss of investor confidence and decline in the market price of our common stock. We cannot assure youguarantee that we will be able to timely remediate any material weaknesses that may be identified in future periods or maintain all of the controls necessary for continued compliance. Likewise, we cannot assure youguarantee that we will be able to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies.

The following MD&A includes a discussion of 2026 and 2025 items and year-to-year comparisons between the years ended July 31, 2026 and August 01, 2025. Discussion of 2024 items and year-to-year comparisons between the years ended August 01, 2025 and August 02, 2024. Discussion of 2023 items and year-to-year comparisons between the years ended August 02, 2024 and July 28, 2023 that are not included in this MD&A can be found in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended August 02,01, 2024,2025, filed with the SEC on September 27,26, 2024.2025.

Cracker Barrel Old Country Store, Inc. (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. 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. As of September 12,11, 2025,2026, the Company operated 657655 Cracker Barrel stores located in 43 states. TheDuring 2026, the Company alsocompleted ownsthe divestiture of its Maple Street Biscuit Company (“MSBC”), abusiness, breakfastincluding the MSBC tradename and lunchthe fastassets casualused concept.in As35 MSBC locations. Simultaneously with the completion of Septemberthis 12, 2025,transaction, the Company operatedclosed 68the remaining 16 MSBC locationslocations. During 2026 and the first quarter of 2027, the Company undertook a number of strategic, leadership and financing actions intended to support its long-term business objectives, which are discussed further below in ten states.MD&A.

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 threethe overarchingfollowing business imperativespriorities: drivingfood, relevancy,experience, delivering foodpeople, and experiences guests love, and growing profitability.

We believe there are significant challenges in the macroeconomic outlook for the coming quarters, including continued volatility of inflation and interest rates,volatility, higher consumer debt levels and lower savings rates, as well as the potential uncertainty associated with the geopolitical environment and global trade among other factors. However,Additionally, despiteduring these challenges,2026, we remainfaced focusedchallenges onrelated deliveringto long-termnegative growthpublicity from brand initiatives related to our previously-announced strategic plan, including the launch of a new logo and returnsmodern fortest shareholders.store remodels, to which we responded by returning to our former logo and discontinuing the modern test store remodels during the first quarter of 2026.

Our 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,and retail merchandise, service, availability of carryout and home delivery, internet and mobile ordering capabilitiescapabilities, effectiveness of marketing and retailadvertising, merchandiseand offered.overall guest experience. We compete with a significant number of national and regional restaurant and retail chains. Additionally, there are many segments within the restaurant industry, suchchains, as well as locally owned restaurants and retailers. Competition also comes from family dining, casual dining, full-service, fast casual and quickquick-service service,restaurants, whichas oftenwell overlapas supermarkets and provideother competitionfood forproviders widelythat diverseoffer restaurantconvenient concepts.meal alternatives. Cracker Barrel primarily operates in the full-service segment of the restaurant industry, and our MSBC concept operates in the fast casual segment.industry. Competition also exists in securing prime real estate locations for new stores, in hiring qualified employees, in advertising, in the attractiveness of facilities and with competitors having similar menu offerings or convenience features. The restaurant and retail industries are often affected by changes in consumer taste and preference; national, regional or local economic conditions; demographic trends; traffic patterns; the type, number and location of competing restaurants and retailers; and consumers’ discretionary purchasing power.

We are currently experiencing, and have in the past experienced, inflationary conditionspressures with respect to a variety of costs, including the cost for food, ingredients, retail merchandise, transportation, distribution, labor and utilities. While weinflationary trends have fluctuated over time, cost increases in these areas may continue to affect our operating expenses. While we have partially offset the impact of these inflationary pressures with menu price increases and operational improvements, there can be no assurance that such conditions will not adversely affect consumer demand or our cost structure in ways that we may be unable to manage without diminishing our profitability.

Total revenue in 20252026 increaseddecreased 0.4%4.7% as compared to 2024. Total revenue in 2024 includes a benefit of $62,800 due to the 53rd week of 2024. Excluding the impact of the 53rd week in the prior year, total revenue increased 2.2%.2025. Our comparable store restaurant sales increasedecrease in 20252026 as compared to 20242025 resulted primarily from the averageguest checktraffic increasedecrease partially offset by the guestaverage trafficcheck decrease.increase. The average check increase included an average menu price increase of 5.3%.4.3%. Off-premise sales represented approximately 20% of restaurant sales volumes in both 20252026 and 2024.2025.

Our retail sales are made primarily to our restaurant guests. The decrease in our comparable store retail sales in 20252026 as compared to 20242025 resulted primarily from the decrease in guest traffic.traffic decrease.

The decreaseincrease in restaurant cost of goods sold as a percentage of restaurant revenue in 20252026 as compared to 20242025 was primarily thedriven resultby ofhigher ourfood waste, commodity inflation, increased discounts and a shift to higher cost menu pricingitems partially offset by commoditythe menu pricing increase. Commodity inflation ofwas 2.1%2.3% in 2025.2026. We presently expect the rate of commodity inflation to be approximately 2.5% to 3.5%3.0% in 2026.2027.

The decreasesincreases in store hourly labor and store management compensation as a percentage of total revenue in 20252026 as compared to 20242025 resulted primarily from menulower priceproductivity increasesand exceedingthe wagedeleverage inflation.associated Additionally,with storethe hourlydecrease laborin benefitedtotal fromrevenue improvedin productivity,2026 drivenas bycompared ourto back-of-house optimization initiatives.2025. We presently expect the rate of wage inflation to be approximately 3.0%2.5% to 4.0%3.0% in 2026.2027.

The increase in store bonus expense as a percentage of total revenue in 20252026 as compared to 20242025 resulted primarily from higherthe bonusdeleverage payoutsassociated duewith tothe better performance against financial objectivesdecrease in 2025total revenue in 2026 as compared to 2024.2025.

The increase in workers’employee compensationhealth care expense as a percentage of total revenue in 20252026 as compared to 20242025 resulted primarily from unfavorable claim development.experience.

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, third-party delivery fees, real and personal property taxestaxes, general insurance and generalmanager insurance.conference expenses. Occupancy costs include maintenance, utilities, depreciation and rent.

The increase in store occupancy costs as a percentage of total revenue in 20252026 as compared to 20242025 resulted primarily from higher depreciationmaintenance expense dueand tothe higherdeleverage capitalassociated expenditures.with the decrease in total revenue.

The increasedecrease in other store operatingexpense, expensesnet as a percentage of total revenue in 20252026 as compared to 20242025 resulted primarily from the receipt of $12,596 in settlement proceeds related to litigation matters involving our poultry and pork suppliers. This favorable impact was partially offset by costs associated with our off-premisebiennial business.general manager conference, which was not held in 2025.

The increase in incentivepayroll compensationand related expense as a percentage of total revenue in 20252026 as compared to 20242025 wasresulted primarily thefrom resultseverance ofcosts higherfrom bonusa payoutscorporate duerestructuring toand betterChief performanceExecutive againstOfficer financial(“CEO”) objectivestransition costs incurred in 20252026 aspartially comparedoffset toby 2024.lower headcount.

Operating incomeIncome (Loss)

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

In 2025, contemporaneously with the issuance of $345,000 aggregate principleprincipal amount of 1.75% Convertible Senior Notes due 2030 (the “2030 Notes”), we used approximately $145,900 of the net proceeds from the 2030 Notes for the repurchase of $150,000 aggregate principal amount of $300,000 aggregate principal amount of 0.625% Convertible Senior Notes (the “2026 Notes”) in separate and privately negotiated transactions and recorded a gain on extinguishment of debt of $3,186. This amount is recorded in the gain on extinguishment of debt line on the Consolidated Statements of Income. For additional information regarding our debt, see Note 4 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

The year-to-year decrease in 20252026 as compared to 20242025 resulted primarily from lower weighted average debt levels and lower weighted average interest rates under the revolving credit facility partially offset by costs associated with refinancing the revolving credit facility and interest related to the 2030 Notes. See “Borrowing Capacity, Debt Covenants and Notes” section below for further information related to the 2025 Revolving Credit Facility and the 2030 Notes.

Our effective tax rate is lower than statutory rates primarily due to the benefit of tax credits. The increasedecrease in our effective tax rate in 20252026 is primarily due to higherlower income before taxincome as well as fewer favorable audit settlementstaxes as compared to 2024.2025.

H.R.1., also known as the One Big Beautiful Bill Act (OBBBA), was enacted on July 4, 2025, with effective dates in 2025 and continuing through 2027. The legislation includes provisions that impact the timing and magnitude of certain tax deductions. Key provisions include the permanent extension of several business tax benefits originally introduced under the 2017 Tax Cuts and Jobs Act. The Company has evaluated the impacts of OBBBA, and the effects of these provisions effectivehave duringbeen 2025incorporated didinto notthe materially impact our 2025accompanying financial condition. We are currently evaluating the potential impact of the OBBBA provisions effective after 2025 to our financial condition.statements.

Our net income in 20252026 increaseddecreased as compared to 20242025 primarily due to our increasedecrease in our operating income (loss) discussed above partially offset by athe litigation settlement income related to the credit card interchange fee litigation recognized in 2026 and lower incomeinterest taxexpense, benefit in 2025 as compared to 2024net as discussed above.

Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under our revolving credit facility. Our cash generated from our operations, together with our borrowing capacity under our revolving credit facility, were sufficient to finance all of our growth,capital expenditures, dividend payments, working capital needs, interest payments on long-term debt obligations and other cash payment obligations in 2025.2026.

We believe that cash at AugustJuly 01,31, 2025,2026, along with cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility, will be sufficient to finance our continuing operations, our multi-year strategic plan initiatives, our continuing expansion plans, debt service, dividend payments, capital expenditures and working capital needs for the next twelve months and thereafter for the foreseeable future. Our ability to draw on our $550,000 revolving credit facility (the “2025 Revolving Credit Facility”) is subject to the satisfaction of the provisions of the credit facility, as amended, and we believe we will be able to refinance and/or pay off our 2025credit Revolving Credit Facilityfacility and other debt instruments prior their maturity.

The increasedecrease in net cash flow provided by operating activities in 20252026 as compared to 20242025 was primarily driven by higherlower operating income, reflecting improved profitability,earnings as well as the timing of cashcertain receiptspayments forpartially accountsoffset receivableby andthe timingreceipt of paymentsincome fortax accounts payable.refunds.

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 AugustJuly 01,31, 2025,2026, for these purchase obligations is $145,900,$151,527, of which $104,917$125,681 is short-term. This estimate of our purchase obligations (i) includes long-term agreements and certain retail purchase orders for services and operating needs that can be cancelled (A) with more than 60 days’ notice without penalty only through the term of the notice period and (B) only in the event of an uncured material breach or with a penalty through the entire term of the contract, (ii) excludes contracts that do not contain minimum purchase obligations and long-term agreements for services and operating needs that can be cancelled within 60 days without penalty. Because of the uncertainties of seasonal demands and promotional calendar changes, our estimated usage for food, supplies and other operating needs and services is calculated ratably over either the termination notice period or the remaining life of the contract, as applicable, unless we had better information available at the time related to each contract.

As of AugustJuly 01,31, 2025,2026, the total present value of our lease expenses (including variable lease costs) under operating leases was $694,974,$698,826, which had a weighted-average remaining lease term 15.20of years,15.22 years. In addition, as of whichJuly $86,20831, is2026, short-term.total Asshort-term offuture Augustminimum 01,lease 2025,payments wewere $86,141. We have not entered into any leases that have not yet commenced.commenced as of July 31, 2026. For additional information regarding our operating leases, see Note 8 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Cracker Barrel Old Country Store, Inc., and its subsidiaries (collectively, the “Company,” “our” or “we”) are principally engaged in the operation and development in the United States of the Cracker Barrel Old Country StoreÒ (“Cracker Barrel”) concept. As of JanuaryMay 30,01, 2026, we operated 656657 Cracker Barrel stores in 43 states and 5452 Maple Street Biscuit Company (“MSBC”) locations in ten states.

We believe there are significant challenges in the macroeconomic outlook for the coming quarters, including continued inflation volatility, high consumer debt levels and lower savings rates, as well as the potential uncertainty associated with the geopolitical environment and global trade, among other factors. In the second quarter ofDuring 2026, we continuedhave to facefaced challenges related to negative publicity from brand initiatives, including the launch of a new logo and modern test store remodels, to which we responded by returning to our former logo and discontinuing the modern test store remodels during the first quarter of 2026.

Our strategy is focused on improving the guest experience to drive an improvement in our traffic and includes enhancing our operations, connectingdeepening our connection with guests through our menu, marketing and value proposition, and implementing cost savings to improveimproving profitability.

Total revenue for the secondthird quarter and first sixnine months of 2026 decreased 7.9%2.9% and 6.8%,5.6%, respectively, as compared to the same periods in the prior year.

For the secondthird quarter and first sixnine months of 2026, our comparable store restaurant sales decreases resulted primarily from the guest traffic decreases partially offset by the average check increases. For the secondthird quarter and first sixnine months of 2026, the average check increases included average menu price increases of 4.2%4.4% inand both4.2%, periods.respectively.

Our retail sales are made substantially to our restaurant guests. For the secondthird quarter and first sixnine months of 2026, our comparable store retail sales decreases resulted primarily from the guest traffic decreases.

The increasesdecrease in restaurant cost of goods sold as a percentage of restaurant revenue for the secondthird quarter andof 2026 as compared to the same period in the prior year was primarily driven by menu pricing increases partially offset by commodity inflation. The increase in restaurant cost of goods sold as a percentage of restaurant revenue for the first sixnine months of 2026 as compared to the same periodsperiod in the prior year werewas primarily driven by higher food waste, commodity inflation, increased discounts and a shift to higher cost menu items partially offset by menu pricing.pricing increases.

Commodity inflation was 1.3%2.5% and 1.7%,2.0%, respectively, in the secondthird quarter and first sixnine months of 2026. We presently expect the rate of commodity inflation to be betweenin the low 2.0% and 2.5%range in 2026.

The increase in retail cost of goods sold as a percentage of retail revenue in the secondthird quarter of 2026 as compared to the same period in the prior year resulted primarily from lower initial margin which was driven primarily by tariffs, higher markdowns, higher discounts and lower vendor allowances partially offset by lower inventory shrinkage. Inventory shrinkage, as a percentage of total revenue, increased in the second quarter due to the decrease in the total revenue for the same period.

The increase in retail cost of goods sold as a percentage of retail revenue in the first sixnine months of 2026 as compared to the same period in the prior year resulted primarily from lower initial margin which was driven primarily by tariffs, higher discounts, higher markdowns, inventory shrinkage and the change in the provision for obsolete inventory.inventory Inventoryand shrinkage,inventory as a percentage of total revenue, increased in the first six months due to the decrease in the total revenue for the same period.shrinkage.

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

TheseThe percentage changes for the secondthird quarter and first sixnine months of 2026 as compared to the same periods in the prior year resulted primarily from the following:

The increases in store hourly labor and store management compensation as a percentage of total revenue for the secondthird quarter and first sixnine months of 2026 as compared to the same periods in the prior year resulted primarily from lower productivity and the deleverage associated with the decreasedecreases in total revenue in the secondthird quarter and first sixnine months of 2026 as compared to the same periods in the prior year.

We presently expect the rate of wage inflation to be betweenin 2.5%the andlow 3.0%2.0% range in 2026.

TheseThe percentage changeschange for the secondthird quarter and first six months of 2026 as compared to the same periodsperiod in the prior year resulted primarily from the following:

The increases in advertising expense as a percentage of total revenuechange for the second quarter and first sixnine months of 2026 as compared to the same periodsperiod in the prior year resulted primarily from higher media spending and the decreases in total revenue in the second quarter and the first six months of 2026 as compared to the same periods in the prior year.following:

These percentage changes for the secondthird quarter and first sixnine months of 2026 as compared to the same periods in the prior year resulted primarily from the following:

The decreasesincrease in incentive compensation expense as a percentage of total revenue in the secondthird quarter andof 2026 as compared to the same period in the prior year resulted primarily from better performance against financial objectives in 2026 as compared to the same period in the prior year. The decrease in incentive compensation expense as a percentage of total revenue in the first sixnine months of 2026 as compared to the same periodsperiod in the prior year resulted primarily from lower performance against financial objectives in 2026 as compared to the same periodsperiod in the prior year.

The decreasesincrease in professional fees as a percentage of total revenue in the secondthird quarter andof 2026 as compared to the same period in the prior year resulted primarily from higher legal fees. The decrease in professional fees as a percentage of total revenue in the first sixnine months of 2026 as compared to the same periodsperiod in the prior year resulted primarily from lower proxy contest expenses and lower costs associated with the Company’s strategic initiatives. In the second quarter and first sixnine months of 2026, we incurred $2,633 and $4,072, respectively,$4,072 in costs related to a proxy contest in connection with the Company’s 2025 annual shareholders meeting held on November 20, 2025. In the second quarter of 2025 and first sixnine months of 2025, we incurred $5,263 and $8,220, respectively,$8,220 in costs related to a proxy contest in connection with the Company’s 2024 annual shareholders meeting held on November 21, 2024. Costs associated with the Company’s strategic initiatives decreased by approximately $4,000 and $3,400, respectively,$7,300 in the second quarter and first sixnine months of 2026 as compared to the same periodsperiod in the prior year. Additionally, in the first six months of 2025, we incurred approximately $3,300 in connection with our settlement of wage-related disputes.

The decrease in payroll and related expense as a percentage of total revenue in the third quarter of 2026 as compared to the same period in the prior year was primarily driven by lower headcount. The increase in payroll and related expense as a percentage of total revenue in the second quarter and the first sixnine months of 2026 as compared to the same periodsperiod in the prior year resulted primarily from severance costs related to a corporate restructuring.

During the second quarter and first sixnine months of 2026, impairment charges of $418 were recorded for three Maple Street Biscuit Company (“MSBC”) locations as a result of the Company’s decision not to not extend the leases for these locations. No stores were closed during the second quarter of 2026. During the first sixnine months of 2026, one Cracker Barrel store and fourteensixteen MSBC locations were closed because of poor operating performance, resulting in closing costs of $3,473 which included lease termination costs.

During the secondthird quarter and first six months of 2025, we recorded impairment charges of $2,163 and $2,863, respectively,$718 as a result of the deterioration in operating performance of threetwo MSBC locations. During the first nine months of 2025, we recorded impairment charges of $3,581 as a result of the deterioration in operating performance of five MSBC locations and two Cracker Barrel locations. One Cracker Barrel store was closed in the second quarter and first sixnine months of 2025 resulting in closing costs of $288.

In the secondthird quarter of 2026, operating income decreased from the same period in the prior year primarily due to the decrease in total revenue partially offset by lower labor expenses and lower advertising expense. In the first sixnine months of 2026, operating income (loss) decreased from the same periods in the prior year primarily due to the decreasesdecrease in total revenue partially offset by lower cost of goods sold expenses, lower labor expenses, lower incentive compensation expense and lower professional fees. Additionally, for the first six months of 2026, higher media advertising and higher maintenance expenses further contributed to the operating loss in 2026.

The decreases in interest expense for the secondthird quarter and first sixnine months of 2026 as compared to the same periods in the prior year resulted primarily from lower weighted average debt levels under our revolving credit facility partially offset by the interest related to the 2030 Notes.

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

The increasesincrease in the effective tax rate in the secondthird quarter andof 2026 as compared to the same period in the prior year is primarily due to a reduced benefit from employment-related tax credits on higher income before income taxes in the third quarter of 2026. The decrease in the effective tax rate in the first sixnine months of 2026 as compared to the same periodsperiod in the prior year areis primarily due to thea impactgreater ofbenefit employmentfrom employment-related tax credits on losseslower income before taxincome as compared to the same periodstaxes in the priorfirst yearnine periods.months of 2026.

H.R. 1., also known as the One Big Beautiful Bill Act (the “OBBBA”), was enacted on July 4, 2025, with effective dates in 2025 through 2027. The legislation includes provisions that impact the timing and magnitude of certain tax deductions. Key provisions include the permanent extension of several business tax benefits originally introduced under the 2017 Tax Cuts and Jobs Act. The provisions effective for the first sixnine months of 2026 did not have a material impact on our financial position. We will continue to assess the potential impacts on our financial position as additional guidance related to the OBBBA is released.

The Company records its interim income tax benefit using the discrete-period computation method, as of JanuaryMay 30,01, 2026 and JanuaryMay 31,02, 2025, as allowed under Accounting Standards Codification 740-240,740-270, Accounting for Income Taxes – Interim Reporting. Use of the annualized effective tax rate (“AETR”) method would have resulted in an unreliable tax rate as small changes in the projected ordinary annual income would have resulted in significant changes in the AETR.

Net Income (Loss)

Net income (loss) consisted of the following for the specified periods:

The decreasesincrease in net income in the secondthird quarter andof 2026 as compared to the same period in the prior year resulted primarily from the litigation settlement income of $47,422 received during the period. The decrease in net income in the first sixnine months of 2026 as compared to the same periodsperiod in the prior year resulted primarily from the decreasesdecrease in operating income (loss) discussed above partially offset by athe higherlitigation settlement income taxreceived benefit induring the secondthird quarter and first six months of 2026 as compared to the same periods in the prior year as discussed above.2026.

Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under the 2025 Revolving Credit Facility. Cash generated from operations, together with our borrowing capacity under the 2025 Revolving Credit Facility, were sufficient to finance all of our dividend payments, working capital needs, interest payments on long-term debt obligations and other cash payment obligations in the first sixnine months of 2026.

We believe that cash on hand at JanuaryMay 30,01, 2026, along with cash expected to be generated from our operating activities and the borrowing capacity under our 2025 Revolving Credit Facility, will be sufficient to finance our continuing operations, debt service, dividend payments, capital expenditures and working capital needs for the next twelve months and thereafter. Our ability to draw on our 2025 Revolving Credit Facility is subject to the satisfaction of the provisions of the credit facility, as amended, and we believe we will be able to refinance our 2025 Revolving Credit Facility and other debt instruments prior to maturity.

Cash Generated From (Used In) Operations

Our operating activities usedprovided net cash of $2,169$92,506 for the first sixnine months of 2026 as compared to $93,693$116,677 net cash provided during the same period in the prior year. This changedecrease was primarily driven by the operating loss in the first sixnine months of 2026 and the timing of payments for accounts payable.2026.

Capital expenditures (purchase of property and equipment) net of proceeds from insurance recoveries were $60,747$87,896 for the first sixnine months of 2026 as compared to $76,986$113,214 for the same period in the prior year. Our capital expenditures consisted primarily of capital investments for existing stores, capital expenditures for strategic initiatives and new store locations. The decrease in capital expenditures in the first sixnine months of 2026 compared to the same period in the prior year resulted primarily from lower capital investments in existing stores and reduced spending on strategic initiatives.

At JanuaryMay 30,01, 2026, we haddid $45,500not ofhave any borrowings outstanding borrowings under the 2025 Revolving Credit FacilityFacility. andAt May 01, 2026, we had $8,703 of standby letters of credit related to securing reserved claims under our workers’ compensation insurance, which reduce our borrowing availability under the 2025 Revolving Credit Facility. At JanuaryMay 30,01, 2026, we had $495,797$541,297 in borrowing availability under our 2025 Revolving Credit Facility. During the first sixnine months of 2026, we borrowed $198,000$238,000 and repaid $152,500$238,000 under the 2025 Revolving Credit Facility.

Our 2025 Revolving Credit Facility contains customary financial covenants, which include maintenance of a maximum consolidated senior secured leverage ratio and a minimum consolidated interest coverage ratio. Under the 2025 Revolving Credit Facility, the maximum consolidated total leverage ratio financial covenant applies unless the Company elects the consolidated senior secured leverage ratio financial covenant in lieu of the consolidated total leverage ratio. During the second quarter of 2026, the Company elected to implement the consolidated senior secured leverage ratio in accordance with the terms of the 2025 Revolving Credit Facility. We were in compliance with the 2025 Revolving Credit Facility’s financial covenants at JanuaryMay 30,01, 2026. We currently expect to be in compliance with the 2025 Revolving Credit Facility’s financial covenants for the term of the facility.

Additionally, on June 13, 2025, we used approximately $145,900 of the net proceeds from the 2030 Notes for the repurchase of $150,000 aggregate principal amount of the 2026 Notes. The remaining $150,000 aggregate principal amount of the 2026 Notes matures on June 15, 2026, unless earlier converted, repurchased or redeemed. The 2026 Notes are senior, unsecured obligations of the Company and bear cash interest at a rate of 0.625% per annum, payable semi-annually inwith arrearsthe final interest payment on June 1515, and December 15 of each year.2026.

During the first sixnine months of 2026, we paid a regular dividend of $0.50$0.75 per share and declared a dividend of $0.25 per share that was subsequently paid on FebruaryMay 11,13, 2026, to shareholders of record on JanuaryApril 16,10, 2026. In addition, in the thirdfourth quarter of 2026, our Board of Directors approved a regular dividend payable on MayAugust 13,12, 2026 to shareholders of record as of AprilJuly 10,17, 2026 of $0.25 per share.

Our criteria for share repurchases are that they be accretive to expected net income per share and are within the limits imposed by our debt commitments. In the first quarter of 2026, our Board of Directors approved a share repurchase authorization to repurchase shares of the Company’s outstanding common stock at management’s discretion up to a total value of $100,000. We did not repurchase any shares of our common stock in the first sixnine months of 2026.

During the first sixnine months of 2026, we issued 83,06583,736 shares of our common stock resulting from the vesting of share-based compensation awards. Related tax withholding payments on these share-based compensation awards resulted in a net use of cash of $1,934.$1,943.

Like many other restaurant companies, we are able to, and often do, operate with negative working capital. We had negative working capital of $297,266$289,503 at JanuaryMay 30,01, 2026 as compared to negative working capital of $312,491 at August 01, 2025. The change in working capital at JanuaryMay 30,01, 2026 as compared to August 01, 2025 primarily resulted from lower accounts payable due to timing of payments and lower incentive compensation accruals due to lower performance in the first six months of 2026 partially offset by the decrease in cash and the increase in sales our gift cards during the holiday shopping season.cash.