[Management View]
Cracker Barrel's management emphasized the success of their transformation plan, highlighting positive comparable store restaurant sales growth for four consecutive quarters. Strategic pricing actions and product mix, particularly premium menu items, supported sales and profitability despite traffic challenges. The Campfire menu promotion was noted as a significant driver for Q4 FY2025.

[Outlook]
The company raised its FY2025 guidance for adjusted EBITDA to $215 million–$225 million, incorporating a $5 million impact from tariffs. Sales expectations remain at $3.45 billion–$3.5 billion. Management plans to continue brand refinement and strategic initiatives, with more details expected in September.

[Financial Performance]
Cracker Barrel reported total revenue of $821.1 million for Q3 FY2025, up 0.5% YoY. Restaurant revenue increased by 1.2%, while retail revenue decreased by 2.7%. Adjusted EBITDA was nearly flat at $48.1 million compared to $47.9 million in Q3 FY2024. GAAP EPS was $0.56, and adjusted EPS was $0.58.

[Q&A Highlights]
Question 1: Jeff Farmer from Gordon Haskett asked about the meaning of a strong start to Q4 in the context of the 1% restaurant same-store sales growth reported in Q3.
Answer: Craig Pommells explained that trends improved from February into March and April, with further improvement into Q4. The Campfire promotion resonated well with guests, although no specific figures were provided.

Question 2: Jeff Farmer inquired about the expense management in Q3.
Answer: Craig Pommells detailed that discretionary expenses, particularly around G&A, were timed and adjusted due to challenges in February. G&A levels in Q4 are expected to resemble those in Q1 and Q2, including some project shifts from Q3.

Question 3: Todd Brooks from The Benchmark Company asked about G&A as a percent of sales relative to Q4 levels and the first half of the year.
Answer: Craig Pommells stated that fiscal '25 is an investment year, and G&A is expected to return closer to historical levels as the transformation plan progresses, with more details to be provided in September.

Question 4: Todd Brooks asked about average check growth and pricing strategy.
Answer: Craig Pommells reported a 6.6% check growth, including 4.9% pricing and 1.7% mix. The barbell pricing strategy continues to work well, with positive mix from premium items like steak and shrimp entrées.

Question 5: Jake Bartlett from Truist Securities inquired about the raised EBITDA guidance despite sustained sales guidance and tariff impacts.
Answer: Craig Pommells highlighted benefits from menu mix, labor improvements, and back-of-house initiatives. Tariff impacts are being mitigated, and egg price moderation provided partial offsets.

Question 6: Jake Bartlett asked about the $5 million tariff impact and mitigation efforts.
Answer: Julie Masino explained ongoing SKU rationalization, vendor negotiations, alternate sourcing, and pricing adjustments. More specifics on tariffs and fiscal 2026 guidance will be shared in September.

Question 7: Brian Mullan from Piper Sandler asked about the back-of-house optimization initiative and its phases.
Answer: Julie Masino described phase one focused on process simplification, phase two on pre-prepared ingredients, and phase three on equipment solutions. Craig Pommells noted expected benefits in Q4 and fiscal 2026.

Question 8: Brian Mullan inquired about the remodeling initiative and plans for fiscal 2026.
Answer: Julie Masino stated that learnings from 20 remodels and refreshes will be discussed in September, with positive feedback from employees and guests on the new designs.

Question 9: Sara Senatore from Bank of America asked about traffic trends and demographic performance.
Answer: Craig Pommells noted improvements from February to April, with steady demographic performance across age and income groups. Julie Masino emphasized the investment year and long-term transformation goals.

[Sentiment Analysis]
Analysts expressed cautious optimism, focusing on strategic initiatives and tariff impacts. Management maintained a confident tone, emphasizing ongoing transformation and positive sales trends despite macroeconomic challenges.

[Quarterly Comparison]
| Metric | Q3 FY2025 | Q3 FY2024 |
|--------|-----------|-----------|
| Total Revenue | $821.1M | $817.0M |
| Restaurant Revenue | $679.3M | $671.2M |
| Retail Revenue | $141.8M | $145.7M |
| Adjusted EBITDA | $48.1M | $47.9M |
| GAAP EPS | $0.56 | $0.55 |
| Adjusted EPS | $0.58 | $0.57 |

[Risks and Concerns]
Tariffs on retail products sourced from China pose a near-term earnings headwind, with a $5 million impact on Q4 EBITDA anticipated. Commodity inflation and consumer softness in the retail segment are ongoing concerns.

[Final Takeaway]
Cracker Barrel's Q3 FY2025 performance reflects the effectiveness of its transformation plan, with strategic pricing and product mix supporting sales growth. Despite tariff challenges and macroeconomic headwinds, the company remains focused on brand refinement and operational improvements. The raised EBITDA guidance and positive start to Q4 indicate confidence in achieving long-term value creation. Investors should monitor tariff impacts and strategic initiatives as the company navigates a dynamic environment.