By Jennifer Williams

Cracker Barrel Old Country Store restaurants are known for a certain aesthetic: Walls lined with antiques and tools, homestyle cooking and its signature peg game.

But the chain is nearly a year into a three-year transformation in an effort to appeal to more diners. Along with refreshing its restaurants with a brighter, more modern feel, the changes include updating the menu and simplifying cooking processes for green beans, bacon and other eats. The trick will be keeping Cracker Barrel loyalists who prefer the country feel, a view some are making known on social media, while bringing in new customers, a particularly tall order as American consumers are feeling rattled by tariff changes and renewed fears of a recession.

Cracker Barrel executives think diners will come if the chain hits the right mix of value, convenience, quality food and service and a welcoming atmosphere. "We're working on all of those," said Finance Chief Craig Pommells.

So far, Cracker Barrel customers and employees have generally responded well to the changes, which are in various phases of implementation. Same-store restaurant sales have been positive for three consecutive quarters, up 4.7% for the three months ended Jan. 31 compared with a year earlier. Guest traffic, however, fell, dropping 2.7% in the latest period, but has improved since the transformation plan was announced a year ago.

Revenue of $949.4 million was up 1.5% compared with a year earlier.

Cracker Barrel executives talk about selling more food in terms of reaching "new" customers, which analysts interpret to mean younger and higher-income. The chain doesn't regularly disclose the specific age of its diners, but executives over the past few years have said that its so-called "traditionalist" customer, the 65-plus group, has been slow to return to in-person dining since the pandemic.

The chain wants both age groups, and the ones in between, to spend on Southern fried chicken, biscuits and other menu offerings, and executives see sprucing up the restaurants with lighter paint and fewer antiques on the wall as one way to do that. Early indications are positive: In March, the company said the first four remodel locations were collectively seeing a lift in sales and traffic. Cracker Barrel aims to finish remodeling 25 to 30 of its roughly 660 restaurants, while refreshing another 25 to 30 locations, by this summer.

Not all customers are impressed, and some are airing their complaints about the loss of the original design on social media. "When Cracker Barrel took away the last piece of nostalgia you had left," one woman posted in a TikTok last month as she walked through an updated location. The post has racked up thousands of comments, many of which prefer the original restaurant design.

"Because it's nostalgic and because it's such an old brand and means very specific things to different people, there may be pushback," said Jake Bartlett, a senior equity research analyst at Truist Securities. "That's why they have to be careful."

Cracker Barrel is working to alleviate any concerns about the makeovers. "We know change can be bittersweet," the chain posted in response to the TikTok post. "While a few things may look a little different, we're not changing who we are ... just shining things up a bit."

The early restaurant overhauls serve as a test to see what customers like and where future revamps can be improved, said Pommells. The company hasn't disclosed specifics on how the updated locations are performing relative to those that haven't yet seen a retouch. It also hasn't disclosed how much will be spent on the remodels, though Pommells said "it's a lot of capital."

Cracker Barrel is additionally updating its food to try and tempt in more diners. Cooking processes for eats like green beans and bacon have been simplified so they are fresher and require less work for employees.

What diners see on the menu is also changing. They have heartier options like hashbrown casserole shepherd's pie and the coming return of campfire meals, dishes in which protein and sides are cooked and served in foil, along with new grilled shrimp options for lighter fare. Cracker Barrel is giving diners options on price, too, from pancakes for less than $8 to steak and shrimp for around $23.

"I think they are trying to broaden it out so there's more of a selection, so you're not pigeonholing yourself to, 'I want to go eat hearty,'" said Benchmark analyst Todd Brooks. "But it'll still be within the Cracker Barrel ethos."

The first leg of the three-year transition is helping to drive sales and improve traffic, according to analysts. But the coming months could bring other obstacles, they said.

One hurdle is tariffs, which Cracker Barrel is more exposed to than some other restaurants because of its retail stores. The vast majority of the dining chain's restaurant purchases are sourced from the U.S. But in its attached retail stores, where customers can buy candles, mugs and more, contributing around 20% of Cracker Barrel's revenue, roughly one-third of the merchandise comes directly from China. The company is negotiating with suppliers of those tchotchkes so it doesn't have to absorb the tariffs' full costs, executives have said. Changing suppliers and the possibility of raising prices are also on the table.

Another is consumers' gloomy mood about the economy. Executives at companies catering to consumers are watching closely to see how recession anxiety and tariff threats affect spending. Cracker Barrel executives say the company is well-positioned for an environment of stretched consumers. A Cracker Barrel diner on average spends $15, compared with $18 at other family dining locations and $28 at casual dining chains, executives have said. That gap gives Cracker Barrel room to even raise prices, which were up 6% in the latest quarter, so far with little customer pushback, analysts said.

"These strategic transformations are difficult to accomplish," said Benchmark's Brooks. "It's that much harder if the consumer is not a tailwind while you're doing it."

Write to Jennifer Williams at jennifer.williams@wsj.com

(END) Dow Jones Newswires

May 01, 2025 06:00 ET (10:00 GMT)

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