CRACKER Barrel’s CEO has made an admission about recent struggles as the brand braces for a $5 million hit in the coming weeks.
Julie Masino hosted a Q3 earnings call on Thursday and outlined a three-pronged attack to deal with incoming economic pressures.
GettyCracker Barrel is rolling out a three-pronged attack to battle the impact of tariffs (stock)[/caption] Cracker BarrelCEO Julie Felss Masino led a Q3 earnings call on Thursday[/caption]Diners have been warned to expect changes over the next few months after Masino admitted the company had hit a “speed bump”.
“I think Q3 is a little bit of a speed bump in kind of what’s been a good year for us so far,” the CEO said.
Despite the company reporting a performance that “exceeded expectations” with a 0.5% revenue increase compared to the same time last year, it is bracing for multi-million dollar headwinds.
It comes as Donald Trump‘s tariffs on imported goods from China wreak havoc on the industry.
“We anticipate the net tariff impact to Q4 EBITDA will be approximately $5 million,” CFO Craig Pommells said during Thursday’s call, admitting the company “didn’t plan for them”.
But, while emphasising that the chain is going through a period of “transformation” CEO Masino outlined the three-pronged attack to battle the impact of tariffs.
And it will mean changes for diners including less promotions, possible menu changes, and alterations to seasonal offers.
“Our approach to mitigate the tariff impacts includes first, aggressively negotiating with vendors, second, alternate sourcing, and third, pricing,” she said.
The CEO said to mitigate tariffs they are making adjustments to their inventory, cutting the number of seasonal themes, and changing how and when they promote seasonal offers.
Those who look forward to getting into the mood early for events like Halloween and Christmas will have to wait a bit longer this year.
“We’ve been known to put Christmas and Halloween out quite early, and so we’re readjusting some of that timing to really be more in time with where consumer needs state and demand is,” Masino revealed.
She highlighted how time will be a “very big factor” in upcoming changes to the business’s strategy but remained determined saying, “but we actually have to keep going because we have a business to run.”
Masino confirmed that negotiations with vendors have been “tremendous” as the company also explores alternate sourcing.
Cracker Barrel chiefs were reluctant to divulge possible changes to pricing, saying it is a “last lever” as the company hopes to “absorb the tariff situation” and continue giving value to customers.
The hesitancy to announce price changes comes after diners have already shared their frustrations over the past few months after already noticing price hikes and lashing out.
GettyThe chain is set to roll out changes to its menu, operations, and possibly its pricing (stock)[/caption] GettySome diners have already raged about changes the chain has been making (stock)[/caption]“As a last lever and look, pricing is an option. But we’re being very thoughtful about pricing because this business is discretionary,” Masino said.
“And we know from work that we’ve done around the transformation that value is important in this business just like it is in our restaurant business.”
It is expected that during the next call in September, Cracker Barrel could announce more concrete price adjustments as well as other changes including store remodels.
As part of its three-year “test-and-learn initiative” after declining customer counts, the company has undertaken multiple restaurant remodels to the tune of $700 million.
But while Masino said they are getting positive feedback from employees and customers, some fans may not take future changes well.
Some have already begged the chain to “change it back” saying it is “destroying itself” while others fear its “demise”.
Now diners have to wait for September to learn how they will be affected by pricing and store changes.
Meanwhile, a beloved steakhouse has confirmed a major change and Kroger has been accused of “failing customers”.
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