Cracker Barrel Old Country Store Inc. (NASDAQ:CBRL) is preparing to incur charges ranging from $43 million to $47 million as it exits the Maple Street Biscuit Company brand. The segment, which contributed less than 2% of total annual revenue, is being divested as part of a broader strategic shift to refocus on the core Cracker Barrel business. Management anticipates that the exit will enhance adjusted EBITDA for fiscal 2027, signaling that Maple Street had been a drag on profitability.
Based on Cracker Barrel's fiscal revenue target of at least $3.30 billion, Maple Street's implied revenue is under $66 million. The expected accretion from the divestiture suggests that the biscuit chain was weighing on overall earnings. The company did not disclose the sale price for the brand, but the initial cash and non-cash charges include $37 million to $39 million in non-cash items.
The deal involves the sale of Maple Street's trademark and assets related to 35 restaurants to Biscuit Belly, a private company. The remaining 16 Maple Street locations are scheduled to close. Biscuit Belly, which operated 15 outlets prior to the acquisition, plans to rebrand the acquired sites within 18 to 24 months, with the first conversions expected in January 2027. The buyer aims to operate more than 60 locations by the end of 2028.
In a separate real estate transaction, Cracker Barrel generated approximately $77 million through the sale of 26 company-owned properties. The company will now incur $5.7 million in initial annual rent under triple-net leases, representing 7.4% of the net proceeds, with scheduled annual increases. These proceeds are earmarked to reduce revolver debt, which amounts to roughly 51% of a $149.9 million note balance that management had planned to refinance.
CEO Julie Masino commented, “Divesting Maple Street sharpens our focus on the core Cracker Barrel brand and is expected to improve profitability.” The exit marks the end of a six-year expansion effort. Cracker Barrel originally acquired 33 Maple Street restaurants in 2019 for $36 million. The chain grew to 70 locations by early 2025 but had already closed 19 prior to this agreement. Notably, the initial exit charges are 19% to 31% higher than the original purchase price, though the comparison is not exact due to subsequent investments in stores, severance, and lease terminations.
Despite the strategic move, Cracker Barrel continues to face challenges at its core business. Comparable restaurant sales declined approximately 2.5% over the first 11 weeks of the fiscal quarter, while retail comparable sales edged up by only 0.5%. The company maintains its full-year guidance for revenue of at least $3.30 billion and adjusted EBITDA exceeding $125 million.
In after-hours trading on Wednesday, Cracker Barrel shares last traded at $53.17, down about 1.4%. This followed a 9% gain to $58.20 in after-hours trading on Monday, which later receded. Shares remain 3.0% higher than their July 15 close. Looking ahead, market participants will focus on the company's final guidance ahead of its July 31 fiscal year-end and any fourth-quarter exit charges.
Risks remain, as the charge range is an initial estimate. Under triple-net leases, Cracker Barrel must cover taxes, insurance, and maintenance costs, and fixed rent increases could extend beyond short-term debt relief. The core challenge of declining restaurant sales persists, and the divestiture addresses the earnings mix but does not directly boost demand.
