Cracker Barrel Old Country Store (NASDAQ:CBRL) saw its shares decline 2.5% to $52.39 in Monday trading following the announcement that David Deno will become the company's next chief executive, effective August 10. Julie Felss Masino, the outgoing CEO, will remain with the company in an advisory capacity until October 9.
The leadership change comes at a critical time for the restaurant chain, which continues to grapple with declining traffic and pricing pressure. Comparable restaurant sales fell 2.5% in the first 11 weeks of the fiscal fourth quarter, while retail comparable sales edged up just 0.5%. Despite these challenges, management raised its profit guidance for fiscal 2026, projecting revenue at or above the upper end of its previous range of $3.27 billion to $3.30 billion, and adjusted EBITDA above the earlier forecast of $120 million to $125 million.
Investor reaction to the CEO transition was notably negative when viewed against the broader casual-dining sector. Shares of four listed competitors—Darden Restaurants (NYSE:DRI), Texas Roadhouse (NASDAQ:TXRH), Brinker International (NYSE:EAT), and Bloomin' Brands (NASDAQ:BLMN)—rose an average of 3.9% on Monday. This left Cracker Barrel roughly 6.3 percentage points behind the group, signaling that investor concerns are focused on company-specific execution issues rather than industry-wide headwinds.
The valuation disparity is particularly striking. Cracker Barrel trades at 45.6 times trailing earnings, a multiple far above its peers. Darden Restaurants trades at 21.5x, Texas Roadhouse at 31.7x, Brinker International at 19.2x, and Bloomin' Brands at 33.3x. The high multiple is partly attributable to Cracker Barrel's low earnings base—trailing earnings of just $1.15 per share make the ratio highly sensitive to any shift in profitability.
Deno, who previously served as CEO of Bloomin' Brands from 2019 to 2024 and as CFO before that, brings over 40 years of restaurant and retail experience. He played a key role in taking Bloomin' Brands public. In a statement, Deno said his focus will be on prioritizing profitable growth and unlocking the brand's full potential. Board chairman Carl Berquist described Deno as the ideal leader to enhance both operational and financial momentum.
The company has taken steps to strengthen its balance sheet, including generating approximately $77 million through the sale and leaseback of 26 properties. Those proceeds will be used to reduce debt. Cracker Barrel is also exiting the Maple Street Biscuit Company business, with the remaining 16 locations set to close. Management expects the withdrawal to boost adjusted EBITDA starting in fiscal 2027, though it will incur non-cash charges of $37 million to $39 million in the fourth quarter, plus $6 million to $8 million in cash expenses over fiscal 2026 and 2027.
The leadership transition follows months of criticism over Cracker Barrel's updated logo and restaurant renovation initiatives. Masino had faced activist pressure, but shareholders voted to keep her in place in November. The company has not provided a reason for her departure.
Key risks for Cracker Barrel include ongoing declines in traffic, inflationary pressures, debt challenges, and potential disruptions from the transition. The company also cites negative media coverage and activist involvement as significant uncertainties. Deno takes over just days before the July 31 fiscal year-end, with the immediate task of maintaining profit recovery while preventing a sharper drop in sales. Monday's valuation and peer comparison indicate that investors remain cautious and are looking for tangible proof of results.
