Bear of the Day: Cracker Barrel (CBRL)

Cracker Barrel Old Country Store operates the Cracker Barrel brand in the United States. Its restaurants serve breakfast, lunch, and dinner, and also offer pick-up and delivery services. In addition, Cracker Barrel stores consist of gift shops that offer various decorative and functional items, apparel, seasonal gifts, and cookware.

Founded in 1969 and headquartered in Tennessee, Cracker Barrel has made a series of missteps, sending the stock sharply lower in recent months.

CBRL Stock Plunges Amid Logo Controversy

In a modern age where many companies are attempting to increase awareness and garner new customers, it’s understandable that a new logo can help play a part in a strategic transformation.

Unfortunately for the southern-country-themed restaurant, the move flopped in spectacular fashion.

The logo switch faced viral backlash after the company removed the overalls-wearing “Old Timer,” who resembled Herschel McCartney – the real-life uncle of the company’s founder, Dan Evins.

Cracker Barrel CEO Julie Masino acknowledged the tactical mistake as traffic dropped substantially in the weeks that followed. The company then warned that if the recent trends persisted, it could result in a 7%-8% traffic decline for the rest of the quarter.

Furthermore, management stated that it would adjust its financial outlook for fiscal 2026 due to the incident, as well as pull guidance for 2027. Cracker Barrel now expects total revenues in the current fiscal year to be between $3.35 billion and $3.45 billion. Analysts had previously expected $3.52 billion.

Apart from the logo fiasco, Cracker Barrel is also dealing with pressure from commodity inflation as well as the closure of chain locations. The company, which acquired Maple Street Biscuit Company back in 2019, closed 14 of the breakfast chain’s locations because they weren’t meeting “financial expectations.”

The Zacks Rundown

A Zacks Rank #5 (Strong Sell) stock, Cracker Barrel is a component of the Zacks Retail – Restaurants industry group, which currently ranks in the bottom 18% out of approximately 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months, just as it has over the past several months:

Stocks in the bottom tiers of industries can often be intriguing short candidates. While individual stocks have the ability to outperform even when they’re part of a lagging industry, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.

CBRL shares have been underperforming the market this year by a wide margin. After a brief upward move off the April lows, the stock represents a compelling short opportunity as we head further into the final stretch of 2025.

Recent Earnings Misses & Deteriorating Outlook

Cracker Barrel has fallen short of earnings estimates in two of the past five quarters. Consistently falling short of earnings estimates is a recipe for underperformance, and CBRL is no exception.

Just last month, the company reported fiscal fourth-quarter earnings of 74 cents per share, missing the Zacks Consensus Estimate by -5.1%.

The restaurant chain has been on the receiving end of negative earnings estimate revisions as of late. Looking at the current fiscal year, analysts have slashed estimates by a whopping -48.86% in the past 60 days. The fiscal 2026 Zacks Consensus EPS Estimate is now $1.79 per share, reflecting negative growth of nearly -43.4% relative to the prior year.

Falling earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.

Technical Outlook

As illustrated below, CBRL CBRL stock is in a sustained downtrend. Notice how the stock has been making a series of lower lows, widely underperforming the major indices. Also note that shares are trading below downward-sloping 50-day (blue line) and 200-day (red line) moving averages – another good sign for the bears.

CBRL shares would have to make an outsized move to the upside and show increasing earnings estimate revisions to warrant taking any long positions. The stock has fallen more than 15% this year alone.

Final Thoughts

A deteriorating fundamental and technical backdrop show that this stock is not set to make its way to new highs anytime soon. The fact that CBRL is included in one of the worst-performing industry groups adds yet another headwind to a long list of concerns.

Recent missteps with its logo along with weak store traffic will likely translate into an uphill battle for Cracker Barrel. A history of earnings misses and falling future earnings estimates should serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.

Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of CBRL until the situation shows major signs of improvement.

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This article originally published on Zacks Investment Research (zacks.com).

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