Prepared remarks
Good day, and welcome to the Cracker Barrel Fiscal 26 Third Quarter Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Adam Hanan, Director of Investor Relations. Please go ahead.
Thank you. Good afternoon, and welcome to Cracker Barrel's Third Quarter Fiscal 26 Conference Call and Webcast. This afternoon, we issued a press release announcing our third quarter results. In this press release and on this call, we will refer to non-GAAP financial measures such as adjusted EBITDA for the third quarter ended 05/01/2026. Please refer to the footnotes in our press release for further details about these metrics. The company believes these measures provide investors with an enhanced understanding of the company's financial performance. This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP. The last pages of the press release include reconciliations from the non-GAAP information to the GAAP financials. On the call with me are Cracker Barrel's President and CEO, Julie Felss Masino, and Senior Vice President and CFO, Craig A. Pommells. Julie and Craig will provide a review of the business, financials, and outlook. We will then open up the call for questions. On this call, statements may be made by management of their beliefs and expectations regarding the company's future operating results or expected future events. These are known as forward-looking statements, which involve risks and uncertainties that in many cases are beyond management's control and may cause actual results to differ materially from expectations. We caution our listeners and readers in considering forward-looking information. Many of the factors that could affect results are summarized in the cautionary description of risk and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnish to the SEC. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it, except as may be required under applicable law. I will now turn the call over to Cracker Barrel's President and CEO, Julie Felss Masino. Julie?
Good afternoon, and thank you for joining us. Q3 results exceeded our expectations. Total revenues were $797 million and adjusted EBITDA came in at $40 million. This performance was driven by strong cost management across the P&L, as well as improved traffic and check. Our dedicated teams have positioned us for success; they continue to execute at a high level. They are key to implementing our strategic initiatives, which are grouped into three areas: improved operations, deeper connections with guests through our menu, marketing, and value proposition, and increased profitability. I will now discuss each one. First, operationally, we remain focused on consistent execution and delivering an exceptional guest experience. This resulted in strong improvements across important guest metrics for the third consecutive quarter. Year over year, our Google star rating increased 4%, reaching its highest quarterly score since 2018. Our food taste and service scores rose 5%, and food temperature scores increased 7%. Managerial turnover improved by 6%, outperforming the industry. We continue to see positive trends in hourly turnover. We are pleased with the favorable trends in these metrics, which are important leading indicators, and are confident these gains will translate into improved traffic over time. Turning to our menu. Our multipronged strategy combines bringing back guest favorites, introducing new offerings, enhancing quality, and leaning into value. We are incorporating these elements into each of our seasonal menus in an effort to improve guest satisfaction and drive traffic. Our spring menu featured the return of our sugar cured and country ham dinner to the core menu and our very popular carrot cake as a limited-time offering. We also introduced our garden and farmhouse scrambles to address a menu gap and respond to a long-standing guest request. Additionally, our spring menu featured our new smoky southern salmon which provided a more premium, lighter fish option. Our summer menu is centered on our Campfire promotion. As a reminder, last year marked the return of the Campfire platform, one of our strongest nostalgia anchors and a clear celebration of Americana, travel, and gathering. This year, we made enhancements to our Campfire chicken and beef offerings to improve flavor and consistency. We also extended the platform into the morning daypart with a new Campfire breakfast skillet. This hearty meal consists of bacon, smoked sausage, roasted peppers, onions, and cheese served over three eggs with crispy Campfire seasoned potatoes. Value is incredibly important in today's environment. For Cracker Barrel, it is not a response to the moment; it is part of who we are, delivering meaningful abundance and everyday value for our guests. Our value remains strong as evidenced by the fact that our Q3 value scores increased 5% year over year. There are a number of reasons we are confident that our proposition will continue to resonate. First, our absolute check remains well below the industry. In Q3, our average check was $15.85 compared to over $27 in casual dining and over $19 in family dining, underscoring our lower prices versus competitors. In fact, guests can order add-ons with us and their check will still be lower than an entree at many of our peers. In addition to lower relative prices, our overall value proposition is strengthened by the high-quality ingredients, delicious food, and genuine hospitality we are known for. Second, we have maintained a strong everyday foundation further enhanced through our barbell pricing strategy that includes compelling entry price points such as our Sunrise Pancake Special for $7.99 and early dinner deals starting at $8.99. Third, we have implemented targeted menu changes to reinforce our value proposition and expand guest choice while also building margin. This includes bundled shareable duos and trios as well as options for guests to upgrade to three sides or add an extra breakfast protein to select entrees for a modest surcharge. Transitioning to loyalty. Cracker Barrel Rewards remains a meaningful traffic and value driver for the business. The program has grown to nearly 12 million members with continued strong engagement. In Q3, member-tracked sales remained above 40%. We saw strong retention among our most valuable loyalty guests that was consistent with historical norms. Overall loyalty member visits increased year over year, reinforcing the program's role as an important traffic tailwind. Beyond points and rewards, we are using the loyalty platform to create more meaningful reasons for guests to engage with the brand. A good example of this is our Fuel Your Summer Road Trip sweepstakes. As part of this sweepstakes, which launched May 19 and will run through July 26, loyalty members who purchase an entree will have a chance to win Cracker Barrel and fuel gift cards. Each week, 25 winners will receive a $500 Cracker Barrel gift card and a $500 gas card, with $250,000 in total prizes awarded. These loyalty-exclusive engagement opportunities are expected to support member acquisition and encourage repeat visits while reinforcing Cracker Barrel's role as a trusted destination for gathering, comfort, and hospitality during the summer travel season. From a marketing perspective, our guest connection strategy remains centered on food, value, and Cracker Barrel's distinct heritage. We continue to leverage key partnerships and cultural moments to deepen emotional connection, expand reach, and drive visitation. For example, our partnership with Speedway Motorsports continues to be an important platform, and we are using it along with our broader summer marketing efforts to generate excitement around Campfire and drive traffic. Building on last year's successful partnership, we have expanded this year's program through broader national awareness, deeper local store engagement in key race markets, and enhanced on-site activations across the season. This year, Cracker Barrel Fan Zones will be present at every Speedway Motorsports race, giving us a larger physical presence with fans and extending the brand beyond the track itself. We were especially proud to have once again served as a title sponsor of the Cracker Barrel 400. This year's sold-out race on May 31 was action-packed and included 31 lead changes among 15 different drivers with Denny Hamlin ultimately winning in an exciting finish. Moving to retail. This business continues to gain momentum under the leadership of Heather Hager, who joined us in September 2024 and was promoted to Senior Vice President this past February. We are pleased with the improvement in our retail performance and are seeing good results from key initiatives such as SKU rationalization, optimized markdowns, and improved merchandising. In fact, retail comps outperformed restaurant comps for the first time in over four years. Additionally, we saw year-over-year improvements in important metrics such as units per transaction and average unit retail. Most importantly, our product is resonating with our guests. I will provide a few examples. First, the toys category has been a particular strength in part because we successfully capitalized on social-media-driven trends related to sensory play and fidget toys. Second, our salt and pepper shakers remain a hit. These unique collectibles are an incredible value as well as a great expression of the brand. And third, our American heritage theme remains a beloved summer assortment full of merchandise proudly celebrating America and patriotism. This year, we are featuring merchandise commemorating America's 250th birthday, and the guest response has been strong. Our last strategic initiative is improving profitability. Our teams, from the operators at our stores to team members at the support center, have done an outstanding job managing costs. As a reminder, we executed a corporate restructuring in Q2 that is expected to deliver $20 million to $25 million in annualized G&A savings. We also reduced our advertising expense in the second half of the year compared to the prior year. Collectively, these efforts and cost savings were a significant driver of our Q3 adjusted EBITDA results. We will continue to diligently manage our expenses going forward. As our team continues to execute our strategic initiatives to improve operations, make deeper connections with guests, and increase profitability, we are also taking other steps to advance the business and position us for the future, particularly through the use of technology. I will provide a couple of examples. First, in the coming weeks, we are upgrading our website to create a more frictionless and intuitive digital journey. The new platform will better support online ordering, rewards, and targeted content. Importantly, this also serves as the foundation for expanding personalization across more channels over time, allowing us to deliver more effective messaging and reasons to visit wherever guests are engaging with Cracker Barrel. We are excited about these enhancements, which will improve the guest experience while simultaneously driving our off-premise business, which, as a reminder, accounts for approximately 20% of restaurant sales. Second, we are using AI across the company to enhance our team's capabilities and to support the guest experience. We have deployed enterprise-wide tools, built foundational data, and established governance to ensure responsible use and scaling. In building these capabilities, we are also investing in our people, upskilling teams and ensuring leadership adoption. We are leveraging AI as a force multiplier that allows us to be more productive while making our teams' jobs more efficient. For example, our machine learning traffic forecasting model has improved our projection accuracy, which supports better labor deployment and execution. Additionally, we are using AI in guest relations to more efficiently resolve tickets and, where appropriate, to more quickly connect guests with live support. Finally, as part of our focus on the guest experience, we developed an internal agent that can quickly mine data across all guest feedback channels and provide actionable insights. In closing, we are executing at a high level and gaining traction across the business as evidenced by our Q3 results. We are focused on sustaining this momentum over the coming quarters. I will now turn it over to Craig to walk through the financials.
Thank you, Julie, and good afternoon, everyone. Before reviewing the results, I would like to build on Julie's remarks and thank our teams. I am proud of their work and their progress, as reflected in the improvements in our key guest metrics, expense management, and overall financial results. Now turning to the third quarter's results. Total revenue was $797.4 million. Restaurant revenue was $658.4 million. Comparable store restaurant sales decreased 2.6% which included a traffic decline of 6.7%. Although traffic remained negative, we are encouraged by the gradual improvement in the underlying traffic trend. The restaurant average check increased 4.3%, including pricing of 4.4%. Menu mix was slightly negative but improved from the first half of the year driven by the menu changes Julie mentioned. Off-premise sales were 19.6% of restaurant sales, an increase of approximately 50 basis points compared to the prior year, driven by growth in catering and third-party delivery. Retail revenue was $139 million. Comparable store retail sales decreased 1.8% driven by lower traffic partially offset by increases in average unit retail and units per transaction. Turning to the quarterly expenses. Total cost of goods sold in the quarter was 30.2% of total revenue versus 30.1% in the prior year. Restaurant cost of goods sold was 26.1% of restaurant sales versus 26.2% in the prior year. This 10-basis-point decrease was primarily driven by menu pricing, partially offset by commodity inflation. Commodity inflation was approximately 2.5% driven principally by higher beef, pork, produce, and seafood prices, partially offset by lower egg and dairy prices. Retail cost of goods sold was 49.8% of retail sales versus 48.9% in the prior year. This 90-basis-point increase was primarily driven by higher tariffs, partially offset by pricing. Quarter-end inventories were $179.9 million compared to $168.7 million in the prior year. Although inventories are modestly higher, we are comfortable with the level and believe we are well positioned with clean inventories. Labor and related expenses were 37.9% of revenue compared to 37.1% in the prior year. This 80-basis-point increase was primarily driven by sales deleverage. Wage inflation was approximately 2%. Other operating expenses were 24.9% of revenue compared to 25.3% in the prior year. This 40-basis-point decrease was primarily driven by lower advertising expense and lower supplies expense, partially offset by higher utilities expense. General and administrative expenses were 6.2% of revenue compared to 5.6% in the prior year. This 60-basis-point increase was primarily driven by the following items which totaled approximately $6.8 million. First, $2.9 million in higher incentive compensation expense driven by a year-to-date true-up based on higher expectations for the year. Second, $2.8 million in higher professional fees driven by legal expenses. And third, $1.1 million in employee separation costs. During the quarter, we received $47.4 million in cash proceeds from a settlement agreement resolving interchange fee litigation. This amount was recorded in the litigation settlement income line on the P&L. It is included in our GAAP results but excluded from the calculation of reported adjusted EBITDA to enhance comparability across periods. Net interest expense was $3.7 million compared to $5 million in the prior year. This decrease was primarily the result of a lower revolver balance and a higher convertible debt balance. GAAP income taxes were $7.7 million, including the tax impact of the interchange fee litigation income. Adjusted income taxes were a $3.5 million credit. GAAP earnings per diluted share were $1.90, and adjusted earnings per diluted share were $0.29. Adjusted EBITDA was $40.3 million or 5.1% of total revenue, compared to $48.1 million or 5.9% of total revenue in the prior year. In summary, Q3 results exceeded our expectations driven by our operating and cost actions, while guest-facing metrics continue to improve and position us for further traffic recovery. Now turning to capital allocation and the balance sheet. We continue to diligently manage the company's capital resources. Capital expenditures are lower relative to recent years. Investments remain focused on core business operations while maintaining modest debt levels. The $47.4 million litigation settlement further bolstered the balance sheet and we continue to have ample access to liquidity, ending the quarter with $541.3 million in available capacity. The quarter ended with $486.6 million in debt, which was approximately $3 million below the prior year. The current debt is comprised entirely of the two convertible debt notes, with the revolver undrawn at quarter end. As a result, the consolidated senior debt to adjusted EBITDA ratio was 0. The consolidated total debt leverage ratio was 2.4 including the $47.4 million litigation settlement. Capital expenditures in the third quarter were $27.1 million. Turning to the fiscal 26 outlook, I want to remind everyone that in Q4, we are lapping a stronger quarter in the prior year, and this more difficult comparison impacts our year-over-year expected comp store traffic and sales results. That said, controlling for the variability between last year's third and fourth quarters and the resulting comparison in the current year, the underlying traffic trend continues to show gradual improvement. Regarding tariff refunds, we filed a claim for approximately $17 million. To date, we have received approximately $5 million, all of which was received in Q4. We expect to reinvest nearly all of this during the quarter. I want to point out that our guidance does not contemplate any additional refunds given the uncertainty regarding the remaining amount applied for but not yet received. Now moving to the guidance. As outlined in the press release, we anticipate the following for fiscal 26: total revenue of $3.27 billion to $3.3 billion; pricing in the low 4% range; commodity inflation in the low 2% range; hourly wage inflation in the low 2% range. Taking all the above into account, we are increasing our full-year adjusted EBITDA guidance to between $120 and $125 million. Finally, capital expenditures are expected to be between $105 and $115 million, the majority of which relates to maintenance. I will now turn it over to the operator for Q&A.
Questions and answers
Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then 1. Our first question comes from Todd Brooks with The Benchmark Company. Please go ahead.
Hey, thanks for taking my questions and congrats on a really strong quarter. Well done. I was wondering if we could talk about the full-year guidance for revenue. Q3 beat by about $20 million; you are raising the ranges on revenue guidance by $30 million which implies a guide up to expectations for Q4. Can you walk through what is giving you the confidence? You just talked about tough comparisons year over year and I did not hear anything in the comments to date around higher prices at the pump and reliance on the summer driving season and travel by car. So if we could kind of weave all that together into a commentary about why the constructive nature to the Q4 guide.
Hi, Todd. Thank you. Sure. You covered a lot there with that question. First, we are obviously pleased with the improving trend that we saw in the third quarter. Underpinning all of that is this gradual improvement in the underlying traffic trend. As you noted, Q4 does have a more challenging comparison relative to the prior year than did Q3; Q4 last year was one of the best fourth quarters we had in a while. But again, the underlying trend is improving. At this point, we are over a month into the quarter. In terms of gas prices, gas prices are obviously an input into discretionary income. Discretionary income is important as it relates to the restaurant industry, and it does impact us as well. So that is potentially a bit of a headwind. But again, we are continuing to execute really well. We are continuing to get better and better, and as a result of that we are seeing that improvement in the underlying trend. So we are feeling good about that. There is clearly, implied in your question, a bit of consumer pressure. We are seeing that as well, particularly with the lower-income consumer. But again, as Julie mentioned, if you think about our check average at $15.85 relative to casual dining at $27 and family dining at $19, we are really good value. And we also have the barbell pricing strategy with sharp entry price points and some more premium offerings as well. So underpinning Q4, it is a tougher comparison, but we do have that gradual improvement trend that is supporting it as well.
That is great, Craig. And my follow-up: you talked about a pressured consumer, especially as we get down the income scale. The retail performance, though, was dynamic in this past quarter. I guess the thought would be that people could preserve the visits to the restaurant, but maybe you do not attach retail in the same fashion. Julie, you highlighted a couple categories that are working really well. But overall, are you surprised by the sturdiness that you are seeing in the retail business given where the consumer is? And as you look forward, as we start to get holiday on the radar here, any changes in the kind of SKU rationalization or anything else we should be thinking about as we get to the holiday season? Thanks.
Thanks, Todd. I appreciate the question because we were really proud of the performance in this quarter and especially the restaurant teams are working so hard, but so are the retail teams. We have a new leader in retail. Heather Hager joined Cracker Barrel in 2024 and was promoted to Senior Vice President of Retail in February. She has a broad background across retail and hospitality—retail design, brand and customer experience, strategy, finance. I'm pleased with the way she's leading the business and the teams and the work they are doing. As mentioned on the call, retail comps outperformed restaurant comps for the first time in over four years, with increases in units per transaction and average unit retail. A few things are driving this. First, initiatives around SKU rationalization and the optimized markdown strategy that Heather and the team have been working on are driving results. Improved merchandising—bringing sight lines down, widening aisles—has helped; they've run many tests this year and are moving successful tests into next year. Second, they mitigated a lot of tariff impacts; we had $17 million worth of tariff impacts in the last year and the team handled that well. Most importantly, they have the right product that resonates with guests. I called out a few categories on the call. Toys have been a bright spot: the team capitalized on social-media-driven trends around sensory play and fidget toys—we had runs on NeeDoh, for example. Our collectible salt and pepper shakers are a hit and a great brand expression at an affordable price. Our front-and-center theme this summer is the American Heritage theme, celebrating America's 250th anniversary; this merchandise is selling out fast and has been so popular that we pulled Halloween merchandise earlier because we were running out of American Heritage product. Halloween hit the floor for us this past week and has been off to a strong start. I'm really proud of the team and all the hard work they are doing. I also want to thank the entire Cracker Barrel team—our store teams and support center—everyone worked hard this last quarter to effectuate the change that we are seeing in the results.
The next question comes from Jeffrey Farmer with Gordon Haskett. Please go ahead.
Thank you. You guys did touch on it, but the middle of the EBITDA guidance range increased by more than 30%, which was a very big number. So I am just curious if you can provide a little bit more color on the nature of that greater-than-expected flow-through you are seeing on the EBITDA line?
Sure, Jeffrey. It is Craig. Good to be talking to you again. The teams did a really good job in the quarter and that is continuing into the fourth quarter as well. We were a little bit higher on our comparable store performance, referencing that gradual improvement, so that drove the top line to be a bit stronger. Traffic was a bit favorable. We also did a lot of work on menu mix, particularly with add-ons. We made changes to our side strategy as well as our Barrel Bites or appetizers, and that paid off. The operations team was humming during the quarter, so we had a really good performance with food waste as well. All of the pieces—the planning and purposeful execution—came together well. From a cost perspective, and perhaps even more importantly, it translated into the guest experience, which improved a lot. It is a function of the team coming together, putting together a good plan, and executing the plan. On a number of fronts, the plan performed at the higher end of our expectations and that drove the improvement we saw in the quarter relative to our expectations. We expect these efforts to continue contributing to the gradual improvement into the fourth quarter.
Okay. Like you said there, I will process that. But actually, here's my follow-up: as it relates to cost control relative to everything you just highlighted, how big a role has cost control played in driving that upward revision to EBITDA?
On the cost control front, it was significant. In this case, cost control actually starts at the sales level. Thinking about check and add-ons, and what the marketing team has done to enhance add-ons, we also updated the way that we discounted during the quarter. We made many improvements in Q3 relative to Q1 and Q2, driven by the marketing organization and executed by the operations organization. There were cost benefits in terms of waste, labor, and supplies. It's all of those pieces coming together: cost controls plus initiatives that drive the top line in the form of check improvement during the quarter.
There is no doubt that we are operating better in our stores. All the metrics I shared—the Google star rating, quality scores, value scores, food taste scores, service scores—are better. The teams are focused on taking care of guests and making sure they are doing things properly, which improves waste management and scheduling. All of those things are coming together nicely. It's real hard work and attention to detail by the teams on all fronts. Thank you.
The next question comes from Jon Tower with Citi.
Hey, thanks for taking the questions. Appreciate it. Maybe just starting in terms of guest composition: it looks like you are focusing more on fan favorites of the past and bringing those back, then innovating around them. I'm curious if you could share some color on the guests you are drawing in during this quarter relative to the past. Are they older, younger, different income levels? You mentioned seeing some pressure in the lower-income cohort. Any color around that would be great.
Thanks, John. This time last year we had brought new guests into the business, and we were excited about that work around Campfire and the Cracker Barrel 400 and how the full marketing funnel came together. In Q1 and Q2 we lost a lot of those new guests, and we have turned very intentionally to our core guests and loyalty members to retain them and bring them back as we pulled ourselves out of the Q1 situation. We have been focused on our high-value loyalty guests, growing loyalty as a percent of tracked sales, and making sure guests know we are the Cracker Barrel they remember—operating even better, food more delicious, and service outstanding. We are very focused on that. I will let Craig provide some numbers, but we have been pressured in the lower-income cohort; we are seeing some growth in the higher-income guests, which is nice to see. Across demographics, it has been pretty consistent—not a lot of newness in the composition—but we are pleased with the progress, especially with holding on to our core guests. We have more to share as we move into next year about how we will continue to drive this.
To reinforce Julie's point, from an age perspective it is relatively consistent across cohorts with no big differences. In terms of income, better performance at the higher end of the spectrum and pretty linear performance as income decreases. This quarter was largely driven by core guests and loyalty program members returning, which was a big driver.
Got it. Thank you. Maybe going to the marketing side: as of the last call you were talking about marketing spend in the back half of the year being down $13 million to $17 million. How are you thinking about that shaping up for next year? Are you contemplating a reset back to previous levels, or are you comfortable with the current run rate?
We will touch on marketing spend on the next call. In the second half of the year we adjusted down; we were down about $7 million versus prior year in Q3. That level puts us in a range for Q4 that, over the longer term, is consistent with where advertising as a percent of sales has been. We will continue to test and learn. If the data and business case say to spend more, we will; if not, we will maintain discipline. Given where we are and our P&L objectives, we were effective with the Q3 level and what we have planned for Q4. Moving into next year we'll use data plus test-and-learn approaches to inform decisions.
What I would add is the team is getting creative and scrappy, maximizing every dollar. Marketing is another area where we have improved effectiveness, not just reduced dollars. We examined the entire funnel, focused on retaining guests, and identified where to find them and how to reach them. We created lookalike audiences and reexamined media and audiences last year and have continued to refine that work. The activations around the Cracker Barrel 400 and Speedway Motorsports are exciting—we doubled down to show up across all races this summer with Fan Zones and local engagement, which extends the brand in authentic ways beyond the stores.
One more lever is the loyalty program. With nearly 12 million members, it is both efficient and effective to communicate directly with them. As that population grows, it gives us another cost-effective channel to drive visits and engagement.
To build on that, this summer we launched a new promo for loyalty members—the Fuel Your Summer Road Trip sweepstakes—which rewards loyalty members and encourages activation and excitement. Anytime a loyalty member purchases an entree between the launch and the end of July, they are entered. We have 25 winners each week who win $1,000 in total ($500 in gas cards and $500 in Cracker Barrel gift cards). It is a way to reward loyal guests, attract new loyalty members, and help guests who are feeling the macro pressure this summer by giving them meaningful value.
Nice. Thank you for all the color. One last question from me: CapEx spend is down this year relative to recent years. I am curious where you are thinking about the remodel cycle. How far out before that ramps up again?
Cracker Barrel's look is enduring, but we continue to invest in improvements that enhance the guest experience without a traditional full remodel. We've done work in areas like bathrooms and updates to retail displays. We're spending in the store in a way that preserves the brand core while improving the guest experience.
We put the remodel program on pause this year after the Q1 experience. We learned a lot from the remodel program in fiscal 2024 and 2025, and our guests did not want us to move forward with the full remodel at this time, so we paused it. In 2027 we will discuss plans going forward, but for now the focus is smaller updates—paint, bathrooms, and other refreshes—rather than a big remodel roll-out.
The next question comes from Peter Saleh with UBS. Please go ahead.
Great. Thank you so much and congratulations on the great results. I have a couple questions. First, you mentioned pressure on lower-income consumers. Have you noticed any other impacts from elevated gas prices and specifically any indication from suppliers of gas surcharges that could hit flow-through?
Hi, Peter. Yes—fuel prices are up and that impacts the business in distribution on the restaurant side and also impacts the retail side. There is some impact in the fourth quarter related to fuel, and all of that is included in our guidance.
Gotcha. Maybe one more on a bigger-picture trend: have you seen any early signs from GLP-1 usage—any shifting guest ordering, customization trends, or order size changes?
Peter, we have been actively monitoring GLP-1s for over a year and watching trends. We have not seen any measurable impact at Cracker Barrel to date. Our menu strategy continues to focus on bring-backs, innovation, and categories. We already have many protein-forward categories and reorganized our menu about a year ago to make it easier for guests to order by protein—beef, chicken, seafood. We offer portion flexibility for guests: two or three sides, add an egg to anything, options to add a soup and salad for $5, and items that guests can take home. People are able to customize their Cracker Barrel experience the way they want—more protein, smaller portions, early-dine options with sharp price points Monday through Friday. Right now, we feel we are meeting people's needs. Guests love abundant portions at a fair price point, and that continues to be the resonant theme based on our ongoing conversations with guests and menu mix trends.
This concludes our question-and-answer session. I would like to turn the conference back over to Julie Felss Masino for any closing remarks. Please go ahead.
Thank you for joining us today. I want to again thank our 70,000-plus team members who are doing such a great job focusing on our guests and executing our plans. We are encouraged by our progress and are confident that our continued focus on serving delicious food and delivering an exceptional guest experience will sustain this momentum.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.