We're going to go ahead and get started. Welcome, everybody. I'm Anton Nicholas, Managing Partner at ICR. Not particularly important other than it affords me the opportunity to have really interesting conversations with great companies, including today's discussion with Cracker Barrel. I am not a lawyer, but I play one at night, and so I need to draw everyone's attention to this and make sure you read that separately. So I'm joined today by Julie Masino and Craig Pommells. Julie is President and CEO. I've been there just over a year now. She's got 30 years of experience in the restaurant and management space. Companies like she was President of North America and then International at Taco Bell. She spent more than a decade at Starbucks. And Craig is CFO at Cracker Barrel. 20 years of experience in the industry, 15 years with Darden in particular. So welcome, Julie.
Welcome, Craig.
Thanks, Anton. Great to be here.
Awesome, so a lot going on for you guys.
We're busy.
We haven't seen you here at this conference in a while, so it's terrific to have you. I think it's a great place to start, Julie, by just starting with what makes Cracker Barrel different? You joined just over a year ago. What drew you to this opportunity?
Yeah, it is exciting to be here. So thanks for joining us this morning. Craig and I love talking about Cracker Barrel, so we'll get you started. Well, maybe you've been going already. But look, Cracker Barrel is an amazing brand. It has such a special place in people's hearts. When I was evaluating the opportunity and talking to people, what came back time and time and time again was just this emotional connection and that everybody has a Cracker Barrel origin story, whether they stopped by Cracker Barrel on their way to their grandma's years ago for Christmas or holidays, or whether they were on traveling soccer. Everybody has a connection and a story, and they're always very emotional and heartfelt. So fun place to be. But let me tell you a little bit about where we find ourselves today.
So you can read the numbers on this next slide, but Cracker Barrel is actually a really big business. We're in 44 states, almost 660 restaurants. Some of the things you may not know or may not remember are that we actually work across three day parts. So we've got breakfast, lunch, and dinner, which makes us really unique in the casual dining and family dining space. The thing that really probably differentiates us the most is that we actually have this big retail business. It's an almost $700 million retail business. If you may remember, if you haven't been in a Cracker Barrel in a while, you exit and enter through our retail business, which is really fun and a key differentiator for us. Last thing I'd probably mention is we are at outstanding value.
When you think about the casual dining check that's out there today, it's a little over $26. Our average check is $14.05. So people know and love us for our abundance of scratch-made, high-quality food, but also for a great, great value. And we're about 70,000 people strong. So it's an exciting business.
But to your point, it's amazing because I think certainly myself, but generally people forget how big a business you guys are. And this slide is incredibly impressive that way. You guys made a big announcement this past year, and you've had a lot of changes going on. We're going to talk about that. But before we get there, foundation of any good company is the management team. Can you talk about your team and also some of the additions that you've added?
Sure. What a joy and pleasure it is to work with this team every single day. What you'll see is it's a mixture of industry veterans, some people that you may know, many of you may have worked with or heard from in the past, and some new faces to the industry, and I love that because I think it helps us raise the bar every single day. We work really well together, really thinking about how we serve our 70,000 team members out there, but importantly, over 200 million guests who visit us every single year and how we grow and create long-term shareholder value together. It's a great team.
Awesome. That's great, and you've recently added a couple of important positions as you guys go through this transformation. Do you want to talk about Sarah and Chris a little bit?
I can do. So Chris joins us from really a consulting background. He's our new head of strategy. He spent plenty of years at BCG and then led strategy at Constellation Brands, who many of you may know of some of their brands like Corona, Modelo, things like that. Excited to have him here really helping us lead the transformation. And then Sarah's here in the audience today. If you get a chance to say hi to her, we're super pumped to have her. She's been about five months on the job, 20 years of hospitality, brand, digital marketing, loyalty marketing experience. So really excited about how she's helping us tell our stories and really focus how we communicate with our guests across all of our channels as well as drive this business. So super excited about this.
Yeah, and both great examples of that broader industry experience that is really pushing you guys. So, all right, good. Let's get into the meat of the conversation. So, transformation announced this year, revamping the strategy. Give us an overview for those that may not be familiar with what you guys are doing.
Yeah. Many of you have been along this journey with us. We announced this strategy back in May. We spent about eight months putting it together, lots of research, talking to our guests, talking to our team members, talking to people who don't use the brand, looking at our competitors, seeing how people win, seeing how people have won and lost in their own transformations, really doing a lot of deep research to build the plan for Cracker Barrel. I'll tell you, it really starts with the three imperatives. Craig and I talk about these all the time. When you see driving relevancy, that's market share. That's making sure people choose us, that we are relevant, top of mind, and really driving that every day. It's really linked to food and experiences that guests love because that's what we do.
So making sure that you love Cracker Barrel and when you come in, it's great, so you'll come back. And those together link to really growing our profitability. Those are the three imperatives that underpin this plan. Next, kind of tranche down, you'll see the five key pillars. These are the five areas of focus, and we have work streams under each of these that really drive these because combine these together is really how we'll achieve the transformation of Cracker Barrel. So it's not just one thing. Many of you know there is no silver bullet in this industry. You've got to bring a lot of things together to really create those great experiences. So we've got refining the brand. It's about how we show up, how we communicate with people. Two is a really big one, and Craig and I talk about this one a lot.
It says enhance the menu, so it's about menu innovation, but it's really also about how we price things on the menu. We've got a really amazing strategic pricing initiative that we love talking about, and then finally, we've got some back-of-house optimization, so how do we make the handcrafted nature of making our food easier? How do we make it more enjoyable? How do we make those jobs easier to learn and do? That's all under that pillar. The third pillar is about making sure that the experience is great, so this is how do we show up executing well every single day, so operational execution's in there. The true physicality of the store and the experience is under this pillar, and then finally, our retail business sits under this pillar, so these are all meaty. There's a lot going on. I always say we're busy.
Fourth pillar is digital and off-premise. We've talked about this one a lot. Our loyalty program sits here as well as executing really well. 20% of our business is takeaway or to-go, so making sure that we do that really, really well. And then finally, and maybe most importantly, making sure that Cracker Barrel is a place people want to work. As I mentioned, we're 70,000 people strong. They've got to love their jobs. We've got to keep and hire great talent, make it easy for them to be successful and to deliver that country hospitality that we're known for. So those are the five pillars. Those are underpinned by making sure that we're agile, that we're testing and learning our way through it, that we're really optimizing our margin. We have got to be more profitable, and we're really focused on that. Tech modernization and then transformation.
So thinking differently, working differently, transforming the way that we work as a company. So we're busy.
I guess so. I mean, there's a lot going on there, and you've talked pretty extensively in the marketplace about what you guys are doing. Maybe the best way to contextualize it for people is, I know things are happening at different timelines and different stages, but maybe we just talk about some of the green shoots you're seeing so far because you are seeing quite a bit of progress.
I think this is the part that Craig and I get most excited to talk about because while it is very, very early days of this transformation, remember in May we laid out a three-year roadmap, which is kind of that last slide I showed you. We've only reported one quarter against it. So that was our Q1 of the year that we're in right now. But gosh, we are so proud and so excited by the progress that we're making against this transformation journey. And that was really what we talked about in our Q1 earnings and a lot of what you see here today. I won't read through all of these, and we'll talk more about them in the breakout as well. But when you start with refining the brand, Sarah and the team have been so hard at work.
I'll leave you for those of you who kind of stick around until the end. We've got a little precursor of what's to come in this pillar because a lot of people ask us about this, so stick around to the end. But lots of work happening there. Things like actually mapping the customer journey, that had never been done at Cracker Barrel. So really going in, and a lot of these are using data as well as our instincts, learning from what we are great at, building upon that, and really taking that into the future. So lots of good stuff in that one. Enhancing the menu, I love talking about this one, and some amazing new shoots here. We've really accelerated menu innovation. We've got a new test that we just stood up in Texas in December, 20 more new items.
Some of you got to taste a few of them last night. I'll talk about them in a minute. We've strengthened our value proposition. We've got early dine. We've got Sunrise Pancake Special. We've got optimized pricing that is flowing through and really fueling a lot of what we're doing here. We're really proud of that, and then really improving our dinner business. This is an anchor for us and really a place that we've been losing a lot of market share, and we're really focused on driving that. Store and guest experience. I'll just start with the first one. We've talked a lot about this, the metrics that matter. Really great improvements on our speed, retention metrics, accuracy for take home. Really great progress. Huge shout-out to our ops team and all that they're doing there every day to show up well.
Digital, we've got over six million people in our loyalty program. We're using that data to get smarter, to really figure out what they want from us and how to use that to really create experiences that they'll love so they come back more often. Finally, under employee experience, this is one of my favorite moments from our Q1 earnings. Our hourly turnover is improved by 17 points versus Q1 of prior year. That's incredible. So we are making progress and making this a place people want to be and really delivering that hospitality that we're known for. So I could talk about this all day, but Craig's got some stuff to talk about too.
Before we get there, I just want to focus on something I care about, which is the food, right? So let's talk about the menu innovation. I mean, while staying true to yourselves, I think you guys have been doing a ton there that has been perhaps even more than traditionally for you. Talk about some of the new offerings and how they're doing.
Yeah, sure. I'd love to, and I could talk about our food and what we're doing here all day long. I'm an innovation girl. I love this side of what we're doing. Again, I talked about dinner. We're really driving our crave-worthy, ownable items here. What you're watching is some of our Instagram content of our Hashb rown Casserole Shepherd's Pie. Don't sleep on this. I think some of the analysts who follow us, I've been talking about this one a lot. It's really changed our trend at dinner, really shown kind of, I think it's really the icon for how we're thinking about innovation. This is something you can only get at Cracker Barrel, and it is craveable, and it's driving preference, and we couldn't be more excited about it. The second thing I've got up here is really leaning into platforming.
So breakfast is a really important part for us, but we've platformed our French Toast Bake, adding our Signature Fried Apples to that. That's a great example of that. And then finally, really upgrading some key items as well. So we used to have a sirloin, and we've upgraded that to a New York Strip. This also helps us enhance our barbell pricing strategy, which we're super excited about, and people are loving that. So upgrading, innovating, platforming, we're doing a lot of things in menu innovation, and they're all delicious.
Excellent. Great. Okay, Craig, let's get to some of the meat on the bones. We're looking at some of the pipeline expansion there on the menu as well. And I know you guys will talk more about that in the breakouts. But we talked about green shoots in terms of what you're doing from a strategy and implementation standpoint. All of those are manifesting and encouraging results as well. Can you talk about some of the financial results?
Absolutely, Anton. First, though, the financial results are an output. You do all of this work, this input. That's really what's happening, and the financial result comes out at the end. We're pleased with all of those work streams that Julie talked about, making great progress really against all of them. In December, we reported our first quarter, and that's the first quarter of our three-year plan. Still early, but we're pleased with the results there. We reported comp restaurant sales of a positive 2.9%. That's about 290 basis points better than the casual dining performance for the period as reported by Black Box. Underpinning that are some general improvements in our traffic trend. As you can monitor that over time, still continuing to improve, further to go, but moving in the right direction. We were pleased with that.
Also, continuing gains with our check average that continues to perform well, which is particularly important because of the strategic pricing work. You're monitoring a lot of things, but one of it is how is that flowing through from a check perspective, and that's going well. Also, behind all of that, one of the challenges that we've had as a company is this kind of loss in share at dinner. And that really started after COVID and didn't really get any better. The part of the business was just much longer to recover, and it's the first thing that Julie tackled when she came on board. And we were pleased with the trends that we're seeing there. So this past quarter, our comp performance at dinner was 600 basis points better than it was in the prior year and 200 basis points better than it was in the prior quarter.
So, as you kind of look at all of that and you look at the direction that things are moving, we're feeling good about the path, still really early, but the signs that we see are encouraging.
Yeah, I mean, it is really great to see because you mentioned dinner two or three times, and then you saw that flow through. And I know it's only one quarter of results in that sense, but it must be gratifying to see that happening. So that's a little bit of a short-term reflection, Craig, on the financials. Let's talk about the longer term from the transformation generally. Talk about the different drivers that get you to that full-year 2027 EBITDA target that you've put out there.
Yeah, so we think there's a really great value creation opportunity for Cracker Barrel investors because we believe our plan is going to drive really big improvements in the performance. We expect our overall revenue to grow from about $3.4 billion last year up to between $3.8 and $3.9 billion, and Adjusted EBITDA to increase from $206 million up to between $375 and $425 million. Now, the first year, which is the year that we're in, is an investment year. And what makes it an investment year is, well, we're kind of just starting. We're pleased with where we are. We're pleased with the progress, but we're still in the early phases. We're still investing in things. There's still a lot of testing and learning that we're doing in the process. By the second half of fiscal 2026, we expect momentum to really build and then accelerate further into 2027.
So what's really driving and what's underpinning that expectation for the improvement that we see and we believe in is, number one, is traffic and the shifts and the improvements that we're seeing there and everything that we're doing to drive that into the future. And that's what Julie was talking about. Everything that we're doing with them, it's a restaurant, right? It's always about the food. It's always about the experience and the price and the atmosphere. Those are kind of the convenience. Those are the levers that you're playing with. So we're doing that. We're doing it in a very Cracker Barrel way that we are highly differentiated with. But also, we have our marketing program that we're continuing to build out, our Cracker Barrel Rewards program, which is awesome. If you're not a member, I would strongly encourage you to sign up.
We're also seeing improvements in our guest experience. We're continuing to invest in that and continuing to get the benefit there, as well as a remodel program that's still in an early testing phase, but that we expect to drive improvements as we go forward. In terms of other contributors to that performance, strategic pricing is a big one. Strategic pricing, well, the output of it is we'll be able to price above inflation this year and then for another couple of years. But behind all of that is a lot of data, a lot of analysis in terms of what consumers are willing to pay. And we've anchored all of that around this really tremendous value proposition. We have breakfast starting at $7.99 every day, and it's actually available all day. Weekdays, we have an early dining offer that's at $8.99. We have the rewards program.
So we're delivering value in a lot of different ways, and that enables the strategic pricing work. And then we have the cost-saving margin optimization work as well. And what that is, we have a long track record, Cracker Barrel does, of delivering cost savings. We are taking that to a whole other level as we look forward to the next three years. One of the pieces of work there is this back-of-house optimization. And that is all about looking at the way we operate in the kitchen and making that easier for employees and more efficient for us and deliver the same or better quality. A multi-phase plan. As a part of that multi-phase plan, we're in the first phase. We've been testing it so far this year, and we're preparing to roll that initial phase out in our Q3.
Basically, what that does is we've looked at a lot of our batch processes, things that we're doing in really large volumes, and we've revisited that, and we're moving to more of a just-in-time approach. That's easier for employees, and in a lot of cases, it's actually improving the quality for guests. It's easier. It takes less time. If it takes less time, that means it saves us labor. We're happy about that.
So, I want to pick up on something because you mentioned investments, even though you finished with cost savings. Part of the transformation announcement was to free up the capital for a significant investment. Talk about some of those investments that you're making to drive that meaningful performance.
Absolutely. So from a capital spending perspective, first, let me set some context. In our fiscal 2023 and 2024, we spent about $125 million in each of those years. So we consider that to be a baseline steady-state capital spend. However, we think there is a significant opportunity, value-creating opportunity to reinvest capital into the core Cracker Barrel business and drive a lot of value for shareholders. And we have that bucketed into these strategic investments. The strategic investments are then sub-bucketed into two pieces. One are growth investments, and another are defensive investments. The growth investments include things such as a remodel program that we're testing this year. Happy to talk more about it when we have more time. We're excited about that. We have a number of different versions of that that are in test this year. And then our technology initiatives as well.
Continuing to build out the Cracker Barrel Rewards program, which is a really, really great program because of restaurants and retail. But to fully capitalize on that, you need to build out all of the technology capabilities so that you are able to do all of the CRM work that a sophisticated marketing organization can do. And that takes some capital. As it relates to the remodel program, our board has been very actively involved in that one. And they've established hurdle rates against those remodel programs that are meaningfully value-creating for shareholders. So as we go through the test-and-learn process with remodels, rest assured that we're measuring that performance against hurdle rates that are meaningfully value-creating for shareholders. And lastly, of these defensive investments, one of the things that we did as a part of the strategy work is we did an audit of every single store.
And the store appearance, how is everything working, what is it looking like, and how are we really executing relative to our standards? And what we found is that in some cases, we were not. We were not fully living up to our own high-brand standards. And so we're making some incremental investments to really get caught up there with a focus on areas that are guest-facing and employee-facing, areas such as parking lots, paint, bathrooms, and floors. So some incremental investments there that we're being very careful with, being very thoughtful, and being very disciplined as we kind of work through all of that. But all in all, a part of a really great value-creation story.
An awesome amount of work that you guys got going on. It's great to see some of the progress. Julie, I know you want to finish us out a little bit. You teased it before, but any last comments?
I would say we're just getting started. This is a multi-year plan. We literally reported one quarter, but we're so pleased with the progress. The teams are working hard every day to execute well and really bring our country hospitality and this amazing brand to life. We're probably looking and feeling a little bit different to you today. This is some of our social media, some of the ways that we're showing up. So if you don't follow us, don't sleep on that either. Get on it. We've got some fun stuff happening. I just want to say thank you. Thank you for your interest today. Thank you for those of you who are invested with us and in us. We are very much committed to growing this brand, returning it to a growth position, and creating long-term value for our shareholders.
So I do have a little teaser.
Yeah.
Should we show that?
Yeah, let's do it.
Okay, let's do it.
Awesome, so Craig Pommells, CFO, Julie Masino, CEO, Cracker Barrel, I want to thank both of you guys for being here, excited about what you're doing, and look forward to watching you progress.
Thanks for having us.
Appreciate the opportunity.
Thanks for joining us.