Cracker Barrel Old Country Store Inc. sold an underperforming asset and entered into a sale-leaseback deal to bolster its finances and increase future profitability.
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The brand known for its traditional Southern cuisine and old-country stores sold its Maple Street Biscuit Co. restaurant assets to fast-casual chain Biscuit Belly but anticipates incurring up to $47M in exit costs, according to a company press release. Cracker Barrel expects to record noncash charges of up to $39M during the fourth quarter as a result of the sale, as well as cash costs of up to $8M for lease terminations, severance payments and exit expenses.
Biscuit Belly acquired 35 existing Maple Street Biscuit Co. locations, along with the trademark and intellectual property. Cracker Barrel plans to shutter the chain’s remaining 16 locations.
Despite the high exit costs, removing Maple Street Biscuit Co. is expected to benefit Cracker Barrel’s earnings before interest, taxes, depreciation and amortization beginning with the 2027 fiscal year. The company said the subsidiary contributed less than 2% to its annual revenue.
Along with the sale, Cracker Barrel completed a sale-leaseback deal with an institutional real estate investor for 26 of its company-owned stores, generating around $77M in proceeds. The company plans to use the proceeds to reduce its debt. Cracker Barrel said the deal was also tax-efficient and will allow the company to utilize capital loss carryforwards that otherwise would have expired.
The move positions Cracker Barrel for long-term success, President and CEO Julie Masino said.
"Our sale-leaseback transaction will allow us to opportunistically reduce debt while monetizing a portion of our owned real estate at an attractive valuation,” Masino said in a statement. “Divesting Maple Street sharpens our focus on the core Cracker Barrel brand and is expected to improve profitability.”
Cracker Barrel expects revenue for fiscal year 2026 and adjusted EBITDA results to meet or exceed the top end of its previous guidance. The company had previously forecast revenue between $3.27B and $3.3B and adjusted EBITDA between $120M and $125M.
Maple Street Biscuit Co. was founded in 2012 in Jacksonville, Florida, and purchased by Cracker Barrel for $36M in 2019, according to FSR. The fast-casual concept had 28 locations at the time of the deal.
Cracker Barrel announced plans to reconfigure Maple Street Biscuit Co.’s business model in May 2024 and then closed 14 underperforming locations in September of last year.
Biscuit Belly was founded in 2019 and has around 20 locations in nine states, according to its website.
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