Cracker Barrel Sells Assets to Cut Debt and Boost Profits
In a strategic move to reduce debt and enhance profitability, Cracker Barrel is divesting its real estate by selling the Maple Street Biscuit Company brand.
On Monday, the southern-themed chain announced it sold the Maple Street assets along with 35 locations to Biscuit Berry LLC. As a result, Cracker Barrel will shutter its remaining 16 Maple Street locations.
Additionally, the company has entered a sale-leaseback agreement for 26 of its own locations, generating about $77 million in net revenue. This arrangement allows Cracker Barrel to continue its operations by leasing back the properties from the new owner after the sale.
Julie Masino, the President and CEO of Cracker Barrel, emphasized in a statement that these efforts illustrate their commitment to managing the business and its finances effectively. The goal is to set the stage for long-term success and increased value for shareholders.
Masino further noted, “Our sale-leaseback transaction enables us to effectively reduce our debt while realizing profits from a portion of our properties at favorable valuations.”
The sale of the Maple Street brand, she mentioned, will sharpen Cracker Barrel’s focus on its core operations and is anticipated to positively impact profitability.
Biscuit Berry, which currently operates just 15 stores, sees this partnership as a chance to accelerate its growth. Plans are in place to transform the acquired Maple Street locations into Biscuit Berry outlets over the next 18 to 24 months, starting in areas like Cincinnati and Richmond, Virginia. This deal will increase Biscuit Berry’s store count significantly, from 15 to over 60 by the end of 2028.
Co-founder and CEO of Biscuit Berry, Chad Coulter, expressed excitement about the acquisition, stating that the geography and team associated with Maple Street were key factors that drew their interest.
Maple Street, interestingly enough, contributed less than 2% to Cracker Barrel’s total annual revenue. The company forecasts that this sale will enhance adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) starting in fiscal 2027.
However, Cracker Barrel does anticipate incurring non-cash charges related to exiting Maple Street, projected to be between $37 million to $39 million. Additionally, it expects to face cash costs ranging from $6 million to $8 million.
This decision comes as Cracker Barrel grapples with backlash over proposed changes to its branding last summer, which included dropping “oldtimer” from its logo — a move that didn’t sit well with many customers.
Interestingly, the company had to backtrack on these changes after receiving substantial customer complaints, signaling a need for careful management of customer relations going forward.
As it stands, Cracker Barrel operates around 660 locations across 43 states, and this latest maneuver appears to be a crucial step in a larger strategy to stabilize and grow the brand amid changing market conditions.
