Revenue Recognition

9 Months Ended

May 02, 2025

Revenue Recognition

Revenue Recognition

7. Revenue Recognition

Revenue consists primarily of sales from restaurant and retail operations. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest, retail customer or other customer. The Company’s policy is to present sales in the Condensed Consolidated Statements of Income on a net presentation basis after deducting sales tax.

Disaggregation of revenue

Total revenue was comprised of the following for the specified periods:

	Quarter Ended				Nine Months Ended
	May 02,		April 26,		May 02,		April 26,
	2025		2024		2025		2024
Revenue:
Restaurant	$	679,341	$	671,328	$	2,113,090	$	2,062,790
Retail		141,806		145,807		502,585		513,585
Total revenue	$	821,147	$	817,135	$	2,615,675	$	2,576,375

Restaurant Revenue

The Company recognizes revenues from restaurant sales when payment is tendered at the point of sale, as the Company’s performance obligation to provide food and beverages is satisfied.

Retail Revenue

The Company recognizes revenues from retail sales when payment is tendered at the point of sale, as the Company’s performance obligation to provide merchandise is satisfied. Ecommerce sales, including shipping revenue, are recorded upon delivery to the customer. Additionally, estimated sales returns are calculated based on return history and sales levels.

Gift Card Breakage

Included in restaurant and retail revenue is gift card breakage. Customer purchases of gift cards, to be utilized at the Company’s stores, are not recognized as sales until the card is redeemed and the customer purchases food and/or merchandise. Gift cards do not carry an expiration date; therefore, customers can redeem their gift cards indefinitely. A certain number of gift cards will not be fully redeemed. Management estimates unredeemed balances and recognizes gift card breakage revenue for these amounts in the Company’s Condensed Consolidated Statements of Income over the expected redemption period. Gift card breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote, and the Company determines that there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction.

The determination of the gift card breakage rate is based upon the Company’s specific historical redemption patterns. The Company recognizes gift card breakage by applying its estimate of the rate of gift card breakage over the period of estimated redemption. For the quarter and nine months ended May 02, 2025, gift card breakage was $1,357 and $10,909, respectively. For the quarter and nine months ended April 26, 2024, gift card breakage was $292 and $8,898, respectively.

Deferred revenue related to the Company’s gift cards was $85,820 and $84,854, respectively, at May 02, 2025 and August 02, 2024 and is included in other current liabilities on the Condensed Consolidated Balance Sheets. Revenue recognized in the Condensed Consolidated Statements of Income for the nine months ended May 02, 2025 and April 26, 2024 for the redemption of gift cards which were included in the deferred revenue balance at the beginning of the fiscal year was $30,047 and $31,731, respectively.

Loyalty Program

The Company’s customer loyalty program, Cracker Barrel Rewards, allows members to earn points (“pegs”) for each qualifying purchase in store or online. Pegs earned are then converted to rewards upon reaching certain thresholds. These rewards may be redeemed on future restaurant or retail purchases in store or online.

The estimation of the standalone selling price of pegs and other rewards issued to customers involves several assumptions, primarily the estimated value of the product for which the reward is expected to be redeemed and the probability that the pegs or reward will expire. These inputs are subject to change over time due to factors such as increased costs or changes in customer behavior.

The Company defers a portion of the revenue related to the pegs earned at the time of the original transaction based on the estimated value of the item for which the reward is expected to be redeemed, net of estimated unredeemed pegs. Pegs expire after twelve months. Revenue is recognized for these performance obligations upon redemption of pegs or rewards earned by the customer. As of May 02, 2025 and August 02, 2024, deferred revenue related to the loyalty program was $4,311 and $1,544, respectively, and is included in other current liabilities on the Condensed Consolidated Balance Sheets.