Tariffs on China are taking a bite out of Cracker Barrel's gift shop business
President Donald Trump's tariffs have part of Cracker Barrel's business over a barrel.
Cracker Barrel diners usually walk through the shop, which sells everything from rocking chairs to skillets featuring Dolly Parton's likeness, on their way into and out of Cracker Barrel's restaurants. The restaurant chain sources roughly one-third of those products from China, CEO Julie Masino said during an earnings call on Thursday.
The number is higher when counting China-made products that Cracker Barrel buys from US-based suppliers, the CEO said. She did not say what share of the stock those items account for.
As a result of tariffs, Cracker Barrel expects a $5 million hit to its EBITDA — a measure of profitability — next quarter, CFO Craig Pommells said. The chain expects EBITDA for its 2025 fiscal year of between $215 million and $225 million.
Like many retailers, Cracker Barrel has worked to limit the cost of tariffs by negotiating with its suppliers, finding new sources of products, and rethinking its prices, Masino said.
"The teams have been thinking about tariffs for months," she said on the call.
At the same time, Cracker Barrel has been planning changes to its gift shops as part of its broader business strategy, Masino said.
Last year, after Cracker Barrel reported a net loss and lower foot traffic, Masino said the chain's restaurants were "not as relevant as we once were." Cracker Barrel has started a three-year plan to turn around results, including new restaurant formats and menu items.
On Thursday, Masino said that Cracker Barrel was reevaluating the product selection at its gift shops as part of that turnaround plan. The company is also reconsidering when it brings in seasonal items, such as Halloween and Christmas decorations, she said.
"There have been a couple of key things that the tariff situation has actually enabled us to accelerate," Masino said.
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