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Cracker Barrel, a US old-fashioned restaurant chain, cut its sales outlook for its fiscal year as it continues to recover from a social media controversy over an attempt to modernise its logo.

The company, whose restaurants are known for serving Southern-style comfort food, reported sales fell more than expected in its most recent quarter, sending its shares down about 10 per cent in after-hours trading on Tuesday.

“First-quarter results were below our expectations amid unique and ongoing headwinds,” chief executive Julie Masino said. “We have adjusted our operational initiatives, menu and marketing to ensure we are consistently delivering delicious food and exceptional experiences.”

Cracker Barrel in August changed its “Old Timer” logo that featured an elderly man leaning against a wooden barrel as a way to modernise the brand and attract new customers. But the shift ignited a social media backlash that prompted accusations that the company was engaging in “woke” rebranding.

US President Donald Trump weighed in, saying in a Truth Social post that the restaurant chain should go back to the old logo and “admit a mistake”.

Management quickly reverted to the old logo but the controversy has stuck: sales continue to fall and the company’s share price is down by about half this year.

Activist investor Sardar Biglari launched a proxy campaign this year urging shareholders to vote against the re-election of Masino, alleging that her tenure had been marked with “highly publicised mis-steps”. The chief executive retained her role following a November vote.

Cracker Barrel’s fortunes have diverged from those of American Eagle Outfitters. The apparel retailer’s ads over summer featuring actor Sydney Sweeney dragged it into the “culture wars” but it was defended by Trump. Last week, the company boosted its outlook, helped in part by the success of its marketing campaign featuring the starlet.

The absence of a “Trump bump” in sales has left Cracker Barrel exposed to the sort of challenges facing other American restaurant chains, as cash-strapped consumers skip dining out amid high prices and concerns about job security. Chipotle lowered its sales forecasts for the third time this year as it noted that the chain lost diners to grocery stores.

Cracker Barrel cut its full-year outlook and now expects annual revenue to be between $3.2bn and $3.3bn, compared to previous guidance of $3.35bn to $3.45bn: management told analysts they expect weaker customer traffic and a higher level of discounting. It also downgraded its forecast for adjusted earnings before interest, taxes, depreciation and amortisation to between $70mn and $110mn, lopping $80mn off each end of its earlier projection.

The outlook downgrade accompanied the group reporting a 5.7 per cent drop in revenue to $797.2mn in the three months that ended October 31, owing to a fall in traffic. That missed Wall Street’s expectations for revenue of $801mn.

It swung to a first-quarter net loss of $24.6mn, weighed down by items including impairments related to store closures and company restructuring costs.

Markets have priced in a 90% chance of a rate hike by the Bank of Japan this month, shifting attention to how the central bank signals its longer-term policy path.

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MUFG is among top Japanese players in the foreign exchange market and the largest owner of Japanese government bonds among major banks.

“If the BOJ fails to anchor expectations for further rate hikes beyond the next and the government boosts spending to appease voters frustrated with inflation, the yen could weaken further,” Hiroyuki Seki, the head of MUFG’s Global Markets Business Group, told Reuters in an interview.

“That could re-accelerate import costs, creating a negative spiral of inflation and currency depreciation,” he said.

Despite narrowing interest rate differentials with the United States, the yen has remained weak around 155 per dollar, partly reflecting market expectations that Prime Minister Sanae Takaichi’s reflationary stance could limit further BOJ tightening.

Seki stressed that eliminating Japan’s extremely low real interest rates was essential.

“The BOJ needs to move early and steadily toward monetary normalization to preempt a vicious cycle where insufficient tightening allows yen depreciation to push inflation even higher,” he said.

Beyond the potential December hike, Seki expects the BOJ to follow a gradual normalization path, raising rates by 25 basis points roughly every six months, provided economic and price trends evolve in line with the central bank’s projections.

The so-called terminal rate – the level at which the tightening cycle is expected to end – is projected at 1.25%-1.5% by mid-2027, though risks are skewed higher if inflation proves sticky, he said.

The BOJ has released estimates suggesting Japan’s nominal neutral interest rate – one that neither cools nor overheats the economy – lies somewhere between 1% and 2.5%.

On MUFG’s Japanese government bond strategy, Seki said the bank has been cautiously rebuilding positions since the benchmark 10-year yield rose above 1.65%.

“If the yield exceeds 2%, we plan to accelerate the pace of rebuilding, mainly on 10-year bonds, in line with higher interest rates,” he said. MUFG has substantial capacity for purchases given its currently restrained risk exposure, he added.

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