Weather hampers holiday season for Cracker Barrel

by Monica Watrous
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LEBANON, TENN. — Extreme winter weather dragged down traffic and sales during the second quarter for Cracker Barrel Old Country Store, Inc. Compared to the prior-year period, comparable store restaurant sales declined 0.6% and comparable restaurant traffic decreased 2.9%.

“Automobile travelers are an important part of our customer base, and they are particularly important to our business during the second-quarter holiday travel season,” said Sandy Cochran, president and chief executive officer, during a Feb. 25 earnings call with analysts. “As a result, we believe the extreme winter weather had a greater impact on our business than many of our competitors. Nevertheless, for the ninth consecutive quarter we outperformed the Knapp-Track index for comparable-store traffic and restaurant sales.”

Menu promotions and marketing strategies during the quarter highlighted the casual-dining chain’s better-for-you offerings, which included a limited-time grilled chicken and vegetable salad, and value options, such as the weekday lunch specials featuring a grilled three-cheese sandwich and green tomato soup. In January, Cracker Barrel added more seasonal items, including a beef and mushroom pot pie, buttermilk chicken sliders and a reduced-calorie Southwestern chicken Caesar salad.

In addition to new menu launches, the company said it plans to expand its licensed retail products, which includes 11 items and extends the Cracker Barrel brand into grocery stores.

“Although the licensing revenue remains immaterial to our P.&L., we’re pleased with the initial reception for this strategy and the sell-through of our licensed product at the grocery stores, especially our CB Old Country spiral ham, which sold well during the holiday season, and our CB Old Country Store brand bacon and lunch meat products, which are ranked high in sales among other nationally recognized brands in their categories,” Ms. Cochran said. “We’ll introduce more new products this year, with five types of deli meats coming in the third quarter.”

For the quarter ended Jan. 31, net income was $37,055,000, equal to $1.56 per share on the common stock, up 5% from $35,168,000, or $1.48 per share, in the prior-year period. Total revenue for the quarter dipped to $698,491,000 from $702,671,000 during the second quarter of the year before.

Net income for the first half of the year advanced 10% to $64,215,000, or $2.70 per share, from $58,360,000, or $2.47 per share, during the same period in fiscal 2013. Total revenues for the six months increased 1.3% to $1,347,632,000 from $1,330,122,000 in the same six months of the year before.

As bad weather continues to weaken traffic, Cracker Barrel said it remains focused on ongoing business initiatives of marketing and menu development, geographical expansion and brand extension.

“As a result of our consistent focus on our long-term strategy and the effective execution of our business priorities, I’m very proud that we’re able to show a solid quarter of strong operating performance,” Ms. Cochran said. “We will remain focused on these key priorities through the remainder of the year.”
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