Cracker Barrel learns to lighten up

by Monica Watrous
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LEBANON, TENN. — For a restaurant chain famous for “rich, fried and heavy” food, buttering up to the better-for-you crowd takes time and money. In the case of Cracker Barrel Old Country Store, Inc., launching its Wholesome Fixin’s menu of lower-calorie options in August required a couple years of planning and millions of dollars in training and advertising expenses.

But the investment may pay off for the company, which said during a Sept. 18 earnings call with financial analysts that it is already pleased with the rollout and its reception from customers.

“This is really the first sort of substantive change to our core menu in 10 years, I would guess,” said Sandy Cochran, president and chief executive officer. “The difference between this and our L.T.O.s is that those, obviously, we do five a year, but this was broader in terms of the number of items and designed to go on the menu.”

Billed as “homestyle meals with a lighter twist,” the menu includes 10 meals under 600 calories, with such breakfast options as multigrain french toast with fruit and a honey citrus yogurt sauce; egg substitute with turkey bacon or turkey sausage, fruit and tomato slices; a yogurt and granola parfait; and egg and cheese sliders on whole-wheat flatbread with fruit. For lunch or dinner, calorie-conscious diners may order a grilled chicken salad, a grilled pepper sirloin, spice-rubbed pork chops, pecan-crusted catfish and buttermilk oven-baked chicken.

“Over two years ago we identified better-for-you as a need that we wanted to focus, on and since then we’ve been introducing a variety of items like our refreshed salad category and additional sides, which include more fresh ingredients,” said Chris Ciavarra, senior vice-president of marketing. “The third phase of that focus has been Wholesome Fixin’s. … We view this as a long-term move to help broaden consideration for visits, and as a reminder, close to 50% of the people in the markets we operate use us once a year or more often. So, when we spoke to those guests they told us that they’re restricting some of their visits because they perceived our foods as rich, fried and heavy. We worked to build a statement to address this by providing that guest with more options.”

Following tests in 60 stores this spring, the company has tweaked its offerings and invested $1 million in training “every single cook and grill cook and server and manager” on the new items.

“In terms of the items, the preparation is not dissimilar,” Ms. Cochran said. “There’s a number of proteins that we do on the grill. We may put, for example, on the chicken, it’s a buttermilk kind of crust on it that’s been baked. Breakfast, it’s a number of egg items but the sides are fruit and cheese grits and maybe turkey bacon versus our more traditional sides of biscuits and traditional bacon and so on. So, there is a lot of similarity in terms of the preparation. We wanted to be sure we got it right.”

In addition, Cracker Barrel added four healthier side items as part of its standard offerings: steamed broccoli, mixed seasonal vegetables, cheese grits and fresh fruit.

“The results are early, but we’re pleased with our guest reception of Wholesome Fixin’s, and our operation teams’ great execution of this rollout,” Ms. Cochran said. “We look forward to the longer-term impact Wholesome Fixin’s will have on addressing guest needs by providing lighter, fresher options.”

For the year ended Aug. 2, the company’s net income increased 14% to $117,265,000, equal to $4.95 per share on the common stock, from $103,081,000, or $4.47, during the previous fiscal year. Sales were $2,644,630,000 for the year, up 3% from $2,580,195,000 during the prior year.

Net income for the fourth quarter was $34,303,000, or $1.44 per share, down 1% from $34,696,000, or $1.49, during the same period a year ago. Sales for the quarter dropped 4% to $674,101,000 from $700,010,000 during the fourth quarter of fiscal 2012.
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