LEBANON, TENN. — Cracker Barrel Old Country Store, Inc. has three priorities heading into fiscal 2018 — convenience, value and menu variety, said Sandra Cochran, chief executive officer, during a call with analysts on Sept. 13.
The release of the company’s fourth-quarter and full-year earnings results revealed Cracker Barrel had exceeded market expectations on profit, but missed on revenues, due in part to lower comparable store restaurant sales and retail sales. To counter these challenges, Ms. Cochran said the company believes focusing on convenience, value and menu variety will position Cracker Barrel to drive sustainable sales growth in the coming financial quarters.
Starting with convenience, Ms. Cochran said Cracker Barrel will address consumer demand for convenient food items by expanding off-premise offerings. The company tested an enhanced off-premise platform during fiscal 2017 in approximately 100 stores. The results were encouraging, Cracker Barrel said, and the company expects to complete a system-wide roll-out of the new off-premise platform by the end of the quarter.
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| Sandra Cochran, chief executive officer of Cracker Barrel |
“This platform offers guests traditional Cracker Barrel home style meals for small groups of 6 to 10 or large groups of 18 of 24,” Ms. Cochran said. “And these offerings can be ordered on-line or in-store and picked up at the guest’s convenience. We’re launching the program with more than 20 on-tray offerings like our ham, egg n’ cheese casserole or our fresh fruit and yogurt breakfast or the home-made chicken and dumplings or roast beef with gravy at lunch and dinner.”
Cracker Barrel has additional plans in the works for other off-premise strategies, Ms. Cochran said, including special occasion offerings like the Holiday Heat ‘n Serve promotion.
“We believe we can not only take market share in this space, but also position ourselves long term as a key player in off-premise business within the casual dining industry to expand the program into new opportunities,” she said.
In the value space, Ms. Cochran said Cracker Barrel must be more aggressive in its response to consumers’ evolving personal definition of value. The company is testing an enhanced value platform at breakfast, lunch and dinner that anchors an entry-level price point at each daypart.
“So, there will be new product offerings like a loaded macaroni and cheese dinner at a $7.99 dinner price point and a biscuit french toast breakfast, which offers a twist on our current offering to bring something new and unique to our guests for only $4.99,” Ms. Cochran said. “To reinforce our value positioning in the industry, we plan to introduce the new offerings in approximately 100 stores, monitor their results and work to mitigate financial risk by offsetting potential negative trade with check-driving add-ons.”
Cracker Barrel will support the new value initiative with a four-week television promotion in test markets.
Finally, the first menu variety initiative at Cracker Barrel will be a new coffee platform that features iced and flavored lattes.
“We believe the platform will complement the strength of our breakfast all day offering through our check favorability and promote guest perception of variety of menu offerings,” Ms. Cochran said.
Cracker Barrel reported a 7% gain in net income for the fourth quarter ended July 28, while revenue for the period was flat. Net income totaled $53.9 million, or $2.23 per share, compared with $51 million, or $2.12 per share.
Revenue for the fourth quarter eased 0.3% to $743.2 million compared with $745.6 million reported in the year-ago quarter.
Comparable store restaurant sales decreased 0.8%, including a 1.7% decrease in store traffic, which was partially offset by a 0.9% increase in average check. The average menu price increase for the quarter was approximately 1.4%. Comparable store retail sales decreased 4.4% for the quarter.
For fiscal 2017, Cracker Barrel reported total revenue increased 0.5% to $2.93 billion, compared with fiscal 2016 revenue of $2.91 billion. Net income for fiscal 2017 was $201.9 billion, or $8.37 per share, compared with $189.3 billion, or $7.86 per share, reported for 2016.
