Release Date: December 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cracker Barrel Old Country Store Inc (CBRL, Financial) reported positive comparable store sales for the second consecutive quarter, outperforming the Black Box Casual Dining Industry by 290 basis points.
- New menu items, such as the Hashbrown Casserole Shepherd's Pie and Pot Roast, have been well-received by guests, contributing to improved traffic trends, particularly during dinner.
- The company's Cracker Barrel Rewards program is driving incremental sales and traffic, with over 6 million members showing higher spending and visit frequency.
- Operational metrics have improved, including a 17 percentage point improvement in hourly turnover and enhanced guest satisfaction scores.
- The company's strategic transformation plan is on track, with initiatives like menu enhancement and store remodels showing early positive results.
Negative Points
- Retail revenues decreased by 0.8% compared to the prior year, with declines in decor and toys categories.
- The company faced headwinds in the retail sector, which remains challenging due to discretionary spending cuts by consumers.
- There was a $9.3 million headwind from atypical costs, including increased workers' compensation and general liability reserves, impacting adjusted EBITDA.
- The company expects a $6 million unfavorable impact in Q2 related to the timing shift of gift card breakage.
- Despite positive sales trends, the company anticipates elevated adjusted G&A expenses in fiscal 2025 due to strategic transformation investments and normalized incentive compensation.
Q & A Highlights
Q: Can you provide more details on the performance during the second quarter to date, particularly around Thanksgiving?
A: Craig Pommells, CFO, noted that Thanksgiving is a crucial week for Cracker Barrel, especially with their heat-and-serve business. The company was pleased with Q2's performance so far. They made significant changes to improve guest and employee experiences and profitability, emphasizing dine-in occasions, which has been successful.
Q: Could you elaborate on the impact of the loyalty program on sales and traffic?
A: Julie Masino, CEO, highlighted that the loyalty program has over 6 million members, who visit more frequently and spend more than non-members. The program has been successful in driving incremental sales and traffic, with a focus on retail spending through targeted offers.
Q: What are the expected benefits from the back-of-the-house efficiency efforts?
A: Craig Pommells, CFO, explained that initial benefits will primarily be seen in labor productivity and improved employee experience. The initiative is part of a multiyear plan aiming for $50 million to $60 million in structural cost savings.
Q: How is the retail business performing, and what are the expectations for the holiday season?
A: Julie Masino, CEO, stated that despite industry headwinds, Cracker Barrel's retail business remains a key differentiator. The company is managing inventory well, and margins are up. They launched a new promotion, "Seasons of Savings," which is resonating with guests. The company is optimistic about capturing last-minute holiday shoppers.
Q: Can you clarify the impact of gift card breakage on financial results?
A: Craig Pommells, CFO, clarified that the $6 million gift card breakage benefit is held at the corporate level and does not impact same-store sales. It contributed to total company sales and EBITDA for the quarter but will be offset in Q2.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
