With about 40 percent of its customers nonlocal travelers, Cracker Barrel Old Country Store Inc. was well positioned to attract more motorists, fueled by lower gas prices, during its first quarter, executives said Tuesday.
For the Oct. 31-ended first quarter, Lebanon, Tenn.-based Cracker Barrel reported that net income rose 25.3 percent, to $34 million, or $1.42 per share, from $27.2 million, or $1.14 per share, in the prior-year quarter. Revenue rose 5.3 percent, to $683.4 million, from $649.1 million the same quarter last year.
Same-store restaurant sales increased 3.3 percent during the quarter, with traffic rising 0.8 percent from the same period a year ago. Same-store retail sales rose 6.1 percent. Average check increased 2.5 percent.
“Gas price really speaks to disposable income from consumers,” Sandra B. Cochran, Cracker Barrel’s president and chief executive, said in a conference call Tuesday with analysts. “Certainly during the quarter we saw the benefit of lower gas prices, and would hope to see continued benefit if gas prices stay low.”
Gas prices are at their lowest point since Nov. 4, 2010, the American Automobile Association reported Monday. AAA said the national average price for regular unleaded gasoline has decreased for 60 consecutive days, reaching a price of $2.81 per gallon. That is seven cents per gallon less than a week ago, one quarter less than a month ago and 46 cents less than one year ago. During the 2009 Thanksgiving holiday, the national average price was $2.63 per gallon.
Cochran emphasized that Cracker Barrel saw its sales more closely correlate to the number of consumer miles driven than to gas prices alone.
“Most restaurant concepts see a positive sales impact from lower gasoline prices, as it puts additional disposable income in the consumer’s wallet,” Lawrence E. Hyatt, Cracker Barrel’s chief financial officer, told analysts.
Cochran added that Cracker Barrel, with most of its 634 locations on major thoroughfares, had positioned itself well in the quarter to capture increased travel. Cracker Barrel puts an emphasis on marketing through billboards, which Cochran said was a competitive advantage for brand.
In addition, Cracker Barrel was able to capture traffic with its
highly differentiated menu that offers value and variety, Cochran said.
The company is also proceeding with its initiative to optimize average guest checks through the implementation of geographic pricing tiers, which it has been testing for several quarters, Cochran said. Systemwide, the average menu price increase for the quarter was about 2.1 percent, the company reported.
The company said it plans to open six to seven new locations this fiscal year, which was reflected in Cracker Barrel’s increased earnings guidance.
Executives said they now expect total fiscal 2015 revenue of about $2.8 billion, an operating income margin of between 8 percent and 8.5 percent, and earnings per share of between $5.95 and $6.10. They said they expect same-store sales for restaurants and retail to be in the range of 2.5 percent to 3.5 percent.
Cracker Barrel has locations in 42 states.
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