Cracker Barrel Old Country Store Inc. will offer a trio of discounted limited-time dinner offerings to appeal to consumers increasingly cautious about spending, company executives said Tuesday.
Executives at the Lebanon, Tenn.-based family-dining chain, in a call with analysts after releasing second-quarter earnings, also revealed more details about the company’s soon-to-open fast-casual Holler & Dash concept, expected to debut later in the spring near Birmingham, Ala.
On Tuesday, the company reported income for the second quarter ended Jan. 29 grew 2.3 percent to $48.2 million, or $2.01 a share, from $47.2 million, or $1.96 a share, in the same quarter a year ago. Excluding a tax credit and other special items, earnings were $1.91 per share. Revenue in the quarter grew 1.1 percent to $764 million, from $756 million in the prior year.
Same-store store restaurant sales increased 0.6 percent in the quarter, and same-store store retail sales increased 2.6 percent, the company reported.
“As we moved into the second quarter, the consumer and economic environment remained challenging, as reflected in our traffic and sales in November and December,” said Sandra Cochran, Cracker Barrel president and CEO, in a post-earnings call with analysts.
Despite those consumer pressures, sales on Thanksgiving 2015 set a new record high for a single day, she said, and the company in a few units tested the offer of a limited number of standard menu items to ease operational complexity.
To improve sales in the challenging environment, Cochran said management is focused on reinforcing Cracker Barrel’s value position.
“To accommodate the price-sensitive consumer in a period of increasingly competitive promotions and discounting,” she said, “our spring promotion will feature three limited-time-only offerings at an accessible dinner price point of $7.99, each served with two sides and bread.”
She said Cracker Barrel believes the three LTOs will complement the core-menu Country Dinner Plate category. Christopher Ciavarra, Cracker Barrel senior vice president of marketing, said the LTOs are being offered at about $1 discount from typical entrée prices.
The company is leveraging the strengths of the Cracker Barrel brand with the new Holler & Dash concept, Cochran said, “while providing a new type of guest experience.”
Cochran said Holler & Dash, “with its biscuit-inspired menu that pays tribute to the South in an innovative and modern way,” would help Cracker Barrel extend its reach into urban cores and attract new audiences. The first Holler & Dash will open within the next month, she said.
“While we are excited about the potential for this new brand,” Cochran said. “I want to emphasize [that] we do not expect it to have a meaningful impact on our financial results for the next one to two years.
Cracker Barrel’s first “fusion” restaurant, which opened last June in Morganton, N.C., is being used as a template for future development, Cochran said.
“We continue to apply selected learnings from the fusion store to our base business,” she said. “For example, we have completed the rollout of a new food processor to all our stores, which we believe will result in a labor savings of about three hours per store per week.”
Cracker Barrel also raised its guidance for the fiscal year to reflect expected moderation in food commodity prices and the anticipated benefit of the Work Opportunity Tax Credit. The company said it expects to report increases in same-store restaurant sales and comparable store retail sales in the range of 1.5 percent to 2.5 percent. It projects food commodity inflation of about 1 percent for the year.
Cracker Barrel Old Country Store owns and operates 635 locations in 42 states.
Contact Ron Ruggless at [email protected].
Follow him on Twitter: @RonRuggless