Cracker Barrel raises outlook on higher traffic
Feb. 27, 2015
by Monica Watrous
Cracker Barrel's apple cider barbecue chicken is part of the company's Wholesome Fixin's menu.
LEBANON, Tenn. — Mild weather and lower gas prices led to higher traffic at Cracker Barrel restaurants during the company’s recent quarter. Executives also credited such seasonal promotions as apple cider barbecue chicken and triple berry french toast for above-expectations performance.
Net income for the second quarter ended Jan. 30 was $47,163,000, equal to $1.97 per share on the common stock, up 27 percent from $37,055,000, or $1.56 per share, in the prior-year period. Revenue increased 8.2 percent to $755,966,000 from $698,491,000. Comparable restaurant sales rose 7.9 percent for the quarter, driven by a 3.2 percent increase in average check and a 4.7 percent increase in traffic.
“Our seasonal promotions drove positive sales mix versus the prior year quarter, contributing approximately 70 basis points to restaurant sales growth,” said Sandy Cochran, president and CEO of Cracker Barrel Old Country Store, during a Feb. 24 earnings call with financial analysts. “Our second quarter is a busy to-go season for us and as a result has expanded marketing and operational execution. We increased sales of both our seasonal pies and our family sized meals to go by nearly 20 percent during the quarter.”
Beginning mid-March, Cracker Barrel is set to launch its spring promotion of expanded weekday lunch specials, with three new sandwiches paired with soup or salad, and two additions to the light menu.
The company also remains on track to deliver $20 million in cost savings during the fiscal year by improving operating margins and reducing costs.
Net income for the first half of the year advanced 26 percent to $81,187,000, equal to $3.40 per share on the common stock, which compared with $64,215,000, or $2.70 per share, for the comparable period. Total revenue for the six months rose 6.8 percent to $1,439,394,000 from $1,347,632,000.
The company has raised its full-year forecast based on year-to-date performance. Cracker Barrel management now expects to report adjusted earnings per diluted share between $6.40 and $6.50 and total revenue between $2,800,000,000 and $2,850,000,000, reflecting the expected opening of six new stores for the year and projected increases of 3.5 percent to 4.5 percent in comparable restaurant sales.
“The second-quarter guidance does contemplate a deceleration of same-store sales increases as compared to our performance in the first and the second quarters,” said Larry Hyatt, senior vice president and CFO. “Again, particularly our same-store sales performance in the second quarter was driven by comping severe weather in the prior year second quarter.
“Gasoline prices, which bottomed out in the second quarter at cyclical lows, and although they are down on a year-over-year basis have begun to rebound off of those cyclical lows.”
Additionally, recent weather has dampened February sales, leading executives to anticipate slower traffic in the third quarter.
Cracker Barrel’s share price on Feb. 24 closed at $145.81, up 8.6 percent from the previous close.