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, 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, 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, and the company expects to complete a system-wide rollout of the new off-premise platform by the end of the quarter.
|Sandra Cochran, CEO of Cracker Barrel|
“This platform offers guest traditional Cracker Barrel home style meals for small groups of six to 10 or large groups of 18 of 24,” Cochran explained. “And these offerings can be ordered online 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.”
She added that Cracker Barrel has additional plans in the works for other off-premise strategies 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,” Cochran noted.
In the value space, Cochran said Cracker Barrel must be more aggressive in the company’s response to consumers’ evolving personal definition of value. She said 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,” Cochran explained. “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.
Value initiatives won’t be limited to the menu. Cochran said Cracker Barrel will improve how the company communicates the affordability, quality and exclusivity of its merchandise offerings.
“So, for example, our children’s apparel assortment will be priced at $19.99 and below which provides our guests with boutique styling at affordable pricing while maintaining our quality standards,” she said. “In addition, we’re working to refresh our assortments regularly to maintain merchandise at affordable prices, ensuring guests can find compelling products at any price point; and we believe this is the right approach to grow our sales gap and to achieve our long-term business growth.”
Finally, the first menu variety initiative at Cracker Barrel will be a new coffee platform that features iced and flavored lattes. Cochran said “…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.”