As Cracker Barrel battles the labor shortage, same-store sales declined 3.1 percent in April compared to 2019, after dropping 8.5 percent in March and 16.2 percent in February. Cochran said through May, the chain’s performance has been choppy. It began with a strong performance on Mother’s Day—both dine-in and off-premises—but sales softened the past few weeks. Cracker Barrel believes some of that is related to the shift of Memorial Day to later in the month and the Colonial Pipeline’s impact on traveling.
Meanwhile, other casual-dining brands such as Applebee’s, Texas Roadhouse, and Outback have seen positive comps through April. Cochran attributed Cracker Barrel’s slower pace to the pressure on the breakfast daypart and the slow recovery in travel. But the CEO is optimistic that both of those will take a positive turn in the coming months.
“In general, we are looking forward to families traveling this summer, and to people getting back to their normalized routines in terms of work, which we think will have a positive impact on our breakfast business,” Cochran said.
Off-premises increased 144 percent compared to Q3 2019, and represented roughly 23 percent of sales. Within the off-premises program, 55 percent is takeout/curbside, 25 percent is delivery, and 20 percent is catering. In April, off-premises sales volumes actually outperformed the prior year when dining rooms were closed. Previously, Cochran said Cracker Barrel could retain at least 50 percent of the growth its seen in off-premises channels. Since making that statement, off-premises has performed so well that the brand is willing to update that guidance to at least 60 percent.
Adding an incremental boost will be Cracker Barrel’s virtual brand, Chicken 'n Biscuits. The company is expanding the test to 19 locations this week.
“We've been working on optimizing the menu and the offering for the Chicken 'n Biscuits brand, and gaining some operational learnings in the last couple of months,” said CMO Jennifer Tate. “ … We do believe Chicken 'n Biscuits has a simple, but winning combination, because it's very broadly appealing food—hand-battered, hand-breaded fried chicken and tenders, just our top-selling sides and scratch-made biscuits, combined with the fact that the menu is very streamlined, which enables us to deliver on guest expectations for speed. So because of that we think that this brand may launch in at least half of our system, pending the results of a test being successful.”
Another major sales initiative is the beer and wine program, which was in 405 stores at the end of Q3. Cracker Barrel expects the program to reach about 600 stores by the end of Q1 2022. Six of the past seven states that added beer and wine have lifted the mix. Markets like the Northeast and Texas are running mixes that are doubling the average of states that rolled it out earlier. Cracker Barrel’s is optimistic that beer and wine can reach 2 percent of dine-in sales.
For the fourth quarter, Cracker Barrel projects 5 percent commodity inflation and 3 percent to 3.5 percent wage inflation on a constant mix basis. The brand plans to take 3 percent pricing, but the chain said that won’t offset the high commodity and wage inflation environment. As the brand moves forward with its pricing strategy, Cochran said it’s important to keep a solid balance.
“We want to be very careful that we understand which of these pressures are short-term versus long, and being very mindful that our brand and our guest very much values value, and that we want to be careful about not disrupting our reputation and commitment to offering value on our menu,” Cochran said.
The Company reported total revenue of $713.4 million in Q3, representing an increase of 64.9 percent year-over-year and a decrease of 3.5 percent compared to 2019. Net income was $33.5 million, or 4.7 percent of total revenue, operating income was $52.5 million, or 7.4 percent of total revenue, and EBITDA was $82.8 million, or 11.6 percent of total revenue.
Maple Street, Cracker Barrel’s fast-casual growth driver, is seeing sales volumes remain well above 2019 levels. On an annualized basis, the chain’s Q3 performance would result in AUVs over $1 million. Cochran said the plan is to reach double-digit unit growth in 2022 through expansion in new and existing markets.