Cracker Barrel Old Country Store Inc. has eliminated 60 management and staff positions in an effort to reduce corporate costs amid increased commodity pricing and challenged sales for the operator of 603 family-dining and retail restaurants.
Most of the affected employees work in the company’s home office in Lebanon, Tenn. Fifty-five positions will be eliminated, with five positions that remained unfilled, the company said in a statement Friday.
Michael A. Woodhouse, Cracker Barrel chief executive, said the “difficult decision” would improve the company’s cost structure.
“Our customers continue to face a challenging economic environment, and our company will continue to face commodity cost increases next year,” Woodhouse said in a statement. “We believe that the actions announced today will generate annual pretax savings of approximately $10 million, improve our organizational effectiveness, and help position our company for continued success,” he said.
The layoffs cut across the board, affecting support staff, district managers and even the vice-president level. All affected employees will receive severance pay and outplacement assistance, the company said.
“The changes announced today do not affect any store positions. With our continued new store growth, we have added over 1,200 store positions this year and expect to continue adding new stores and new jobs in future years,” Woodhouse said.
The company plans to open 11 new restaurants this year.
Earlier this week, Cracker Barrel closed a refinancing deal that involved entering into a five-year $750 million credit facility. The multi-bank refinancing was comprised of a $250 million term loan and a $500 million revolving line of credit.
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Cracker Barrel estimated that severance and other charges related to the layoffs will lower income from operations in the fourth quarter between $4 million and $5 million, and reduce net earnings by between 14 cents and 17 cents per share. Prior to the adjustments, Cracker Barrel had said it expects to earn between $3.80 and $3.90 per share for the full year.
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