Cracker Barrel Old Country Store Inc. plans to expand its off-premise platforms along with its new Crafted Coffee offerings in the year ahead, company executives said Tuesday after reporting a 4.1 percent decline in fiscal first-quarter profit.
The Lebanon, Tenn.-based family dining chain said net income for the third quarter ended Oct. 27 declined 4.1 percent to $46.4 million, or $1.92 a share, from $48.4 million, or $2.01 a share, in the prior-year period. Revenue rose 0.1 percent to $710.4 million from $710 million in the same quarter last year.
Cracker Barrel’s per-share earnings exceeded the Earnings Whispers consensus of $1.86, but revenue fell short of the anticipated $720.1 million. At midday Tuesday, Cracker Barrel stock was down 4.5 percent, trading at about $150.19 a share, a decline from Monday’s close of $157.20 a share.
Same-store sales in the first quarter were up 0.2 percent, including a traffic decline of 1.8 percent and an increase in check of 2 percent.
Sandra Cochran, Cracker Barrel CEO and president, said the restaurant-retail brand would continue to focus on everyday value against a backdrop of industry discounting while enhancing convenience, especially in off-premise channels.
“Throughout this year,” she said in an analyst conference call, “we plan to leverage our off-premise platform as we seek to grow market share through catering, individual to-go and the ‘heat and serve’ program.” The company also plans to test multiple delivery options this fiscal year, Cochran said.
Cochran said the heat-and-serve program, which features full meals to go, has been especially popular at the Thanksgiving, Christmas and Easter holidays.
Jill Golder, Cracker Barrel CFO, said that off-premise platforms last year produced 7 percent of the brand’s sales, and that continued in the first quarter. “Off-premise in the first quarter was up over prior year,” Golder said.
Cochran said the results of a 100-store test in the first quarter of a new value platform was promising, which she said was a “prudent” move against a backdrop of heavy industry discounting.
“Coupled with new product offerings, the test featured value messaging across four weeks of local television and in-store advertising,” Cochran said. “We plan to extend the test with additional markets and television weight January through March.”
Cochran said the new Crafted Coffee program, introduced earlier in the fall, was complementing the brand’s breakfast offerings and it would be introduced systemwide by the end of the third quarter.
“We’ve introduced the program in approximately 40 stores, and we’ve been pleased with the results,” Cochran said. “Through everyday feature offerings of iced and flavored lattes and mocha as well as limited time only offerings like a pumpkin latte in Q1 and a peppermint mocha during Q2, we expect the Crafted Coffee program to deliver favorable mix results this fiscal year.”
In guidance for the full fiscal 2018, the company said it expected same-store-restaurant sales to rise between 2 percent and 3 percent and same-store retail sales to be flat.
The economic environment for restaurants remains challenging, Cochran said.
“We continue to believe that our guests are anxious,” she said. “They are anxious about a variety of things. It depends on where they live and how old they are and what the pressures are. So, whether it’s getting a job or keeping a job or affording their health care needs or affording retirement, they continue to struggle against a backdrop with a lot of uncertainty.”
As of Oct. 27, Cracker Barrel had 647 Old Country Store locations in 44 states. The company added two new fast-casual Holler & Dash locations in the quarter, bringing the total for that brand to six.
For fiscal 2018, the company forecast opening eight or nine Cracker Barrel stores and three new Holler & Dash units.
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