Cracker Barrel is trying to offset its recent traffic challenges brought on by inflation and difficulties in getting a major demographic (65+ adults) back in the door post-COVID by raising prices.
According to the company’s latest earnings release for the fourth quarter ended July 29, Cracker Barrel raised prices about 7% as wage as commodity inflation and gas prices continue to eat away at the casual dining company’s bottom line. As a result of taking price, same-store sales increased 6.1% driven by ticket growth. Despite the pricing increase (and continued plans to take pricing next fiscal year as necessary), Cracker Barrel wants to continue offering affordable options for their guests and balance the company’s fiscal needs with making sure guests feel comfortable.
“There is so much thoughtfulness that goes into pricing strategy,” CEO Sandra Cochran said during Tuesday’s earnings call. “We moved away from two modest price increases a year to more frequent, smaller increases that we monitor. We are being thoughtful and careful to ensure that even after price increases, that guests can find value on the menu.”
Cracker Barrel seem to be having some trouble with targeting specific demographics: Baby Boomers/adults over 65 have historically been a major demographic for the homestyle cooking-focused brand, but they have not been spending as much since pre-pandemic times. The company also saw fewer travelers come through its restaurants’ doors during the summer season, which is usually peak traffic time for the brand known as a pitstop on road trips.
On the flip side, Cochran noted during the call that they’ve been hitting the millennial demographic — many of whom now have growing families — much better, particularly with the company’s refreshed menu and the growing popularity of its wine and beer program.
“We’ve been a multi-generational guest space for quite some time now but we’re seeing increased frequency from younger demographics, where we rank high in food, value and environment,” Jennifer Tate, CMO of Cracker Barrel said Tuesday. “Our build-your-own breakfast and strawberry cheesecake pancakes were intended for this group.”
Moving forward, the company intends to open several Cracker Barrel locations and build the Maple Street Biscuit Company team, while building out a pipeline of stores for the burgeoning brand.
For the fourth quarter, Cracker Barrel’s revenue increased 5.9% to $830.4 million, while same-store sales grew 6.1%. Net income was $33.4 million or $1.47 per share, or an 8.2% decrease compared to prior year quarter net income of $36.4 million or $1.57 per share. Cracker Barrel opened 10 net new Maple Street Biscuit Company units last quarter, with no Cracker Barrel openings or closures, bringing the portfolio net total to 715 restaurants.
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