Increased vacation travel this summer likely had a positive impact on Cracker Barrel Old Country Store Inc.'s fourth-quarter results, which the company is scheduled to report next month, according to an analyst.
Brad Ludington of KeyBanc Capital Markets Inc. wrote in a research note Thursday that stable gas prices helped boost summer travel, which would have benefited the family-dining chain's 593 restaurants, the majority of which are located along interstate highways.
Lebanon, Tenn.-based Cracker Barrel will report results from the July 30-ended fourth quarter on Sept. 14.
Gas prices this summer stayed within the range of $2.60 to $2.80 per gallon nationally, which is slightly above the price of gas last summer but well below the nearly $4.00-per-gallon prices seen in 2008, Ludington said.
He pointed to data from the U.S. Department of Transportation showing a 1-percent uptick in the number of urban miles traveled in June and information gathered from various turnpike authorities indicating that the number of passenger turnpike miles driven increased 2.7 percent in June and 4.9 percent in July.
“We view this as a positive sign for CRBL, which we estimate has 83 percent of stores located on interstate highways, and would benefit from an increase in travelers stopping at Cracker Barrel restaurants,” Ludington said.
He added that travelers are more likely than local residents to purchase items from Cracker Barrel's retail stores.
With gas prices remaining stable so far in August, Cracker Barrel likely will continue to benefit from increased travel through Labor Day, Ludington said.
Separately, he noted that a recent recall of shell eggs over salmonella fears likely will have little impact on Cracker Barrel's sales.
“According to the United Egg Producers, the recall represents less than 1 percent of U.S. annual egg production, which we estimate translates to roughly four days supply," he said.
"Additionally, we have not heard much anecdotally about consumers skipping egg dishes in stores, and we believe the restaurants have been very proactive in addressing customer concerns,” he added.
Contact Elissa Elan at [email protected].
