Cracker Barrel’s same-store sales remained mostly flat last quarter. | Photo: Shutterstock.
Cracker Barrel on Thursday reported same-store sales grew 0.4% in the company’s fiscal fourth quarter ended Aug. 2, driven entirely by higher prices as customer counts continue to fall, while earnings fell below analyst expectations.
But the highwayside family-dining chain believes it is showing progress in its comeback from a tough, post-pandemic period. Sales appeared to improve in August and into September, executives suggested on Thursday.
“We think the work we’re doing is working,” CFO Craig Pommels told analysts on Thursday, according to a transcript on the financial services site AlphaSense.
Cracker Barrel hired Julie Felss Masino to be the company’s CEO and then in May launched a massive, $700 million transformation amid steep declines in customer traffic as prior marketing efforts failed to gain traction.
The stakes for the chain are key, as longtime activist Sardar Biglari is once again launching a campaign for seats on the company’s board.
Cracker Barrel’s efforts to revitalize the chain include menu improvements, including several new offerings and limited-time offers. Some of those offers are designed to improve its value proposition, a key element given consumers have been cutting back on their dining frequency in reaction to generationally high inflation.
The company implemented a more sophisticated pricing strategy, with stores pricing based on costs at those specific restaurants along with the willingness of customers at those stores to pay higher prices.
The chain moved 150 stores into a higher pricing tier, for instance, while 70 stores moved to a lower tier. Cracker Barrel also increased prices in August. But, Masino said, “we have actually seen an improvement in our value scores” after the price hike.
Customer demographics have remained the same so far this year. Cracker Barrel has been losing lower-income customers, those making $60,000 per year or less, though Masino said it has seen some improved results from older customers.
The company has also focused on improving operations, which typically takes longer to yield results but which are key in keeping customers returning. The company invested in more labor hours to improve service. Turnover improved in the quarter. “Seat-to-eat times,” a key metric in the full-service world, improved by 7%.
“This will translate to increased visits over time,” Masino said.
The company is also working on sprucing up its restaurants. The company has remodeled 35 parking lots, updated 30 back-of-house and 30 front-of-house floors and repainted the exterior of another 30 stores last quarter and so far in the current period.
Cracker Barrel’s initial investments are targeted at areas that it believes will have the most impact on customer and employee experiences. “Store design and atmosphere are critical to the guest experience and to position us to win in the near and long term,” Masino said.
The company is also testing a lower cost remodel option in four stores, each of which have had sales and traffic growth since their remodels.
Cracker Barrel is also putting some hopes behind its loyalty program, which has 6 million members to date. Members visit 50% more often and spend 10% more when they do. Masino said that the program has provided “robust guest data and insights” so far.
“We’re excited to really understand the cohort better,” Masino said. She said the company hasn’t spent time looking at members demographically, but is “thinking about their behavioral spending and using that to test and learn ways to drive behavior.”
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