CBRL - Earnings call transcript Q3 2018 | Cracker Barrel Old Country Store, Inc.

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Operator

Good morning and welcome to the Cracker Barrel Fiscal 2018 Third Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Adam Hannon. Please go ahead.

Adam Hannon

Chad. Thanks, welcome webcast. third and conference fiscal Cracker and call to morning quarter Barrel’s XXXX Good we a XXXX morning, and This issued our quarter our outlook results third for the fiscal press year. release announcing non-GAAP one-time second release liability and which deferred year call, refer the In this quarter. of financial exclude the on for a press measures to tax the reevaluation we occurred this will in to non-cash adjusted net current company’s information prior provides maybe The performance from that its of company company’s more excluding effects the results believes indicative tax while these financial improving periods. that ongoing operating comparability to This information information or prepared to considered financial as with accordance in GAAP. is isolation not intended in for a substitute be GAAP page press The of financials. from release the the reconciliation to last includes the non-GAAP information

morning Senior begin Sandy Vice President of and business the and with Barrel’s Senior and Officer, Jill On financials Cracker will Principal Cochran; review Sandy Hoffman; Wilson. review this President outlook. President Golder; President will CEO, the and Jill Accounting with the Vice Vice and a call are of Marketing, Don CFO, and me Jeff

description control open our uncertainties regarding then furnished operating the or are the Jill, by that summarized to release this as or known statements described results could results expected involve factors information. the and the and our may of many with questions we in events. of which made risks actual and for and reports cautionary management’s Many that detail and differ statements listeners readers the in cause to and from future filed and end of uncertainties Jeff. considering found SEC. forward-looking expectations. in in the will materially press We On call caution and that We affect Don are are at risks in of call, beliefs their are These management the maybe up company’s expectations for Sandy, future results beyond forward-looking statements cases

on except this company turn shared of Sandy President information it, date applicable the and valid no to call maybe the as Barrel’s law. now as Cracker today’s under call Sandy? Finally, update Cochran. is and CEO, undertakes required to over the obligation I

Sandy Cochran

and Adam, trend our comparable third quarter were delivered we sales am announced but above an the inflation our per improvement quarter commodity I margins, restaurant store are businesses. making. both in morning, This operating progress and that we retail positive everyone. we and good again for quarter we with Higher pleased industry previous versus Thanks, to the outperformed morning Sales reflected our and that share initiatives earnings and expenses expectations. pressured related the the

announced We to our in dividend share. regular per also $X.XX quarterly an increase

X years, our dividend last the Over have growth. totaling nearly increased Xx we XXX%

for our the year of dividend declared appropriately our some financial invested dividend review our the capital and to the third our speak we special fourth of our fourth quarter full for I’d returning quarter. to increase our commitment special a does, the the quarter will in in business. plans regular dividend. to Additionally, declaration after like and well our The shareholders reflects but expectations, we have updated before as to as she highlights results Jill

popular return with bowl. yesterday a Cakes believe they X and Southern menu integrated marked ingredients weeks of twist campaign resonated Campfire and Benedict items national both Grits high-quality new time-only of cable flavors Tomato menu. and marketing Sausage, which Maple showcased TV, homestyle Supported infrequent the our users our that of promotion Chicken quarter frequent limited a our Summer an launched we with the menu the these Southern brand. featured Ham included and a and third Bowls, which included by bowl Fried promotion Our new Bacon bowl, Green in-store Gravy n'

entrée Chicken. S'mores Smoky Beef In Sweet our as Glazed dessert, about addition Roasted Brisket new are Beef to excited we our and Campfire and returning several such Breakfast as Campfire favorites our offerings such

rooted Our weeks Campfire advertising. the will along are supported menu marketing digital markets, TV what social guests of weeks new and promotional while promotion. providing Campfire news relevance X new promotion campaign offerings X in our this will last an of love national in The know be featuring and by to with integrated maintain key and and cable billboards

and further grew on on Moving I business, the second we our the from retail year pleased that both quarter. previous momentum versus and sales built prior our to am retail comparable the quarter

are Our team that with continues assembling our compelling do to a guests resonate great unique and that value. assortments job

well Our inspired introduce business items by focused new XXs our XXs, broad returning themes retro XXs, generational and as such to addition favorites, which to in on XXs nostalgic the and performed appeal. theme retail and we had continue collection,

our restaurant we Additionally, of again improved to retail purchasers. conversion guests

The our of peanuts the Crafted Cluster, created for our is favorability. retail drives introduced classic to our was Cluster southern of and and which Goo chocolate with it quality featuring XXXX Coffee flavors rollout a is Latte. in check program caramel, and quarter, signature guest to features higher Nashville initiatives, satisfy is April Goo Turning our are milk continue of familiar that the those part strategic and And Coffee espresso initiative we and favorite specialty and nougat, with completed it both Crafted Goo a hot candy a desire be pleased store. guests’ not the we you multiple cold platform roasted results. help for and Last the Goo delicious beverage drinks in in beverages

menu milk flavors and be part We that with will cracker the future are graham chocolate such menu of Latte promotion. our Campfire S'mores promotions as marshmallow, featuring looking introducing forward to seasonal additional our

our quarter, off-premise initiative, different Heat progress three catering. the which to on individual and make we a encompasses Serve n’ continued reminder, as During To-Go, platforms:

prior part Heat increase business, to been anticipated the the To-Go, success with had and versus be organically Easter coming additional our Serve offering we our have continues Serve it this Because of testing a largely with Mother’s Heat pleased pleased In as of such individual year in significant expand n’ We the have be the the will sales quarters which is with for performance delivery Day. we expanding we we were and program, of occasions occurred to which we growth business. to grow. will in third-party seek as the n’

We also to business. continue build our catering

ham, our are example brown Breakfast breakfast and quarter, includes menu along which and that Bundles, For meat the we casserole Barrel which in complementary offerings casserole, apples. items, biscuits, bundled introduced grits, gravy Classic, such Cracker choice added sawmill fried our with cheese of new hash and egg conveniently the with as or

items will be developed catering to new as catering the X exclusive we weeks begin the testing that will also During that offerings. quarter, in we enhance

further be Additionally, will support in off-premise expanding have delivery been coming and quarters our the program we investing will to initiatives and be in additional we our marketing labor. in-house technology

year investing initiatives, spoken in line our being lost have have this savings a top we cost of year sight not we our of of While initiatives.

We our targeted continue fiscal cost as achieving well for make savings as good to coming additional foundation setting cost progress savings on the XXXX years. the for in

location. expand X core markets. third in including Lastly, our the our Barrels by opened Cracker both new first opening stores footprint quarter, in and California We our developing we continue to

this stores We Carolina was are week which Dash Holler Charlotte, bringing five of XXXX have X, year. in we we opened driving call Award opened And turn quarter a on & last and X proud location top year. line investments to recipients Jill. number a North X help from to quarter one of with Concept accelerating will the over opened that pleased this of we & Holler in remain have the total of and we with last Also, News. In will of total the Dash focused the We that, along these the objectives. with Restaurant plans Nation’s our overall us closing, achieve our place, initiatives. we And that are growth I continued believe Hot

Jill Golder

begin XXXX this $X.XX and third financial thank you, the discussing our for earnings year. like I release, fiscal per In of of then quarter would morning’s income diluted and everyone $X.XX. per we Good Sandy. to our net of compared to third outlook year share $XX.X or the million quarter for fiscal share XXXX performance morning, diluted prior reported by

an to $XXX.X compared million. reported For $XXX.X the million, X% quarter, of we total year of when revenue increase prior of revenue

increased million million. revenue increased retail X.X% to our to restaurant $XXX.X revenue and Our X.X% $XXX.X

X.X% Our of X new driven X.X%. approximately of The the increased store increase restaurant by X.X% the menu Barrel Cracker prior was price Cracker impact retail quarter decreased X.X%. sales average mix revenue positive opening new and total and comparable menu check Holler increases and increase as year quarter. increased X and Barrel restaurant locations location check and a X.X% the since favorable traffic of comparable sales reflected average third in Dash in &

southern driven spring primarily was promotion and favorability goals. menu Coffee featured The which our third mix initiative quarter our by our Crafted

store we and results earnings that impacted quarter on weather call, sales we and February third adversely comparable severe sales traffic in estimate comparable shared by was inclement the As our store X.X%. approximately weather our affected February

within quarter Third primarily stationary store accessories. coming increased and X.X% books with and sales increases women’s comparable retail

goods cost year Moving XX.X% quarter. in prior of on was of sold the in to expenses, quarter XX.X% total total versus the revenue

in of inflation. an higher This commodity mix year. primarily our goods by X.X% were by food the was year On sold cost driven eggs. point impact constant approximately increase of XX and increase XX.X% the a of sales, prior beef, restaurant than increases commodity quarter was prior versus Our pork the the restaurant in driven basis, basis quarter in costs

basis XX.X% increased of the the year’s to goods This higher XX strength prior cycle. this of during primarily retail of XX.X% inventory point year activity as Our to compared was increase was well quarter. retail as in due sold impact promotional cost sales

over quarter in inventories $XXX.X the at prior compared $XXX.X related million $XXX.X million million XX.X% retail in quarter. increased point of revenue in largely Other the store million driven partially year $XXX.X quarter for and end. unfavorability quarter. or at XX.X% was improvement to quarter the of quarter benefits or basis This Labor by compensation restaurant were operating incentive and expenses prior initiatives, end removal, revenue as prior XX.X% with resulting from and basis and million computer revenue in were point was million compared favorability higher expenses programs. capital year Our wages. operating planned expenditures, with the third employee year expenses were XX prior by store result inflation expenses Wage X.X% maintenance related the equipment costs in hourly announced weather offset in This $XXX.X off-premise adverse of items: building our from related the the compared increases higher higher to of other $XXX.X expenses to quarter. several depreciation our growth with increase implementation cost and associated revenue supply year such XX.X% or the of repairs, higher or snow the previously higher of of XX

our versus guidance compared $XX million in our compared revenue the $X.XX of favorability $XX.X with million quarter Within quarter. $X.X season. Store or or versus in to favorable in lower to interest and to incentive to Net the primarily in summer with the previous driven prior prior income basis revenue income marketing quarter expense of line, XX operating million X.X% was the shift prior of third million the or prior for quarter. the other million the of third administrative This busy due in income Operating during quarter operating revenue operating by expenses were approximately million a in $XX.X EPS was G&A compensation. year income of million compared was was quarter. decrease about year the quarter travel support operating was of or of store or or $X.X in revenue of points. XX.X% compared $XXX.X X.X% $XX.X the year by XX.X% year prior quarter. was million the quarter XX.X% expenses revenue $XX.X General million $X.X year fourth of

rate rate was the quarter. third XX.X% in tax to effective compared for an Our prior the year tax XX.X% effective quarter of

to cash the sheet, we with balance million $XXX.X compared at end. our to quarter and prior Turning year million quarter of equivalents fiscal ended $XXX.X the

million was at debt end. $XXX total quarter Our

sales longer provide fiscal that release. in outlook, XXXX XXXX comparable we like would in store will to moving press our information monthly our no fiscal note to I Before starting

respect to risks change today’s uncertainties earnings with in fiscal results With this should mindful and weather, and variability in in due our described reports of such items filed with SEC. outlook everyone menu associated to this shifts the sales be making promotions. the release outlook, as from and as holiday the and our XXXX are timing We monthly marketing

total expect billion. to continue We approximately $X.X revenue of

sales for anticipate year continue We full fiscal of the X% the to comparable in store growth and range restaurant X%.

to expect growth continue store We flat. approximately comparable sales to retail be

increases, in stores for & updated XXXX. increased Barrel expectations reflecting fiscal Dash X X food a Cracker shell related and market the price X.XX% constant stores category basis and well for commodity strong costs January We in be eggs new that’s since eggs mix approximately the exports expect the the fiscal the particularly demand. pricing new beef primarily as to as to commodity Holler for We open year, price now change increases and beef, expect to within underlying related on for fresh to

approximately our fiscal We on compared requirements pricing XX% XX% have locked at for last in XXXX to time our of this year. commodity

We expect depreciation the of for approximately million expense year. $XX

revenue expect enhancing We of our tax to the anticipate approximately the of rate GAAP XX%. fourth incorporates our expenditures for anticipate This and and in on We investments strengthening benefit our is continue brand, expense blended quarter. fiscal and employee approximately quarter to upon sales fourth $X.XX $XXX be we will assumptions million. of that We approximately the the per experience. of to our Taking year and expect $XX income capital effective between full approximately tax into growth to quarter and expectations. account, be XXXX of plan of a modest on these current the will rate approximately guidance per earnings $XX net GAAP total full We with and supporting between the $XX.XX share in occurring now interest in predicated initiatives of anticipate million year trends. million $XX.XX focused now growth a industry will our the We share year margin fiscal earnings operating strategic $XX adjusted expect invest improve we for $X.XX. improvement third that guidance million. of year These X.X% report majority investments these

Campfire of However, And I accelerate trends. the Thank efforts initiatives. sales than start can to our slower our marketing that operator and menu that the so strategic due We May with to much. questions. anticipate take your promotion, the has will over our will been turn very our third we call that, you quarter

Operator

from Longbow Instructions] [Operator will come you. Research. Alton Thank Stump The ahead. question first Please go with

Alton Stump

Good year the ‘XX? any kind recent could over that to pressure don’t am you but ‘XX out course you. just could I the commodity just obviously, see year If of on Thank how want of commodity I full sure ask offer continue the the front, if guidance basket morning. playing you think yet, you full

Jill Golder

Good morning, Alton. This is Jill.

more current talk expectations. So we commodities will about our

quarter, by our in the saw saw As commodity what – prices we peak step really the pork. QX and about quarter. of saw And eggs is determined I a reminder beef a recent at the in And largely our the expecting saw in quarter, are what set up we shell we And dozen. inflation we as per prices said egg most eggs, guess be And guidance, in we as third we in lag, I just this on XX-day so inflation quarter. eggs, again, majority a commodity our as to our somewhat third $X QX. pricing fourth from with we said in look to is similar QX coming are at we shell

So, we seen demand, eye seen And rib believe in price size demand the increase static cycling time. category, is more and this to and Easter. that was that’s have driven. primarily this around and season, we are fixed a beef what pork a at features again around strong expired beef we we especially retail on then some year favorable have roast And last consumer eggs primarily position with been recently due then during aggressive inflation the flock

Alton Stump

assumption in here, seeing you at uptick overall category helpful. one that quick far kind course so just are XQ of are And thinking mentioned guess you, your you trends of over I in modest quarter? follow-up, will think that a then I the we in that that’s least that comments curious see fiscal of Jill. driving any Okay, you what’s evidence and Thank the

Sandy Cochran

this is Alton, Sandy.

fourth correct? is of are So, sales you quarter macro to environment, sort the that referring

Alton Stump

Yes.

Sandy Cochran

appear looks picking up, just of the confidence some knows been fundamentals we saw have is economy certainly may at there broadly as least it and low, everyone consumer unemployment the some is would have high, improve are so the industry health holidays as a strong wages of Well, speaking consumer number spending metrics like sectors in after pent-up are picking in demand up, the QX. improved,

However, the the improved tough. We trend and lot remains dining negative. segment casual is in very still still a the although competition have of overcapacity traffic

early too tell if the trend will little with a sustained. it’s So, the to consumer be

choppiness has could trend the which mentioned Jill QX, start with reflect the As than the softer been some her of May consumer. in comments, in

the trends. watching are We

We feel in that quarter and initiatives will anticipate a got industry have in number in some we the improvement quarter. initiatives. are the We of driving fourth focusing sales the on executing be do fourth there

Alton Stump

Thank you, Joe. and Great. Sandy

Operator

will with go question ahead. Farmer Wells next The be from Jeff Fargo. Please

Jeff Farmer

you. Thank

your you I So catering think Serve, where as currently off-premise you and as I us your where stands or off-premise sales? the you am said curious greatest there three is greatest opportunity just things: To-Go on n’ catering, percent Heat mix update a individual think with your of opportunity could

Sandy Cochran

Well, start Jeff. I will

have less where three would categories and I the think currently the are biggest incremental and to category not we to the we position is biggest is though opportunity believe our grow where individual, I in will So, be catering say where I side.

offering, we sort certain including where support that’s focused in on on we that but and sales delivery to markets number programs managers a so that, in the things. put are And of of

let in seeing metrics category, I and providing. she Jill other the though we speak of any that to growth will So, each are is

Jill Golder

Jeff. Great. Yes, good morning

off-premise Investor are that total Year-to-date, sales growing to sales X.X% And the X% versus of sales our our we three double-digit just and up in categories talked of shared we over growth seeing approximately below Sandy our about. last X off-premise each are XX% year, As of a next in years. reminder, Day, year as are off-premise from X% ago. we the is targeting

seeing And are of are n’ in individual Heat Serve growth our currently, are we progress. we is as in catering as To-Go off-premise with the pleased business. but occasion our special which So, our our initiatives, early some business business, well we

Jeff Farmer

I how get then on any rate, as tax year? the Okay. And be missed next this, I guys we did color but provide apologize the tax ‘XX FY should you into we rate modeling if

Jill Golder

haven’t We ‘XX year expecting we do for get rate, the to but you where provided just are want on rate Jeff, guidance address our FY tax to tax pieces and the there.

Jeff Wilson

Sure. the In half because XX%. the the reform we the about that to to expecting the we we and I at tax back due current reform of at about are everybody year will year, rate approximately remind of to were the midpoint guided current being X% tax year be XX%.

I current of year is it where math similar to to how what expect the would ‘XX XX% So then the works at fiscal that’s it ‘XX. to getting year and be in the FY close

Operator

Our Jake Bartlett will next with from SunTrust. be question

Jake Bartlett

question. impact the did taking run-rate? first trying Thanks March your shift, whether the of that for to understand understand results, around real Great. the am Easter My can so we I is versus April kind

Jill Golder

Okay. Yes, hey, Jill. Jake, this is

talk just and the traffic. monthly cadence about me Let

thought as remarks earlier. in same typically impact that years standpoint, in Easter year the last see because break reminder February, with a So, quarter. both was was our from than an April From as it and We Easter was said in earlier aligns benefit spring although points Easter had an it do earlier just in the month we was holiday, vacation. on we which basis often in weather that XX fiscal a about I prepared

been lift with April change. have may there associated in So some that

Jake Bartlett

understand it’s add improvement average if the the new, believe kind April pricing, aggregate – then, when incremental the you understand bowls is, and effect if help of we impact the had impact us And you trying given old take continuing specifically or in I drivers from check can an and rollover that you to April. the some of great. coffee could pricing can so do March Okay, you I menu your whether some that? the from are the just outside am the versus to bowls not in coffee

Jill Golder

Sure.

right that’s generally when and introduce take September So you we – and then are pricing. we or new we take some usually August in a March menu would

Coffee. similar mix bowls the So, in pricing full did approximately check with the our that also and then helps the overall plus increase and of April, relatively Coffee Crafted quarter, increase X.X% support was promotion coupled to within our growth. rollout April Crafted but check

Jake Bartlett

was bowls, coffee the impact that of say instance? for you than would greater a So, the

Jill Golder

was. It

Jake Bartlett

Okay. And I before weeks, to going rated that, last on year was the I is I Meal, you year weeks Campfire and year the XX weeks X last believe for what think the this XX it’s be I and it believe question heard.

am from that’s current incremental going So whether year last this understand – – drive to to deceleration to level few just whether I more and will the confidence trying you increase of your much going the how that results it’s weeks? in be just

Jill Golder

I on QX. So, just start will

improvement the as prepared plans which in in bit have our talk off slower, in confident started our are and in Don, about but quarter? we a said want you our guidance fourth industry Campfire to do I we little remarks, modest a and little promotion, So contemplates on that started increase sales marketing QX yesterday our a

Don Hoffman

Sure.

the duration have bit Campfire, the a to we on to it in program. that relates tightened of up little maximize return full the program As store

of year a support television support, levels we comparable at and ago. In are terms marketing to

in-store other that continue course the integrated year event have concentrated We and this from for weeks program. support will the not the greater air materials we fully call strategy guest more are space only a full on impacts then duration. continuing getting being attention will last that on the marketing out-of-home digital It to the our about television, are of about talked support on and in but that will we for we greater and

sales have we to the year the Campfire of momentum added of for also the that program at this a balance sustain We summer. continue think is backside to going

Jill Golder

Jill. is this Jake, And

fourth your quarter checks guidance working now color are or do support as to Campfire overall on of mix the we we kind Bowls expect Just similar to numbers, what little with most through help specialty saw to add a and Southern more you since with of have beverage mix a fully quarter recent also to incremental sales expect beverage out specialty are – associated rolled with the in lift we we then would will coffees. we have our

Operator

be ahead. CLK. question Gallo Please from will Michael go with next The

Michael Gallo

Hi, good little I think just operating in on morning. basis dive or points the want to bit I up in were which expenses, a quarter. so XX other the

to that, quarter. the Just some what see you the to recurring fourth there, other from various and you components technology forward plan going but also of reinvestments understand savings around costs you obviously will make incremental some the to be of depreciation and in tax strategic spoke

other expect puts I dial-up takes or Should will in we wondering things that are it to XXX we forward? sort about of other think of all the or line, we that about year-over-year XX will back? So, dial there basis and pressure as should how point kind range, was Thanks. think on equal stay going the comps being

Jill Golder

guidance to ‘XX other operating some want but Yes, puts you takes of let and our in good don’t said morning. expenses. We about as give into the talk me

have those expenses invested pressuring you and that in Sandy initiatives, comments many So in we line other our in are which operating expenses. her mentioned see margins of top

make expenses is cost There that ongoing. as our had and system will it. initial maintenance rollout be up supplies as support example, they depreciation as as roll for has off-premise then as Coffee future, equipment that that along associated but which help off-premise. supplies we have continue some we expense we that to Crafted initiatives we we the new impact see would the for some in to which again of expense savings our our some believe put we other you So And seen grows, set in operating the we well in our supply that both business some with restaurants needed, expect for investment out, with system, would success sure they see in in also that POS

other driven are items the being are operating big by that within initiatives. expense our those So

Michael Gallo

terms forward in anything third other and you kind removal, that the have recurring that would just would then to come hit And of going again back than line? there so not see was snow in of quarter that

Jill Golder

as within the of I have higher expense and need to mean, you and by to when fix some quarter that and snow break quarter, when we on we some a late things bit see little that did the winter ebb depending we mentioned maintenance some removal them. and just repair flow did tends with

Michael Gallo

great. year. three Okay, question, have a anticipate running fourth weeks last fewer I you advertising obviously just And a you actually you then yet, for right, heard you if the Jake’s started follow-up weeks have a than X you TV Campfire but to slower that reacceleration quarter, little fewer trend, and the think had I for of

come into or simply not So else something that’s we to end TV sort place that towards I is guess are we have this year weeks of versus the of the promotion, but going fewer going Thanks. the at quarter would to have there last? had

Sandy Cochran

will number of sales have of got a we Don let sort add to but I it, initiatives.

fatigue promotion think duration and concentrated. short Campfire effective I which the plan, the in will it’s support and the avoid So, we have got has the to we more right it’s way marketing believe being be although been

in got have fully as be Crafted off-premise that We our will the more traction a we side. out the Coffee rolled especially some getting we able business, job well effective catering as do marketing are of and to

tests some are other are doing about. have We that excited got we we

want tests, fried end Don, that? at got but the Campfire running the and for to fill X-week will and you meals a speak Don to have alluded we bone-in a gap program. of to We it’s family size be chicken about a

Don Hoffman

Couple Thank of Sure. points. you, Sandy.

levels are that on to prudent on and were with of they although shorter visiting for just greater it’s think our frequency wait audience, television last that in on and just to program where in our clarify the I year, First, more get time television the want earlier slightly people terms builds are reach way we we the actually for stores. the impact duration, above

more is was higher The wait level as than it actually the So mentioned. concentrated a is duration year Sandy just ago.

in, of of traveling advantage we The in other call the what guests. are things quarter off-premise fourth our investing things is of terms types doing more I to take would are we in media

We for using our for and some such phones programs mobile stations, media mix, platforms on. newer are television, so as some gas mapping

mentioned. that have our the as last retail to in-store going We additional for take conversion to the other some programs and programs X going of hopefully Especially year, we to be driving guest Sandy fiscal introduced occasion. advantage weeks got some appeal of be are create summer are travel

Operator

Gregory of will question Bank Please go ahead. next America. from with Francfort come The

Unidentified Analyst

[indiscernible] Thanks. I despite modest the the relatively achieve that? getting there to It’s what you to to seem you environment in leverage line, doing on wondering Greg, tight just labor continue wanted for ask on comps, are labor actually

Sandy Cochran

It’s that labor X.X% on a wage of in of couple with of pricing so portion line is to impacting $X you. our it’s cost One our $X are our line. business remember levels, about million that inflation you and the things. thank Well, year, savings the is a is million in then will the this

on our are productivity. labor we So, improving

are probably two pieces there. those the biggest So, in

Unidentified Analyst

you. Thank it. Got

Operator

comes from with Anderson Maxim Stephen Group. question Next

Stephen Anderson

want you slightly the in to saw on I per climb was May beginning regarding have close, of getting Yes, and $X you it piece mentioned good What quarter. morning. gallon I the what the prices, up over running same gas is of if sales not you you growth the maybe third have at slightly call that a comp below ask margin. saw to follow-up the restaurant seen saw question you

on might meals yet have Given that system as Interstate other thoughts than you you the if put extra particularly maybe get decide in any exposure marginal Highway spend as gas kind so to your the high that? the demand as of well restaurant as slackening have on $XX seen to consumer that

Sandy Cochran

great question. Yes, it’s a

if So listen are rise folks, and projected you to up summer have gas prices some months. of kind moved to they the over

then us. So we degree gas think the for impact the that way consumer, prices income gas negatively could the prices is that about to headwind a create from discretionary

step the change usually and have at, terms that gas in are have we something certainly to for prices. think we an not that have a but – when see really it’s so And this I about talked in we impact have a of we past it yet to seen look taking

Stephen Anderson

Alright, thank you.

Operator

Telsey question next Derrington comes Advisory Instructions] The Bob Group. from [Operator with

Ben Flox

Hi, good first now guess, heard comments I we sounds about the catering, your Flox of last to testing new items one quarter more is you, hearing Bob. bar, biscuit are dinner. for about new on lunch items on we for like This in Ben and it kind morning. towards Sandy, that skew

dayparts get handle driving the to on better exactly this continues and you should menu, guests think hearing mix across just tweaks from this? what in tweaking broadening Is what about are about is trying testing? to your a evolve, we how the how this the Just

Sandy Cochran

and Barrel Cracker ham, casserole complementary prepared combo Classic cheese I a is the that items Well, combination egg and breakfast mentioned then the with it. my remarks in actually around

we been So, that for hot I breakfast going the consumers testing be in next with very is to hearty designed X and some received find we weeks. to were that address guests. it’s our also favorably the mentioned things

be to that that as breakfast will we I well and spreads next on actually go week when announced and different is some biscuit the I So flavors and that’s the flavors additional with bar as call it’s of biscuit putting assorted which then casseroles. last in think

So, focused has of up been our now hot in daypart development to the majority and and really on hearty breakfast. particular, testing menu breakfast the the

Ben Flox

Got it.

timing something on something that? when expect part this maybe the handle must should rollout, see this said Okay, some we on to will previous. POS labor marginal come you a to rollout just line then is of is to module, I labor we trying of the benefit the had from of later, part is should your have say I the misunderstood new And get

Sandy Cochran

that all future savings Yes, that’s foundational things testing cost POS the help and There to are number is with question. we is certainly to of of great a a that.

So, as is would one of talked we enable new help think about have a POS reminder, the thing system we like tablets that other the with productivity labor. which tools will

that begin development based we on currently. implementation on post fiscal Separately, so a in testing And some we successful initiatives rollout would that are kind and of working savings we are XXXX. then early the POS there other are cost of being that

Our two to have prime cost management would pieces it.

it a focused. management One the is food is of labor and waste focus other management a

working food management testing that waste helpful? are currently Is the module. and We on

Operator

Jake Bartlett, follow-up a comes question next The from SunTrust. Thank from you.

Jake Bartlett

of the the test I expected are be it’s wondering my about what to the is been? maybe don’t system, with thanks. going am count just this – delights. it I on kind moving rolled might Is so or kind value from the and little last I pieces more XXX out why to how that the where rollout, a going so believe as had Great, had faster? daily sunrise question surprise to of that was not quarter, much the you it stands, have the stores what pace from a XXX learnings

Sandy Cochran

start will to it I Jake Don. and then over Okay. turn

all, is strength of in brand. the value first our So, positioning this

delivering like basis. is on focused competing this everybody are in seems value, everyday We

So, to currently an of we our that in believe even reinforcing value job reminding have value the our we of to the continue do we and brand. have better everyday guests that

everyday platforms with those Specials really Lunch And for offerings; and a you an news was menu Dinner our and at reinforce offering Country program is referring to you familiar those our dinner which our Don $X.XX will at Weekday new three I aren’t of delights a the to gave $X.XX; so value Breakfast really that let of it little platforms: that. designed to you on daily our to are bring Plates, three as bit and $X.XX has update then and

on that? an give are we to where want on you update Don So,

Don Hoffman

Jake. Thanks, Sure.

there that great mentioned, Sandy are to of deliver value brand As things continues number know a doing. the the to guests. we We that is

Our research maintaining strength. and that shows we growing are

range and of to look that strategies the continue we to Our to program the a and teams tactics value reinforce culinary at guests. offer marketing

meal family offers, news our some an and As size we dayparts. lunch different new are bundling breakfast, example, dinner product options, at within looking

during we specifically, that the program we study usage we attitude are our know it awareness, and driving out we relates the year, actually that through time sales at delights as visit brand daily to including rating. As over brand have value looking and intent incremental been periods rolling ratings, traffic has know and advertising interesting in the been analytics have we been sales we are and it overall growing

been it’s perspective, that good. from So

As like over are in doing have the operational we some to of also show programs the evolve are the time that guest we seeking. build the program ratings to upon things profitability is simplicity, there these and sure things continue and we and making appeal are and but around some offering build that products we

special look how mentioned, in in daily we ongoing the the breakfast as and doing that systemwide So the is menu be $X.XX improve part other time. over how incorporate of to are program going to also of Sandy we are out selection. And and things be delights to August are the program rolling value to daily starting of we delights going elements just as one sunrise to

assessing the We will daily and in specifically of making advertising in fiscal ‘XX be that continuation delights a decision for weeks. coming on

Operator

Ladies Cochran to session. question-and-answer and return conference our to gentlemen, remarks. I back closing for over this would concludes like the Sandy any

Sandy Cochran

long-term making we and to our Thank strategy. leadership the for right building and to right forward today. are us We in and support. shareholder your strategy we I drive appreciate to move on execute we We have joining brand interest value. you continue confident forward that progress remain the as the place look all the

Operator

Thank attending now has for The concluded. you conference presentation. today’s

may You disconnect. now

Cracker Barrel Old Country Store (CBRL) 22 May 182018 Q3 Earnings call transcript