CBRL - Earnings call transcript Q1 2019 | Cracker Barrel Old Country Store, Inc.

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Operator

Good morning, and welcome to the Cracker Barrel Fiscal 2019 First Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please now Adam Hanan, would like to to over conference the Manager turn I of Relations. Investor ahead. go Please

Adam Hanan

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

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

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

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

Sandy Cochran

Good morning. earnings and store restaurant retail positive sales Thank $X.XX. reported Adam. you, This we share comparable of morning, per announced and we

our growth reflected an restaurant industry. versus the improvement quarter the sales comparable improved trend we and Our sales prior versus

much quarter. work some continued have well of I as want improve focus business. the financial for progress does speak she review heightened highlights through value recent remaining performance Jill expectations, the and still off-premise results the experience, menu full from as our guest a traffic and of made the will year expansion declines, seek before the we quarter While we updated addressing but the our we everyday to as to in to on

our traffic plans for call, focus discussed highlighting everyday I improving on included our our on increased value platforms. As last

pecan topping extending our them and Toast Biscuit is as new sweet butter ways guest a with our and sauce. In signature French addition, featuring this our quarter love such with through which we also by new blackberry news in item offerings Biscuit introduced Beignets Biscuit

Our reminded love of guests they new also offerings the that providing Biscuit seek. they while what variety

and we focusing Biscuit on centered more quarter, messaging first offerings and on our unique media time menu value a of implemented support and messaging messaging. the and limited our national greater strategy placing price quarter. everyday offerings we emphasis only on the was point aired During The to our on value TV

excitement marketing As our I’m further highlighting interest, cross part results from products with campaign, retail of Biscuit-related our and menu promoted marketing integrated in campaign. to pleased our we’ve shop the by increase build and and

markets over XXX to to key in sales basis We now compared catering catering the to sales and approximately over as catering well our points our have XX vans managers to expand percentage the added off-premise, Moving quarter XX, to in prior markets. total increased nearly of several a XXX it delivery continued bringing We performed and year. we coverage.

Turning the our of were to on for comparable our floor with store growth of which the sales Halloween pleased well year, retail, Guests was much above expectations. the I’m quarter. first over which and retail to our X.X% harvest assortments, very prior quarter responded

As a the and sell-through improved versus levels year. on merchandize much seasonal result, seeing inventory we’re better prior

the Regarding stores our stores second quarter XXX the to three two total first opened in across in new second growth, already store store additional including unit count opened in quarter, XX states. new we California. bringing We’ve our

to developed learnings. factors focus around improvement. guest sales. experience has the increased a action on implementing our action and For leadership and the aligned plans our fiscal We’ve guest and XXXX, drive and organization traffic begun around to visibility the We’ve experience targeted operations we’re improve on the and based steps prioritizing employee driving

ways. continue the in The served by our with imagery. which fiscal a current Bean Green Country quarter holiday with remain we’ll Turkey cranberry Fried hospitality included our the I’m offering extending promotion experience Similar business. media. was This ad our Looking relish. leveraging TV we’re gravy and while pan XXXX, and quarter, creatives ahead new on also first as of Casserole about brand excited spot on value, menu guest built features the elements menu food of promotion the our focus topped first our and and of supported we focused off-premise and it and menu national guest to TV into in growth new favorite the incorporating

progress make continue We chicken fried initiative. on signature to our

We’re nearly are We the in XXX encouraged our summer. remain results. schedule currently and by on rollout to the by early complete stores

the about with the and expanding to occasion. and leverage the catering We’ll Thanksgiving The business our expanded pleased second in we’re third quarter Heat were off-premise n’ due Serve to we’ll holiday our support sales Serve key our excited year for Heat our a period be occasions the is quarter and our experience. several delivery. this this guest Christmas n’ catering to enhancements made second the stores, we grow We party and improve delivery, continue managers performance and

remain points holiday Looking and initial needs all highlight forward budget. ways assortments enhancing well to we’re to this Llama. and year’s retail with our merchandizing offerings. assortment as meet performance their at to and been that and improvement all brand to our build and any value holiday price through with price outstanding strengths for on Christmas In in confident to encouraged focusing by within gifts encouraged initiatives plans By and décor Hedgehog to we’ve traffic fit items this retail, $XX whimsical price under guests we’re Great Gifts with for strong points drive shop business our the the by finding provides points resonate our our I’m top growth. guests performing, such the our easily assortments, ages, assortment sales with which giftable positioned affordability for the closing, performance unique execute and in-store our are in Plush continues all highlights season in to in our I of sales QX approach oversized

remains With it believe take to outlook that, our I’ll the turn as it over short-term Jill. Our to continue trends. we implement cautious to fully some traffic reverse and plans will time

Jill Golder

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

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

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

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

in business. with prior contributed the favorability mix program We The to Coffee comparable our compared results. business pleased which teens off-premise our grew primarily off-premise were year was store first and by driven our quarter sales high and to the Crafted our

primarily accessories. increases comparable First store quarter coming within with retail apparel increased sales and X.X%

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

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

increase to was XX.X% retail in sold a primarily result goods freight of of cost This the sales prior costs. retail Our of quarter. was higher year compared XX.X%

Other with operating expenses retail at XX.X% compared XX.X% appreciation inflation of revenue quarter. sales or and prior year million This point store asset year increases was inventory with in revenue $XXX.X result related quarter. the planned $XX.X or million due in or XX.X% million $X.X XX.X% million year This quarter. revenue quarter to compared in compared compared driven related million quarter. the administrative Our to write-offs in capital or XX-basis store million was quarter. quarter increase expenses was fall XX.X% compared bonus or XX.X% at the of support with $XXX of inventories management. revenue million of to year $XX.X year the wage of in increase expense million Net the quarter in million the other prior point revenue was quarter year our million the or of primarily $XXX.X to or XX% of and $XX.X by income revenue of revenue store operating and the XX-basis in promotion. $XXX.X income expense. interest prior higher million compared income prior Store $X.X $XX.X revenue of $XXX higher the million expenses with was in in X.X% quarter. of prior revenue advertising million revenue were of higher income operating to effective X.X% the million year X.X% expenditures, end prior or end of to Operating quarter for operating first of $XXX.X or the and menu General were expenses strong Labor of $XXX.X were and the expense compared were prior operating $XXX.X or quarter

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

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

respect quarter this release Our SEC. described mindful our today’s uncertainties filed With reports total end. our and with the and should with outlook debt associated be everyone XXXX the earnings was fiscal of outlook, $XXX in million risks at as in to

flat year to in comparable store of the growth comparable now sales of X%. expect X%. store sales and billion range the continue to in revenue expect retail fiscal growth X% to of the approximately for total restaurant range $X.XX full We We

to Cracker stores expect XXXX. continue Barrel in new eight We to open fiscal

costs approximately compared year increased fiscal the half. first to the X% lower the food commodity expect half being for continue in with of the on year mix back a basis We of inflation to constant

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

tax and We presently of approximately expect GAAP year expense for approximately the $XX continue We interest million expect the effective for of rate approximately to million depreciation $XXX a million. to fiscal XX%. net $XXX year expense of

of for expenditures we account, expect into $XXX the total $XXX margin these We the revenue. will assumptions million be X% of continue approximately million. in range Taking to year operating year capital that X.X% anticipate to to income full now

turn expect that, And so to full we report that earnings your $X.XX. to questions. I’ll can per much. operator over take continue you of very call between Thank and year We to with the $X.XX the share

Operator

Thank you.

question-and-answer session. the will now begin We Instructions]. [Operator

The King. first Michael go from Gallow Please comes ahead. question with CL

Michael Gallow

Hi. Good morning.

Sandy Cochran

Good morning.

Michael Gallow

couple a questions. Just of

a last from the Just not margin, some under had when look it year. shape look would reduction in your when your guess little environment – in bit program But I pretty good mix and margin going retail considerable at really would outlook your quarter. check at it commodity quarter. the percentage average was really are somewhat, commodity your still lapping headwind at pressure forward, you in it I strengthened seem bigger. coffee the I would inventories But obviously when I know strong from the look that has the I of the hasn’t that in they basket operating changed. were retail seem seem know I

margin So I of than first look given in the for operating profit the in quarter just why on any reduction came to year side want it away Thanks. the square sort the like annual didn’t guidance expectations? the differently

Jill Golder

so for Thank Jill. Michael, Great. is much question. your you this

that and we into normalized incentive and fact to year so rate to million as expected year, reminder increased that more partially at million. OI did approximately compensation prior guide took savings by And a X.X% offset our the beginning initiative cost margin $XX we depreciation $XX versus of account a of the the

And so that all remains true.

higher the though given between expecting by key then of to invest a payouts now even And we’re at we’re our update a inflation One, didn’t end from have also that compared range X.X% we primarily in to our to in to then assumption. range and X.X%. the is continuing be We’d wage couple staying original X% X.X% of driven incremental some range So X% expectation, margin bonus movement areas. expectations. to potentially approximately of

some in we’re to that experience and order support invest to maybe areas the employee training some focus to both on in, going there experience some of guest other have initiatives. investment and We

So baked into those are that number.

Michael Gallow

you. Thank Great.

Operator

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

JonMichael Shekian

on Hi. This Greg. is for JonMichael actually

experience to Another metrics. look mentioned slipping satisfaction taking last on employee know mentioned some were in and guest at that Michael’s the you you follow question. a quarter, I the you have

that’s so satisfaction what So far through have what flowed just any those? training wondering of you’ve if addressing to to forward employee the going guest on and you done sort planned experience and metrics address

Sandy Cochran

take me that. let JonMichael,

I for which some approaching all, that we want us the issues are we believe of experience that longer do will be so drives emphasize addressing, to short-term First although experience the we’re guest are things, term to also trying we these are the areas say certainly were employee side too. that leadership a to To to through address little first on key longer the that quarter particularly point able maybe our of year-to-date; things one some the is has in field would get that we I done staffed. employee

the I a better up year of them restaurants seen set to training head done volume think staffing into the the holiday to we complete which as they’ve handle the period. and we’ve job this that

manager at a that better in can training, work the about after sort our us, got hourly already will to out an good better we’ve of hourly Where a district leveraging number we we’re which was feel job senior I to technology the So of training most done our be they’ve holidays. improve our our plans our manager get strength do through training, year well the there. for as employees, training we looking IVs. but rolling as How PAR even we how and of incorporate later our

So experience. those the of areas are employee focused sort on we’re the in

particular what in guest some around field the the was and organization insight to really by issue actionable trying experience some leadership give our started and On reporting the side, we aligning about better happening.

inconsistency As seeing we of I’ve our things in to one were you was numbers. recall, might pointed the the that

were great So expecting every every experience on shift. each in visited the as you same you might have time you store not

to That of was the on focus that your season you’re the and there attentiveness on with and there. seen celebrate coming almost host emphasis servers. improvements some off-prem shifted area our area we’re started deterioration. We the was seeing That’s when we that’s important the We our our on some on important an that we’ve holiday maybe certainly and the focusing pressure puts focusing Potentially business an of had particularly really So off-premise towards family. in that host. by position. the

guest problem better, updated through that But the we we’re to making. continue am you I So working our understand along. have and leadership to to the as the are they we’ll I and keep just optimistic with the progress understanding are teams field plans journey think move

JonMichael Shekian

Sandy. you, Thank

Operator

with The Please next Humphrey. question comes go from Jake Robinson ahead. SunTrust Bartlett

Kevin Robinson

Thanks bit first my has the key for more if taking did also the your question. a and when elaborate This Robinson the little for are And is experience drivers? they on like improving seem Kevin could Daily with in Jake. and it? Delights Things what That’s question. you been you launch the on quarter,

Sandy Cochran

and give flavor Delights. then start to Hoffman the ask Daily I’ll I’ll Well, on Don you

that think Biscuits reminding a extensions think we on as Daily a just Biscuits, side lot prepared and the of on people – emphasizing in I’ve reflected I by everyday I the the remarks, the plan the value culinary the through quarter said Delights. solid the had to about focus

think support TV was of in the buyers worked. performance a successful lot the our example. spot, things the people I that happy retail performance wanted with buy. marketing for to that choosing say plan of I the to Certainly were that would

and pleased in in really of off-premise Crafted our expected did I dining field I better as teams Coffee. room on the our job with we think business, mentioned we executing where growth a both had than good the are

Pie there. incredibly haven’t We was yet, we’re but popular seeing which We that had in completely cycled nice Pumpkin quarter. a Latte growth the

think to you that and deliver a of together were Delights speak Don, want elements -- lot just to So I Daily it. there came to

Don Hoffman

fiscal We markets eight introduced more actually over last Kevin, believe a become XX markets of XX advertised number well menus, we specials. sunrise flight. in Daily nationally breakfast we quarter with fiscal progressed feature $X.XX nationally program we to including our support limited rolled introduction our Sure. core during of I two year And flights. the it one program in as television of first Delights a permanent year as adding this then then and on as the a televised the started markets.

Kevin Robinson

sense the My help question just impact on you. get better can of was the final a results? you Thank us from hurricanes your

Jill Golder

restaurant hurricanes is last XX the Jill, in quarter. quarter. impact within the were to negative and is hurricane Kevin. approximately From This on points same first year’s That Michael similar Sure. basis the Florence sales

Kevin Robinson

Okay. Thank you.

Operator

ahead. The Research. next question Stump Please from Alton Longbow with comes go

Alton Stump

Good morning.

Sandy Cochran

Good morning.

Alton Stump

quarter. the on congrats First,

what I been from over wanted Just environment. aggressive continue price peers quarter? your course first the do plans Did on what to at the be into holiday casual competitive are appears overly plan ask pretty messaging which standpoint. color we if behind heading your more focusing a discounting that have does competitive to dining more is about quarter, the force that major during stay of a talked if category but first know you of the value couple of kind the continue what season, just about your moment? And see

Sandy Cochran

of I guess noticed the – Well, we certainly environment. in I in reduction haven’t any maybe discounting the level

Our in and favorites bringing by value, both aggressive job doing back people some it old to competitors of introduce some doing very remind of TV. trying in a cases a are cases lot with

an competitive. value think are on is and we highly we So in to that continuing environment operate focused

using the terms the the pivot own value. In emphasis, our away of to second TV in everyday emphasize we from quarter

Our on mentioned, current as Turkey. the spot, I Fried Country is

we little what mix indulgent of in a eat choose see one in and the them little more maybe a our This to guests menus. to, terms they more quarter spend tends where what be to

with ways that I’ll he’s the in the going Don remind menu our value other to So Delights speak on guests categories. about the let three to is Daily continue how to

Don Hoffman

Sure.

last part everyday in and about significant our strategy a messaging restaurants. call, is outside of talked our inside of we’ve reinforcing As our both value

our specifically Delights during is So to of part price that provides program a the all occasions. dining broader program Daily guests certainty

to going outlook or offerings going category everyday And support we’re television to the continue support, fair emails, So well marketing continuing also and optimal to to point periodic within in-store value communicate price as a evaluate stay to deliver the competitive guests. we’re program, social to value through our be as advertising.

of very fried in on year that platform and the an now example and be and chicken we’ve past, to based that price the we’ve mentioned great on going value fiscal platform offering. introducing guest as in doing this bounce a scores feedback has we’re later rollout proportions been strong the [ph] chicken fried the new So testing

Alton Stump

then That’s guess I and Thank one up. helpful. you, follow quick Sandy Don. And

of this you update think over Northwest, conference course out lot last kind Vegas about far? a California in many couple there any in the into or back just experiencing doing have and haven’t the on how I talked on whole the now so of calls, out Coast, you’re stores last – what but I now, how stores you’re West

Sandy Cochran

five When and with our But that – I for California I Well, the of may we’ve count now stores or hit say is four our think volume two pleased I’m California got top Oregon one California in six. of have three I stores. was certainly or the week. Thanksgiving

to So there’s are the using says there. who out we plans to and additional know open a that of out have And brand certainly people interested stores it. lot continue there in

Alton Stump

Great. Thank you.

Operator

Instructions]. next go Telsey with comes [Operator Please from The Bob Derrington ahead. Okay. Advisory. question

Bob Derrington

are your is Country more your and Yes. priced unique your signature more? products Any your higher Sandy, to seems priced help? foods new of Thank Fried as – example? you paying overall about also which in average. don’t that bit a for be above fried your more you introduce you. that average, above of a I little would learning I think chicken very consumer overall well check your think color little these new bit interest priced average some the than check is customer check finding are mind they you received Turkey kind Are what

Sandy Cochran

All right.

our core brand think we the experience of menu. all one to and emphasize on fact the to you continue And at of in things points. for I in the it’s brand ability price Delights strengths menu to all, is Daily of breadth the that the of the different and like So the want first our of sort

signature the to platform a the southern at we the Don fried and with higher, going chicken I happy very very abundant perceive and value chicken are of scores are inside as mentioned the which guests the that’s price that. introduced point the is It be recognize that offering. is we monitoring think fried and value have We how

where promotion, of are we find the terms little second In willing to a consumers more. place spend our to quarter holiday a be

Country Turkey Our offering of is don’t Fried ensure we watching and higher to terms scores value in slip are overall. we that

with to to something delicious, our Although both guests offerings some Crafted your to and offerings, see and our differentiated, their Coffee this Biscuit like check what are our we point then of willing offer is increase get when unique, we it. craveable,

Bob Derrington

That’s helpful. really

the relates Was business, your around dine-in it Country to-go? for it meals typically to the view? execution? it As were business, Was the the satisfying your catering? a holidays the What of into the Thanksgiving with? you pleased from launch most Thanksgiving Old it Was Day Store. most piece it’s was of part heated great the that business What

Sandy Cochran

maybe talk everything haven’t through did volume we analyze very time We’ll we that channels. of always all of time about say have job next operators I in to lot all, an call. amazing of more various have I during can this that think our much Thanksgiving. first about Well, a to had the managing year the our

give to ordering door. had with to the of to at this surrounding use lot grow We’ve technology do take come us improved don’t ability it stores Serve We the n' A guests to execute. did dine-in, ability enhancements to year. King, our the of of the eat more to ever volume. and We experience to room, make want Heat but the variety So our expanded we the It Polar our to continued that in refrigeration easier stores try so business some the the the dining been things. payment has to of a growing. our manage back sacrifice

that. I’m from with the pleased So very results

for that fits very We it do with through which party awful an season, of business think with used holiday to wanted for that brand, on Barrel managers maybe the business comfort, the a a it I their for got with And the hot – meal lot kind meal service of this Cracker meal employees. its employees. and our also type year vans catering focused fits fits that catering people to

pleased I’m plans able holiday were And so to many the able to our how field rest the continue the business. a so that – with have that at execute is to season to much grow It that. we through different do areas. actually So really teams they this year off-premise testament through we they were of in as

Bob Derrington

One may. if I last question,

seems be On sounds that perspective? thing the signature that catering through fried chicken chicken color fried that around rollout, kind is we’ve is signature from and the heard you available it your we’ve – Can of one it to popular what heard. in

Sandy Cochran

Other than we agree.

is on – a people to-go. in protein for that fried there’s the the lots bone-in like think I built of of and a chicken like reason One terrific been things that a bucket whole idea have chains

in are highlight it. fried carry guests, addition and our the to and dine-in the it’s side to and a very containers popular looking having how we popularity that to being off-premise chicken the with anticipate and So offering also offering the at offers design on it

So future. about the it’s we’re that excited platform one the in the reasons of

Bob Derrington

That’s Sandy. Thank you, terrific.

Operator

The next go ahead. question Please comes Maxim Group. Anderson from with Stephen

Stephen Anderson

Good Yes. morning.

Just a ask wanted to this follow – really is up.

guys You that prices you gasoline a my questions are answered but have do up higher on most of follow about the hurting last quarter a made I comment consumer.

the seeing opposite we’re impact. Now

maybe low you’ve $X of range, ask ask starting consumer, approaching to come gasoline’s many that they’re you if just the now noticed anything to if markets want Just about your back to maybe comment to wanted the to-date about that?

Jill Golder

Thanks, Stephen. Great.

in it standpoint as stronger well an as consumer was the from our we As industry consumer, that we’re our the looking saw at first trends quarter.

lower gas been have so might about that make would of impact been and happy. have that has the the that income. which could an fact some there on benefitted discretionary unemployment prices, the wages talked consumer We’ve higher effective And from

So things that these all has contributed are we think to that.

on So uncertainty bit well. out, the the bus. rates a because potentially there consumer minuses of that then not much there’s and impact a interest little of that as sure that’s seat add will continue, we’re consumer some of from as how have we tariffs increased added could little then out Potentially bit with an look a uncertainty

Stephen Anderson

All you. right. Thank

Operator

our would concludes like any question-and-answer the remarks. for closing over to turn I session. This to conference Sandy back Cochran

Sandy Cochran

all I’m us start drive year plans and today. holiday happy remain you and the our confident a you our to interest season. to and by in appreciate We all Thank performance. wish joining encouraged continue for safe your to

Operator

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

now disconnect. You may

Cracker Barrel Old Country Store (CBRL) 27 Nov 182019 Q1 Earnings call transcript