CBRL - Earnings call transcript Q3 2020 | Cracker Barrel Old Country Store, Inc.

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Operator

Good day, and welcome to the Cracker Barrel Fiscal 2020 Third Quarter Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded. I would like to turn the conference over to Adam Hanan, Manager of Investor Relations. ahead. go Please

Adam Hanan

an asset a the welcome these our conference to and a Barrel's earnings quarter the and third impacts This release the this XXXX, nine impact Good financial and months results items pandemic the COVID-XX to accordance intended investment and to The webcast. equity includes enhanced or financials. Bowl assets, considered May XXXX Punch on providing provides Xst, results quarter related and call our net business. This will issued to charges regarding the to This fiscal the press announcing information investors quarter to of with of Social morning company's from press third Cracker as of results. isolation The tax the in items. financial prepared an on the update morning, GAAP COVID-XX, for press release related information company's non-GAAP and third release excluding refer from related to impairment exclude reconciliation expenses related or these to understanding information its the non-cash adjusted in in we store call, with page share believes of financial non-GAAP charges measures for impairment not substitute is ended we income company the last be GAAP. per

CFO and Brands, the Jill On Wilson. President and CFO, Vice with review and business morning begin FP&A President and the CEO, Sandy of of the Cracker will review Jeff with call Jill me Senior Emerging Vice financials and will this and Cochran; outlook. are Sandy a President Golder; Barrel's of

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

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

Sandy Cochran

by and Good this, the extending succeed families employees in our staying morning will for our trying you will this and our healthy by from and through us. What I've most heartfelt employees, their safe to not you people. begin during Thanks resilience times. everyone time. work of I me however, are business, bolster employees had these this in the and unprecedented address come the want Adam. to pivoted an to the confidence joining hope COVID-XX I an you difficult mission incredible challenges inspired our field to stronger to done both thank second We and responding thank to a your to the our our I quickly the say support changes and at rapid with we job been position. pleasing only our want significant and Particular you tirelessly even that extraordinary quarter and have we I've gives been we operators we by of this presented industry coming difficult quarter, and adapting out throughout started office, who've mid-March, of and who to in business. third pleased the period out working liquidity. witnessed thank during momentum home to our

priorities believe I accelerating as and to relevant just they as our future current innovation, such Fortunately, and existing the were business off-premise as menu prior pandemic. the environment, in

measures for menu including while family orders, new while the thoroughly popular to implementing introducing and for between food that beyond health off-premise As a precautions and that to actions throughout From guest safety health including and such business the we our entire areas, implemented the our touchpoint baskets And began taking following hand and guests, and We screening and meal support temperatures, requirements. cleaning in standpoint, wellness were cases, a employees a worked reduce closely realities. were serve close providing closing we to our cleaning high to also taking their sealing distancing for of fittings, elevated to proved and in packaging with employees their the numerous our of the authorities off-premise to implemented implemented limited mid-March, and labor include took offerings sanitizers required rooms employees, reduce stores health menu frequently waste, safety offering. guests, ensure and Measures dining we've we as rooms and journey. and jurisdictional we chairs above and smaller over weeks dining social be heat for tables adapt go amount measures. to in facemask many employees new

during were support to free accelerated reduced, provided we as to due store off-premise. a delivery hours our the closures, our We focus to also we employees provider, and third-party room employees delivery, employees. curbside and dining new pay our marketing period, hourly daily our short-term rollout we difficult pivoted on implemented to this offered of To messaging meals

who benefit the We ended for payments. also for windows eligibility previously qualified on those based continued payment benefits premium hours

with provide employees Additionally, our partnered employers we large opportunities. employment other to supplemental

we align Not believe do benefits. will believe help are actions that employee for employees maintain strong these applying engagement. investments unemployment worthwhile we business promise, We one-on-one only these provided retention and also people our assistance for with

March all were open have late While, from all stores limited pandemonium until only. April, late to the off-premise our stores of remained during

to the we the have a parts addition closed that breakfast portion for by our fact lunch sales our In which rooms, the account of believe been specially day significant sales exacerbated further and challenges impacted. were dining

as such conservation, on which and we I'm menu also speak as in Additionally, outlined focus of travel Part our of will we've accelerating also of a to. X-Ks our cash introducing priorities meaningful a occasions number in innovation. off-premise, actions reduced our we on have with progress part took Joe greatly which the represent recent the sales pleased Despite made been months. business business challenges,

home forward Some an in welcoming expenditures and the furloughed employee actions suspension employees model annualized postponed and nature initiatives. temporary of the both the short-term in office believe are of long-term. and capital resuming we million. such look ongoing improvements approximately strengthened the realignment $XX savings of as model field our these and back We the to in the and business Other result as actions of an our sustainable business furlough organizational such will

we've the variety off-premise that transition stores. to our menus menu dining to limited stores As rooms, only have of compared include greater reopened we

weekly seen sales to trends into IV productivity phase. in effective back I Backing I re-staff I'm stores in our reopened labor support We and work. open, a will reopened with with are levels. to by breadth we've traffic facilitated have sales positive comparable I've many advantage experienced our combined I sustain our re-staffing that our stores and the earlier improvement actions more of our an I'm we've strong employees and with We've trends, with as stores. employees. welcomed has of recent with employees referenced been dining and stay touch PAR has returned our dining me still XX% store encouraged this rooms, believe employees dining of depressed and ability improved. restaurant efforts our doors approximately are will have guest that the believe culture for optimistic to employees balancing employees we menu been experienced priority traffic our amid food reopening appropriately the welcoming provide the also momentum. looking steady waste during the forward we're pleased as rooms our rooms to

business focus rolling driving craveable near-term, Looking the employee and introduction introducing the cash the select as and experience. guest Prior our of but making investments menu such included were remain process priorities we'll off-premise food conserving major ahead, in enhance this continue as signature evolution and in new a by business to topline balance initiative we'll We growth on business. by accelerating offerings. approach as of pandemic, well our simplification on focused support will the to we continue to the to that

and menu reopened dining to to the migrating it all we've we to for months. been new rooms, transition stores in As plan the coming stores we've

to guests We positively. believe introducing new results so better and pleased such results Chops. with Chicken as responded operators and new Pot offerings offerings it execution variety. Pork Pie and and the signature consistency highlights menu a abundance then in and Saturday increased our and value I've addition been In Fried and have far both

guests conducted Another beverage research determine to beer to more and additional wine program. and had and occasions a a variety interest exciting enjoyable. make initiative tableside We visits strong options their is the beer extensive provide in and of wine addition

wine expanding weekend stores. vote, to of Additionally, was dinner. strawberry a the limited reduce approximately the and Test in featuring which currently especially findings way the look popular. and response test. pleased selection we're been is quite the to We've also forward been during with also have indicated guests' this and orange moses, veto beer Part the XX

delivery, such off-premise growth family off-premise future continue business. will that that see expect and demand the and curbside working elevated optimize initiatives for to and to we strong baskets, this delivery, be successful Continue as leverage we'll enhance off-premise to operations. We will our meal remain in third-party foreseeable

further pandemic in the technology off-premise usage accelerated in of that our enablers enhance We emphasized experience We've and are model the and initiatives invest has area. drivers applying business importance continue We convenience. this improvements. recent digital adoption digital for the work been the as learnings growth strategy our in to and of serve has and sales and believe the acceptance guests accelerating and to

allow to preparing the guests the new enhanced convenient payment believe retail. our refer contactless digital a mobile For App, increased convenience of their investments store, and is in these ways. as launch and also digital the food ordering hospitality property via as user provide provides we're extend what such months, allows an example, we're new which guests out that option Coming device. in we experience which of rolling for Pay to to process and in us We integrated

digital and improved of on reinforcing believe delivery, increased third-party which are more value. focus and and will messaging use curbside that our months. and of as our our dining recent our marketing social to fourth We drive TV billboards while and well driving awareness everyday and as channels reopened marketing Our also rooms are our TV. flexible and include Continue efficient ways to effective and plans quarter some frequency national awareness effective in our also

months with while by and through dining. converted remain locations Holler our and We impressed early, updating converted and Maple future The recent be and was former completing they immense core Bowl the hard capital Social growth. Unfortunately, resilience they've to provide brands weeks. closure our their were to billboards we'll crisis. segment the we progressed excited have it especially the demonstrated has resulted the decision and we our than due the performance resources our eatertainment been less in Additionally, presented, look with to remaining be hit not Biscuit pleased attractiveness their accelerating less fast segment to managed has months. pandemic business the they've which we conversion the than Despite challenges and model Dash the about discussions been mix our that brand allocation we'll and coming with strategy additional Company, approach presented disciplined the by Barrel the believe of pandemic, forward the of in the stores, casual I'm I've in integration challenges their the coming Cracker experienced of off-premise funding. severe during and keeping the Several the & to creative their Maple Punch fact on the difficult the on the all casual Street their made how to extended pandemic, of focus impacted declines higher and in in the the Streets locations. of After well reinforced

creation. our While uncertainty Cracker long-term we Barrel will very ability there our expect continue remains and make in industry our value, the made trust coming drive scratch guests value and dining to in to continues the and challenged in and expectations will one us I of the be to be company on months, most in the differentiated future significant of hospitality, confident their believe preferred us deliver everyday have brands destination. our genuine a foods, we're to

the firmly and business, place strengthen I we to resources drive through returns. navigate believe successfully Additionally, our and have in environment, this strategies shareholder

Jill, been are stronger remaining. over employees. express turn there get a that, Before to gratitude come with turning will it we of I'll has to again Jill. I and once will want challenges this to it our this this many through I And But know time, over my we difficult even to than before. out

Jill Golder

you Good thank morning and Sandy.

by to will related our my primarily financial to remarks position, our capital COVID-XX, sales I prepared begin performance. and want circumstances, on impacts the today liquidity Given performance, focus sales discussing our allocation.

by restaurant weekly before and in comparable XX.X% store XX.X% impact. the by XX.X% X.X%. store sales April strong We've open XX.X% store store in since with were third We're quarter seen COVID-XX. due with the most recently improvements approximately off-premise encouraged related declining and some of of our comparable completed sales sales compared for stores sales increased restaurant store only. in dining decreased recent speak comparable decreased March the the like would check trends. of fiscal I now in to The comparable Barrel to and sales topline COVID Comparable quarter. XX% declined retail week Cracker stores XX% quarter, for average to P&L to rooms to to by traffic impacts the reopening positive approximately down X.X% February began we XX.X% in sequential as dining rooms restaurant started limited For declines

of in ensure number As the Sandy our our health guests, our support model. and pandemic safety strengthen and a to to business and outlined, took employees, actions employees response we of the

provided as additional pay were million. to approximately hours example, due reduced their employees totaled to $XX hourly room For which we dining our being closures,

in third food includes the waste as write-down. employees, In which million addition, to incurred noted room inventory severance, we in $X.X approximately as to provided closures, as and we quarter, such our expenses, well meals the as earnings in COVID-related due release, items dining

a of million in our an as Punch impairment assets Additionally, impairment related $XX.X Social. we recorded investment charge store equity to as million in $XXX.X charge Bowl well

$X.XX. Third quarter GAAP share earnings diluted loss were per

as related Punch to earnings $X.X in and expenses, adjusted COVID-related related assets were diluted impairment well tax to the the as million impairment loss per impacts, those store Excluding share related the Bowl Social $X.XX.

business we mentioned, savings in Sandy the We as initiatives, decisive will took result annualized realignment, As approximately also million. actions to believe sustainable organizational our $XX model. strengthen such these of

liquidity company believe we with the liquidity the following. deal well-positioned to allocation, the pandemic, that and to going to due capital was Turning into challenges

First, our cash and consistent generation. profitability flow

third, million liquidity. challenges bolster our of the the prudent our portion ratio; That given we actions our fourth, our further lastly, credit to of allocation; are unprecedented ownership we took to Second, to a approach our additional $XXX conservative locations. facility capital XXXX; increase and significant facing, leverage said, in in

we Taking to May remarks, business in $XX additional while third and million. suspended suspended for were the quarter. our relief we've strengthen to mentioned strategic by quarters prepared we received current to costs, well stores in store accordion. we pleased already were combined XX%. estimate our were our strong that canceling open, is off-premise-only generated inventories, our store in we recent operators quarter We and strengthened variable increase three the we managed with initiatives and modest consistently account then covenants except on during retail flow, cash we maintenance, within approximately the and our And model capacity have exercised borrowing initiatives weekly into ended million conserve restaurants cash an revolver, next further our beginning feature accordion and substantially was positive covenant by while what our level comparable our an their believe drew been down on of we at with lastly, fourth aggressively and quarter, how our drawing position cash, rate to our they programs, We're dividend also a managing neutral share that we This of XXth, initiatives. we we've as essential In on approximately all we including burn have hand, keep the investments which cash repurchase our the CapEx, corporate at liquidity orders operating able is estimate addition assumes have key down and $XXX down feasible, sales, model. fully for

believe and liquidity we outlook warranted. and increase the should options uncertain be further environment this However, to we additional have remain

Board have give circumstances. will allocation capital commentary Barrel the strategy been capital additional light Investing We our to plan thinking with in We remain capital of on allocation currently current working appropriate, priority. want as provide about updates to in we're but the how some appropriately modify closely I a to allocation. Cracker

initiatives, sale we Although Street. making our point will on resuming program, and our digital near-term, cash. and increase in in Barrel business be prudent our normalizes and to we the investments generate our unit cash investments for to plan our We Cracker as focused system. and look forward beer both menu are We evolution growth conservation Maple as more of we wine our strategy,

With expect These were in juice open planned delayed We units. currently our Street working are We the fiscal We still $XXX,XXX. to stores fiscal they XXXX two soon intends Maple to do to regular evaluate has $X a to we pandemic. the in are to tentatively due to to so. reinstate respect XX XXXX, economics expect environment to dividend Cracker the to Street continues as open originally as a and condition non-COVID this were normal in Barrels fiscal million below finalize plans in costs open we AUVs an Board but approximately over attractive XXXX. Maple dividends, investment and with believe and unit our

are of right-sizing long-term the above and balance due debt investments and with leverage our ratio our target allocation, our Lastly, currently reduced return plan regarding capital our to levels. increased shareholders we to EBITDA and cash to debt we

March, previously earnings fiscal including guidance. As announced issued XXXX our in we have withdrawn outlook,

would comments However, some provide expectations. our around I future to like

stores rooms XXX hope presently, dining all weekend, rooms. The the dining this fluid, June. situation of of we As but opened to substantially have end by remains open had

before lift sales time will off-premise that we likely completely elevated our several rooms However, dining for quarters. be of growth we it some are at expect the and to able all will remain restrictions next

potentially we ahead, will several believe we Looking benefit from factors.

we trusted a with differentiated First, brand guests. loyal are

the impacted. concentration most of geographic Second, country not of stores parts been the our has were that in

Third, well event to car position interstate in summer. this by our families the vacations choose locations us that take

outlook is to restaurant our uncertainty in around continues general full-service There several to in of quite However, near-term. be reasons. willingness bit consumer the a cautious revisit restaurants for

be hesitant And dining because been our for may the COVID-XX. uncertainty Additionally, return pandemic. reopened outlook Retail for room, to may around cautious. a but are as more economic lastly, encouraging there sales our the at of impacts guests older higher have we've for is risk is of also they lot retail

retail the area. measures dining expect the in room will social retail and We by that distancing pressured be to continue both

the business challenged highly merchandise broader will Additionally, anticipate restrained. discretionary. be our as will that we more consumer be by environment, spending our is believe we And retail further

environment, the managing highly promotional merchandise, anticipate sell our assortments. our on lower do done retail through Due and the to we teams focused are inventories a of especially nice job Our margins. they have seasonal

not for chain we any or and Lastly, year. do vendor seen fiscal issues remainder been closely expect with discussions restaurant our we meaningful regular not of are the have our supply having our have partners. we supply To-date, disruptions monitoring and

for commodity of the volatility we will Although believe restaurant business likely outlook market economy is and we Because we it anticipate surrounding and industries, industries be uncertainties XXXX. do elevated the retail some will time. in numerous and facing cautious these our the and pandemic-related that our challenges fiscal see is

challenges performance this, the I and that continue Despite you. successfully coming with Thank expect earnings call to we long-term are positioned will the now these quarters. so likely in over operator believe a choppy take can deal well will As we turn be creation. our drive result, we value we somewhat your the to to questions.

Operator

Thank you.

question-and-answer today the from Our proceed with [Operator will will of now Francfort Instructions] Please question your We Gregory Bank first begin of question. America. session. come

Gregory Francfort

I Thanks. question. Thanks -- a the for just had I couple.

pretty that I'm were you and expanded as on on that curious be dine-ins, two insight, has just would the has topline. helpful. guys The off-premises the Clearly Just been? first substantially business how open sticky any

Jill Golder

your performance as you morning, question. Good pleased dine-in. our reopened restaurants the Greg. with we've We've of been the Thank for

remarks, improved Overall not significantly say our we seen of we've They've but decrease that would dine-in much XX% as days. prepared guess, in I for has it's down we've much been there. the off-premise; So, or said seen so. still restaurants early retained little, I cannibalization

room we'll been Again, So, three weeks. that how XXX had about got trends. that for stores -- only we've have open dining see their

Gregory Francfort

Got it.

a base kind of of, thoughts. comments the that and and XX% happens. returned PAR IV you I And on have of what employees, the think is is seems as off you of it having thoughts getting just around then incomes employee of unemployment. going Okay, said good in got of the -- had for that the I employee are that I'm the of questions July. it. both troubles, was the the in your fare and on your can having curious elevated the kind I work of much lot And then other getting had had the work. you a on return stage to two kind environment? to how you've question be Sandy, consumer, turnover me But maybe, how seeing industry past you're perspective I'm and trouble was Thank consumer given Is remind to the other to in kind if and on rolling any read this kind to people

Sandy Cochran

Well, me consumer. the start with let

reiterate predicting had. dining with reaction the pleased but been really trouble having comments we've rooms, everyone's think her we've as prepared going reopening been remarks, seeing, Jill a in I to to we've we're what's happen, made what

up benefit as is as we are guests and restaurant rate our stimulus more to expected us reaction the had buy both well maybe consumers the use problems unemployment. the reaction off-prem back dine in after the retail It's sort than be to the is coming continuing business hard checks to opens with what to So, unemployment and think recession we team we some the that credit to and I the economic how of the are it resonating. fits country be. the said, and be deep because assortment that's that to to enhanced and the being and may our then the which back sensitive the product, determine how that do have retail With how though, will the and impacting where -- degree which of the the -- of what will then of

is as got the positives biggest trust. sell just think food one of brand. that in is terms it's we we've So, -- the they we bad. probably some comfort think strong that Jill we The brand, mentioned, We a which

of happier, I people think times. reminds safer it

I tremendous will for And value. think value a everyday got be offer important. we've

kind think we've I and the are of older what we're uncertainty to to community. we're and degree be other have using positioned full guests event by going those And about that headwinds that to in fall the on travel what in service, whether consumers impacts comfortable outbreaks talked do about the particularly will our the all people have car. going well the

know we're we that we, I where so saying are get and but trying I the pleased with to way so a So, of are long on far. read consumer you're a guess that's

unemployment, we've of In had, I PAR terms there's them. -- overall, IVs, on of think our XX,XXX about the it's

some Now, back, at fewer used our of employees. are for people We're obviously, terms be And to experienced are pleased in in much ones situation family -- pre-pandemic. been particularly ability given bringing restaurants come feedback of Many know our may their that were being those I them There to reluctant lower have that uncomfortable of back. of our work are personal much though tenured levels, or safety. their to us. were employees don't many but how than pockets hours retain, we're come continue to with

about we're So, back. that how we in good of employees terms bringing feel navigating

Gregory Francfort

those Thank I thoughts. appreciate you for it. all

Operator

with Please come will question. question MKM next Partners. of Our proceed your Levy from Brett

Brett Levy

pause talked puts at in Thank the talk the net what's more you just I takes could for as your labor and thinking generation, Great. and could in but the and well. you the taking magnitude about savings us costs, What bit And have on level, of the to little it the whether layering how back just the gross burn field do is the the decline, sustainable be are I'll out or hope from you're about, store a you're you're incremental XX% level technology? cash for support, there. to doing We including in perspective. system? about the corporate. cash a my cash everyone question. And of not the on What invest system, flow both items you of static how through still -- coming if like the comp the walk thinking you some cash that, -- just

Jill Golder

Okay, good morning It's Brett. Jill.

got kind to of a where of of So, about start from are I'm we with I'll going and standpoint, how we how it the with question. cash forward. here, thinking we're start going end your kind then

the when in we Xst, shared at our remarks, actions sales we've on cash. if about talked So, down million on XXth, ended in store as quarter May the cash March prepared of the taken we neutral assumes -- we X-K an we think said that of is we in conserve March, we we that we're had And on for back XX% and cash. and about time. cash about this call million prudent investments that you when and filed to in all had When $XXX $XXX our burn started point in comparable

less a the safety and $X burned that take and and week. And six some care five than million over per investments. to that we cash we our some time included of making So, employees, to period, in health proximately, of that half week investments made

done job has nice a business today. that team the have the managing So, really we

level. variable the at profitable been we've So,

as open sales talked clearly, cash. that that to some you that the rooms, would about to would you now we so generating we're we're the get And dining seeing point starting be where fact

let balanced So, highly time We're principle back of will say that spending have about think and that go guiding strategy. continue us. remain I we'll a to to we -- approached around our disciplined certainly high reevaluating investments we're would that. me kind capital how for allocation with a our

in We key will menu really top point our strategy, at her in digital looking is beer And, cash of sale. evolution, around that wine, as Cracker mentioned will remarks, we're investments be the in the we investing maintain that and priority, conservation Sandy near-term. the our prioritize Barrel; while and prepared and

we look Then two leverage of debt we when depending that, that dividend Cracker the kind build open priority in to and our to what mentioned to And cash, fiscal continue of that long-term were course, They back of that, Street supposed brand. which about beyond openings. are then Board current We evaluate reinstate quarterly that levels -- conditions expect to would units for XXXX. been new they Barrels Maple have As open have open; more pushed that then very coupled our we're our excited will store we'll to XXXX. would and above targets. with regular our And long-term our to on remains a are. that all we'll

debt to shareholders. balance we will back cash returning reducing So, with then

here. will these we navigate ongoing -- of an as waters our be uncharted allocation capital course, conversation So, strategy through and

gets that of all questions. to hopefully your So,

Brett Levy

on Just one technology. follow-up

digital at app running but systems how seen You capabilities, year, your, it but both a systems had that merits get about I'll the queue. now store fully of quickly the your POS been elevate you integrated the let world, you've to can digitizing do POS and the ordering then level, the go also think you XXX at

Jill Golder

Okay.

stores of So, we've with our have XXX facing today rollout guest both approximately And The the well does help paused start us from we've pandemic. got employee again, a standpoint the as POS standpoint. point new that as sale. of the

So, we're it. excited about

it'll to food all as to order experience. we're it of balance investments. streamline it guest with their it's mentioned, for -- strategy, going retail, to both we'll the So, helps digital our Sandy guests these experience, really make much easier and going The

roll fall We pay expect time in to period. in out app the

digital are exclusive, quickly both kind the where liquidity the on we of two from moving path. But we well the as mutually are those of, standpoint. depend how will as POS do down not a path So,

Operator

you. Thank

proceed Jon Wells question. come from with Fargo. Tower question next Please with Our your will

Jon Tower

right your the whether in can it was with to national within how channel how thanks. house test do testing to could -- move get not in if at the Great, itself, you're retail dining to stores, see now well. beer I obviously, then results moment. bit the beverages plan ultimately, curious to you why about you got curious room little And or house push sense decide thinking forward? in plan you a and a on the doing and limited And well? or stores makes it to as do brands on using this the follow-up I'm the a then to dig I and wine perhaps trying decision and you're it to as

Sandy Cochran

Well.

and interest we about well So, been by time in a research guests' this doing for a thinking And first began to long year, of all, this understand the we've this. pre-pandemic. testing and began over have

visits experience January, results So, from opportunity of we room so in the I What our test Budweiser, to wines we more is brands results. and then hard we some communicated to is, are and is had Ribbon, and our our their shutting were, us Blue menu thing desire a and like What Home. that have Sutter beer, dining had the rolled from, the pleased menu Pabst make to enjoyable. research the and on found it cider Bud get think for from about guests already them an have were beer Light, many wine a we to down out in occasions down with way did current prior Florida,

So it popular we've select a red. proven It's popular which to how a be surprisingly surprising least, limited have got And mimosas, be. then a actually and was white menu. me they very to would at

that with assortment -- some opportunity we we the we able again, wine We learning’s we opened and before some dining way rooms long had down we then were we the when in to process. and them were down beer on had shut got Florida. So put open pause, to through

up XX about have and running. we now So stores

the to monitor continue on. and so We it, the to reaction sales

do will we pleased, roll we're brand. continue the out right believe to and And the for so just thing it that's far to we as

Jon Tower

Do moving time? over the channel see Good. all this retail stores the you and into within

Sandy Cochran

offered Not. Partly, in a But it some us see people do channel, think store. don't being of And places offer, to retail to that on go we the when take of now, you I say lot we in that. thought the retail it allowed part don't see I -- of way. as some communities didn't offered us

Jon Tower

you about like choppier into think over a this it I could how you're seasonal the is mentioned be to this to itself, it items are So then you business talk little throughout how Okay. inventory had well next others? but how your more you're much business, from very a of crisis. that trough And perhaps you retail than business going several going environment the forward, I'm have there's if managed seasonal I Jill, of expecting just manage know, just manage earlier, a to you and And demand curious, lot the in can the choppy months bit it to thinking going there? forward that looks point knowing

Jill Golder

that, the to needed thought couldn't managing and quite our retail well to assortments our we in. we a got we think that could a pleased Where forward done coming the where and were, be, cancelled, is consumer of I would we've phenomenal We and to response reflect we have risk bit knowing teams could. we going a had modified been where combination I job as be promotional what inventory with we we what choppy. from of of they had, we have our really a what as

there will trick with sure shorter a would those although, or gatherings. seasonal kind comfortable treating, whether It's of go, big Halloween. be for of example, weren't for We So, very be little in that's it us, assortment be be will holiday. as a parents a the stores presence Thanksgiving we and whether there'd

So, investment inventory we our on about like in were cautious things very that.

and But assortment, it traffic our assortment at on wall approach, wish. us. the impulse can paying an Maybe the has been through off as navigating is so where sales I come of it the their retail on it that in was not we very uniqueness, we how up personal when off-prem, an we bit think an been during long encouraging and a of don't and thoughtful keep that floor lot about best of were amount of we've food, people that like as elevated a can. seasonal a care. value fun, we we the Quite inventory somewhat quality, the much would have So the food great can as the environment the to surprisingly, the pick has afford price pandemic, would people nostalgia things to way

that a So for. well categories I there for positioned couple consumers think what were were were looking actually, we

Jon Tower

Great.

Jill Golder

on then let just inventory. And -- the me add

believe levels. additional quarter So given we and/or declines pressure have elevated inventory you some or large in we fact that, We seen, markdowns know, combined do we've have the, you'll that the do And, see with merchandise. you margins. traffic the on that next know, so, in seasonal

Jon Tower

me. one last Okay. for The

would us million these we The operating are to be savings, bucket going to can $XX settle somewhere in in expenses where like where stores? just channel? help the you those kind going of be could new you the if store quantify help labor, expect it the Is that helpful. cogs On of

Jill Golder

be them pleased business mention all, some the Sure. areas million action a as result in as will the on team's these us savings of both were I that we we to said, longer initiatives and I'm pulled quick trying think Well, first term. of do model, forward term. the want the $XX the strengthen long really pandemic. short in cost will benefit term the to in in that planned. with And of focus We

So, the was was for one realignment planned. example, that

So, you amounts. of key then going see the in those the primarily we in categories. those, through it'll in the two around management go year, where the give are But side labor be restaurant more And to areas the the -- as around G&A. labor, two we key you're the the can benefit and dollar up

Jon Tower

appreciate I much. luck. Best of Thank you very it.

Jill Golder

you. Thank

Operator

question question. your comes next Jeff Our Please proceed Farmer with the from with Haskett. Gordon

Jeff Farmer

thanks. a have Great, follow-up I of questions. couple

the of in performances. are first restaurants sort same-store week ended markets, May, thinking So curious more even in sales putting declines consistent how the they're then Cracker more I'm declined a across I was What earliest Central of is states up the open about meaning of had was that think of of in up. guys XX% that for XX. performance that up have performance And Tennessee or range importantly, and and like is XX%, same sales Barrel and of operation that some weeks. about of terms the there wide look their then you the terms part markets these referenced. Georgia, one in for follow opened better context units five number And theoretically have I sales that the

Sandy Cochran

So, going I'm great to it Jeff. more question, broadly. answer

broadly, pandemic, of as So throughout some, has similar. looked the we've first the all, performance relatively been

next only off the interstates, So of April seen stores broadly than more in interstate that May, those the the are impacted That's areas. was kind going the just modestly really that the much more this differentiation, place were biggest since differentiator. we've right that started, through of kind and are suburban

Now fast flows dine-in with for when recent restriction for variability we've times, forward anything that to capacity know experience we had have The and the else? of really a I some more that. of don't the restaurants re-open more versus lot

Jeff Farmer

Okay. Excellent.

they've than probably XX%? way at least terms that bit Tennessee five those Is it opened, to thinking of In it? Considering and open been as we states that they're it? safe just not four doing to weeks little think about for is is assume down better a to Georgia or that the mentioned, about

Sandy Cochran

don't it. as much I We early to think have about just it's talk little on it. data a

Jeff Farmer

John's question, cost up $XX million the on so following And Okay. in then saving opportunities.

in that a we alluded considering more of cost about much million, think than question that? about above should in or are So is, saving how of that some and incremental $XX it, the really, $XX million $XX beyond $XX the million, identified of environment? thinking in the million numbers pre-pandemic you terms past? you've to that but opportunities How is You

Sandy Cochran

were of business initiatives to take to as bringing strengthen to delivering We had initiatives we reminder, out The towards tracking it low addition million added are So, costs $XX the that that million million. and a in in thanks pre-pandemic we year the in in are savings. model. that that fiscal this $XX to $XX for were were value up. working number This a initiatives

So much are of new. those

Jeff Farmer

helpful. just last very Okay. And And that's one. then

that you seniors, So are words in to that continue mouth will that your you're you "optimistic" recovery notice did line putting top momentum? deliver

Sandy Cochran

recovery or over, I'm you it, the you having but see and let's incremental two curious move the again, June. on that the did impact on sales, month we largest forward call driving With as things touch said, three are that it of

Jill Golder

set probably there biggest and on. and with us that retail so the happens, lifted, Well, degree I trips product those welcome think outbreaks that we'll in them I other and as and vacations whether happens, If going restrictions communities that people's think restaurants some and in it's moving concerned which even we comfortable will and and to the to tends And But road are whether consumers have to issue. that, back communities hospitality whether provide capacity be -- set connected. be that dining I'm and when optimistic to that's feel the are around, back then getting doing and ready open-up some… taking them be that, comfort having and And out, that's we'll

Jeff Farmer

Thank Right. you.

Sandy Cochran

that enhanced … people when to the if pandemic when is one feeling in money, and with. for comfortable to reasons deal said is everything the or have do said, has brand, post that spending out, we that believe going think this is the said, another positioned that settles Jill then well the that's economic I've issue be environment -- I we'll not all event. But such are as I’ve that

Jeff Farmer

Thank you.

Operator

proceed Jake Bartlett comes Please from with question. your with question SunTrust. Our next

Jake Bartlett

burn, for the implication one that it's Great. little the XX%. maybe any working it's that think whether level that want sure I whether negative CapEx, I Thanks My first a in just the didn't any you weekly We make cash taking the us quarter. just I also margins if bit. capital. on you'd first changes including questions. is decompose and including unit at help to And see understand positive could in is have

at at of XX% just to any the help we for just want you meaningfully work right is this confirm, you what kind margins fairly to And G&A level. unit I on as run try as negative So give could positive the out? well expect rate all

Jill Golder

Okay, the this out, teams all job. great. trying still too. But work really think Well I -- and done I'd say, to we're have nice a

go down. was, over when that and if again, cash our experience back those were when burn what with investments, were And that's our five, million. we you of if at rate So, we through even down, to Jake, was you kind look the burn $X six-week rate significantly significantly COVID about period

we door. that include when neutral, all are XX%, does out cash the say So that at we cash

spending. CapEx includes It G&A. includes it So

So working cash, it's there. -- changes total capital cash total any

towards we where that where we this business be in -- on the So, of focus to get to generate position we're this and the balancing want a and will is with hopefully north reinvest start side where cash, will generation we're then it's the number moving in back going to -- back there. cash really the now team as stepping

us. for number, of bit I that us, question because hard with a a going a So it's for answer think to it's to be journey

Operator

Research. Please Stump Alton from come proceed with will question next question. your Our with Longbow

Alton Stump

are than, are it of space be better casual lot peers than you in are. from Presumably, of bigger positioned the so over taking next environment I One, the see, Thank you your Obviously, playing two? thanks quarter Great. do good Sandy, the And for competitive COVID seeing impact that most stores two morning, had here pretty questions. out the course, or how will a your overall and a question. environment. own you. competitive a

we would see than to You've already of it if had course. promotional strategy? of everyday had But it got have you COVID you the next different two? out be a over of how value do look overall as Is going what not kind platform, been your very sort strong quarter or

Sandy Cochran

me I that let speak Well, think to -- we're certainly where now. focused I think

value. be of out coming consumer the to that very on focused think I is going this

rolling every that And even took we rethinking can -- ensure think dinner new our We're dinner this. over was our be the though would look that so value of our about strategy to we're get we rethinking we pricing ambitious coming that don't price. we menu, are a thought it we out of that we -- need delivering element where menu, the to sure we

of able How will with to continued just environment on that's think And plays going that to we're the for to the places value be to guests probably the be will out will be the to of come it a very and that competing find and of consumers I ensuring share and on among a are people variety eat there so be will focus that every in some be and menu. deals that And out time. on competing a in there'll that of be all in sure do environment, market for competitive And who lot us doing to be going promotional. price that it out way think they are fighting there. I'm can now, the there's lot we people

we positioned So like I can as best are be. well we feel

Alton Stump

helpful. want then to I follow-up. That's just Thanks. And

and off-premise store footprint, about growing into think obviously, nicely I was off-premise As COVID. heading

probably it's at to Now time -- will point, be some levels, come. is elevated to your for

there period, kind something call opportunity that dining smaller would about currently? of big off-premise open an of As Or is about, to that of room? for think you're potentially it, not have up the curbside, and a to kind not locations average next, is bigger I three you on thinking that a as five-year over

Sandy Cochran

behavior was sort coming a the shift is Well, strategy. rethinking to off-prem off-premise the our is -- accelerated over the of certainly, has that would and some short with time a very off-premise years And of what team consumer number anyway. reopened say, has, in

whatever So, where the is We're important. consumers the now, the where we technology competitors of the now, reassessing in on be going is thought are light everything where table. to was now. are And

of kitchen where other thought those talking those all will including So, assuming we ready we opportunities -- ghost I'm the we're discuss like have, things, a some is be things about when version to about believe and prioritized what of we've versus yet. you're or a not

Operator

Our question. next question Todd with King. C.L. will proceed Please come from your with Brooks

Todd Brooks

Hey, Thanks my for taking good everyone. morning, questions.

reopening, just you the as two Just capacity the over of kind and impacting retail retail we you're have moving how to customers if side capacity through seeing any restaurants you're we One, ones. where constrained? can you're been and spill discussion house, quick then the of about what capacity, the of controlling talk peak-ish how the are also periods And business? the and sales can flow finding the space retail that's

Jill Golder

thank Todd, the question. for you Okay.

as and one, capacity more it, of we a bit days there's really don't with the So, a experience but think more of hit open the through and guess, here, dinner lot I variability, have we peak is we at on weekend. where

with dine-in been we've mean, been that I we have rate again, side, So sales. kind the of flowing pleased we've pleased generate a that's trends, both attachment the, off-premise their we've of well governor and sales then can we there. do kind when that as with the for And to the really the to sales retail been able more delivered through we on frankly, as the that

Todd Brooks

Okay.

think what's need question. it comprising Just where other the something $XX store base? When potentially Or you. the than a asset closures of something impairment then store one more And lower charge? pandemic? charges, out asset is at great. we just is Okay, of that kind I that level the level unit the is store entire some about across Thank that's million look to definitional

Jill Golder

Yes.

yes. So it's --

straight impairment. monitoring test. So asset and our performance our it's a store evaluating We're always impairment

we to million impairment cash it accounting So looked when down we our looked approximately and flows, write when we guidelines appropriate thought was for that, store the $XX in test at at did future assets.

store at it's not but look we'll accounting charge. at have closures an So, a no our to just store to closure performance, this we That said, time. overall announce It's continue implication.

Operator

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

Sandy Cochran

to pandemic points such hope kind you out of created this. So, been The unusual actions. and took a summary challenges call, key got of of with this the maybe an time, I'm going disruptions. I unprecedented close that We quickly it's

closed. rooms have think, a We job I although, environment. of to the Our We of with open, were dealing learnings. the operators lot all did all keep our were and gained crisis navigated, of well able dining fantastic of locations a our

strengthening a our As result, we're business model.

confident value We're well we I creation. for we've by term seen but near think to our cautious, the positioned reopenings. the future. in what we're drive And are long-term ability encouraged with

stays safe looking speaking So, and you being I again I September. on call. everyone forward you to we're with appreciate the hope in

Operator

The conference Thank very today's concluded. you has much presentation. now for attending

You disconnect. may now

Cracker Barrel Old Country Store (CBRL) 2 Jun 202020 Q3 Earnings call transcript