Earnings call transcript Q2 2023

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Operator

Good day and welcome to the Cracker Barrel Fiscal 2023 Second Quarter Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Kaleb Johannes, Vice President, Investor Relations and Business Transformation. Please go ahead.

Kaleb Johannes

Thank you. to webcast. second welcome conference fiscal and and call morning, Cracker quarter Barrel's XXXX Good we a morning, This issued quarter our results. second press release announcing refer for press non-GAAP January this release on call, In and XX, XXXX. financial second the we'll measures quarter ended the to recognized measures leaseback assets transactions related impacts. the non-GAAP and of financial the amortization our adjusted the are The gain exclude on to non-cash the from and sales tax

understanding as the that believes GAAP. earnings to per The GAAP investors these financials. substitute the items the release financial This share with of net the page performance. from provides accordance enhanced press the isolation be or in intended excluding from a income last with results include information for an The to of in information not information or financial company's company reconciliations prepared non-GAAP is considered

morning call Jen and provide Craig Sandy of President financials outlook. Senior with Vice me the the a Vice On and Cracker Senior this CEO, and Craig business, Barrel's will Cochran; Sandy and and President CFO, President and review are Pommells Tate. CMO,

will open We for Jen. the questions then call Craig Sandy, for up and

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

company the date to it, valid call required undertakes except as update of be Finally, as and shared is the on law. information may no the today's obligation applicable under

Cracker Cochran. the and call turn Sandy President Barrel's over CEO, I'll now to Sandy?

Sandy Cochran

good Thank everyone. you, morning, and

announced especially we margin operating retail off-premise morning, our was These rate expectations, I pleased of and performance. adjusted This X.X% strong results with sales exceeded of and and continued income total our X.X%. growth

our I the menu and of believe our the as initiatives. underscore merchandise offerings results from appeal brand, well our traction as

well macroeconomic we headwinds we and deliver momentum uncertainty, initiatives making continue sustain and our of half in key are year, back margin on QX. face further we're driven to by great the positioned heightened While and the I progress to believe improvements

some I'd to second now to like speak quarter. highlights from our

As Thanksgiving you quarter our our to for to at of a the teams know, again and due off-premise in occasions, particularly channels. Christmas these and our is our us once leadership executed importance outsized high level holidays. And bolstered second

offerings. saw significant to items our the promotions, We Turkey holiday offered new demand Fried continue and with did again offerings, that as grew and we seasonal sampler culinary other our bundled including such Roll Pie meaningfully for Cinnamon as introduced business menu our guests resonate catering Country

to to to track this we've our target achieve and continuing do fiscal to we're support see are our and growing channel driven by by on enhancements million saw and our We made catering channel of well, marketing year. this XX% optimized our offerings $XXX

in blow our year. glitter of holiday and prior the streak nostalgic were lapping the Our light assortments, which backdrop retail we the strong responded their enthusiastically performance delivering impressive continued and teams retail holiday trim. molds, results, globes particularly challenged to of was Guests especially our in

and hourly and line remain believe we've staffing our an experience. are with both hospitality encouraged results retail operations to turnover. the levels total We levels in over approximately and our We're Our and below our XXX recently end fiscal historically year's the we complete XXX it system, labor the From system margins, standpoint, the by the in majority implemented guest and manager last to stores, bringing the planning by high to substantial year. the of on solid, are in focused well the the seen expectations. of test of we improvements rollout were

continues visitation to will believe as gains a delivering again to the visitation which We flat income who guests improvements. due the a value improvement compared this group macroeconomic the guests visitation experience the by year. system productivity XX new Omicron saw we guest in our enhance pressured and in strong remain moderate From was with over, younger prior employee both while environment. and lower to also to among saw we proposition this appeal guest believe We guests and relatively lapping part year-over-year from was perspective,

to looking and Lastly, we're we're two Columbus, The locations quarter, by accelerating opened year their half Maple of markets. and during Texas, in fiscal and encouraged back growth were the prepare Street scaling successfully performance Houston, for forward continues new the which beyond. both and the Ohio of these locations. in team to new of the

quarter will on the And once year. for and provide in our about additional fiscal details finished, some he's second detail initiatives. expectations now results greater our Craig cover upcoming I'll update provide an

Craig Pommells

everyone. morning, Thank Sandy, you, and good

year increase for Total we the top of expectations the revenue an quarter, surpassed over For was that results $XXX.X restaurant million, second our both quarter. prior X.X% retail. delivered and line

a And December as lapping well a from From month. performance we cadence, monthly from benefit favorable line as was in as benefited generally January with the weather outperformed Omicron larger-than-anticipated expectations. our our and during in November

by to store Retail sales, retail was grew half Restaurant from new restaurant X% grew restaurant pricing. prior revenue and both driven the of X.X% revenue including roughly of approximately and the total was million pricing over by store by X.X% year X.X%. year, Comparable prior $XXX.X primarily versus Comparable which sales forward which quarter. increased $XXX X.X% fiscal XXXX to and traffic, million, half increased carried

industry line with trends. X.X%, which declined Traffic was in

we our any seen from has meaningful of regard. pricing remain and impact happened the have on pleased not check, monitor pushback in and closely this our to continue traffic We that guests we

were Barrel saw and beverages. menu Bites mix driven Off-premise favorable of by our also for sales. increased over approximately sales shareable restaurant We XX% X%, of sales

As high a due seasonally sales the during and holiday bundled offerings reminder, elevated mix business. for our second quarter is to off-premise catering the

compared the largest sales store of prior and category. second increased quarter the Comparable year. by to X.X% delivered, increases the retail Apparel, decor food

on This quarter versus versus goods cost quarter. Moving was cost Total and extent, to increase by goods menu inflation freight. quarter as items change year by sold in partially in pricing a of revenue offset of of year point mix to in XX.X% well prior XX.X% total quarter quarter. the was was a by commodity our prior lesser Restaurant restaurant in in second XX% XXX basis the the expenses. sales the XX.X% second of XX.X% higher primarily of sold of as driven

primary year-over-year experienced We produce. increase poultry, were in of the of the inflation where QX dairy across basket drivers our market most and

when quarter our prior of was promotional in was COGS compared markdown favorable retail which, atypically more Second driven rates of line quarter, in as a rate. historical sales levels. to at by increase XX.X% was a primarily cost goods retail reminder, normalized expectations although basis the XXX sold versus activity, remained with our point XX% an This low

to year. million to timing million sales, the retail $XXX a quarter was were product at in in $XXX to more of end a higher prior compared inventories lesser and support normalization increase to primarily The Our extent, deliveries. carrying due

leverage, to primarily the offset regard revenue expenses of costs, by labor partially driven decrease labor in XX quarter sales With our of related were year quarter. by versus and was This second XX.X% restaurant XX.X% inflation point hourly wage prior basis X%.

expense from revenue resulting by of year versus maintenance, depreciation prior other supplies lower partially quarter. offset point were sales primarily increase XX.X% and Adjusted and by expenses higher was in advertising XX XX% inflation, expense basis leverage. This operating the from driven utilities resulting

the of expenses Finally, X% from second our point prior quarter versus leverage. X.X% basis resulted were XX general year decrease and This primarily the administrative revenue sales quarter. in in

All was operating amortization or from $XX.X the revenue. in the million. $XX operating gains of asset transactions, million of of and of the X.X% this leaseback for recognized income culminated for noncash sale GAAP on the quarter the Adjusted income

Net interest a of higher level quarter. higher and $X.X is in the increase prior to quarter of This $X.X million interest million borrowing. was expense interest rates compared result expense for of the the net year

tax second the was for rate effective quarter GAAP XX.X%. Our

earnings second quarter, per the were $X.XX. $X.XX was million Second EBITDA diluted quarter share adjusted GAAP and X.X% In were share of earnings or diluted $XX.X per revenue. total

balance to Now balanced turning our capital allocation. and a to sheet. to We allocation our remain committed capital approach

of Barrel Cracker first invested Street. Maple and in Our the remains growth priority

a to plan return flexibility appropriate our we and conservative balance that, capital maintaining shareholders, while Beyond sheet. to

a returned and second combination and the $XX invested quarter, dividends expenditures capital $XX of quarter the million million in repurchases. share second In through we to shareholders in we

in million additional With $XXX guidance our to some outlook, on color would I ended Lastly, to quarter with we the like this in debt. respect the release. morning's total provide XXXX

QX we're balance even want remind that and the with our confident said, with our will predicting heightened the pleased everyone, results, I are we half in of continue an second environment uncertainty That normal. we momentum operate more the to year. of in to makes We the sustain challenging year than

X% growth guidance. the year anticipate year. over the will we XXXX pricing, by for fiscal This of is to We be expect prior full to Turning which driven approximately total the primarily X.X% revenue currently now X%.

increases. approach to approaches to to guest we As continue remain to in previously price multiple monitor thoughtful mentioned, our reactions prudent and pricing utilize and

opening We four anticipate and Street three XX approximately of to locations the Maple Barrel Cracker new locations. new

that Maple updated delays. fiscal fiscal that 'XX open the late into of as Our may units from result were construction possibility slip a reflects some early in to 'XX, primarily Street expectations planned

anticipate in low for This now fiscal mid-single-digit commodity inflation QX. We in single-digit the to X.X% inflation year. and assumes approximately inflation of QX X%

updated for QX. expectations Our for inflation current commodity outlook reflects

lower this expect being protein favorability anticipated inflation is While outlook, categories and higher than produce. we some previous by to offset inflation now in eggs our more in compared

a X.X% fiscal million fiscal hospitality relatively market now expect has which for slower restaurants wage for inflation. of restaurant-only $XX now this to inflation year. of remains in labor cost in anticipated deliver and The We approximately resulted tight, moderation savings year. We expect than the during

assumptions savings, commodity areas to operating our and following the income to the a moderation which of revenue impact QX most inflationary growth, G&A supplies, in other the pressures cost notably for incentive have contemplate year addition meaningful In and and inflation assumptions: margin maintenance, to on retail wage continues the expectation margin in in and above near normalization, QX. will high compensation historic and utilities prior P&L, compared continued

in of X% year margin adjusted including into expect in X.X% account, to QX range, full operating this QX. X.X% in all Taking income the high and X% we to X.X%

or further our to were further there increases. environment commodity be the We also moderate be or believe is consumer operating inflation there there deterioration if downside environment a upside income were the if potential expectation fails in moderation in to if and to of

tax adjusted Lastly, we effective effective XX% rate the to we full anticipate of tax capital for will million. XX% to expect GAAP approximately and a And an of rate be year $XXX $XXX expenditures million that XX%. XX% to

I'll now plans back to turn the so fiscal for additional call may she details share and around outlook our XXXX. business Sandy over

Sandy Cochran

continue headwinds, uncertain operate while Despite QX to this I'd margin we're back like by in to is highlights. outlook further As we improvements primarily in now some speak gains outlined, that half an year, to optimistic. deliver faced our QX. and we'll the Craig of confident the driven some environment margin in backdrop,

our several menu current initiatives we introducing also think environment critical further while reinforce value will about the craveable we which new is in excited offerings. believe I'm leadership that

and advertising and promotion including under value have signature reminding meals $XX, menu XX guests over several current that is campaign favorites. for focused on we hearty Our variety

we've take $X home recently new introduced Additionally, offerings.

provide and protein of $X. It's for additional early, the one add have encouraged entree, inside our of which build with by choice affinity guests the we've and this a With entrees, to includes is we seen another can way but far so just been believe we've three yet to guests. any purchase what value

entry maintain We mindful and points. remain on how the menu pricing, and sections being deliberate and we're price our attractive value we're thoughtful taking to of

preserving also of effects and strategy actions We believe value to the strength. our balancing, our appropriately protecting margins closely is our monitor while continue pricing

value, examples new Bacon Chicken, Day recent offerings of our Cheesy we under XX currently in enhance offerings $XX. on fried with signature as innovate Both continue our are is success a we're which with chicken focusing menu, our the leverage we And and featuring innovation Breakfast Chicken to continue also addition In our how and menu. to part Toast. such the part Homestyle these seeing to French of Homestyle of

menu see our For to catering off-premise, offerings. Easter looking occasion as we're our expect enhance to for Easter forward the We're and continuing strong we'll well. bundled demand

uniqueness of and Regarding strong merchandise cross-generational the retail, our have will believe appeal. we value continue to

we assortments with other seasonal start, guests. that off we're believe also Our good about excited assortments are Easter to will a resonate and

quarter. We had In closing, quarterly expectations. our a results that we solid delivered exceeded

are gaining We focus well innovation, our on and remain believe our to performance and our recovery. experience. and and we're our technology strategic initiatives on Our margin the we're making drive guest operational in value, progress through traction initiatives menu excellence, positioned continued confident strategies,

Finally, efforts for continued turn our and that, I dedication. with for the your want over thank call I'll their questions. operator the to strong employees to And

Operator

[Operator Instructions] Jeff ahead. first Haskett. question The comes with Gordon go Farmer from Please

Jeff Farmer

you thank morning. Hi, and good

million it, -- but I and of improvements, on touched should from $XX cost business You savings looking you're for say. model

being How in of what guess drove that increase the much to of through reinvested? in expect versus that is, I question you guidance flow So the do through? terms flow

Craig Pommells

we've ongoing -- of process. save list. to you you to inflation, are The for think component, is this business more I as Obviously, an how ways about is to continued mean Jeff, there's we've cost morning, -- and increase add continued to efficient, to the guidance projects in function constantly the price make a a that's our Good address Craig. looking

saves of those projects implement we'll idea cost that from -- to confidence as as more have increased successfully, them gone confidence high result. we a So have the

the And of weighted it's towards -- of terms first of the the year. more cost of half the saves, in second heavily the the the skew versus year half it's --

commodity used and of say partially of in said cost wage. inflation of would having the that's terms that, Now terms being saves, I in what mitigate is some to

So we cost have save a number. gross

technology on. being being so like areas used Some things and of and increases some cost and initiatives to invested that's different to of like drive it's commodities mitigate partially in maintenance

Jeff Farmer

like Okay. But little than probably not a going that. you're specific to bit sounds it be more

Or provide $XX So can market is reinvested? some half if million for sort it is gross, us? level being of it's there of you

Craig Pommells

we've inflation saves in The them Yes. that numbers the example, cost has the already. for shared, benefit of

so how counting risk -- because double if a net-net, if already it So it some is to through flowing I amounts. guidance in of other much some there's our say I I think we've were of included

Jeff Farmer

terms moving Okay. one I you in apologize on February Omicron this, missed but offer more I trends, just And quick of I missed you it of offered. trends the Again, apologize if just favorability, anything there? can then through February I guys one. anything sort if

Craig Pommells

part quite was February, consistent big favorable. So clearly, a January on with a our Omicron, than normal. of year-over-year but basis warmer It expectations. was also large has positive was weather in because more And been overall much

from is moderation unusual expectations. So a clearly, period February that but was and time with line an January, in

Jeff Farmer

Thank right. you. All

Operator

Our ahead. Brooks Todd Company. from Please go with comes The question next Benchmark

Todd Brooks

Hi, thanks it. questions. Appreciate taking my for

in traffic either were we seeing catering would performance. explore far buckets sequentially are can what the at about helpful. you of fiscal compare strength dine-in but what I if being dine-in First, you to to Sandy, off-premise, being holiday QX, compare you seeing want be pre-pandemic talked as or levels performance as that to if

Craig Pommells

On basis, continued us X-year the So I'll basis ways, look, morning, a a this Good X-year Dine-in to start improvements okay? have on Craig. Hi. in of pre-COVID. a in we versus shifted basis. dine-in off. consumer is down -- is has still see clearly a on lot X-year some Todd,

individual down, still area so gains pre-COVID, certainly highlights. driving go a and that traffic. catering made think strong also to that's we spot off-premise been growing the particularly business. Dine-in Yes, in also is party but our within we're and sales Relative tremendous seen have bright I has to are focus a those third off-premise we've or

Todd Brooks

kind million much of Okay. the now through of $XX in catering we're that is the share in season? that growth Craig, bar you how important there. in a follow-up just holiday already Can

Jennifer Tate

Can that? I take

Craig Pommells

to Sure, I'll Jennifer turn Jen. that it over for one.

Jennifer Tate

Yes.

off-premise. I think expectations We year-over-year is XX% would of in say up our QX of what terms exceeded that we catering. were in terms

also catering. true felt about our really, we And So of made progress delivering. that's we quarter good in second the really in in third-party terms the

there solid well. had quarter a as We

that are definitely to track out we the hit on like feel we we year. that So for well set goal

Sandy Cochran

is respect to is QX And strongest. catering, biggest With the quarter. QX our

Todd Brooks

then And I'll Great. in one, back queue. jump final

know the targeting were pricing strategy, of of out increase. quarter, menu last price On coming I kind X% you maybe

full maybe crept maybe Can talk face especially about we now commodity outlook the continued the another think I year points. how off? moderating, increases in basis up XX And forward? roll has of price going does

kind quarter. timing that So with it other X.X% said year? occurred Or I during stay increase the is the the steady incremental, you're at roll-offs. Do don't now I the a half think of of we've lumpier know you balance now of running through got the of -- we the the

Craig Pommells

Todd. have the for fiscal on X.X% the action the half accumulation about that we half -- the so of is other prior Craig from rollover far year year. is The the QX, that it's this and pricing pricing, And of in year.

the For of expect prior in in as range. fiscal remain rollover level the the well we half pricing year the high to this year, meaning year overall the back as pricing cumulative, X%

example, go as pricing to have price will -- mathematically, is by be driven you but less from we QX. in benefit year, we that just prior took the year, of we in for Now will that actions took actions, going that throughout the we

QX. range QX So and for upper X%

Todd Brooks

I'll Okay, queue. in the jump back thanks.

Operator

question comes Alton Loop Our with from next Capital. Stump go Please ahead.

Alton Stump

year? the the flow. competitive heading even into want think certainly you recession you Is year? and good in do morning. the et than promotional a half Thanks news what first lot questions it Or for you with of calendar been obviously had worse What more There's typically of competitively? time see Great. at par to as about This do concern my is with ask the consumers always. the a it's but Thank of more this thought so time year taking cetera. with about usually the I or environment. just of anyway you

Sandy Cochran

then Alton, Jen I'll start sort and wrap up. let of

QX reinforcing has and take on our $X menu introduced we've the value on that we with now XX our is our mentioned, As our we $XX, been under home. focus certainly in believe

will And about that will marketing believe so largely be messaging our because we important. value be

our agree detail appear we're let I We're speak or on reintroducing even competitors value would would the are, seeing menus and and think, their that I based promotions. seeing Jen to they think where more, I'll on advertising. would the reinforcing --

in what consumers a back coming to dissimilar will industry 'XX and economic time difficult out 'XX the went them. through not it's was So challenge we when of and

So continue, I accelerate. would assume it's going not to if

Jennifer Tate

Yes, about We're well. I it number the over that think the But many we of Sandy big things, that messaging, really said pointed well price what $X.XX, pointed, under items of XX are XX fact discounted so that we just in -- on is with $XX. XX from our menu especially our $X.XX, $XX.XX, seeing under have we're on really focused price have definitely increase competitors. talking some an promotional meals are

so of the mix, in, favorites, but to we innovations very there start also just come our across And familiar all home whatever under soon drive point are that are media channels you part day that all that promoting of $XX. new enticing

take think response to new really so to Cracker So really value and everyday strong We've reason we seen on year we'll far people will as on well $X extra which homes, that that. make Barrel. visit the the that balance an focusing platform of a as value, give that added strong of be promoting

but the heating to environment is competitive I is on we on our think menu. more our continue strongly do value have even intention double So down great to up, the

Sandy Cochran

Jen, we're Jen with because said and value, check have, be we to initiatives pleased continue that to going things. doing attachments, on everything, that those premium the just add with little, the work while our Bites about our do I'm pleased building just beverage Barrel we're size, our we a to

indulgent the investment afforded seeing that those menu, those something with value, So kind items especially we're the I years for that now are the the we're those it of on that or last either the and is But still few they helpful. are we're be watching over guests still and for are for all value increases to guests think taking around for there of choosing that, price maybe sure be marketing our looking who more looking them. will ensuring in are that

Alton Stump

you. That's in it. so Thanks Got from color of much. back great you. Thank some queue. hop I'll both

Operator

Bank Our America. of next Katherine question comes from Griffin with

Katherine Griffin

commodities you. quarter ask Hi, to fourth I thank the about wanted outlook.

that I inflation. deflationary single-digit from of expectations went low think to

just I were. So was could order what the rank that kind wondering main you how of of drivers

Craig Pommells

prior The way prices, And contracts Yes. eggs. a were given though produce Relative be our to to think in were spot eggs the QX, eggs market certainly, and that most -- egg in from a solid we perspective, -- and current up a and we most much favorable is that going higher we in moderating. for moderated even are are and more now are good it's spot do position line I in hundreds goes news perspective, with developments we you from then be expectations to proteins. percent if our market expect prices top projections of on formula are our The went other with -- market same and conditions, two produce. than the in to seeing it's

Katherine Griffin

that unit I I'm think just Okay. on outlook, changes guessing then Maple -- Understood. there. And Street

You called some headwinds. construction out

if permitting? sort constraints, that -- of of construction sort just could what you was labor, I wondering So mean that. you supply elaborate Is do headwinds? on by What chain

Sandy Cochran

All Different stories. of that.

people do the the Some takes cases, to in some many we it. get we labor do don't equipment, some it's permitting it. have cases, can't is to get -- the have some as to the In get communities construction. longer issue cases It can't

So those least issue in. probably one it's or every of have at one categories

Katherine Griffin

Barrel the for problem stores? And Cracker it's less so a

Sandy Cochran

fewer actually new on it are of pour We one have a on our have, But It's of of because the footings less because the one we each labor. ones units is because couldn't and delayed weather it we stores. of problem. both

labor the and way the issues work supply their be to for little while a problems likely is the continue system. longer, through this chain while problem So to a

Katherine Griffin

it. Got

hop back I'll queue. you. in the Thank Okay.

Operator

Securities. Our Please Bartlett Truist from ahead. with Jake next go question comes

Jake Bartlett

some Great. still Thanks a wide wide year, on question. which a back of first taking seen and leading of for means of of like the But results in strong caution line, very, very that even so kind January. it so we've and the wide top terms What there's has you over half really the have bag. the for is concern year keep range been the the the My and are for just the the of range signs demand back kind volatility to kind far volatility just guidance. you is of that revenue some the that My of seems over lead Craig, X% you've though half. about revenue the rough -- on range. talked Sandy about in XX% you've in to to kind of half wide the we to given range upside, range math growth give that very the

Craig Pommells

much it up, is Jake. you think set in Hi. when normal. to it you underlying -- that wider given I volatile of than the said volatility, environment a hand. us range. implies morning, actually Good kind hand It more And goes that just The is

as experience has we're saw to our expectations. January, more from Our the of so movement normal. fiscal than we far for A that been example, there's path meeting in But this B,

don't will us that to low put end are of that degree the the or the year, to of they high some some in and very about our maybe second they positively, the range the there would assumptions the put -- if play we even in put they range half risks. think end degree out us the on built of As that

going which travel For and their over which Ukraine comping folks the the example, on half of sharp gas the saw in be sentiment prices, we how from impacted also specifically, XX on they our they're negative what while guests. And second effects the war, a trip. we're to of do impacts year, travel

And had their negative their halo they their that, in minds and a for monitoring financial in future. were outlook it really

comp we're guidance, over that going So is and will that our that in an -- positive. expectation be to expectation there our a

impact then degree the to offsets else there that Now that something us that that, that's would is negatively. negative

Jake Bartlett

it. Got it. Got

more and Okay. dig guidance. a the in And wanted then I on COGS little commodity to new bit the

you us have tell what at can you contracted If point? this

I it what's idea could us think time And you look the you also contracted. roughly last was but we of should if give what XX% just spoke, out an then for.

back we you're exposure that out contracted that there, you can for don't So you and most the kind really the whether track hit monitor on are have what that of in see of guidance? sensitive to

Craig Pommells

market while the in we market And are of at spot a the the down, carrying little because time. back did highs. the a half that's this we than it's And different less are down function of spot XX% coverage from market's So contracted year last year, about spot the coming prices -- is coming your down, but price. coming off of

prudent have to traditionally. seemed of that to have -- hasn't in the to we us not we all lock it result of as a that, So degree

-- market across that So extends there a areas really of and basket. our are of variety

the but they So less suppliers. want it's market of traditionally provide is spot They there coverage with coverage degree but high. a rationale that lot that risk And a premium is the the not normal down, behind to than would. do aversion is coming of still at

So but that math is it change starting changed to hasn't yet. as

I So different carry broad in say, would areas. know, our in terms as of basket a we market fairly concentration you

normally exposure to we higher coverage, exposure, forces of across but than those. amount would. less is been most that than market And really is have We of do fair there it's

and some have out those some have also exposure. prices there, formula formulas We

not you as as it's and So an white as would probably answer black like.

more a So commodities perspective. starting more to exposure than normal, favorable look but environment the from is also underlying

Jake Bartlett

four big quarters, something for And causing last -- there's higher. question. be then Great. COGS the bad to last that's been there, your guy Within been COGS, in a there's

unspoken COGS. at commodities, on the of an of price, So bad So X% there's "inflation." there X.X% for quarter, if pressure kind I look been it's second Basically, was more in XX.X% a kind guy.

that I some -- think how we it? of normalize? couple as mix. the switch good about next become there, Is in Does there's tailwind to as of quarters in a think that freight should that those

Craig Pommells

XX of upgrade. with come menu more from COGS but Yes, mix we've we the And have a menu really percent. coming done is mix, to bps about a of those options had of also that and work some higher guests provide that with mix form the roughly it's in come check to higher

but cost favorable the has margin increased it's result. percent a as So

you some we a that started and seeing about as bit to in further of of QX last it noted, out And last little QX in got year. year play increased degree

on that the I comping But to be really, we'll continue flexibility headwind But we're of in how lower to the us, points. and in keeping entry price -- guests said regard. providing terms a that. same use also our So are to choose tailwind do do of degree. I we a all give that, they major not not we anticipate having anticipate

that a with come And goods guests things to degree the opt normal. a fairly that typically higher cost price. sold, of into items that's have higher Those

that started of you comping degree be over that as a noted, in to the will So be point, headwind we to continues but COGS QX. wouldn't when that, as is happen, that I surprised this that,

Jake Bartlett

appreciate it. I Great. Thank you.

Operator

Wolf King. from Our Andrew Please next go CL question with ahead. comes

Andrew Wolf

it's chain wanted to I being out beginning out the you've it half Good to start to rolled labor or where system now. you. mentioned is morning. roll about with Thank by the

let's targeted. matching do lot the traffic And getting how of us to has that is and KPIs work to it give doing is a just it, you it's So versus you've with on. so -- sort of I how as milestones, guest in it understand the update like say, with could achieving an

could to it's either is or a own? we on out something our productivity that metric us where So with this try labor you could figure ultimately share

Sandy Cochran

me Andrew, start that. morning, Good let so Yes.

First the last now, about of pleased with PCM new, got about stores continued XXX all, results. and call we here are just labor. we've it our ruled In to XXX, we the be

you category. a system primarily does the sales said, they specific As variety the matching by of labor it helps the of store sort things, with anticipate a needs but that

them specific better they're visibility sales, different to labor match. the than stores their different have to of helps demands business it to of gives than and individual do, type sales catering So to it labor match them the that trying which better off-premise time day allows and just is dine-in,

and employee also is experience. a with the comes for has The system an It app. benefit cloud-based

able access things variety a them. helps employees do and are to of So system the that

this the has to employee it So experience. benefit

better I it our think manage allow believe us in labor. will general, we to

us improve whole productivity in I the Craig, labor imagine giving guest that roll one our other that per over of hour a up specific to a There's guidance. it productivity, components things will lot labor management would of anticipate, other labor lot don't but help I on line, metrics component.

Craig Pommells

component. about it's XX% save, labor. Yes, the cost out out sales, in think I I of XX% got million think I Andrew, got, about think, labor And a we've of coming component $XX and that coming is of cost we've this of

Andrew Wolf

color. Okay. Appreciate that

are you're because the Christmas? -- you like you waiting the be is it of kind increase you younger question just a for -- program, there or Thanksgiving marketing programs sales of of I in just Is is example? other I to stuff, -- where need flat is you do the sort kind seasonality is items think ask that and Can know a you're give programs other visits cohort loyalty some target I wanted kind of were in to for us more I about it sort right, think The penetration. to if selling a heard or of product the timing a of Or And of phase strategic issue? catering-related it year-on-year.

Jennifer Tate

Andrew, it's Jen.

several sort we have But specifically, improvement younger QX with over of cohorts. were unchanged modest younger as quarters, those for back seen with cohorts. think our look I we we steady,

just a we see say particular quarter. this likely whether was I I that think where that to was piece, Omicron was in our of guests the gains with see but wave. the some older we most seasonality modest wrapping the or didn't did can't quarter guests improvement older this returning So due

base, with meaningful feel are -- guests. we've wasn't many we win. we to of hard just But we And with older increasing younger So with continue overall, do the cohorts. diversify QX believe It pleased just just and coming frequency our good some significant how the obviously, in return. those have It's working guest about that. and to been see, a seen guests a of the our were say to we quarter pleased younger progress back will portion we to particularly

have ones efforts folks, of of launch more do a the end program. to of lot the And our in to we younger bring one biggest rewards continue being planned towards the those year the loyalty

Andrew Wolf

program on remain launch you to the track So fourth loyalty the program? in your quarter, fiscal

Jennifer Tate

We to quarter. intend are working certainly very fourth hard to in meet that do timing, the and launch we

Andrew Wolf

you. Thank Okay.

Operator

Tower be mute. your Jon, [Operator with Please line next Instructions] might ahead. from Citibank. on Our Jon go comes question

We're the with next Todd going questioner, ahead. Company. go the Please Brooks Benchmark to get

Todd Brooks

Hi, thanks.

sites, this start talking of to you ease building type of which fiscal frictions. couple a year. of Street to XX Maple On then the for you. and follow-ups account, just about forward I a of were a will pipeline taking a look frictions going growth talent If construction into And Just pipeline want the earlier What's expectation. and 'XX unit is reasonable a an quick and here. you're hopefully year question, to into out

in Or next year? up? If XX can you that you we think you the start open how XX should year, out frame to open

Craig Pommells

Todd, it's process still 'XX time, that enough planning our this as fiscal yet. to early not openings Craig. share prepared the in it's any -- we're At

Todd Brooks

I XX% from know of margins historically, I talked saw of the gross we've Okay. because retail gross But QX, normalization an range. that more markdown I seen a been in XX% follow-up second standpoint, gross the just When And rates, retail mid-XX% we we that couple in past to of a my about even think years the Fair on in look kind kind the quarter environment, is range. so clean inventory and we've in normalized at then in margin. enough. in the ended that margins.

historical how Do a wondering to again? Or shot are think quarter? there just over old to about XX% that markdowns this carry the kind clean range? should Thanks. the do inventories? into we the And XX% So of XX% is

Sandy Cochran

it how see inventory to wants what -- say, actually, specific turn are Well, -- and I'd very I'll on on Craig I clean. he the start to get can over inventories to he then retail guidance. the But

through, teams our of did a I think our good seasonal job managing particularly inventories. retail

the love First of them. all, consumers

went sales. so into the strong And season with that we

really did job good they the closer, markdown. of a got we managing as And

longer, a at higher particularly, have a if inventory price right So clear Christmas had at would waited of storm big we we to I weekend. than lot able we we think a the were had

good inventories feel about I are where So now.

of In kind than in of terms standpoint of margin expectations to better for is as the now but more quarter, what as going generally, I... last 'XX a which from year, is on, normalizing good not be we're

Craig Pommells

-- the normal. and Exactly. They pleased business doing That's is We're are on track. is approach exactly great. We're retail right. the to margin very returning

were QX, I year's we think were much still last And we QX, closer. normal. lower than by

say would we closer pre-COVID. as where it's I forward, been we've to So traditionally go

Todd Brooks

helpful. Thank you Very Okay. both.

Operator

America. Katherine ahead. Our next Griffin with Bank comes from of question go Please

Katherine Griffin

Hi, thank more about a ask I little wanted you. off-premise. bit to on

fulfill the coming layout structurally talk expected, So than if to I think wondering in any a with with order restaurants you I'm physical could adopting you of technology to the stronger in in sort of that little more respect either maybe reflecting changes that stronger about or demand. some just the demand? made

Sandy Cochran

quarter is meals n' celebration Jen the programs quarter as But We've very -- strong historically to go. first and it's of a opportunities to or for turn -- individual more for second it Katherine. just I'll to us. specifics, she lots of Serve Heat has all, whether off-premise I or the catering over

operations job had on experience focused And with and guest did have on -- think each particularly the Christmas. teams Thanksgiving in I improving of in really delivering. and We good -- delivering accuracy category, off-prem and a our been the really our teams

and against We that our We our at catering. in back lot actually do well. a more invested door, managed really of business marketing often it's

catering did to that job as the we our think selling great of or available of went menu catering lots the into I were businesses team sales some a good optimization of items holidays. had we managers, that

it by you really teams our a So lot anything Jen, do the that? of that a to of add results. delivered to lot done was work want

Jennifer Tate

XX% that go delivery pick composed Well, would off-premise I and then up, and business say our like Yes, was of catering pretty just is Serve. Heat to XX% good. n' XX% individual third-party

parts third-party strongest n' Heat delivery Serve. two off-premise were the of catering and the quarter, the then this and business During indeed our

and catering in because whole network the we expanding big marketing catering. strong system sales that say that for were of BXB was our fully efforts getting saw stores so in terms and accuracy, third all there, that of that and improving staffed can which managers delivery helped growth really important. our deliver That really I sales with those would of And in catering party drivers has catering delivery

third marketing are have because on and doubling with And do down such strong we platform a catering we party.

year. that plan the we the to So of balance continue

Sandy Cochran

launch digital did also our app. We and improve

Jennifer Tate

done that app native the our and really app Yes, -- got has a that app are we've ratings now strong. well,

X.X of huge saw that think orders. seeing lot been I the a these We're in I was usage Store the adoption latest a Apple of increased that's of improvement. that so and placing customer for

Katherine Griffin

Great. Thanks color. for the

Operator

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

Sandy Cochran

Believe for fiscal of in us our second QX sustain our drive continued Well, the improvements with performance pleased strategy the joining today. appreciate half thank year. momentum the and I'm results. you and interest. our We execution will

Operator

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

You may now disconnect.

Cracker Barrel Old Country Store (CBRL) 28 Feb 232023 Q2 Earnings call transcript