Coming off another quarter of declining traffic, Cracker Barrel Old Country Stores is counting on several strategic shifts by its new CEO to right the family-focused chain.
The adjustments aired Tuesday by Julie Masino are less sharp turns from the path set by her predecessor, Sandy Cochran, than changes in emphasis and timing. For instance, Masino’s emphasis on bringing Cracker Barrel more in line with prevailing tastes and restaurant preferences was not dissimilar from Cochran’s call for evolving the brand to keep it relevant.
But “while we’ve taken some steps in this direction over the past few years, we need to do more,” said Masino. “Cracker Barrel is a timeless brand, but even timeless brands must evolve as consumer preferences change.”
Within a few weeks, she continued, the chain will commence a comprehensive study to determine what Cracker Barrel should become to stay relevant. The effort “will inform all aspects of the brand, from menu and marketing to digital and store experience,” Masino said.
Even before reaping those insights, the leadership team will start working on potentially significant changes to the Cracker Barrel menu. Already in a small test is a new bill of fare, Masino revealed.
“While it is only in a few stores, it is a significant test because of the scale of the changes,” she told financial analysts following the release of the company’s second-quarter financial results. “This test includes approximately 20 new items, several modified items and over 20 deletions, as we seek to balance our innovation with simplification.”
Simultaneously, Masino continued, “We are also innovating through day-parted offers.” On Tuesday, the chain rolled out a mini-menu of seven reduced-sized entrees with prices starting at $8.99, all available exclusively from 4 to 6 p.m. on weekdays. Masino predicted that the updated versions of early-bird specials would draw bargain-hunters during a usually slow period for the chain, but without complicating kitchen operations. The big change is in the portion size of items, not their preparation.
If there was an across-the-board attribute to the strategic changes outlined by Masino, it was in the speed of adoption.
“I believe it’s important that we become more agile and innovative and I’m pleased with how the teams responded to my challenge to move quickly,” she said.
That sense of greater urgency will also apply to gleaning insights from the chain’s months-old loyalty program. “I believe we can do more to faster realize these goals,” said Masino.
And what does she foresee for the company’s secondary concept, breakfast-and-lunch specialist Maple Street Biscuit Co.?
“Myself and the management team right now are insanely focused on Cracker Barrel,” Masino said. “There's a lot to love about Maple Street. But right now we are really focused on growing Cracker Barrel and returning it to strength.”
Second-quarter results for the Cracker Barrel brand suggested that the concept could use a jolt. Same-store restaurant sales rose 1.2%, but menu prices rose by 4.8%, indicating a traffic drop of about 3.6%.
Comparable sales for Cracker Barrel’s in-restaurant gift shops dropped 5.3%. Masino attributed the decline to sea changes evident across the whole retail industry, an apparent reference to rise in internet shopping.
Overall, net income decreased 13%, to $26.5 million, largely because of increased labor expenses, according to management. Revenues were essentially flat, at $935.4 million.
The company ended Q2 with 662 Cracker Barrels and 63 Maple Street Biscuit Co. units.
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