Strides in hiring helped Cracker Barrel get sales back to pre-pandemic form in its first fiscal quarter.
Same-stores sales turned positive for the first time since the pandemic began, increasing by 1.4% on a two-year basis for the period ended Oct. 29.
Better staffing was largely to thank for the improvement, executives said during a call with investors Tuesday. The Lebanon, Tenn.-based chain hired an average of 2,000 workers a week in the quarter, nearly closing staffing gaps in the kitchen and making progress in the dining room.
“We do feel good about where we're positioned going into the busy season,” said CEO Sandra Cochran on the call. “And we think that those improvements in staffing is certainly a meaningful part of how we've been able to achieve the sales recovery that we've seen.”
A new virtual orientation program was key to the improvements, Cochran said. New hires can do the training on their own “and come to the restaurant ready to work really the next day almost,” she said.
“That has really helped, I think, make us an employer of choice for a lot of potential workers.”
The 664-unit chain is still dealing with difficult pockets and callouts due to COVID-19 protocols, a final hurdle before dining rooms can return to normal capacity, Cochran said.
While Cracker Barrel’s sales and staffing more closely resemble their pre-COVID levels, the underlying business has changed. Sales from its retail shops are playing a larger role than in 2019, up 17.6% in the quarter vs. two years ago. Meanwhile, takeout and delivery remains strong, accounting for 20% of total sales in the quarter.
“More impressively, we retained almost all of our off-premise sales from last year, when we had a large number of stores operating either off-premise only or with significant capacity restrictions,” outgoing CFO Doug Couvillion told investors.
Contributing to those off-premise sales are the chain’s new virtual brands, Chicken ‘n Biscuits and Pancake Kitchen. The former is now being offered by 500 restaurants, while the pancake concept is available in about 100 locations.
Cracker Barrel’s operating margins are also different now than they were two years ago. Operating income was 5.5% of revenue in the quarter, down from 8.5% in 2019. That’s a result of higher costs for labor and commodities that have affected restaurants nationwide coming out of the pandemic.
To offset commodity inflation of 7.3%, Cracker Barrel raised prices 5.5% in the quarter, and said it would likely raise them again as it expects inflation in the high single digits for the rest of the year.
That price hike is more than what the chain typically takes, but executives said it hasn’t affected traffic.
“We think we still have an increased pricing power right now in the near term,” said CMO Jennifer Tate. “So we are planning to take another increase in Q3 that will probably also be above that typical range of 3%.”
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