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Cracker Barrel puts its hope in catering

The family-dining chain is confident in the future of its takeout business.

Cracker Barrel has built a successful restaurant chain by placing itself along the nation’s highways, hoping to be a stop-along for hungry travelers.

But the Lebanon, Tenn.-based family-dining concept now hopes to become a destination for shorter-term stops, too. The company said on Tuesday that its efforts to increase takeout and catering orders yielded fruit late last year.

The company has a new catering program and online ordering, and is working on an improved menu, such as handheld biscuit sandwiches or a biscuit bar for its catering program.

“This is a long-term initiative for us,” Sandra Cochran, CEO of the 635-unit chain, said on the company’s fiscal second quarter earnings call on Tuesday. “We’re really focused on building competency and awareness in the next few years.”

She said that the company’s “heat and serve” meal helped generate strong sales over the Thanksgiving holiday, and Cracker Barrel is hopeful that a similar meal will help bolster sales during the Easter holiday.

The chain expanded its off-premise efforts last year, including a newly upgraded coffee program. The company plans to add flavored teas and lemonades, and Cochran believes that specialty beverages should improve the chain’s sales in the coming months.

Casual-dining chains and family-dining concepts have been working increasingly hard to take advantage of consumers’ demand for more convenience. Chains from Darden Restaurants’ Olive Garden to The Cheesecake Factory have been working on numerous issues, from catering and delivery to online ordering and even a change in store design, to increase that part of the business.

Cracker Barrel on Tuesday reported 1.1% same-store sales growth in the company’s fiscal second quarter ended Jan. 26, while its retail same-store sales rose 0.5%.

Customer traffic to the chain’s restaurants declined 0.9% in the quarter, however.

The results were somewhat disappointing to investors—Cracker Barrel stock declined nearly 7% on Tuesday.

The company also lowered its expectation for full-year same-store sales growth to between 1% and 2%.

Executives said on the call that same-store sales so far in February have been “challenged” because of winter weather, but they expect that same-store sales will improve as the year goes on.

“We remain confident our business and top line initiatives and marketing efforts will drive sales,” CFO Jill Golder said on the earnings call.

Cracker Barrel reported net income of $91.1 million, or $3.79, up 73% over the $52.7 million, or $2.19 per share the chain generated in the same period a year ago. Tax reform generated $1.63 per share in additional profits during the period.

Revenue in the quarter increased 2% to $787.8 million.

Executives expect that tax reform should yield $45 million to $50 million. The company plans to invest $10 million to $12 million of that back in the business.

Cochran said the company is “evaluating our options,” but that it would work on strengthening the brand, supporting its various initiatives and investing in its employees.

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