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The holidays were good to Cracker Barrel

Takeout sales grew 20% last quarter as the company’s focus on Thanksgiving and Christmas paid off.
Photograph courtesy of Cracker Barrel Old Country Store

It’s fair to say that Cracker Barrel Old Country Store had a good holiday season, at least in its restaurants.

Its retail area? Not so much.

The company said that same-store sales rose 3.8% in its fiscal second quarter ended Feb. 1, with traffic up 0.1%.

Yet the chain’s comparable sales inside its retail shops fell 1.4%.

In both cases, holidays had something to do with the results. Company executives said on their second quarter earnings call that takeout sales increased 20% last year, or 200 basis points as a percent of sales.

In particular, the company’s Heat n' Serve options for Thanksgiving and Christmas, as well as large-order catering around the holidays, all performed well. And the company said that its country-fried turkey meal drove sales inside its restaurants.

“Holidays are an important time for Cracker Barrel,” CEO Sandra Cochran said on the company’s earnings call Tuesday. “We continue to strengthen our reputation as a go-to holiday destination for both in-store and off-premise dining occasions.”

Retail same-store sales declined, however, as products the company hoped would sell during the season didn’t quite resonate with customers as much as executives had hoped.

Still, Cracker Barrel believes that it can continue to bolster its takeout business in the coming months and years. The chain is expanding delivery this year to more locations, and takeout sales rose across all channels, including individual orders and catering.

Executives hope to finish the current fiscal year with takeout representing about 9% of total sales, up from 7.5% the previous year.

The Lebanon, Tenn.-based chain, which operates 664 locations, is also planning a major launch of a new chicken platform in April.

The company’s bone-in, Southern Fried Chicken should be available systemwide by April, with a major ad campaign to begin in May. To ready for the launch, Cracker Barrel has been installing equipment throughout its system—about 500 stores are equipped for the chicken, with the product available in 400 locations.

Cochran said she is “pleased” with the initial customer response to the chicken, “even initially without any marketing against it.”

The chicken will be a centerpiece of a new Signature-Fried Chicken platform that will also feature the chain’s boneless Homestyle chicken—also known as Sunday Chicken because it is only available Sundays.

The new equipment will enable the company’s restaurants to make that product available all week.

Cracker Barrel has also invested in training employees on the chicken, and Cochran said that the platform will allow different types of innovation. “We’ll be able to offer things like sandwiches,” she said. “Eventually we can do hand-breaded, dipped tenders with some rubs or flavorings. The culinary team has some ideas about how to build the platform over the next several years, really.”

Cochran said the company hopes that the new chicken platform will further improve takeout sales.

“Fried chicken lends itself to off-premise consumption,” Cochran said. “I think it will be popular as an individual to-go item.”

Cracker Barrel’s revenue in the second quarter increased 3% over the same period a year earlier, to $811.7 million. Net income declined 33% to $60.8 million, or $2.53 per share. The company’s stock price declined nearly 3% on Tuesday.

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