With a new fried chicken line proving a strong nighttime draw, Cracker Barrel Old Country Store is aiming to keep dinner traffic growing by gradually adding other homestyle dishes to its evening lineup.
The family-oriented chain is also planning to add a new everyday menu of homestyle dinners priced at $8.99, a move intended to offset the rampant discounting of casual chains, while incorporating the brand’s breakfast lineup into the dinnertime bill of fare. Management explained that many customers don’t realize Cracker Barrel’s signature Southern-style breakfasts are available all day because those options are currently listed on a separate menu.
Simultaneously, the company intends to push for more off-premise business, including large takeout orders of fried chicken, while tweaking Holler & Dash, its biscuit-based fast-casual brand. “We believe there is great opportunity in the breakfast- and lunch-focused fast-casual segment,” Cracker Barrel CEO Sandra Cochran said in disclosing financial results for the fourth quarter ended Aug. 2.
Cochran also revealed that Cracker Barrel has completed its purchase of a 49.7% stake in games and food concept Punch Bowl Social for $89 million. As part of the co-development deal that was announced earlier this summer, Cracker Barrel has also agreed to provide $51 million in growth capital in the form of interest-bearing loans. About $15 million of the expansion kitty has already been forwarded, with the remainder to be invested during fiscal 2020, according to Cracker Barrel CFO Jill Golder. The partners plan to add six Punch Bowl Socials to the 18 current units by the end of the fiscal year, she said.
The company’s core concept, the 660-store Cracker Barrel chain, posted a restaurant same-sales gain of 3.8% for the fourth quarter. About 0.2 points of that gain came from traffic, another 2.3 points came from pricing, and the rest from a shift by customers to higher-priced items, Golder said.
Comparable sales for the retail component of the outlets rose 0.4%.
Cochran attributed the gain in traffic and overall restaurant comps largely to the success of a Southern fried chicken combo dinner, the first iteration of a new Signature Fried Chicken line. The launch of the new chicken line, in turn, is the first step in what Cochran described as a comprehensive recast of the concept’s dinner menu.
“We’re attempting to do a variety of things,” she explained to financial analysts. “First, we plan to add new craveable signature items. ... The signature fried chicken platform is the first and maybe the best example of the kind of thing we're trying to do.” She did not cite any additional examples, but said tests of the possible additions will begin gradually this quarter.
Simultaneously, she said, Cracker Barrel intends to simplify its menu to speed serving times and spare wear and tear on the kitchen staff. It will also add the new bargain-priced $8.99 Home-cooked Classics line as a value-oriented draw.
Golder said Q4 comps had also been helped by a 20% increase in the chain’s off-premise business, to 9% of total revenues. Delivery is currently offered through third-party services by about 450 stores, with another 150 set to add the service by the end of the new fiscal year.
Off-premise sales were helped by the addition of family-sized orders of the new fried chicken, both for delivery and for pickup at the restaurants. Cracker Barrel has invested in new vehicles and catering managers to sell more large-party orders in fiscal 2020, Cochran said.
She mentioned Holler & Dash just once in the conference call with financial analysts. She was pressed with information about Punch Bowl Social, but provided little additional information, noting that the relationship is still in its earliest stages. “We will provide input and strategic advice, but our main focus remains Cracker Barrel,” Cochran said.
Overall, Cracker Barrel posted a net income for the fourth quarter of $65 million, a 6% rise from the year-ago period, on revenues of $787.1 million, down 2.9%.