Q1 2024 Cracker Barrel Old Country Store Inc Earnings Call
Speaker 1: Good day and welcome to the Cracker Barrel 5th Goal 2024 First Quarter Conference Call. All participants will be in a listen-on-me-mode. Should you need assistance, please signal conference specialist by pressing the start key followed by zero.
Good day, and well continue the cracker barrel fiscal 2024 first quarter conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing darcie followed by DRAM.
Speaker 1: After today's presentation, there will be an opportunity to ask questions.
After today's presentation there'll be an opportunity to ask questions.
Speaker 1: To ask a question you may press star then one on your touch term phone. To withdraw your question, please press star then two. Please note this event.
To ask a question you May Press Star then one on your Touchtone phone.
Withdraw your question. Please press Star then two.
Please note this event is being recorded.
Speaker 1: I would now like to turn the conference over to Caleb Johan. Vice President and Dr. Relation, please go ahead.
I'd now like to turn the conference over to Kim up Johan.
This president relation. Please go ahead.
Speaker 2: Thank you. Good morning and welcome to Cracker Girls First Quarter fiscal 2024 Carpets column webcast. This morning we issued a press release announcing our first quarter result.
Good morning, and welcome to Cracker barrel first quarter fiscal 2024 conference call and webcast. This morning, we issued a press release announcing our first quarter results.
Speaker 2: In this press release and on the call, we will refer to non-GAAP financial measures for the first quarter, ended October 27th, 2023. The non-GAAP financial measures are adjusted to exclude the non-cash ammarization of the asset recognized from the gains on the sale and lease back transaction.
In this press release or on the call we will refer to non-GAAP financial measures for the first quarter ended October 27 2023.
non-GAAP financial measures are adjusted to exclude the noncash amortization of the asset recognized from the gains on the sale and leaseback transactions expenses related to the company's CEO transition expenses associated with the strategic transformation initiative, and a corporate restructuring charge and the related tax impacts.
Speaker 2: expenses related to the company's CEO transition expensive associated with the strategic transformation initiative and a corporate restructuring charge and the related tax impact.
Speaker 2: The company believes that excluding these items from the financial results provides investors with an enhanced understanding of the company's financial performance.
The company believes that excluding these items from our financial results provides investors with an enhanced understanding of the company's financial performance.
Speaker 2: This information is not intended to be considered an isolation or as a substitute for net income or earnings per share information prepared in accordance with GAP.
This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP.
Speaker 2: The last pages of the press release include reconciliation from the non-GAAP information to the GAAP financial.
Last pages of the press release include reconciliation from the non-GAAP information to the GAAP financials.
Speaker 2: On the call this morning, our cracker barrels, President and CEO , Julie Messino, and Senior Vice President and CFO Craig Pamel.
On the call. This morning are cracker barrels president and CEO, Julie Masino, and senior Vice President and CFO Craig <unk>.
Speaker 2: Julian Craig will provide a review of the business, financials and outlook. He will then open up.
Julian Craig will provide a review of the business financials and outlook.
He will then open up the call for questions.
Speaker 2: On this call, statements may be made by management of their beliefs and expectations regarding the company's future, operating results and expected future events.
On this call statements may be made by management of their beliefs and expectations regarding the company's future operating results and expected future events. These are known as forward looking statements, which involve risks and uncertainties that in many cases are beyond management's control may cause actual results to differ materially.
Speaker 2: These are known as forward-looking statements which involve risks in uncertainties that in many cases are beyond management's control and may cause actual results to differ materially from expectations.
Really from expectations.
We caution our listeners and readers.
Speaker 2: considering forward-looking statements and information. Many of the factors that could affect results are summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnish.
Considering forward looking statements and information many of the factors that could affect results are summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnish to.
The SEC.
Speaker 2: Finally, the information shared on this call is valid as of today's date. The company undertakes no obligation to update it except as may be required under applicable law. I'll now turn the call over to Cracker Bittles, President and CEO Julie Messina. Julie?
Finally, the information shared on this call is valid as of today's date. The company undertakes no obligation to update it except as may be required under applicable law I will now turn the call over to cracker barrels President and CEO Julian Massena Julie.
Speaker 3: Thank you and good morning everyone. This morning we reported total Q1 revenue of 823.8 million and adjusted operating income margin of 2.3%.
Thank you and good morning, everyone.
This morning, we reported total Q1 revenue of $823 8 million and adjusted operating income margin of two 3%.
Speaker 3: Our sales results were in line with our expectations, and our operating margin was at the low end of our internal expectations, reflecting certain investments we made to shore up our tops.
Our sales results were in line with our expectations and our operating margin was at the low end of our internal expectations, reflecting certain investments we need to shore up our top line.
Speaker 3: Although we continue to face challenges, I've been impressed with the team's work to diagnose the key drivers of our traffic headwinds, and I've encouraged by our results as we've delivered sequential monthly improvements in our comparable store traffic performance during the quarter, which I am pleased to say has continued into our important second quarter.
Although we continue to face challenges I've been impressed with the team's work to diagnose the key drivers of our traffic headwinds and I'm encouraged by our results as we delivered sequential monthly improvement in our comparable store traffic performance during the quarter, which I am pleased to say has continued into our important second quarter, we have to.
Speaker 3: We have taken numerous actions to drive traffic and deliver the sequential improvement. I'll go through them now.
Taken numerous actions to drive traffic and deliver this sequential improvement I'll go through them now.
Speaker 3: First, as we discussed last call, we took several actions to improve the effectiveness of our marketing in the first quarter. We increased our media spend by approximately 20% and refined our messaging to focus more on our core guests.
First as we discussed last call. We took several actions to improve the effectiveness of our marketing in the first quarter, we increased our media spend by approximately 20% and refined our messaging to focus more on our core guests.
Speaker 3: This included increased advertising in linear TV, including premium sporting events like College Football.
This included increased advertising in linear television, including premium sporting events like College football.
Speaker 3: We also highlighted our compelling value proposition by featuring an 899 price point in our breakfast-focused messaging. And we continued highlighting our over $20 under $12 in our lunch and dinner-focused messaging.
We also highlighted our compelling value proposition like featuring an 899 price point and our breakfast focused messaging and we continued highlighting our over 20 under $12 and our lunch and dinner focused messaging.
Second from an operational perspective, we remain focused on the guest experience.
Speaker 3: Second, from an operational perspective, we remain focused on the guest experience.
Speaker 3: We invested in the labor hours to deliver great hospitality and we continued to emphasize staffing, retention, training and development.
We invested in the labor hours to deliver great hospitality, and we continue to emphasize staffing retention training and development.
Speaker 3: We're encouraged by the improvements we've seen in certain key guest experience metrics. We are happy with our staffing and turnover levels, and we are optimistic we can sustain our sales momentum and gain further traction in the coming quarter.
We're encouraged by the improvements we've seen in certain key guest experience metrics, we are happy with our staffing in turnover levels and we are optimistic we can sustain our sales momentum and gain further traction in the coming quarters.
Speaker 3: Finally, we successfully launched Croper Barrel Rewards, our new loyalty program.
Finally, we successfully launched cracker barrel rewards, our new loyalty program.
Speaker 3: The launch was supported by a multi-channel media campaign to drive awareness and enrollment.
The launch was supported by our multichannel media campaign to drive awareness and enrollment.
Speaker 3: Our operations teams have done a terrific job as ambassadors and champions of the program, and guests have embraced it. We're very pleased with the guest response and the number of enrollments which have exceeded our expectations thus far. And we've been thrilled with the exposure we've received through our partnership with the iconic Dolly Parton.
Our operations teams have done a terrific job as ambassadors and champions of the program and guests have embraced it and we're very pleased with the guest response and the number of enrollments, which had exceeded our expectations, thus far and we've been thrilled with the exposure we have received through our partnership with the iconic Dolly Parton.
Speaker 3: We continue to believe Crocketer-Barrell Rewards will be one of the best and most engaging loyalty programs in full service dining. At our confident, it will be a meaningful brand's differentiator and traffic driver over the long term.
We continue to believe cracker barrel rewards will be one of the best and most engaging loyalty programs and full service dining and are confident it will be a meaningful brand differentiator and traffic driver over the long term.
Speaker 3: Turning to Retail, the Retail Environment remains challenged.
Turning to retail the retail environment remains challenging although there were some bright spots during the quarter such as our harvest assortment, we experienced sales declines across most of our categories. Some of this was due to lower restaurant traffic, but we also believe some price conscious guests may reduce their retail purchases as are we.
Speaker 3: Although there were some bright spots during the quarter, such as our harvest sortment, we experienced sales decline across most of our categories.
Speaker 3: Some of this was due to lower restaurant traffic, but we also believe some priced conscious guests may have reduced their retail purchases as a way to manage their overall spend with us.
<unk> to manage their overall spend with us.
Speaker 3: However, the team has done a good job managing inventories and is focused on emphasizing value and optimizing displays to drive sales improvements during this important holiday season.
Over the team has done a good job managing inventories and it's focused on emphasizing value and optimizing displays to drive sales improvements during this important holiday season.
Speaker 3: Looking ahead to Q2. Our second quarter is an especially important quarter for us due to the seasonally higher volume.
Looking ahead to Q2, our second quarter is an especially important quarter for us due to the seasonally higher volumes.
Speaker 3: Over Thanksgiving, our teams around the country worked tirelessly to deliver a great holiday experience for millions of guests and did so with extraordinary results.
Over Thanksgiving our teams around the country, who worked tirelessly to deliver a great holiday experience for millions of guests and did so with extraordinary results. We hit on all cylinders in every aspect of our business dine in heat and serve to go and catering and our planning and support systems, including supply chain and guest relations.
Speaker 3: We hit on all cylinders in every aspect of our business. Dine in, heat and serve to go and catering. And our planning and support systems, including IT, supply chain, and guest relations, and our retail teams all performed very well.
In our retail teams all performed very well in fact, we set a company record for total sales in a single week during Thanksgiving week with over $110 million in sales and we served approximately 6 million guests are top five stores alone.
Speaker 3: In fact, we set a company record for total sales in a single week during Thanksgiving week with over 110 million in sales and we served approximately six million guests.
Speaker 3: Our top five stores alone served more than 80,000 deaths over Thanksgiving week. To put that into perspective, those five stores served more people than attend most NFL games.
More than 80000 guests over Thanksgiving week to put that into perspective, those sized stores serve more people than attended most NFL games.
Speaker 3: I want to give a huge shout out to our field teams and leadership for their efforts and these results.
Once you get a huge shout out to our field teams and leadership for their efforts in these results.
Speaker 3: As we begin December , we will look to continue our Thanksgiving momentum over the holidays with our off-premise offerings and cater.
As we begin December we will look to continue our Thanksgiving momentum over the holidays with our off premise offerings in catering.
Speaker 3: We are leading into seasonal guest favorites such as our country fried turkey and cinnamon roll pie which continue to resonate with guests.
We are leaning into seasonal guest favorites, such as our country fried, Turkey incentive enroll pie, which continue to resonate with guests.
Speaker 3: With regard to catering, we're leveraging our catering sales managers to drive growth, especially with large accounts.
With regard to catering, we're leveraging our catering sales managers to drive growth, especially with large accounts.
Speaker 3: All of this is being supported by a marketing campaign that is emphasizing our strong all day value, which we believe is a competitive advantage for us, particularly in the current environment, and is something that we will continue to underscore.
All of this is being supported by a marketing campaign that is emphasizing our strong all day value, which we believe is a competitive advantage for us, particularly in the current environment and is something that we will continue to underscore.
Speaker 3: We are also continuing to optimize our media mix to improve our share of voice, particularly with core gas.
We are also continuing to optimize our media mix to improve our share of voice, particularly with core guests.
Speaker 3: For example, we recently tested local TV and saw a meaningful traffic lift with solid returns on this investment. And we plan to expand this to other key marks.
For example, we recently tested local TV and saw a meaningful traffic lift with solid returns on this investment and we plan to expand this to other key markets.
Speaker 3: Our marketing is also focused on promoting cracker barrel rewards to continue driving awareness and enrollment.
Our marketing is also focused on promoting cracker barrel rewards to continue driving awareness and enrollment.
Speaker 3: As I mentioned, we have partnered with Deli Parton to highlight Cracker Barrel rewards and promote her collaborative album Rockstar. We've been very pleased with this partnership with Deli, which has helped deliver a large number of impressions and high engagement rates, and has incrementally contributed to the strong levels of enrollment we have seen today.
As I mentioned, we have partnered with deli part and to highlight cracker barrel rewards and promote our collaborative album Rockstar. We've been very pleased with this partnership with DALI, which has helped deliver a large number of impressions and high engagement rates and is incrementally contributed to the strong levels of enrollment we have seen to date.
Speaker 3: I'll now turn the call over to Craig for a more detailed look at the first quarter from a financial perspective and to discuss our financial outlook for the rest of these.
I'll now turn the call over to Craig for a more detailed look at the first quarter from a financial perspective and to discuss our financial outlook for the rest of the year.
Speaker 3: After he finishes, I will then comment on our priorities and upcoming initiatives, including a strategic transformation initiative we have undertaken to help us invigorate the brand for long-term success. Craig?
After he finishes I will then comment on our priorities and upcoming initiatives, including a strategic transformation initiative, we have undertaken to help us invigorate the brand for long term success Greg.
Speaker 4: Thank you Julie and good morning everyone. As Julie noted, for the first quarter we reported total revenue of $823.8 million.
Thank you Julie and good morning, everyone.
As Julie noted for the first quarter, we reported total revenue of $823 $8 million.
Speaker 4: Restaurant revenue decreased 0.2% to $660.8 million.
Restaurant revenue decreased 0.2% to $668 million.
Speaker 4: Retail revenue decreased 8% to $163 million versus the prior year quarter.
Retail revenue decreased 8% to $163 million versus the prior year quarter.
Speaker 4: Compowerable store sales declined 0.5% over the prior year. Pricing was approximately 6...
Comparable store sales declined zero, 5% over the prior year.
Pricing was approximately six 8%.
Speaker 4: As with previously shared, we're taking more moderate net new pricing, given the current environment.
As we previously shared we're taking more moderate net new pricing given the current environment.
Speaker 4: Our quarterly pricing consisted of approximately 5.5% carried forward pricing from fiscal 2023 and 1.3% new pricing from fiscal 2024.
Our quarterly pricing consisted of approximately five 5% carryforward pricing from fiscal 2023.
And one 3% new pricing for fiscal 2024.
Speaker 4: We continue to closely monitor the impact of our price in actions, and we have not seen a negative impact to traffic.
We continue to closely monitor the impact of our pricing actions and we have not seen a negative impact to traffic. However.
Speaker 4: Given the current environment in which promotional activities elevated and consumers are generally pressured, we will continue to take a more cautious approach with our price and for the remainder of the fiscal year.
Given the current environment.
Promotional activities elevated and consumers are generally pressured we will continue to take a more cautious approach with oil pricing for the remainder of the fiscal year.
Speaker 4: Off-premise sales were approximately 17.5% of restaurant sales.
Off premise sales were approximately 17, 5% of restaurant sales.
Speaker 4: We continue to be particularly pleased with our catering business, which grew over 50% versus the prior year.
We continue to be particularly pleased with our kitchen business, which grew over 50% versus the prior year.
Speaker 4: Compare the store retail sales decreased 8.1% compared to the first quarter of the prior year.
Comparable store retail sales decreased eight 1% compared to the first quarter of the prior year.
Speaker 4: Although retail sales remains soft, we were pretty used with how the team has effectively managed inventory levels.
Retail sales remained soft we were pleased with how the team has effectively managed inventory levels.
Moving onto our first quarter expenses.
Speaker 4: Total cost of goods sold in the quarter was 31% of total revenue, versus 33.5% in the private quarter.
Total cost of goods sold in the quarter was 31% of total revenue versus 33, 5% in the prior year quarter.
Speaker 4: Restaurant cost of goods sold in the first quarter was 26.2% of restaurant sales, versus 29.1% in the prior quarter.
Restaurant cost of goods sold in the fourth quarter was 26, 2% of restaurant sales versus 29, 1% in the prior year quarter.
Speaker 4: This 290 basis point decrease was primarily driven by many prices.
This 290 basis point decrease was primarily driven by menu pricing.
Speaker 4: A modded deflation was approximately 2.3%. Driven principally by lower poultry and pork price.
Commodity deflation was approximately two 3%.
Principally by lower poultry and pork prices.
Speaker 4: First quarter retail cost of goods sold was 50.4% of retail sales versus 50.2% in the prior year quarter.
First quarter retail cost of goods sold was 54% of retail sales versus 52% in the prior year quarter.
Speaker 4: Our inventories at quarter-end were $207.3 million compared to $231 million in the price.
Our inventories at quarter end were $207 3 million compared to $231 million in the prior year.
Speaker 4: With regard to labor costs, our first quarter labor and related expenses were 37% of revenues.
With regard to labor costs.
Our first quarter labor and related expenses were 37% of revenue.
Speaker 4: versus 34.8% in the prior quarter.
Versus 34, 8% in the prior year quarter.
Speaker 4: This 220 basis point increase was primarily driven by our investments in additional labor hours to support the guest experience.
This 220 basis point increase was primarily driven by our investments in additional labor hours to support the guest experience.
Speaker 4: Our early restaurant wage inflation was approximately 5%
Only restaurant wage inflation was approximately 5%.
Speaker 4: Adjusted other expenses were 24.3% of revenue versus 23.1% in the prior year quarter. This 120 basis point increase was primarily driven by our investments in advertising as well as higher appreciation.
Adjusted other expenses were 24, 3% of revenue versus 23, 1% in the prior year quarter. This 120 basis point increase was primarily driven by investments in advertising as well as higher depreciation.
Speaker 4: Adjusted general and administrative expenses in the first quarter were 5.4% of revenue and excluded the following items. First, approximately $1.6 million related to our CEO transition.
Adjusted General and administrative expenses in the first quarter were five 4% of revenue and exclude the following items.
Approximately $1 $6 million related to our CEO transition.
Speaker 4: Second, approximately $1.1 million in professional fees related to our strategy, transformation initiative, which Julie mentioned and about which she will speak more monetarily. And third, an approximately $1.6 million corporate restructuring charge.
Second approximately $1 1 million.
In professional fees related to our strategy transformation initiative, which Julie mentioned and about which she will speak more momentarily.
And third and approximately $1 6 million.
Corporate restructuring charge.
Speaker 4: Compared to the prior year, adjusted general and administrative expenses increased 30 basis points, primarily due to sales delivery.
Compared to the prior year adjusted General and administrative expenses increased 30 basis points, primarily due to sales deleverage.
Speaker 4: All of this culminated in gas operated income of $11.4 million.
All of this culminated in GAAP operating income of $11 4 million.
Speaker 4: Adjusted operating income for the quarter was $19 million or 2.3% of revenue.
Adjusted operating income for the quarter was $19 million.
Or two 3% of revenue.
Speaker 4: Net interest expense for the quarter was $4.9 million, compared to net interest expense of $3.5 million in the prior year quarter. This increase was primarily the result of higher weighted average interest rates.
Net interest expense for the quarter was $4 9 million compared to net interest expense of $3 5 million in the prior year quarter. This increase was primarily the result of higher weighted average interest rates.
Speaker 4: Our gap effective tax rate for the first quarter was 15.7%.
Our GAAP effective tax rate for the first quarter was 15, 7%.
Speaker 4: On an adjusted basis, our effective tax rate for the quarter was 19.9%.
On an adjusted basis, our effective tax rate for the quarter was 19, 9%.
Speaker 4: First quarter, gap earnings for a diluted shear were 25 cents, and adjusted earnings for a diluted shear were 51 cents.
First quarter GAAP earnings per diluted share were 25.
And adjusted earnings per diluted share were <unk> 51.
Okay.
In the first quarter adjusted EBITDA was $45 7 million or five 5% of total revenue.
Speaker 4: Now, turn into capital allocation and or balance.
Now turning to capital allocation and our balance sheet.
Speaker 4: We remain committed to a balanced approach to capital allocation.
We remain committed to a balanced approach to capital allocation.
Speaker 4: Our first priority remains invested in the growth of Cacabarral and Ababals.
Our first priority remains investing in the growth of cracker barrel and enables great Bill.
Speaker 4: Beyond that, we plan to return to capital to our shareholders while maintaining appropriate flexibility and a conservative balance.
Beyond that we plan to return of capital towards shareholders, while maintaining appropriate flexibility and a conservative balance sheet.
Speaker 4: In the first quarter, we invested $24.6 billion in capital expenditures, and we returned $29.3 million to shareholders in dividends.
In the first quarter, we invested $24 $6 billion in capital expenditures, and we returned $29 $3 million to shareholders in dividends.
Speaker 4: We ended the quarter with $475 million in total debt.
We ended the quarter with $475 million in total debt.
Speaker 4: Lastly, as we announced in our press release, the board declared a quarterly dividend of $1.30 per share payable on February 13, 2024 to shareholders of record on January 19, 2024.
Lastly, as we announced in our press release, the board declared a quarterly dividend of $1 30 per share payable on February 13, 2024 to shareholders of record on January 19 2024.
With respect to our fiscal 2024 outlook I would like to provide some additional color on the guidance in this morning's release and an update on recent trends.
Speaker 4: With respect to our fiscal 2024 outlook, I would like to provide some additional color on the guidance in this morning's release and an update on Reef and Train.
Speaker 4: Order to date, we have sustained our momentum recovery and trapping.
Quarter to date, we have sustained our momentum recover in traffic.
Speaker 4: We were particularly pleased with our performance in November , which continued our trend of sequential monthly improvements in comparable store traffic that began in August . And as Julie mentioned, we delivered strong sales during the Thanksgiving week. However, looking ahead, we continued to...
We were particularly pleased with our performance in November which continued our trend of sequential monthly improvement in comparable store traffic that began in August and as Julie mentioned, we delivered strong sales you are into the Thanksgiving week.
However.
Looking ahead.
We continue to operate in an uncertain environment.
Speaker 4: Although consumers have been resilient, sentiment remains relatively weak by historical standards. With many consumers feeling economically pressured and more pessimistic, which could pressure discretionary spending.
Although consumers have been resilient sentiment remains relatively weak by historical standards with many consumers feeling economically pressured and are more pessimistic, which could pressure discretionary spending.
Speaker 4: With this in mind, we currently expect this vote 2024 revenue off $3.4 billion to $3.5 billion.
With this in mind, we currently expect fiscal 2020 for revenue of $3 4 billion to $3 5 billion.
Speaker 4: We anticipate pricing of approximately 4.5% to 5.4% for the full year, which includes approximately 2.8% of carried forward pricing from fiscal 2023.
We anticipate pricing of approximately four 5% to five 4% for the full year.
Which includes approximately two 8% of carryforward pricing from fiscal 2023.
Speaker 4: As a reminder, we expect our President to moderate sequentially each quarter during the year.
As a reminder, we expect oil prices to moderate sequentially each quarter during the year.
Speaker 4: We anticipate opening two new cracker barrel stores and nine to 11 new maple street stores during the year. We expect commodity inflation in the low single digits and our early restaurant wage inflation in the mid single digits.
We anticipate woltman, two new cracker barrel stores and nine to 11, New Maple Street stores during the year.
We expect commodity inflation in the low single digits and only restaurants wage inflation in the mid single digits.
As noted in the reconciliation table in our press release, our full year outlook also contemplates certain excluded expenses. In addition to the noncash amortization of gains from our sale leaseback.
Speaker 4: Our full year outlook also contemplates certain excluded expenses in addition to the non-cash privatization of gains from our sales back.
Speaker 4: These include approximately $10 million in consulting fees related to our strategy transformation initiative that Julie will cover in a moment.
These include approximately $10 million in consulting fees related to our strategy of transformation initiative that Julie will cover in a moment.
Speaker 4: approximately 10 million dollars in one time CEO transition costs.
Approximately $10 million in one time CEO transition costs.
Speaker 4: and approximately $2 million in corporate restructuring charges.
And approximately $2 million and corporate restructuring charges.
Our full year outlook.
Speaker 4: also includes the benefits of a 53rd week this fiscal year.
Also includes the benefit of a 50 <unk> week this fiscal year.
Taking all of this into account.
Speaker 4: We anticipate full year adjusted operating income off $130 million to $150 million.
We anticipate full year adjusted operating income of $130 million to.
To $150 million.
We also expect a full year GAAP effective tax rate of 2% to 5%.
Speaker 4: and an adjusted effective tax rate of 7% to 10%
And an adjusted effective tax rate of 7% to 10%.
Speaker 4: and the capital expenditure is up $120 million to $100 and a 35 million.
And capital expenditures of $120 million to 100, and a $35 million.
Speaker 4: I'll now turn the call back over to Julie, so she may share additional details on her perspective and our business plans and areas of focus.
I'll now turn the call back over to Julie So she may share additional details on her perspective on our business plans and areas of focus.
Yeah.
Thanks, Craig.
Speaker 3: I now want to provide some perspective on my initial impressions, my pillars for achieving long-term success, and where we will focus in the coming months.
I now want to provide some perspective on my initial impressions my pillars for achieving long term success, and where we will focus in the coming months.
Speaker 3: Since joining a company in August , I've been busy meeting with the field and home office teams, understanding our challenges and opportunities, particularly as it relates to the near term, and doing deep dives into our initiatives and financial plans.
Since joining the company in August I've been busy meeting with our field and home office teams understanding our challenges and opportunities, particularly as it relates to the near term and doing deep dives into our initiatives and financial plans.
Speaker 3: These past few months have reinforced my convictions that Cracker Barrel is an iconic and highly differentiated brand with a large and loyal guest space who love us and talented and dedicated teams who are passionate about our mission of pleasing.
These past few months have reinforced my conviction that cracker barrel is an iconic and highly differentiated brand with a large and loyal guest base, who love us and talented and dedicated teams who are passionate about our mission of pleasing people.
Speaker 3: Over the past 90 days, I've traveled the country with our field leadership teams and by myself, observing and interacting with guests and with team members at all levels, retail and restaurant, front of house and back of house.
Over the past 90 days I've traveled the country with our field leadership teams and by myself observing and interacting with guests and with team members at all levels retail and restaurant front of house and back of House.
Speaker 3: Over and over again, I've been struck by the enthusiasm and genuine affinity so many of our guests have for Cracker Girl and the love they express for our brand.
Over and over again I've been struck by the enthusiasm and genuine affinity. So many of our guests have for cracker barrel and the love They express for our brand.
Speaker 3: Multiple times I've had guests and employees approach me unsolicited to share stories and express adoration about our food, our hospitality, and our culture.
Multiple times I've had guests and employees approach me unsolicited to share stories and express aberration about our food, our hospitality and our culture.
Speaker 3: These interactions were powerful reminders to me that this brand really is special. And the foundation with which we have to work, including our traffic, would be the envy of most in casual and family.
These interactions were powerful reminders to me that this brand really is special and the foundation with which we have to work, including our traffic would be the envy of most in casual and family dining.
Speaker 3: Despite traffic declines on a relative basis, we still serve approximately 200 million guests a year, which offers us an equal number of opportunities to improve and grow.
Despite traffic declines on a relative basis, we still serve approximately 200 million guests a year, which offers us an equal number of opportunities to improve and grow.
Speaker 3: I'd now like to speak to the cornerstones that we will refer back to as we take advantage of these strengths.
I would now like to speak to the cornerstones that we will refer back to you as we take advantage of these strengths.
First we.
Speaker 3: We need to be a brand that our guests absolutely love.
We need to be a brand that our guests absolutely love.
Speaker 3: For as many guests as we serve each day, many of them only visit us once or twice a year.
For as many guests as we serve each day many of them only visit us once or twice a year.
Speaker 3: The best way to drive growth is by making sure that their visits are truly wonderful so that they will dine with us more often. And we can only do this if we are executing with excellence and doing the small things well, every shift, day in and day out.
The best way to drive growth is by making sure that their visits are truly wonderful so that they will dine with us more often and we can only do this if we are executing with excellence and doing the small things well every shift day in and day out.
Speaker 3: This means providing friendly and efficient service and making sure guest orders are correct and come out quickly. Retail product is on the floor and easy to access and the store is immaculately.
This means providing friendly and efficient service and making sure guest orders are correct and come out quickly retail product is on the floor and easy to access and the store is immaculately clean.
Speaker 3: While it may sound easy, it takes relentless focus across the organization to do this consistent.
While it may sound easy it takes a relentless focus across the organization to do this consistently our field teams are extraordinary and they have been focused on these very things with a renewed sense of purpose and commitment and their efforts are paying off.
Speaker 3: Our field teams are extraordinary and they have been focused on these very things with a renewed sense of purpose and commitment and their efforts are paying off.
Speaker 3: I believe with the focused energy and support of the rest of the company, they can continue the trajectory and build on our momentum. Second.
I believe with a focused energy in support of the rest of the company. They can continue this trajectory and build on our momentum.
Second we need to improve our relevance.
Speaker 3: Well, we need to be our authentic selves and lean into our competitive advantages of hospitality, value and comfort. We must actively work to evolve both the brand and our business model in a brand-appropriate manner to meet an ever-changing consumer needs.
While we need to be our authentic selves and lean into our competitive advantages of hospitality value and comfort.
Must actively worked to evolve both the brand and our business model and our brand appropriate manner to meet an ever changing consumer needs.
Speaker 3: Among other things, this means improving our speed of service, ensuring our menu features craveable food at all three-day parks, making our physical stores more appealing to guests and employees, and reducing friction for our guests and employees through a combination of operational and technological improvements.
Among other things this means improving our speed of service ensuring our menu features craveable food at all three day parts, making our physical stores more appealing to guests and employees and reducing friction for our guests and employees through a combination of operational and technological improvements.
Speaker 3: Our Cracker Barrel Rewards Program is an example of this sort of technological investment and offers us a unique platform to maintain and grow our relevance across all guest cohorts.
Our cracker barrel rewards program is an example of this sort of technological investments and offers us a unique platform to maintain and grow our relevant across all gas cohorts.
Speaker 3: We believe the program will help us speak to guests in a more individualized fashion and offer compelling value tailored to their particular behaviors and
We believe the program will help us speak to guests in a more individualized fashion and offer compelling value tailored to their particular behaviors and needs and that it will be a key part of a virtuous cycle of actionable guest data and company response that should drive visitations and grow brand affinity.
Speaker 3: and that it will be a key part of a virtuous cycle of actionable guest data and company response that should drive visitations and grow brand-of-finity.
Speaker 3: As I said, the response to this program has exceeded our expectations thus far, and we will continue investing in the program to accelerate the benefits we believe are out.
As I said the response to this program has exceeded our expectations, thus far and we will continue investing in the program to accelerate the benefits. We believe are out there.
Finally, we need to deliver compelling shareholder returns.
Cracker barrel is a mature brands that has faced many challenges in recent years and like all companies in full service dining will continue to face pressure going forward, while we need to and will control costs and maintain operational discipline to drive bottom line results.
Firmly believes that the only way we can sustainably grow is through the top line.
Speaker 3: For this reason, we will continue investing in marketing our everyday value to guests who love us and to do so in the places we know they are. And investing in labor, particularly on weekends and at dinner, so that our guests have an experience that will make them watch the YouTube.
For this reason, we will continue investing in marketing our everyday value to guests, who love us and to do so in the places we know they are.
And investing in labor, particularly on weekends and had dinner. So that our guests have an experience that will make them want to return.
Speaker 3: As Craig referenced, we kicked off a strategic transformation initiative in late September . This initiative is dated, driven, and multi-faced, and includes a comprehensive review of our business and a wide-ranging assessment of the near-term and long-term opportunities, as well as identification and execution of these strategies and tactics to go after them.
As Craig referenced we kicked off a strategic transformation initiative in late September. This initiative is data driven and multi phased and includes a comprehensive review of our business in a wide ranging assessment of the near term and long term opportunities as well as identification and execution of these strategies and tactics to go after them.
<unk>.
Speaker 3: We've engaged a top tier consulting firm to give us an impartial, external, and expert perspective to identify and appropriately challenge our institutional assumptions and to bolster our internal capabilities. Our board and our teams are actively engaged and leaning into this important initiative.
We've engaged a top tier consulting firm to get us an impartial external and expert perspective to identify and appropriately challenge, our institutional assumptions and to bolster our internal capabilities our board and our teams are actively engaged and leaning into this important initiative.
Speaker 3: We recently completed the initial diagnostic phase of this project. And the findings have given us confidence that the actions we've already taken to address near-term traffic challenges, more and more effective marketing that highlights our everyday value in more relevant channels like College Football, investing in front of House Labor, particularly during those days and day parts where we are either busiest or most challenged, and leveraging a robust loyalty program are the right ones.
We recently completed the initial diagnostic phase of this project and the findings have given us confidence that the actions we've already taken to address near term traffic challenges more and more effective marketing that highlights our everyday value in more relevant channels like college football investing in front of house labor, particularly.
During those days and day parts, where we are either busiest almost challenged and leveraging a robust loyalty program are the right ones.
Speaker 3: Initial findings are also helping us evolve and refine our thinking about key parts of our business, including a need to focus on our dinner day part and deploy additional technology to improve the employee and guests.
Initial findings are also helping us evolve and refine our thinking about key parts of our business, including our need to focus on our dinner day part and deploy additional technology to improve the employee and guest experience.
Speaker 3: Our strategic transformation project is intended to ensure we continue to evolve the business and play to our strengths and differentiators to drive long-term value creation, improve profitability, and to win market share.
Our strategic transformation project is intended to ensure we continue to evolve the business and play to our strengths and Differentiators to drive long term value creation improve profitability and to win market share.
Speaker 3: This involves refining our brand's strategies and positioning, identifying and prioritizing the most impactful growth drivers, defining required capabilities and enablers, and last but not least, executing with X.
This involves refining our brand strategies and positioning identifying and prioritizing the most impactful growth drivers defining required capabilities and enablers and last but not least executing with excellence.
Speaker 3: We are in the early stages of this project and I anticipate sharing more details with you over the next several months as we develop and begin to implement a longer term plan that delivers on the three pillars I outlined earlier. Being a brand that our guests love, maintaining and improving our relevance, and delivering compelling shareholder returns. More to follow on subsequent calls. Thank you.
We are in the early stages of this project and I anticipate sharing more details with you over the next several months as we develop and begin to implement our longer term plan that delivers on the three pillars I outlined earlier being a brands that our guests love, maintaining and improving our relevance and delivering compelling shareholder returns more to follow on.
Cyclicals.
I'll now turn it over to the operator for questions.
Speaker 1: Thank you. We will now begin the question and answer session.
Thank you we will now begin the question and answer session.
You ask a question you May press Star then one on your Touchtone phone.
Speaker 1: If you're using a speaker phone, please pick up your handset before pressing the keys. So if you draw your question, please...
If youre using a speakerphone please pick up your handset before pressing mckean.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
Our first question comes from Dennis Geiger with UBS. Please go ahead.
Great. Thank you a couple of questions I guess the first one.
Could we talk a little bit more about what youre seeing from your customers. What you saw in the quarter or perhaps even into the month of November.
From a customer standpoint anything as it relates to keep customer cohorts other behaviors worth calling out any any notable changes et cetera.
Okay.
Hi, Dennis.
Hi, Dan This is Julie I'll take that one thanks, so much for the question.
I would say that the environment out there really continues to be uncertain and mix.
There have been some positive it seems that a recession is potentially less likely inflation continues to moderate and the consumer and labor market has been resilient.
Those are the positives. However, there has been some reason for caution as well you know the.
Consumer sentiment has been declining in recent months and remains at relatively low levels labor market is cooling and savings accumulated during the pandemic are evaporating.
And yet.
Burdens from higher interest rates so low.
With all that behind us and sort of in the landscape out there. We are encouraged by the monthly sequential improvements in our traffic we believe that the investments that we've made to.
To focus on the guest experience to emphasize our strong value proposition across our day parts that was an important pivot in Q1.
It has been accelerating their frequency and enhancing our business model and we will continue to help us drive performance and win share in this very very mixed environment.
I appreciate that color jewelry, I'm very hopeful I guess second one just following up on that as you talk about sort of some of the resiliency out there a little resistance to the pricing to date, but then you know you and Craig kind of talking about the tough environment and maybe gets gets worse from here from a macro perspective, just wondering if.
If theres any more context, you can put around.
Your expectations over the balance of the year as we think about that macro environment do you expect the consumer deteriorates from here very helpful. That you gave the color around pricing for the year, but just anything more on kind of what's embedded in that in that sales algorithm, you've got a bunch of initiatives, but what youre thinking about your consumer from here.
And maybe related to that is there any context you can give.
Thinking about last year's trends in recent months relative to this year end.
Is it sort of our underlying traffic trends improving over these last several months is there any kind of year over year dynamic to be thinking about.
You very much.
Hi, Dennis this is Greg I'll dig into I'll dig into that one.
As we finished up our quarter four last year, we talked about an unexpected decline in nor traffic and then we talked about the things that we were going to be doing to bolster that and I think we're on a really good path with the actions that we've taken.
So at a time, we talked about we believe the environment was more promotional we believe the consumer was a bit more pressured than at the time. We also didn't have a whole lot of messaging and now we have adjusted we think to the current environment appropriately and that seems to be working for us.
The environment is more promotional that is what we're seeing in our results. The consumer is pressured but they haven't shut down there is still down and now they're making choices and what was important to US was that we are top of mind and in order to be top of mind, you have to communicate the bulk and we've ramped up our.
Asia and we've also focused our communication around what we're calling kind of this core plus group with a lot of our traditional core plus elements of our growth segments that are closer to that core you reach those folks in.
College football NASCAR things like that and that is working for US we are pleased with.
That outcome, so while the consumer environment may get a little bit better or make it a little bit worse, we don't know, but we do think we're well positioned given the environment.
That we're in now towards the end of the year, we're going to be comping over.
Q4 that was particularly soft for us I don't think were prepared to say anything else more about that specifically at this time, but we think we learned from that and we have adapted and adjusted for it the other point with that is.
Cracker barrel, particularly experiential brand, we we serve a lot of <unk> 200 million a three day parts breakfast lunch dinner.
And.
We're known for a lot of things, but one of them is hospitality.
And because of that we have been investing more in labor to ensure that one we can deliver that hospitality and we are and two that we can really serve over that kind of peak peak demand. So that's an investment that we're making in the short term for sure now one of the other benefits that you get.
From that is that's also a better experience for the employees and we're seeing turnover comes down so as we think about all of these investments play out over time.
One of the ways that it plays out as you have turnover comes down and you actually get more efficient over over time. So we're investing for the future. We are investing to grow our traffic in the short term, we think our investments are well timed for the environment and we think over over a period of time that will also help our profitability.
Great. Thank you Bill.
Okay.
Our next question comes from Katherine <unk> with Bank of America. Please go ahead.
Hi, Thanks, so much for the questions.
First I wanted to dive a little deeper into the promotional intensity that you mentioned is.
Is there any kind of differences in geographies or in specific sub segments.
You can you can speak to that Youre seeing.
Hi, Catharine its Julie I'll take that.
That one yes.
As we discussed in September on our last call. It's been really promotional out there from the competitors does that really caused us to take a look at what they were doing and what we were doing as Craig just talked about we really adjusted our messaging to ensure we were playing to our strengths and our differentiators that cracker barrel because we are in all three.
Day part brand.
So we wanted to make sure that our messaging really resonated with that core and core plus guests across those three day parts value messaging of our.
Of our day part messaging our value messaging around breakfast starting at 899, all of those things are really resonating well with our guests and the other thing that I spoke about in my prepared remarks that we're very heartened by is that we made additional investments in testing some different marketing strategies.
The quarter, one of which was college football Craig talked about NASCAR. Those additional investments have returned quite well for us both from a traffic and investment perspective. Additionally, we've invested in some local TV advertising in some key markets that has also provided a really strong return.
On investment and return on traffic that we've been pleased with and we will be constantly evaluating our marketing mix. The team has done a great job.
Digging in and looking at that to really drive efficiency as well as effectiveness with that core and core plus segment. So we remain optimistic about our ability to continue to evaluate and ramp of effectiveness in that space as we move through the year.
Okay. Thank you and then just following up on an earlier question can.
Can you just help us frame sort of what the comps were by months in your fiscal second quarter of last year.
Well actually I don't have.
We will follow up with you.
On that one we will provide whatever detail, we probably any details we can as it relates to what the comp is for last year.
Okay understood. Thank you.
Our next question comes from Alton Stump with loop capital. Please go ahead.
Okay.
Hi, guys first off on the commodity inflation guidance.
Craig.
Down two 3% in the first quarter, but are you looking for a low single digit decrease for the full year.
I guess, one what are the key drivers behind that increase as far as inputs and that you know.
Any sort of color on you know kind of what the pace may be over the next three quarters of the year.
Yeah.
Hi, Alton.
So Q1, we had deflation we're confident of peak inflation from the prior year. So that was that was good news, we do expect the commodity environment to be pretty good for the rest of the year, we don't expect it to be deflationary, though.
So I believe we've got some expectations out there for Bacon as an example to start two to start to move back up. So we expect a much more modest commodity inflation through the rest of the year are you. All know about beef has been beef has been high.
Hi, we were previously in our relatively high end or mixed but not towards not towards the top so as a result of that we do expect mild commodity inflation for the rest of the year, but not deflation in part because of the changes to our bacon.
Scott.
Understood. Thanks for that color and then.
I guess one quick.
Additional question just on the retail side of your business, obviously, a disappointing performance I'm sure for you here in first quarter.
Are you heading down to of course with the huge time of the year for that business I guess, how are you feeling heading into the holidays.
The retail side of things.
Oh, it's Greg again, we feel.
Just give a little bit of background on our retail if we think about retail or retail business over the longer term since 2019, the retail business has outperformed pretty consistently both in terms of sales.
And profit so we're really proud of that business. We're proud of the work that the team has done no more recently, it's been softer so keep in mind that there is the retail is completely discretionary.
We're not sell in essentials, and the retail environment has kind of shifted.
From the things that are more everyday essentials, and that's not really an area. That's been core to us. So I think considering the environment in the retail business is holding up well and so the team has made adjustments in terms of inventory. We have made those adjustments early with continue would continue to.
To make them to ensure that we have an appropriate level of profitability in the retail business as we move forward. So I think we're managing.
We can manage there given that consumers are shifting.
Bit more to what appears to be essentials, and largely what we have are things that people want to have when you don't necessarily need them on a day to day basis.
Sure. Thanks for that color I appreciate I'll hop back in the queue.
Our next question comes from Jake Bartlett with Securities. Please go ahead.
Great. Thank you so much for taking the question. My first one is also on the kind of the near term trends.
Greg and Gino you, both mentioned improving traffic throughout the quarter and into November can you share what the traffic was in the first quarter I know it comes out with the Q, but if you could provide your traffic and mix and just so we can see what the trajectory is there.
Absolutely a drag I'll take the I'll take the numbers and then we can go from there overall traffic for Q1.
Restaurant traffic negative seven 1%.
Check overall, plus six six including price of $6, eight and mix of negative or zero point too.
Okay got it.
And just reading into the.
The commentary of improving traffic by months and into November.
It feels pretty safe to say that the same store sales have moved to decently positive.
Quarter to date in this.
This goes back to and ask it one more time about about last year's trends, but at ICR last year, you gave preliminary second quarter revenue growth guidance of 6% when you reported eight three.
<unk>.
I'll leave that that implies that January was.
Stronger than I expected, so very difficult compare this year so.
We're trying to kind of judge.
How much we should read the current trends, which seem to be pretty decent positive on same store sales for the restaurants for the whole quarter. So any help there would be helpful. And then I had a longer term question.
So Craig again J b.
Reflecting on Q2 from last year.
Perhaps to that if I remember correctly.
Sember close, though was a little bit softer I believe there was some weather at the end of December.
And then January had to kind of benefit components one was.
Our robust kind of wrap on omicron. So some of the January beat as was Amazon related.
Also I believe a warmer than normal January so there were some weather or weather tailwind, it's always risky to try to forecast up forecast of the weather, but I think.
To the degree that.
Weather was a little bit of a tailwind last year in January.
Do recall that December towards the second part of December was a bit challenged by weather.
Well.
Okay. Okay and then my other question is on margins.
In the quarter itself as you mentioned your sales were in line with expectations internally, but.
You were at the lower end of guidance for margins and my question is what what drove that whats surprised you to the downside there on the margins and as we look forward. You know you didn't explicitly give restaurant level margins or our G&A guidance, but can you help us in terms of what is driving the expected.
Margin compression that's implied in guidance.
In 2004 as it is at the margin side or is it G&A to beverage that you think is going to drive that.
For this quarter for quarter one.
<unk>.
As we were we had some hypothesis there is data driven as we went into as we went into the quarter.
But we werent.
But we werent certain so we were we started out with some additional advertising largely committed to that and we added some labor as as well we were seeing really good results from the advertising we're seeing good results from the labor.
And it also gave us more confidence in.
It gives us more confidence in November so as a result, we invested a bit more in labor than we had originally expected. We knew we had that out there as an option, but we went ahead and we did some more and that played out well now the things that were unexpected or kind of came in on the <unk>.
Favorable side of our internal expectations. There were a couple of them wage rates came in a little bit higher maintenance expenses came in a little bit higher public liability general liability came in a little bit higher. So we had a couple of things that kind of didn't that.
That were on the high end of the cost range, but the primary driver of it was we were making a bet that was working and we just continued down that path because we were seeing a lot of good impacts from that so what does that mean then for the rest of the year.
With a whole lot of detail there I will say it's directionally.
The things that we've been we've been doing that are working.
Probably to continue to do those so we're advertising has been working through a greater degree.
So I would expect that we're going to continue to do more advertising now.
We try to measure all of that best we can we do some test and learn and as long as the ROI and that remains compelling.
We expect that we're going to continue to do that.
The labor investment has also has also been working out well not only in terms of the short term.
Traffic in our ability to.
Execute at peak periods, but you see a benefit to the guest satisfaction is your benefits of turnover, which pays a dividend in the future.
So we will continue to invest in those things as we go as we go throughout the year.
Okay. Thank you very much I appreciate it.
Our next question comes from Andrew Wolf with <unk>.
CL King. Please go ahead.
Good morning. My question is also guidance related.
Actually two first on earnings.
The implication of your guidance is.
Better margins going forward.
For the next few quarters.
So you called out you know the advertising increase.
Continuous as well as labor because it's driving traffic.
But I might have missed this but could you go through the if you're still expecting $30 million cost net cost savings gross cost savings this year.
To help defray some of that cost and if thats. The case whats the cadence of those cost savings would be against the increased spend that's helping with the traffic.
Hi, Andrew it's Craig.
I'll start with the cost saves, we've talked about $30 million of the cost of the last fiscal.
And we delivered on that I think we strive to the 25 and that.
We increased that to 30 over the course of the year.
We actually have an internal target for cost savings in fiscal 'twenty four that's consistent if not higher higher than that however, we also realized that we're making a lot of investments. So it felt a little odd for us to be talking about a cost save at the same time, we're spending a lot of money and labor has been a lot of money.
In market and so the way that we're thinking about it internally is where.
Saving costs.
Significantly more than we did last year, we're reinvesting we're reinvesting those cost saves.
As a way to support these guest driving initiatives and overall long term business strengthening.
Business strengthening initiatives.
Okay. That's good can you speak to the cadence I mean have you realized in first quarter.
Like a pro rata amount or is it or is it going to build.
More proportionately later in the year the amount of content.
The cost savings I don't have the exact quarterly breakdown in front of me, but.
We have a program that is the sustained program a number of the cost savings that we started in fiscal 'twenty three we didnt get 12 months of those cost savings in 'twenty three so there's quite a bit that this carries through into fiscal 'twenty four and then we have additional.
Cost savings queued up in 2004 as well.
Okay and on the sales guidance I just wanted to test the way.
My number is sort of back into what I think youre scenarios could be it's pretty broad sales guidance for the year from here. So.
So I think you're anywhere from you know.
Things could continue to get better.
I assume as you hopefully you're one of your plans at least.
But then there was a scenario where it looks like things would actually get worse, perhaps even worse in the quarter you just.
Just announced is that because.
You you have to bake in that even though you know thank.
Julie mentioned, the recessionary odds are lower that given consumer behavior, and we're not out of the woods in the economy.
Just have to put in a pessimistic scenario and you decided to also include that in your sales guidance range.
I think that's a reasonable a reasonable point of view the economy is uncertain, so who knows what the what's going to happen and I think to the extent that things continue to play out the way that we're seeing them.
We would be towards the high end of the range.
But to the degree that they they don't either from an external perspective or something happens internally would be on the low end.
Lower end of the range.
The macro environment, it's still a volatile.
Overall economy has been doing well, but if you can dig below that there are some concern in.
Elements there. So we'll just need to kind of see how it goes and as a result, we're still pretty early in the year. As a result of that we think that leads to that type of that type of a range.
Thank you.
Maybe just one for Julie on the loyalty program. It is good to hear.
The launch as well going well and I think.
You've got to tie it into Dolly Parton through early December with rocking chair.
Give away.
But is there any way to continue.
Is that sort of.
When the relationship with Darling kind of Peter ends in.
Do you have more things to keep the or are you going to keep going with with her like to keep these getting the.
Sign ups.
At a pretty good clip above your plan and I guess longer term based on your experience and what you're hearing from your people are helping with the program. When do you really expect to really see you know increased traffic.
Through promotion really targeted promotions and the other things that can come out a loyalty program.
Hi, Andrew its Julie now as I mentioned in my prepared remarks, we are really pleased with the launch of the program.
We launched the program actually without dollar right and so even when we launched it guest embraced the program signed up really told US that this is something they are excited about seeing from cracker barrel. So then when we added anjali that as I said in my comments, it's been incremental.
And of course, we're very pleased with the partnership there. She is she is an icon and it's great to have an icon Airbus an icon.
Soccer barrel. So the program is off to a great start.
Hitting our expectations that we've been modeling in the benefit of that program into this year and into the future.
And we can the team continues to do a great job to actually bring benefits of the program forward given the fact that we are ahead of our plan. So we continue to be excited about it. It's the early days of it but we know it's going to be a differentiator for us going forward in an exciting part of the brand as we move forward.
Uh huh.
Got it thank you.
Our next question comes from Todd Brooks with the Benchmark Company. Please go ahead.
Hey, good morning, Thanks for taking my questions first.
First question if I may.
You were talking in regards to the retail segment, well managed inventories and really trying to.
Operate as much for protection of gross profit dollars than you are to drive topline can you spend a minute talking about the inventory positioning and how we should think about it.
If that is a potential constraint on retail same store sales as we're going into the holiday quarter here and just trying to get some color around how the how to model.
Retail.
Same store sales performance, given where the inventories.
Hi, Todd it's Craig.
I think we're really well positioned there.
So we have we carry a very wide assortment. So to the degree that demand is higher than we projected that would impact our kind of discount cadence than we'd be able to I think make more margin.
Through through that approach and to the degree that demand stays a bit softer we would also be managing margins.
As well and keep in mind, we also have a lot of difference.
Lot of different offer as we go through.
Quite a few themes throughout the year. So if one of them is selling at a higher rate than we projected we can bring in another one of our older different things that we can do to fill and just given the breadth of the the breadth of the assortment that we have I think the macro picture on.
This part of retail.
It really gives us confidence that we're making the right decision to manage the inventory and not end up.
Very long and then having to do a significant amount of a significant amount of markdowns, but that would be a problem candidly that we would we would love to have that problem because to the degree that we have the demand that we can redirect folks to other items.
Okay, great. Thanks, Craig and then.
Two others, if I can on the occupancy and other costs.
Pointed out.
On a year over year basis, the incremental advertising and some incremental DNA.
And you pointed to the advertising working driving a return layering in some local TV.
What's the right way to think about that line item going forward is the spend that we saw in the first quarter kind of that just above mid 24% of sales level is that the right way.
To model this line and what we could call it an investment year or maybe some more offensive spending around marketing.
I think it's fair to say that the advertising line item is going to be.
A bit higher.
Nothing to assure an exact number candidly in part because we're going to continue to flex that based on our findings, but I would expect it to be higher there was also a part of the loyalty program, it's not dramatic but there was a part of the loyalty.
<unk> for the loyalty program that goes through market and so that will cause that line item to be a bit higher and then we're going to continue to optimize our profitability up over normal normal media to the degree that that's working really well and we're getting a compelling return we will do more to the degree that we are.
Not seen as compelling a return not as profitable then we may do less but in general I would expect marketing to be higher than it's been traditionally for the coming quarters.
So to just clarify on that if we're if we're looking year over year up 130 basis points are you, saying Craig that.
Because of the success, you've said you expect marketing to actually be higher as we progress through the year as far as just okay. Okay. So of the 130 basis points.
In Q1, I believe market than was something like <unk>.
The 80 basis points something like that.
After Q1 and so.
I'm not suggesting that we're going to be invest in <unk>.
Incrementally more than that maybe we do but it would be modest so it's could be a little bit more than that to be a little bit less but I don't think our marketing spend will be as a percent of sales at the levels that it was added in 2023 is going to be higher as a percent of sales move it into 'twenty.
Sure.
Moving into 2024.
Then it was in 2023.
Okay, perfect and then it looks like ex the one time.
Expenditures in the quarter, the G&A came in at a little bit more efficiently.
I expected.
Would you encourage us to budget that type of mid five as a percentage of sales and then what's the cadence of the CEO transition costs and the.
The strategic.
Initiative costs, how do those coming over the balance of the year.
I don't expect anything dramatic as it relates to two G&A, so probably wouldn't get into a lot of detail. There in terms of the cadence of the onetime costs I do expect that.
That there will be more of that.
<unk> expense related to the CEO transition in Q2 because of the accounting for you know really sandy.
Sandy the prior Ceos earned retirement benefits. She officially retired as the CEO early in Q2 and as a result of that I think that will drive some more expense in Q2, I expect the consulting cost to be fairly.
Flat going forward from Q2 through Q4, we Didnt, we started at midpoint at about the midpoint in Q1. So would expect Q3, two three and four to be relatively flat for that line item.
Okay, great. Thanks, Craig.
Yes.
Yes.
Our next question comes from Ashwin <unk>.
<unk> engineer with Piper Sandler. Please go ahead.
Hi, Good morning. My question is on Maple Street on the last earnings call. It was mentioned that our Maple Maple Street weekdays. We're still challenged we're just wondering if <unk> seen any improvements in that and how you're thinking about the growth that meet the street over the course of the year.
Hi, Ashwin. This is Craig the Maple Street Interestingly over the course of the quarter, we have seen.
Really solid traffic improvement at Maple Street, the weekdays do continue to be do continues to be softer.
But instead, we've actually doubled down on the weekends, we've extended our operating hours on the weekends because the demand is so high and we're seeing really good progress there, particularly for wheat.
Weekend lunch as we think about the long term, we're really excited about the business is to differentiate the business. We like the location strategy is complementary to so cracker barrel and at the same time.
And we're continuing to grow it we were a bit behind developments. This quarter that was more a function of construction delays than anything else and we're continuing to grow the business at a moderate pace, but we also realize that there is more work to do on the business model in particular.
On the weekdays so we've seen some improvement on the weekdays, but we've actually seen more improvement.
Over the weekend, which is a positive, but we still need to do some more of these days.
That's great to hear thanks, and I'll pass it back.
This concludes our question and answer session.
I would like to turn the conference back over to Julien CEO for any closing remarks.
Thank you all for joining US today, we're encouraged by our improved traffic trends and our start to Q2 and while we are mindful of the competitive and uncertain environment in which we continue to operate we are cautiously optimistic that we let this gain this momentum and drive improved performance over the balance of the year, we have a lot of work.
Ahead of us to achieve our objectives, but we have a strong foundation in place and I'm confident that our talented teams are up for the challenge before we sign off I'd like to wish you all a happy holiday season, and express my sincere appreciation to our more than 70000 employees not only for their hard work over Thanksgiving last week for the warm welcome Dave.
Send it to me since joining the cracker barrel family and for all they do every day every shift to delight, our guests and to bring this great brand to life. Thank you all and happy holidays.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.