Q4 2024 Cracker Barrel Old Country Store Inc Earnings Call
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Speaker Change: Good day, and welcome to the Cracket Barrel fiscal 2020-4 course quarter conference call.
Speaker Change: All participants will be in a listen-only mode.
Speaker Change: Good evening, you assistant. Please signal a conference specialist by pressing start key followed by Vero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question, you may press star, then one on a touch-toe phone. To withdraw your question, please press star, then two.
Speaker Change: for you to note that this is an insane recorded.
Speaker Change: I would now like to turn the conference over to Adam Hanan, Director of Investor Relations. Please go ahead.
Adam Hanan: Thank you.
Adam Hanan: Good morning and welcome to Cracker Barrel's fourth quarter, this is still 2024 conference call in Webcast. This morning, we issued a press release announcing our fourth quarter results.
Speaker Change: In this press release and on this call, we offer to non-gap financial measures such as the Jesse Yvita for the fourth quarter in August 2, 2024. Please refer to the footnote for our press release for further detail about these metrics.
Speaker Change: The company believes these measures provide investors with an enhanced understanding of the company's financial performance.
Speaker Change: This information is not intended to be considered in isolation, or the substitute for net income or earnings per share information prepared in accordance with GAP. The last pages of the press release include recommendations from the non-GAP information to the GAP financials.
Speaker Change: On the call of me this morning, our cracker-brille President and CEO Julie Masino and Senior Vice President and CFO Craig Pommells.
Speaker Change: and Craig will provide a review of the business financial with an outlook. We will then open up the call for questions. On this call, statements may be made by management of their beliefs and expectations, regarding the company's future operating results or expected future events.
Speaker Change: The Internet is forward-looking statements which involve risks and uncertainty that in many cases are beyond management control and they cause actual results to different materially from expectations.
Speaker Change: We call Charlotte Nurse Interators in considering board-looking statements and information.
Speaker Change: Many of the factors that could affect results are summarized in the cautionary description of risks and uncertainties bound at the end of the press release and are described in detail in our reports that we follow with for furnished to the FTC.
Speaker Change: The information share on this call is valid at the today's date and the company undertakes no obligation to update it, except it may be required under applicable law.
Speaker Change: I'm now trying to call over to Craig Pommells, President in the Julie Masino. Julie.
Julie Masino: Good morning, and thank you for joining us.
Speaker Change: Today, March's Cracker Girl's 50 disc first day. This incredible milestone is one that few concepts have achieved, and is a testament to the enduring appeal of our brand, and the hard work by so many since Danny Evans founded Cracker Girl in 1969.
Speaker Change: There are efforts, ways of foundations for the investments we are making for our future and we are grateful for the opportunity to build upon and continue this legacy.
Speaker Change: This morning, we were pleased to report total revenue and adjusted evidoc consistent with our guidance.
Speaker Change: We remain focused on operational excellence, day in and day out, our multi-year strategic transformation journey is off to a great start.
Speaker Change: I'll touch more on each of these in a moment, but there's a lot to be excited about.
Speaker Change: We've hired a new dynamic CMO and are making progress on refining the brand. Our new menu items are resonating with guests.
Speaker Change: Our optimized pricing initiative is delivering strong flow through and strong value perception scores.
Speaker Change: We're seeing a list in traffic and sales in our model pilot stores.
Speaker Change: Our loyalty program has 6 million users after just one year, and is delivering incremental failed and traffic.
Speaker Change: and our teams are highly engaged in executing at a high level, which is reflected in key improvements in employee and guest metrics.
Speaker Change: All of these are highlights from our five strategic pillars, refining the brand, enhancing the menu, evolving the store and guest experience, winning additional on-off premise, and elevated the employee experience.
Speaker Change: Now I'm taking the each one of these.
Speaker Change: Our first pillar is focused on exalting the brand and reflecting this in all the ways we interact with guests.
Speaker Change: We've partnered with a top tier agency and have conducted extensive qualitative and quantitative research that is informing our upcoming brand refinement.
Speaker Change: Our findings reiterated our numerous brand strengths and identified opportunities to increase brand love and ultimately drive increased consideration and traffic.
Speaker Change: I'm thrilled that Sarah Moore has joined our team as Chiefs Marketing Officer and she is leading this work.
Speaker Change: Sarah Green's nearly 20 years of hospitality experience, most recently as SVP of marketing at NGM Resort International, where she spearheaded marketing initiatives for portfolio of world-class hospitality brands such as the Lajio, Ariah and NGM Grant.
Speaker Change: Her expertise in digital marketing, loyalty programs and crafting innovative approaches that honor brand heritage while driving strong business results. Coupled with her hospitality focused leadership and love for the brand, make her an ideal fit.
Speaker Change: As I mentioned earlier, Craig Grawell was founded 55 years ago today, and we're marking this milestone for a day in several ways.
Speaker Change: First, we're excited to be partnering with legendary athlete and cracker barrel superfan, Deon Sanders, and Coach Pry will be featured in our digital messaging.
Speaker Change: Additionally, to commemorate our birth day and show appreciation to all cracker-bearers reward members, including both guests and employees, were offering complimentary servings of our double-fudge Coca-Cola cake, coffee, and ITT today through Sunday.
Speaker Change: Our second pillar is to enhance the menu and make it more craveable for guests and easier to execute for our teams.
Speaker Change: This also includes optimizing our pricing while maintaining our strong value proposition.
Speaker Change: We're leaning into innovation and have introduced several new offerings in recent months.
Speaker Change: These included LTOs such as our sweet and spicy, feasting, chicken tenders and sandwich featured in Q4 and our new fanfavorite hash brown tasterl shepherd's pie and fried apple french toast bake that are currently featured.
Speaker Change: We've also added several new offerings to our core menu.
Speaker Change: We introduced a news, Sunrise Pancake Special for 799. It's an incredible value. It includes two fluffy, delicious buttermilk pancakes, two eggs, and your choice of bacon or sausage.
Speaker Change: We also added several premium offerings featuring in New York Strip, which is a quality upgrade from our previous state.
Speaker Change: Additionally, we've augmented our daily dish menu by adding several daily specials such as our sweet and tangy Southern barbecue ribs, creamy and savory chicken and rice, and delicious, umptuous, slow-brain spot roast.
Speaker Change: We've been pleased with the performance of these new offerings and we're building an exciting innovation pipeline.
Speaker Change: Our menu enhancements go beyond the offerings themselves and also include how items are presented on the menu.
Speaker Change: We're very focused on strengthening our already strong value proposition and one of the ways we're doing this is by implementing a barbell pricing strategy.
Speaker Change: As I mentioned earlier, we've already introduced new items at both the low and high end of the spectrum and we'll be adding more.
Speaker Change: Additionally, we're continuing to highlight our early dinner deals. These often are an exceptional value, and the platform allows us to message compelling price points, which is especially important given the high level of promotions and discounting in the current environment.
Speaker Change: Another way we are enhancing our menu is by driving efficiencies to improve profitability by reducing fixed labor and making back of health drops easier and more enjoyable.
Speaker Change: We're working with an industrial engineering firm and we just completed the first phase of analysis and are now moving into the initial testing phase.
Speaker Change: As part of this, we'll rethinking back-of-health roles and responsibilities to improve production efficiencies and reduce waste.
Speaker Change: We believe this work will yield significant cost savings, both in FY 25 and beyond, while also improving the quality of our scratch made food.
Speaker Change: In the coming weeks, we will be launching an approximately 20 store-tests to validate key assumptions and we've planned to launch system-wide in Q3.
Speaker Change: The final aspect of menu enhancement is our work on price optimization and bolstering our strong value positioning.
Speaker Change: Our brand has always been synonymous with delivering great value to our guests and we know this is particularly important right now.
Speaker Change: We are being much smarter and more sophisticated with our approach and improving the way we price, so that each store hits the sweet spot based on consumer willingness to pay competitor pricing and store operating costs.
Speaker Change: In most cases this means increasing the pricing and stores, but in some cases it means lowering it.
Speaker Change: For example, in Q1, approximately 150 stores move to a higher pricing tier while approximately 70 stores move to a lower tier.
Speaker Change: We've been pleased with our results to date. Our analysis indicates we are effectively passing through our pricing crisis.
Speaker Change: In addition to the strong flow through it, we have actually seen an improvement in our values for following our August price increases.
Speaker Change: We will continue to monitor this closely and are prepared to adjust as necessary. But the data suggests this is a large opportunity and will be a key driver of improving our profitability.
Speaker Change: Our third pillar is focused on the gas experience and this encompasses operational execution, store-designed atmosphere, and retail.
Speaker Change: Operational Excellence in Consistent Execution or a Top Priority.
Speaker Change: We remain a hyper focus on the metrics that are most highly correlated with same store sales growth.
Speaker Change: Throughout fiscal 24, we invested in labor hours to support these objectives, and we continue to make improvements in these important leading indicators.
Speaker Change: Although we may not share this detail of a quarter, I do want to provide some examples.
Speaker Change: In pair to the prior year quarter, hourly turnover improves by 13 percentage points.
Speaker Change: BTE times a K-speed metric, improved by 7%
Speaker Change: Average skill level for the key positions of cook and server increased by 1.5%.
Speaker Change: who will start rating increased from 4.1 to 4.2 and our internal net sentiment score hit their highest levels as we relaunched the program last fall.
Speaker Change: and finally, off-premise missing items scores improved by 13%.
Speaker Change: I want to give a huge shout out and thank you to our retail and restaurant teams for achieving news results. This is a testament to their vigilant focus on our guests and executing the day-to-day business.
Speaker Change: I believe we will sustain this momentum and this will translate to increased visits over time.
Speaker Change: As I've mentioned before, store the sign at Adam, it's your critical to the guest experience and to position us to win in the near and long term.
Speaker Change: That is why we're investing in more maintenance capital to ensure our stores meet our brand standards that they compare wealth to the competition and that they are desirable places to work.
Speaker Change: Our incremental investments are focused on areas we think are the most impactful to the guest and employee experience.
Speaker Change: Things like exterior paint, parking lots, flooring and restrooms.
Speaker Change: To give a sense of the progress we're making here in Q4 and Q1 to date, we've redone approximately 35 parking lots, updated 30 back a house and 30 front and out floors and repeated the exterior on another 30 stores.
Speaker Change: This work is part of our defensive capital spending that is crucial to our success.
Speaker Change: Another important initiative of this pillar is our model program.
Speaker Change: In FY-25, a key objective is to understand which removal packages resonate to most with guests and drive the strongest return on investment because this will inform our plans in subsequent years.
Speaker Change: In addition to the high medium low options we've previously spoken about, through our testing we've also developed a Ford, even lower cost option that we're calling a refresh.
Speaker Change: We are excited about the refresh option because it's provided a strong return in the initial pilot store and allows us to quickly address more stores at a lower cost.
Speaker Change: In addition to the 25 to 30 full remodels planned in fiscal 25, we also anticipate completing 25 to 30 refreshes.
Speaker Change: Although I want to emphasize that it is still early, we are encouraged by the results of our model pilot stores.
Speaker Change: We have consistently seen traffic and sales growth across the four stores that were updated in fiscal 24.
Speaker Change: Best of noted that the update of data stores built brighter and more open, but most importantly, remain authentically cracker barrel.
Speaker Change: We've also received positive feedback from our employees and a common theme is that they feel energized by the investment and that the updates are improving their experience.
Speaker Change: We will continue to be thoughtful and disciplined with our remodel program.
Speaker Change: This is one of the biggest areas of planned investment in the coming years and we are working diligently to ensure we get the investment algorithm right for our shareholders.
Speaker Change: We are taking the learning from our four pilot stores and applying to our first market test in Indianapolis, Indiana.
Speaker Change: For this 12 store test, we are bringing together elements from the Remodel Program, a law that's new menu items and service standard enhancements to further refine our hypotheses around the Remodel Program and algorithm.
Speaker Change: I'm going to take a few months to get a read but we are excited about this test and look forward to sharing updates in the future.
Speaker Change: Another aspect of this third pillar is our retail business. And here we're focused on optimizing our assortment, improving the shopping experience and driving profitability.
Speaker Change: We continue to lead into our seasonal themes, which have been a relative strength.
Speaker Change: We're encouraged by the guest response to our Halloween and Harvest collection and we're seeing positive momentum in our everyday businesses.
Speaker Change: Additionally, this year we're focused on supporting margins by enhancing our allocation, replenishment and inventory management capabilities.
Speaker Change: Our fourth pillar is to win in digital and off-premise.
Speaker Change: Today I call them a two-door gift on digital.
Speaker Change: Before providing some additional detail, I want to note that we are committed to regularly updating you on our progress for the Royalty Program.
Speaker Change: However, for some of the ventricly we recommend we intend to only provide updates on an annual basis.
Speaker Change: Freckabero rewards launched one year ago, and this is another way we are reinforcing our strong value proposition.
Speaker Change: We continue to see proof points that it is one of the most engaging and differentiated loyalty programs in both service dining and we're excited about it for several reasons.
Speaker Change: First, we're pleased with death's adoption. We currently have 6 million members which is exceeded our initial expectations and is a testament to the appeal of the program.
Speaker Change: Second, our members are very valuable. They visit a 50% more often, and their average check is 10% higher than non-members. They also have a strong proclivity for retail, as their average retail basket spend is about 40% higher than non-members.
Speaker Change: Third, we demonstrated an ability to influence guest behavior and drive traffic as evidenced by the increase in visit frequency of members pre and post enrollment.
Speaker Change: Finally, we're excited about the robust guest data and insights this program provides.
Speaker Change: Over the past year, we've markedly improved our analytics capabilities. We are excited about the opportunity to unlock new insights and to directly communicate with our members to further drive sales and traffic.
Speaker Change: We're continuing to test and learn to understand what resonates most.
Speaker Change: To give some examples, we recently tested Meber exclusive campaigns, such as our Enlook Summer Sweep Sticks, and other limited time promotional offers such as Peg Accelerators and Kids Eat Free.
Speaker Change: The results of these tests affirm the potential of the program and the power of directly communicating with this valuable guest segment.
Speaker Change: We remain still optimistic about this program. We believe it will be a long-term traffic driver and brand differentiator, and we will leverage its uniqueness and insights to direct profitable growth in the business.
Speaker Change: Our final pillar is to enhance the employee experience.
Speaker Change: We're in the hospitality business and people, those employees and guests are the heart of our business.
Speaker Change: Deliver an excellent employee experience. We'll continue to focus on staffing and retention to get and keep the right people.
Speaker Change: As I alluded to earlier, we continue to make great progress on turnover and our focus on further improvement.
Speaker Change: In Q4, our return over was approximately 100% compared to 113% in the prior year quarter. And manager turnover was approximately 22% compared to 27% in the prior quarter.
Speaker Change: We're also focused on making jobs easier, through simplification and upgrading our tools and training.
Speaker Change: and Q4, we launched a new human capital management system.
Speaker Change: and this system provides a modern foundation to support and improve simply experience.
Speaker Change: Additionally, it will improve our positioning as an employer, choice and it will also deliver efficiencies that contribute to cost savings.
Speaker Change: Managers are especially critical to our success.
Speaker Change: So we're working diligently to improve their experience and streamline their jobs so they can focus on what's most impactful, which is directing and coaching their teams and supporting an exceptional guest experience every shift every day.
Speaker Change: Before handing it over to Craig, I want to reiterate that we were pleased to deliver results that were in line with our guidance, and that we're focused on executing our day-to-day business while making significant progress on our future.
Speaker Change: All now turn it over to Craig to review our financials and provider outlook.
Craig Pommells: Thank you, Julie and good morning everyone.
Craig Pommells: Today we reported to a revenue of $894.4 million, which was up 6.9% from the prior quarter. This increase was primarily driven by an additional $62.8 million of revenue from the 50-dirt week.
Craig Pommells: Restaurant revenues were $731.3 million and retail revenues were $163.1 million.
Craig Pommells: Comparable store restaurant sales increased 0.4% over the prior year.
Craig Pommells: Prythin was approximately 4.2%.
Craig Pommells: Our quarterly price in consisted of approximately 0.2% carried forward price in from fiscal 2023 and 4% new price in from fiscal 2024.
Craig Pommells: Off-premise sales were approximately 17.2% of restaurant sales.
Craig Pommells: Comparable store retail sales decreased, 4.2% compared to the fourth quarter of the prior.
Speaker Change: We saw declines across the most categories with food and decor seeing the largest declines.
Speaker Change: Although retail sales were soft, we were pleased with how the team effectively managed human Tory levels, which were of the little prior year.
Speaker Change: Moving on to our fourth quarter expenses.
Speaker Change: Total cost of goods sold in the quarter was 30.4% of total revenue versus 30.8% into prior year order.
Speaker Change: Restorate cost of goods sold in the fourth quarter was 26% of the fresher out sales versus 26.6% in the prior year of order. This 60 basis point decrease was primarily driven by manufacturing.
Speaker Change: The modified inflation was approximately 1.1% driven principally by higher pork and beef prices, partially offset by lower oils and poultry prices.
Speaker Change: North Quarter, retail cost of goods sold was 50.1% of retail sales versus 48.8% in the prior quarter.
Speaker Change: This 130-bit support increase was primarily driven by discounts and markdowns.
Speaker Change: Our inventory is at order and, or $181 million, compared to $189.4 million in the prior year.
Speaker Change: with regard to labor costs or fourth quarter labor and related expenses or 37.5% of revenue versus 36.5% in the prior year quarter.
Speaker Change: This 100 basis point increase was primarily driven by our investment in additional labor hours to support the guest experience.
Mowerley Weage: Mowerley Weage, the location of approximately 5%
Mowerley Weage: and Higher Workers Compensation Expense.
Mowerley Weage: Other operating expenses were 23.9% of revenue, versus 23.3% in the prior quarter. This 60 basis point increase was primarily driven by our investment advertising and higher store maintenance.
Mowerley Weage: adjusted general and administrative expenses in the fourth quarter were 5.2% of revenue and exclude approximately $5.1 million in professional fees related to our strategic transformation and initiative.
Mowerley Weage: This compares to 4.5% in the prior year of order and the 70 basis point increase was primarily driven by investment related to our strategic transformation, a legal settlement, and a more normalized incentive compensation.
Mowerley Weage: Net interest expense for the quarter was $5.7 million, compared to net interest expense of $4.5 million in the prior quarter.
Mowerley Weage: This increase was primarily the result of higher weighted average interest rates and higher debt levels.
Mowerley Weage: ORACAPIffected tax rate for the fourth quarter was negative 10.1%.
Mowerley Weage: On an adjusted basis, our respective tax rate for the quarter was negative 2.2%.
Speaker Change: Hort Quater, Catherine in Spur del Luzicier, or 81 cents, and adjusted earnings per del Luzicier or 98 cents.
Speaker Change: These results include a benefit from the 50th third week of approximately 25 cents.
Speaker Change: In the fourth quarter, adjusted EBITDA with $57.4 million or 6.4% of total revenue, which includes a benefit from the 53rd week of approximately $5.8 million.
Speaker Change: Compared to $70.4 million, or $8.4% of total revenue in the prior year of quarter.
Speaker Change: Now, turning to our balance sheets and capital allocation.
Speaker Change: We continue to believe that we're well positioned with our balance sheet to execute our strategic plan over the next few years.
Speaker Change: The company's worth directors has committed to a balanced capital allocation approach. Invest in the business to drive profitable growth continues to be the top priority, followed by returning cash to shareholders through lower regular, or to the dividend and to share purchases.
Speaker Change: and the fourth quarter, we invested $47.4 million in capital expenditures and returned of $28.9 million to shareholders and dividends.
Speaker Change: We ended the quarter with 476.7 million dollars in total debt.
Speaker Change: Lastly, as we announce today's press release, the Board of Clear at a quarterly dividend of 25 cents, payable on November 13 to shareholders off-record on October 18, 2024.
Speaker Change: Now, turning to over fiscal 2025 outlook.
Speaker Change: What we're mad at everyone that we view fiscal 2025 as an investment year, as many of our strategic initiatives will be in the early stages, and that we expect to see significant improvement in our financial results in the back half of this fiscal 2026, the further acceleration in fiscal 2027.
Speaker Change: While fiscal 25 is an investment year, there are several initiatives we're excited about that will improve the business model and help us achieve our target of growing the fiscal 27 even at margins by approximately 400 basis points over fiscal 24.
Speaker Change: I want to highlight a few.
Speaker Change: Hills.
Speaker Change: We're implementing our optimized price and strategy that allows us to effectively price above inflation, while simultaneously enhancing our overall value proposition.
Speaker Change: which will lead to margin expansion over time.
Speaker Change: Next.
Speaker Change: As Julie discussed, our loyalty program will be a meaningful traffic driver in the coming years.
Julie Masino: Currently, approximately 25% of transactions are associated with the loyalty program. And we expect this to increase further.
Julie Masino: As a result, the program provides an opportunity to improve the efficiency of a marketing spend by directly communicating with members with targeted messages.
Speaker Change: Lastly, we're excited about the back of house optimization work.
Speaker Change: This is a significant cost savings opportunity and will improve our labor model by reducing overall cost while making back at House Labor more variable and less fixed, allowing us to more efficiently flex up and flexed out.
Oregon Adams: Now turn it to Oregon Adams for Biscuits 2025.
Oregon Adams: We expect total revenue of $3.4 to $3.5 billion.
Oregon Adams: Priced in approximately 5%.
Oregon Adams: The old man of two new practical milestones and three to four new maple street units.
Speaker Change: Comrades the inflation of 2% to 3%.
Speaker Change: and an hourly restaurant wage inflation of 3% to 4%.
Speaker Change: We expect our general and administrative expenses will be elevated at this close 25, compared to the prior year, primarily due to investments related to ours for teaching transformation initiatives, as well as more normalized incentive compensation.
Speaker Change: We expect the GME as a percent of sales to normalize as our financial results improve in the second half of the school 2026 and into the school 2027.
Speaker Change: Haken off the water into a cold.
Speaker Change: We anticipate fully year adjusted EBITDA for approximately $250 million.
Speaker Change: As a reminder, begin in Q3 of this book 2024.
Speaker Change: We modified our definition, but just it EBITDA, and are no longer a just in for the non-cash organization of the asset recognized from the gains on sale and leaves that transactions.
Speaker Change: This will be in approximately $3.2 million non-cash expense each quarter and is expected to remain at a similar level over their main and life of these leases.
Speaker Change: Additionally, we are now including an ATVAC for non-cash, sure-based compensation expense.
Speaker Change: Or the more, or adjusted EBITDA guidance, excludes consulting fees related to our strategic transformation, which we expect would be approximately $5 to $10 million.
Speaker Change: It also excludes any expenses related to our proxy contest, in connection with the company's upcoming annual meeting of shareholders.
Speaker Change: We expect a full-year, competitive tax rate of negative 7% to negative 11%.
Speaker Change: and an adjusted effective tax rate of 0% to negative 4%.
Speaker Change: We anticipate capital expenditures of 150 million to 180 million dollars.
Speaker Change: As a reminder, the increase in capital expenditures is driven by our investments in maintenance capital or a remodeling program and our IT initiatives.
Speaker Change: As a result, we expect depreciation will be meanfully higher in fiscal 25.
Speaker Change: With board wrapping up, I want to emphasize how proud I am of the progress we're making and how excited we are about our future. I'm confident that we will successfully execute our strategic transformation while simultaneously remain in focus on operational excellence in our day-to-day business.
Speaker Change: and I'll turn the call over to the operator for questions.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question, can we press star, then one, on your touch-toon phone?
Speaker Change: If you are using a speaker phone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star send to
Speaker Change: At this time, we will pause momentarily to assemble our laughter.
Speaker Change: The End
Speaker Change: So for a question today comes from Brian Mullin with Piper Stamler. Speak, go ahead.
Brian Mullin: Hey, thank you. Just question on the remodel plans for the current fiscal year. Can you just remind us or take us through the differences between, you know, the high, the medium and the low options and is there one of those that you are favoring at this point or, you know, is there a goal to settle on one of those for fiscal 26 and beyond after you have the learnings and then.
Speaker Change: Just separately, you mentioned a new refresh option, if I understood you right in the prepared marks, I think that was informed by what you're seeing in the pilot source already, so just maybe elaborate on that refresh option, what makes a store good candidate and maybe what kind of sales FLS, you're hoping to see. Thank you.
Speaker Change: [inaudible]
Speaker Change: Welcome, Hibran, it's Craig, good morning.
Speaker Change: So let me start out by actually talking about all of these so we have the high meat in the dough which we've talked about before and we lay it out with a plan for 25 to 30 of those in fiscal 25.
Speaker Change: and we completed three of those in fiscal 24 and we've added the refresh option as well. And the refresh option, I'm going to start with that one and work up from there because they all build.
Speaker Change: The Refresh option
Speaker Change: We really came out of the work that we did in fiscal 24.
Speaker Change: and what we realized as we went through that work is there was an opportunity for something at a lower cost.
Speaker Change: that really included, you know.
Speaker Change: Paint and Decor, and that seemed to accomplish a lot that we were seeing good results, so that's the new one.
Speaker Change: As we move up from the refresh option, the low option adds on to that.
Speaker Change: and it lays on furniture primarily furniture and lighten.
Speaker Change: and from low to medium, we start to do some flour in the work and a little bit more extensive work on the interior and exterior and the high has more flour in it.
Speaker Change: in addition to the floor and in the...
Speaker Change: Restaurant portion of the business we have floor in the retail portion of the business as well as a couple other elements. So this call 25 for us is really all about testing. We have these pilots in 24. We're encouraged by the pilots.
Speaker Change: But all of the math that everything that we're working through, we have targets, but the precision around that is going to be developed in fiscal 25 across all of those designs. So we're excited about that and we'll share more in the future.
Speaker Change: Okay, thank you, and then just follow up question just when you're understanding there's different pricing tiers and you're seeing some success moving some stores up and down just as you put together the guidance for Fiscal 25, how are you thinking about menu pricing for the Fiscal 25?
Speaker Change: [inaudible]
Speaker Change: So we have 5% price in for the year in the guidance and that, you know, it blends all of those together, everything that's down as well as office.
Speaker Change: Okay, thank you very much.
Speaker Change: Welcome.
Speaker Change: The next question comes from Dennis Geiger with UBS. Please go ahead.
Dennis Geiger: Great, thanks guys. One of them if you could talk a little bit about what you saw in the quarter.
Dennis Geiger: from a customer standpoint. Any thoughts as it relates to some of those key cohorts, either age, income demographic, et cetera. And then specific to loyalty, maybe the incremental customers that you've been adding, if there's anything you could say about those, you know, age-wise, how it's skewed, great stats I think on the uplift.
Speaker Change: that you're seeing from the program, but maybe just who is now in the program, who you've been adding to that if there are commonalities there.
Speaker Change: Sure, thanks Dennis and Julie.
Speaker Change: You know we really haven't seen a huge mix or a mix shift in the customer thank you for we've seen a little uptick in our 65 plus group which is positive because they had been down prior So it's nice to see that recovering a little bit but other than that the demographics is pretty pretty similar
Speaker Change: We have seen a decline among the under $60,000 your cohort in spending.
Speaker Change: So we're just kind of keeping our eye on now. We have great value for all guests and we continue to reinforce that with the Barbel pricing strategy items like early dying as well as our sunrise pancake special that's just such an amazing value.
Speaker Change: If you're like me and you love our pancakes, it's a delicious way to start your day. We feel really good about the shifts that we're seeing there, although they're very minimal, done it's honestly. One, two, thanks for asking about that.
Speaker Change: We are so excited about this program, we're so excited to really understand
Speaker Change: The cohort better. We haven't really been spending a lot of time digging into them demographically. We've actually been spending more time thinking about their behavioral spending.
Speaker Change: and really using that to test and learn ways to drive behavior. The demographics from what we've seen and what we're setting are relatively in line with the average Carcoberal guest. Again, we've viewed it as more of a way to drive behavior, and that's really what we're looking at as we segment the population and really communicate with them directly to drive their behavior.
Speaker Change: And then if I left, so let's just Craig, I'll jump in and add a little bit to that as well as the building what Julie was saying. You're a couple.
Craig Pommells: really more encouraging things.
Craig Pommells: Despite the really challenging backdrop, you know, we ended the quarter on average of the quarter. We actually exceeded black boxes, casual diet and index for the quarter and continues to exceed for a family dinane.
Speaker Change: and some more encouraging news in that regard is we've been doing a lot of work around the dinner, dinner has been challenged for a while and we've shared that on the last few calls
Speaker Change: and we added this early dye and offer as well as some other dinner news and we're seeing that trend start to move in a really good direction. So we're starting to close the gap there. So some urgent things kind of finish an out Q4 and go on into Q1.
Speaker Change: Great, very helpful guys. One more, just on the cost savings side of things of a future kind of put in here. Craig, on the GNA side, anything more specific to share for 25, beyond what you said already, it was a bit of a moving target where you want to maintain a little bit of flexibility there as a release to that exact GNA number 425.
Speaker Change: and related on the cost-saving side of things. We talked about a few of the opportunities today. Is that 50 to 60 million dollar cumulative three years? Is that still the same?
Speaker Change: That it was, if anything has just changed there or if any kind of net commentary there would just be curious. Thank you.
Speaker Change: Also now start with cost payment, yes, we're still, you know, pulling a line with the 50 to 60 million dollars over the three years.
Speaker Change: in Biscuits 25.
Speaker Change: We also have, you know, meaning for what I would call as a gross cost savings as well, but it is an investment year and as such we're really invested in that we want to kind of keep building the momentum. So that's not going to net flow through in 25, but, you know, as we've shared before by the back half of 26.
Speaker Change: and into 27, we expect those benefits to really accelerate and leave it out to start to pick up meaningful.
Speaker Change: and I think he hit the nail on the head as it relates to G&A. You know, it is an investment year. We're doing a lot to build the business. But however, G&A as well as we move into the back half of 26 and into 27, we expect that will start to normalize as overall financial performance improves.
Speaker Change: Great, thank you very much.
Speaker Change: [inaudible]
Speaker Change: The next question comes from Katherine Griffin with Bank of America. Please go ahead.
Katherine Griffin: Hi, thanks for the question. Craig, I don't know if I missed it, but did you provide a breakdown of traffic and mix in the quarter? And then maybe you can also help us just understand like the pricing came into the year in terms of when you took pricing in the quarter.
Speaker Change: just assuming like they're trying to get a picture I guess of the full year pricing at 5% be guided to and how much that implies for, you know, for a carry forward.
Speaker Change: Hi Catherine, profit for the quarter was approximately negative point, negative 4%, negative 4%, mix was approximately a positive 0.2. And as you think about price in 4...
Speaker Change: Fiscal 25, we had multiple actions really in in 24, we didn't have like two large ones, we had multiple throughout the year. So I am not anticipating a whole lot of lumpiness or to speak as it relates to pricing in fiscal 25.
Catherine: Okay, thank you. And then, you know, I think like something that, you know, the brand is known for is value. I imagine that's, you know, it's most appealing in the loyalty program and in your messaging. So I wanted to understand, you know, how you're thinking about balancing, taking, you know, some more pricing with maintaining those value scores. I think just given that casual dining has relatively low frequency, what gives you confidence that you can maintain, you know, those, I don't know, it's their rising value scores against, you know, higher pricing.
Julie Masino: Hey, Catherine, it's Julie. I'll take this one. Thanks for the question because value is so important to us at Craig Pommells. To your point, it is a whole mark of the brand and something that our guests really take very seriously. And when they think about value at Craig Pommells, it's like at any, any concept or any brand. It's an equation, right? So it is about...
Julie Masino: Not only at a price point that they're paying, but all of those elements of service, all of the elements of the food and the experience that come together in that. Our gas have told us, we've spent a lot of time thinking about this and researching it in the last year, that for them, one of the most important pieces of that equation is the amount of food and the abundance and quality of the food that they receive from us at Craig Pommells. So, as we work on the strategic pricing initiative,
Julie Masino: One of the things that we have absolutely maintained is our focus on quality and our focus on a real full plate. When you leave Craig Pommells, you are leaving Hungary and honestly look around Craig Pommells the next time you're in. Most people are leaving with leftovers for tomorrow or for later in the day. So we are absolutely focused on maintaining that.
Speaker Change: As we talked back in May, when we were introducing this strategic transformation, the way we've really approached pricing is different for cracker barrel. We have taken a new approach which really puts the barbell pricing strategy out there, so we have really focused on sharpening and frankly talking more about some of our lower entry price points. And to highlight that, we really have a key thing at breakfast which is the Sunrise Pancake Special for $7.99.
Catherine: Two Pancakes, Two Eggs, and Daken Our Spotted, which is an amazing value, but then for dinner we introduced our early-dying deals. And those are phenomenal. Again, huge value, started 89, and Monday through Friday, 4 to 6pm. And what we've seen, Catherine, is as we've actually put that early-dying out there that the take rate on that continues to build. So we see that our guests are recognizing that value, they're coming in for it, they value the value. And as well as the delicious food that they're getting for it, and that's enabling us to really implement the barbell pricing strategy. I also talked to my prepared remarks about how we've actually upgraded our quality of our state. So that is actually a higher price point item when you think about how to...
Catherine: of our belt strategy work.
Catherine: and we're seeing great response to that item, as well as one of our new items, which is the Hatch-Front Hazler-L Shepard spy, has been a wild success.
Catherine: and that's sort of in the upper tier of pricing, but people love that item and it's really drawing a lot of people to the dinner day part and also to that item. So we're being very, very mindful of it. We are watching those value scores everywhere that we've taken price to make sure that people feel like we are upholding our...
Catherine: are, you know, kind of bond with them around what value means to them in the way that we executed at Crackerboro. So, the data suggests we're on the right path and just the responses that we're getting from our guests. We'd also suggest that as well. So, we feel really good about where we're landing on all of that.
Julie Masino: Alright, thanks, Julie
Julie Masino: The next question comes from Jake Bartlett with True Is the Curie. Please go ahead.
Jake Bartlett: Great. Thank you so much for taking the question. You know, mine was just on the things for self guidance, the implied guidance in 25 and you'll have that might be informed by more recent friends. I believe maybe Craig, if you can just confirm that you're looking at positive, low single digits in your sales for the year. You know, we heard earlier today from another company that industry, you know, sales had been had improved in August and then in September. It looks to me like, like, cracker row would, you have likely seen the same. If you could just confirm that.
Speaker Change: and then if that is true, if you see an improvement, do you attribute it to industry trends or do you think some of your missions are really starting to come to bear fruit already?
Speaker Change: IJEC, so...
Speaker Change: Yes, we'll be starting out with the first part, and as we talked about our finances, total sales, 3, 4, 2, 1, 4 billions, 3, 0.5 billion. If you take a 52 to 52 week basis there, that does work out to about approximately a 1%.
Speaker Change: Sales Girl with the year over year on a 52-52 week basis, and with the price in and the restaurant set of about 5%.
Speaker Change: You know you could kind of back into roughly what we're thinking in terms of traffic. What I would say on the recent trends is our guidance really contemplates.
Speaker Change: That already, you know, we think the work that we're doing is working, and things are going to come in together, and it's, you know, it's, but it is a multi-year.
Speaker Change: Malty Erd Journey
Speaker Change: We're very confident in the guidance, you know, we're really encouraged by the momentum that we have across the whole host of metrics and Julie talked about.
Speaker Change: The Operations Mentorics, the Guestada Svatchan Mentorics, the Loyalty Metrics, what we're seeing with early Dine. However, the backdrop is challenging. I mean, there are times in a little bit better or a little bit worse, but it is a challenging.
Speaker Change: Backdrop for SOAR and that is contemplated in the guidance as well so we're current trends are contemplated and a challenging backdrop is also contemplated. The big thing for me is really like...
Speaker Change: is really the three-year plan and how, where are we working towards, and how do we feel about that?
Speaker Change: The signs that we're seeing right now say, hey, you know, it's a three-year plan but we're on our way and we're feeling good about the progress.
Speaker Change: Okay, and on the 5% menu pricing, you know, at the surface, you know, it's obviously a big number in the challenging environment that you just mentioned.
Speaker Change: Can you try to disaggregate, you know, how much of that is driven by the tears, the changing of, you know, moving, you know, the net restaurants to get to a higher tear or a versus.
Speaker Change: You know, like for like many press and then the end of the given story, I'm probably hard to disagree, but I think the answer there would help us, you know, feel a little more confident that traffic is not going to be, you know, which are really impacted by a 5% price income.
Speaker Change: Yeah, I'll start Jake and then Craig can jump in if there are some things that I miss.
Craig Pommells: Let's start with kind of the last part of your question, which is we have been testing our way through this since about March.
Speaker Change: and every single test that we have done, you know, and that would give us a little bit of a lot more time, honestly.
Craig Pommells: has proven out that we're actually able to flow through almost all of it. It's not impacting traffic or elasticity is frankly lower than what we had built into the plan.
Craig Pommells: and so that gives us a lot of optimism as well as looking again at those value scores that I talk to you about or that I talk to Catherine about. So we feel good about that side of things.
Catherine: With the moving pieces and the more strategic approach and the more sophisticated approach to pricing it is hard to sort of disaggregate it a little bit. But what I will tell you again there is that...
Catherine: We are watching it, we are watching what's going up, we're watching what goes down, we're watching the way that all of that is coming through and it is, it is again flowing through very, very nicely. I want to remind you of something that I talked about.
Catherine: Back in May, which was when we started this strategic pricing work, we did a ton of competitive analysis we looked...
Catherine: Tom the Research Out there. On average,
Tom: For light items with our competitors, we are priced 8-12% below them.
Tom: It's a really important thing to remind everybody of because...
Tom: You know, even taking 5% that doesn't close that gap right and that would just be sort of straight numbers on all of that. So in general we have room.
Tom: and our guests are telling us that we have room to take price and so that's sort of the foundation of how we've actually kind of gone in and re-assorted stores and the tiers looked at where we have room, you know this is a multi-variate approach we're looking at willing this to pay, we're looking at cost of living, we're looking at cost of operation and trying to really come through with the best way to take this price and a way that doesn't.
Tom: Effect the same consumers and the same stores all the time, right? So that's really a big part of the strategy there. So that's giving us a lot of confidence.
Tom: and what we're doing in our ability to do it and to actually flow through the pricing. The important reason that we're taking it is because we want to flow it through. It's an important part of our drive to drive profitability.
Jake Alfield: and Jake Alfield, and that's a little bit of one of the things that's not as clear to everyone if you're kind of outside the company looking in is our Czech average, our Czech average on the mid-14, right? mid-14 Czech average.
Speaker Change: Casual Dining Track Outrage these days is in the $26 range.
Speaker Change: You know, if you take all the steak heavy bulbs you may be in the 22-23 dollar range
Speaker Change: So, we're starting out from really a much lower point and the price in addition to everything that Julie also said is kind of what Katherine said earlier too. The additional value lever is the loyalty program.
Speaker Change: We're able to deliver not only just a sheer discount through the loyalty program.
Speaker Change: but we're also able to have offers and we've been hefting those offers.
Speaker Change: Over the year as an additional way to drive value and to drive incremental traffic. It's a good question and we've really pushed on a lot of levers and sure that we get really good flow through from the price in and so far so good.
Speaker Change: The next question comes from Andrew Will with CL King. Please go ahead.
Andrew Will: Thank you, good morning, wanted to follow up on the Loyalty Program.
Andrew Will: and first, could you just compare that $6 million, a $6 million active users?
Speaker Change: to the Legacy Program.
Speaker Change: and assuming it's up somewhat for a lot. Can you discern whether that's...
Speaker Change: Existing customers who you convert in, or is it like met new customers, you know, to crack the barrel.
Julie Masino: Andrew, it's Julie, I'll jump in. We did not have a legacy program, so this is all new. We launched the loyalty program kind of in September last year, so it's about a year old.
Speaker Change: Now, your question may be, were these already loyal customers to Craig Pommells?
Andrew Will: Sure, but we don't have a lot of that pre-impermation, but while we can tell pre-imposed of the loyalty program implemented, these guests that are in the loyalty program today have a higher frequency than non-loyal team members, about a 50% higher frequency, and their check-in tire, and of this at a micro-pair remark, they're spending more on retail. We do know a lot more about them now, it's 6 million of all the guests that come to visit us in a year. Some of them probably were very loyal to us before we implemented this program last fall, but it's a new program, and we continue to learn and be really optimistic about the results.
Andrew Will: Okay, I thought there was like a pegs program and it was sort of manual but...
Andrew Will: and just move on. Can you kind of discuss what the...
Speaker Change: or what the 27 goal is in terms of penetration if you're at 25% of them.
Speaker Change: Transactions now.
Speaker Change: Oh, I don't love teenagers?
Speaker Change: Ah, yeah.
Speaker Change: Okay, thank you.
Speaker Change: Yeah, I'll start with that one, you know, we haven't, you know, we're at 25, it's continuing this continued to grow, you know, at this point we really haven't even defined what the top is, you know, we're, we've been doing a lot more test than we think there's a lot more opportunity to go here, really we'll continue to build capabilities, this one of the areas that we're continuing to invest in, but we have not communicated a firm penetration target as yet.
Speaker Change: Okay, the last thing I just wanted to ask about the quarter, I think it's a travel, have a quarter. What's the concept? Same for sales improvement.
Speaker Change: you know as you go up between measuring between folks who travel then.
Speaker Change: Local, you know, people live around the store around the restaurant. I am able to discern which cohort cut that way you saw more improvement.
Speaker Change #100: You know, we do that period, I think we did not do it for this quarter, you know, we've really been...
Speaker Change #101: Yeah, it's really shared. There is, you know, we've spent what we've seen more is.
Speaker Change #102: A big difference between the under 60,000 cohort versus the over 60,000, and we continue to see you know softness with the under 60 and you know much more stable in the above 60 we also saw
Speaker Change #102: some, you know, improving friends with the over 65, over 65 group. And we've been focused on dinner, we've been focused on regaining our momentum at dinner, which has been a challenge for, which has been a challenge for a while.
Andrew Will: And I would just add on that real quick, Andrew, remember our Q4 last year was real challenge for metrophic perspective, so we were really pleased to see some dramatic improvements in our traffic there. So kind of across all the segments as cringes.
Andrew Will: just mentioned.
Andrew Will: i
Andrew Will: The next question comes from John Tower with City Group. Please go ahead.
John Tower: Great, thanks for taking the questions. Maybe first off, just a clarification, the pricing action that you took, did that start in August or something? It's hit a little bit later.
Speaker Change #104: I'll start. We, the price in action, one of the things that we've done and we've been doing this for a while is we're taking...
Speaker Change #105: More frequent price connections that are smaller.
Speaker Change #106: because get respond.
Speaker Change #107: Better to that and that's one of the reasons that we're not expecting a whole lot of lumpiness as it relates to as it relates to price in. So we had a series of price in actions in 24 that will roll off and we have a series of price in actions in 25 that will roll on.
Speaker Change #108: Okay, so some woods, I guess the 5% was included in the August number, is quarter to date number. Yeah, exactly, exactly. Okay.
Speaker Change #109: Great, and then maybe just go on to the advertising piece of the, you know, I know 2024, the company stepped up, stand there and I'm just kind of curious given all the transition to the companies going through right now when looking at fiscal 25.
Speaker Change #110: Do you anticipate another step-up in spend and specifically where do you see yourselves?
Speaker Change #111: Putting that money will be focused more around value still as that's imperative to the core customers today Or do you see it focused on some of these new menu items that you're talking about that? Having a attractive price point, but might be a little bit more premium to the everyday value.
Speaker Change #111: Yeah John, thanks for the question, I'll start and then Craig can kind of jump in. We do not have a plan step up in marketing.
Speaker Change #112: Markings spent as a percent of sales in 25. We did step that up last year. As we were, as I talked about on a lot of different calls, really testing and really refining our mix and looking at that and that's something that we're always doing.
Sarah: Especially with Sarah here, the team is really evaluating the mix. We're really doing a lot of media mixed modeling right now to really find.
Sarah: are way in through all the noise, because remember noise is the out there. Our competitors are spending a lot of money, they're screaming a lot of value, and so we've got to find our way in with those messages now. In the last kind of Q4 and even in Q1, we've had some different messages out there. What I will say is that they're actually all resonating. When you think about the fact that we've even nested early dinner...
Sarah: Early Dine, that's been, as I mentioned earlier, that has been ticking up the tape rate has been going up on that. And right now, we just switched over to the Hashbrown Caseral Shoverx Pi, which has been a tremendous performer for us. So I think we're able to really just be uniquely cracker-barril. Find our guests, find our super fans, and really communicate with them in ways that are meaningful, because we are able to deliver amazing value as well as these.
Sarah: and Cravable Delicious Menu items.
Sarah: In our way, and that's really a big part of our goal to regain market share, is to really speak to guess the way that they want to be spoken to, and really continue to tell our story and delight them every step of the way. And I was there at the helm of the marketing organization, we'll continue to refine that and move that forward, and really meaningful with.
Speaker Change #114: Got it. And then maybe as you're going through the the remodel process, I know you had some store closures last year. Have you found perhaps there's more opportunity to clean up the portfolio with respect to incremental store closures? Are you pretty happy with where you sit today?
Speaker Change #115: We're always looking at the store portfolio, we do it regularly.
Speaker Change #116: So what I'll say is for right now, we don't have any planned closings but we'll continue to evaluate it.
Speaker Change #117: Got it. And then just last one for me, I should ask this earlier. What's your average guest frequency today?
Speaker Change #118: Yeah, it's a good question, right now it's still a little under two times a year, but that obviously doesn't take into account our loyalty members. So as we continue to learn more about them and the program will be able to talk about that, they visit and...
Dave: Dave visited about 50% more often than a normal guest, so that's pretty exciting for us. So we'll continue to work on driving their frequency as we move forward.
Dave: to
Speaker Change #120: Got it. Thanks for taking the questions.
Speaker Change #120: Yeah, I think so.
Speaker Change #120: This concludes our question and answer session. I would like to turn the conference back over to Julie Masino for any closing remarks.
Julie Masino: I want to thank everybody for joining us today. It is a 50th birthday of Krakow Girl, so it's an exciting day. And both Craig and I want to thank our 70,000 plus team members for their continued hard work and dedication to bring in the brand of life each and every day.
Speaker Change #121: I hope you took away that our transformation plan is well underway and on track. We're pleased with the progress the team is making and the initial results of our initiatives are promising.
Speaker Change #121: We're still on the early stages of this multi-year journey and there's much work to be done, but we are confident we are in the right path to deliver our imperative of driving relevancy.
Speaker Change #121: which is really about capturing market share, delivering food and experiences that guests love and growing profitability. And make no mistake, we will do this while continuing to maniacally focus on operational excellence every shift every day.
Speaker Change #121: We look forward to providing further updates on our progress and thanks for your interest.
Speaker Change #121: i
Speaker Change #122: Thank you for attending today's presentation. You may now disconnect.
Speaker Change #122: H.O.T.
Speaker Change #122: [inaudible]
Speaker Change #122: [inaudible]
Speaker Change #122: I think it's a good idea to have a good time in the future. Thank you for watching!
Speaker Change #123: Good day, and welcome to the Crackabair Alps fiscal 2020-24 fourth quarter conference call.
Speaker Change #124: All participants will be now listen only now.
Speaker Change #125: Good evening, you assistant, please signal a conference specialist by pressing start key followed by zero.
Speaker Change #126: After today's presentation, there will be an opportunity to ask questions.
Speaker Change #127: Do ask a question, you may press star, then one on a touch-toe phone. To withdraw your question, please press star, then two.
Speaker Change #128: Reign out this event is being recorded.
Speaker Change #128: I would now like to turn the conference over to Adam Hanan, Director of Investor Relations. Please go ahead.
Adam Hanan: Thank you.
Adam Hanan: Good morning and welcome to Cracker Barrel's fourth quarter, this still 2024 conference call in Webcast. This morning, we issued a press release announcing our fourth quarter results.
Speaker Change #129: In this press release and on this call, we offer a non-gap financial measures such as the Jesse Yvida for the fourth quarter in August 2nd, 2024. Please refer to the footnote for our press release for further details about these metrics.
Speaker Change #129: The company believes these measures provide investors with an enhanced understanding of the company's financial performance.
Speaker Change #129: This information is not intended to be considered in isolation or is it subs to, for net income or earnings per share information prepared in accordance with Gap. The last stages of the press release include reconfigulations from the non-Gap information to the Gap Financials.
Speaker Change #130: On the call of me this morning, our cracker-brille President and CEO Julie Masino and Senior Vice President and CFO Craig Pommells.
Speaker Change #131: and Craig will provide a review of the business financial with an outlook. We will then open up the call for questions. On this call, statements may be made by management of their beliefs and expectations, regarding the company's future operating results or expected future events.
Speaker Change #131: The Internet is forward-looking statements which involve risks and uncertainty that in many cases are the on-management control and may cause actual results to differ materially from expectations.
Speaker Change #132: We call Charlotte Nurse Interators in considering board-looking statements and information.
Speaker Change #132: 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 follow with or furnished to the FEC.
Speaker Change #132: Finally, the information share on this call is valid at the today's date and the company undertakes no obligation to update it except it may be required under applicable law.
Speaker Change #132: I'm now trying to call over to Craig Pommells, president in the Julie Masino. Julie.
Julie Masino: Good morning, and thank you for joining us.
Speaker Change #133: Today, March, Cracker Girl's 50 disc first day. This incredible milestone is one that few concepts have achieved and is attestant to the enduring appeal of our brand and the hard work by so many since Danny Evans founded Cracker Girl in 1969.
Speaker Change #133: There are efforts, ways of foundations for the investments we are making for our future. And we are grateful for the opportunity to build upon and continue this legacy.
Speaker Change #134: This morning, we were pleased to report total revenue and adjusted EBITDA to consistent with our guidance.
Speaker Change #134: We remain focused on operational excellence, day in and day out, or multi-year strategic transformation journey is off to a great start.
Speaker Change #134: I'll touch more on each of these in a moment, but there's a lot to be excited about.
Speaker Change #134: We hired a new dynamic CMO and are making progress on refining the brand. Our new menu items are resonating with guests.
Speaker Change #134: Our optimized pricing initiative is delivering strong flow through and strong value perception scores.
Speaker Change #134: We're seeing a list in traffic and sales in our model pilot stores.
Speaker Change #134: Our loyalty program has 6 million users after just one year and is delivering incremental failed and traffic.
Speaker Change #134: and our teams are highly engaged in executing at a high level, which is reflected in key improvements in employee and guest metrics.
Speaker Change #134: All of these are highlights from our five strategic pillars. We're finding the brand, enhancing the menu, evolving the store and guest experience, winning additional and off-premise, and elevating the employee experience.
Speaker Change #134: Now taking to each one of these.
Speaker Change #134: Our first pillar is focused on evolving the brand and reflecting this in all the ways we interact with guests.
Speaker Change #134: We've partnered with a top tier agency and a conducted extensive qualitative and quantitative research that is informing our upcoming brand refinement.
Speaker Change #134: Our findings reiterated our numerous brand strengths and identified opportunities to increase brand love and ultimately drive increased consideration and traffic.
Speaker Change #135: I'm thrilled that Sarah Moore has joined our team as Chief Marketing Officer and she is leading this work.
Speaker Change #136: Sarah Grings nearly 20 years of hospitality experience, most recently as SVP of marketing at NGM Resort International, where she spearheaded marketing initiatives for portfolio of world-class hospitality brands such as the Lodio, Ariah and NGM Grants.
Speaker Change #137: Her expertise in digital marketing, loyalty programs, and crafting innovative approaches that honor brand heritage while driving strong business results, coupled with her hospitality focused leadership and love for the brand, make her an ideal fit.
Speaker Change #138: As I mentioned earlier, Craig Grawell was founded 65 years ago today, and we're marking this milestone for a day in several ways.
Speaker Change #139: First, we're excited to be partnering with legendary athlete and cracker barrel superfan, Deon Sanders, and coach primal be featured in our digital messaging.
Speaker Change #139: Additionally, to commemorate our birth day and show appreciation to all cracker barrel reward members, including both guests and employees, were offering complementary servings of our double-budget Coca-Cola cake, coffee and ITT today through Sunday.
Speaker Change #139: [inaudible]
Speaker Change #140: Our second pillar is to enhance the menu and make it more craveable for guests and easier to execute for our teams.
Speaker Change #140: This also includes optimizing our pricing while maintaining our strong value proposition.
Speaker Change #140: We're leaning into innovation and have introduced several new offerings in recent months.
Speaker Change #140: These included LTOs such as our sweet and spicy, feasting, chicken tenders and sandwich featured in Q4 and our new fanfavorite hash brown tetheral shepherd's pie and fried apple french toast fakes that are currently featured.
Speaker Change #140: We've also added several new offerings to our core menu.
Speaker Change #140: We introduced a news Sunrise Pancake Special for 799. It's an incredible value. It includes two fluffy, delicious buttermilk pancakes, two eggs and you're choice of bacon or sausage.
Speaker Change #140: We also added several premium offerings featuring a New York Strip, which is a quality upgrade from our previous state.
Speaker Change #140: Additionally, we've augmented our daily dish menu by adding several daily specials, such as our sweet and tangy Southern barbecue ribs, creamy and savory chicken and rice, and delicious, and delicious, slow-brain spot roast.
Speaker Change #140: We've been pleased with the performance of these new offerings and we're building an exciting innovation pipeline.
Speaker Change #140: Our venue enhancements go beyond the offerings themselves and also include how items are presented on the menu.
Speaker Change #140: We're very focused on strengthening our already strong value proposition, and one of the ways we're doing this is by implementing a barbell pricing strategy.
Speaker Change #140: As I mentioned earlier, we've already introduced new items at both the low and high end of the spectrum and we'll be adding more.
Speaker Change #140: Additionally, we're continuing to highlight our early dinner deals. These often are an exceptional value, and the platform allows us to message compelling price points, which is especially important given the high level of promotions and discounting in the current environment.
Speaker Change #140: Another way we are enhancing our menu is by driving efficiencies to improve profitability by reducing fixed labor and making back-of-mouth drops easier and more enjoyable.
Speaker Change #140: We're working with an industrial engineering firm and we just completed the first phase of analysis and are now moving into the initial testing phase.
Speaker Change #140: As part of this, we'll rethinking back-of-health roles and responsibilities to improve production efficiencies and reduce waste.
Speaker Change #140: We believe this work will yield significant cost savings, both in FY 25 and beyond, while also improving the quality of our scratch-made food.
Speaker Change #140: In the coming weeks, we will be launching an approximately 20 store-test, devalidate key assumptions, and we plan to launch system-wide in Q3.
Speaker Change #140: The final aspect of menu enhancement is our work on price optimization and bolstering our strong value positioning.
Speaker Change #140: Our brand has always been synonymous with delivering great value to our guests and we know this is particularly important right now.
Speaker Change #140: We are being much smarter and more sophisticated with our approach and improve the way we price. So that each store hits the sweet spot based on consumer willingness to pay, competitor pricing, and store operating costs.
Speaker Change #140: In most cases this means increasing the pricing and stores, but in some cases it means lowering it.
Speaker Change #140: For example, in Q1, approximately 150 stores move to a higher pricing tier while approximately 70 stores move to a lower tier.
Speaker Change #140: We've been pleased with our results to date. Our analysis indicates we are effectively passing through our pricing creases.
Speaker Change #140: In addition to the strong flow through it, we have actually seen an improvement in our value scores following our August price increases.
Speaker Change #140: We will continue to monitor this closely and are prepared to adjust that necessary. But the data suggests this is a large opportunity and will be a key driver of improving our profitability.
Speaker Change #140: Our third pillar is focused on the gas experience, and this encompasses operational execution, store-designed and atmosphere, and retail.
Speaker Change #140: Operational Excellence in Consistent Execution or a Top Priority.
Speaker Change #140: We remain a hyper focus on the metrics that are most highly correlated with same source sales growth.
Speaker Change #140: Throughout fiscal 24, we invested in labor hours to support these objectives and we continue to make improvements in these important leading indicators.
Speaker Change #140: Although we may not share this detail of a quarter, I do want to provide some examples.
Speaker Change #140: In pair to the prior year quarter, hourly turnover improves by 13 percentage points.
Speaker Change #140: BTE times at KSC Metrox, improved by 7%
Speaker Change #140: Average skill level for the key positions of cook and server increased by 1.5%.
Speaker Change #140: who will start rating increase from 4.1 to 4.2 and our internal net sentiment score hit their highest levels since we relaunched the program last fall.
Speaker Change #140: and finally, off-premise missing items scores improved by 13%.
Speaker Change #141: I want you to give a huge shout out and thank you to our retail and restaurant teams for achieving these results. This is a testament to their vigilant focus on our guests and executing the day-to-day business.
Speaker Change #141: I believe we will sustain this momentum and this will translate to increased visits over time.