Cracker Barrel Old Country Store Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dennis Geiger - UBS Securities LLC - Analyst : Great. I appreciate all the color as well as the detail or some of the color on Thanksgiving. Craig, wondering if you could talk a little bit more about that 2Q-to-date period maybe and kind of what you're seeing, if you're seeing overall kind of a continuation of that momentum. I know Thanksgiving is a big part of that. But just if any -- any additional color on the most recent quarter-to-date period?

Question: Dennis Geiger - UBS Securities LLC - Analyst : That's great. One more, if I may. As it relates to the strength you saw in the first quarter, it sounds like progress against a bunch of the strategic plans, including dinner. I want to touch on the loyalty piece, and if there's just -- if there's anything more to share there. It sounds like you like what you're seeing from an incremental sales and traffic perspective. Any more breakdown as far as frequency or kind of other benefits that you're seeing thus far from the program?

Question: Dennis Geiger - UBS Securities LLC - Analyst : Thank you, Julie. Appreciate. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 4:00PM, CBRL.OQ - Q1 2025 Cracker Barrel Old Country Store Inc Earnings Call

Question: Brian Mullan - Piper Sandler Companies - Analyst : Just a question on your efficiency efforts and the back-of-the-house work. As you continue with your test and then deploy some of the system-wide in Q3, can you give some examples or some specifics around what areas of the P&L do you think will start to see some benefits as we get this deployed?

Question: Brian Mullan - Piper Sandler Companies - Analyst : Okay. And then just a question on the retail business. I guess one, just talk about your outlook for the upcoming holiday season. Anything you could offer on the consumer in a realistic way to think about the top line there would be helpful just given how important the 2Q is from a seasonal perspective? And separate from that, the gross margins looked really good in the first quarter. I'm just wondering how we should be thinking about retail gross margins from a full year perspective.

Question: Brian Mullan - Piper Sandler Companies - Analyst : Thank you both.

Question: Jake Bartlett - Truist Securities - Analyst : Great. My first is I wanted to dig into some of these more -- these atypical items and make sure I understand what's going on. For the gift card breakage, I was just looking quickly last two first quarters, it was a positive. So, this seems to be something that is a positive in the first quarter in general. And maybe just kind of confirm that. The $6 million, does that contribute -- I mean, my math would be that slightly less than 1% on same-store sales for the restaurant side. I just want to make sure that gift card breakage gets reflected in same-store sales. And then I had some follow-up questions on the other side.

Question: Jake Bartlett - Truist Securities - Analyst : Got it. Okay. That makes a lot of sense, and that's helpful. On the other side, I think there's about $9 million in atypical costs that you mentioned. It doesn't look like any of those costs are kind of being added back to adjusted results. So, those are flowing completely through to your adjusted results. So, I guess the net impact is a drag on EBITDA. While you have the $6 million benefit from the gift card breakage, there's $9 million of a headwind. Is that the right way to think about it? Or am I getting that right that none of that $9 million was actually -- okay. Those $9 million.

Question: Jake Bartlett - Truist Securities - Analyst : Got it. And just to kind of close the loop on these typical items, in the second quarter, the $6 million should reverse from the benefit side. But anything reversing out on the cost side? Are there any offsets to the what looks to be a $6 million drag in the second quarter for EBITDA?

Question: Jake Bartlett - Truist Securities - Analyst : Okay. So, net-net, you kept your EBITDA guidance, but there's a $3 million headwind that you hadn't expected in the first quarter.

Question: Jake Bartlett - Truist Securities - Analyst : Great. And then just one question on the operations and it's on your remodel program. I guess I'm a little confused with some of the terminology. I just want to make sure I get it right. I'm looking at the last quarter's earnings call, and you talked about the three kind of high, medium, low options, and then you've developed a fourth option, which you're calling a refresh. Now it seems like you're referring to kind of refreshes separately from the four different tiers of remodel. So, I just want to make sure I understand the difference between a refresh as you're calling it now and the four tiers of remodels that you're testing. And I'm also wondering if there's anything more you can share about the relative performance of each. It sounded like -- one of my takeaways from the last call is that the refresh or the less intense remodel was actually having a really good result, and that might end up driving maybe a lower cost of the program overall. I guess my question is whether is that bearing out, that you're finding that maybe some of the lighter investments is actually driving the most attractive returns?

Question: Jake Bartlett - Truist Securities - Analyst : All right. Thank you very much. Appreciate it.

Question: Andrew Wolf - C.L. King & Associates - Analyst : I actually have a follow-up on the $6 million as well in the breakage. If you take that out of sales and flow it through, you'd get to about a flat margin year-over-year on restaurant level? Or were any of the $9.3 million cost, Craig, that you called out, were any of those -- would any of those be in the restaurant-level expenses, or were they all in G&A? I'm trying to.

Question: Andrew Wolf - C.L. King & Associates - Analyst : Okay. That's what I was getting at. Great. All right. Juliw, I want to get to the restaurants. On the menu, when you talking about menu items, you talked about some new items and some LTOs and an LTO that might become a new item. I just wanted to get a sense, it sounds like there's -- it's going quite well and there's good guest reception. Is that because the Company is taking kind of more shots on goal? Or is it there's something like improved in the innovation process so that you're putting better items on the menu that are resonating better?

Question: Andrew Wolf - C.L. King & Associates - Analyst : Just for your last sentence. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 4:00PM, CBRL.OQ - Q1 2025 Cracker Barrel Old Country Store Inc Earnings Call

Question: Andrew Wolf - C.L. King & Associates - Analyst : Okay. I was going to get to that second part, you kind of -- so some of the innovation is to drive trial and some of it is to maybe increased repeat business?

Question: Andrew Wolf - C.L. King & Associates - Analyst : And just the last thing, I mean, on new items, driving new traffic, new customers and trial, probably not intentionally, but you didn't get too much in what's new with marketing in this period, although you did -- you were asked about the loyalty. But I think you have a new agency and so on. Would it be fair to say you might want to skew more towards increased usage by existing customers until your marketing is more ramped up? Or can you -- can the menu speak for itself and word of mouth and that kind of thing?

Question: Andrew Wolf - C.L. King & Associates - Analyst : Got it, Thanks and congratulations on the progress so far.

Question: Todd Brooks - Benchmark Company - Analyst : Quick question, Julie. You mentioned in your comments that you saw a strong average check growth in the quarter. Can you share the magnitude of check growth with us?

Question: Todd Brooks - Benchmark Company - Analyst : That's great. That's really encouraging. And then knowing that Sunrise is out there at $7.99 and Early Dine at $8.99, would you share with us what the value mix is? How many -- what percent of customers are accessing through those two platforms to drive their visit to Cracker Barrel? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 4:00PM, CBRL.OQ - Q1 2025 Cracker Barrel Old Country Store Inc Earnings Call

Question: Todd Brooks - Benchmark Company - Analyst : Those are all very germane points. And I probably should have asked the question this way, it might be the way that you guys really do look at this. You talked about value scores improving with your customers. Would you share with us how much value scores have improved year-over-year? That might be the holistic way to look at all these efforts together.

Question: Todd Brooks - Benchmark Company - Analyst : Okay, great. Thank you both. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 4:00PM, CBRL.OQ - Q1 2025 Cracker Barrel Old Country Store Inc Earnings Call

Question: Katherine Griffin - BofA Securities - Analyst : First, I wanted to ask about the quarter trends, in the first quarter, the outperformance versus the casual dining industry. Did you see that cost in each month of the quarter? And then were there any call outs as far as maybe where outperformance was strong by region? Or was it also consistent?

Question: Katherine Griffin - BofA Securities - Analyst : Okay. That's helpful. And then I wanted to ask, I guess, a follow-up to an earlier question just about the different, I guess, tiers of remodel and then refreshes. As you're a few months into the strategic turnaround, I'm curious if there are initiatives that are resonating better than you had expected or maybe better than others. And has that changed at all the way that you're thinking about the timing of or how you're allocating the investments into the turnaround?

Question: Katherine Griffin - BofA Securities - Analyst : Thank you.