Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) Q2 2023 Earnings Call Transcript

Todd Brooks: Okay. Craig, just a follow-up there. Can you share how much of that $25 million in growth in catering is already kind of in the bar now that we’re through the important holiday season?

Jennifer Tate: Can I take that?

Craig Pommells: Sure, Jen. I’ll turn it over to Jennifer for that one.

Jennifer Tate: Yes. I think what we would say is that Q2 exceeded our expectations in terms of off-premise. We were up 40% year-over-year in terms of catering. So we felt really, really good about the progress we made in the second quarter in catering. And that’s also true in terms of our third-party delivering. We had a solid quarter there as well. So we definitely feel like we are well on track to hit that goal that we set out for the year.

Sandy Cochran: And Q2 is our strongest. With respect to catering, Q2 is the biggest quarter.

Todd Brooks: Great. And then final one, I’ll jump back in queue. On the pricing strategy, I know kind of coming out of last quarter, you were targeting maybe 8% menu price increase. I think the full year now has crept up another 50 basis points. Can we maybe talk about continued increases in the face of maybe moderating, especially commodity outlook going forward? And how does price roll off? So with the incremental, I think you said half of the increase you’re running now occurred during the quarter. Do we stay at a steady kind of 8.5% through the balance of the year? Or is it lumpier now that we’ve got — I don’t know the timing of the other roll-offs.

Craig Pommells: Craig — it’s Todd. The pricing, we have that 8.5% on the year. And for Q2, about half of that is the rollover from prior year and the other half is the accumulation of the pricing action so far in this fiscal year. For the back half of the year, the overall pricing level cumulative, meaning the prior year rollover as well as pricing in this fiscal year we expect to remain in the high 8% range. Now just mathematically, as you go throughout the year, we will have — less of that price is going to be driven by actions that we took in the prior year, but we will benefit from pricing actions, for example, that we took in Q1. So upper 8% range for Q3 and Q4.

Todd Brooks: Okay, thanks. I’ll jump back in the queue.

Operator: Our next question comes from Alton Stump with Loop Capital. Please go ahead.

Alton Stump: Great. Thank you and good morning. Thanks for taking my questions as always. I just want to ask about the competitive environment. There’s obviously been a lot of news flow. This time of the year certainly is typically more promotional anyway but even more so with consumers with the concern about a recession or et cetera. What do you see competitively? Is it worse than usually at this time of the year? Or do you think it’s in par with what you had thought heading into the first half of the calendar year?

Sandy Cochran: Alton, I’ll start and then let Jen sort of wrap up. As we mentioned, our focus in Q3 certainly has been on reinforcing the value that we believe is on our menu with our 20 under $12, and now we’ve introduced our $5 take home. And so our marketing messaging will be largely about that because we believe value will be important. I think our competitors would agree based on the advertising. We’re seeing that — we’re seeing more, I would think, and I’ll let Jen speak to detail where would appear they are, even reintroducing or reinforcing the value on their menus and promotions. So it’s not dissimilar to what we went through back in ’10 and ’09 when the industry was coming out of a difficult economic time and consumers will challenge them. So I would assume it’s going to continue, if not accelerate.