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

Jennifer Tate: Yes, I think Sandy said it really well. We’re definitely seeing an increase in the number of price pointed, discounted promotional messaging, especially with some of our big competitors. But what we’re really focused on is talking about the fact that we just have so many items on our menu that are price pointed well from $8.99, $9.99, $10.99, we have over 20 things, 20 meals that are under 20 — under $12. And so we start very soon promoting all of that across all channels of our media mix, just to drive home the point that whatever day part you come in, there are familiar favorites, but also new enticing innovations that are under $12. So we’ll be focusing on that strong everyday value and promoting that the balance of the year as well as that new platform of $5 take homes, which we think will really give people added value, an extra reason to make a visit to Cracker Barrel.

We’ve seen really strong response so far on that. So I do think the competitive environment is heating up, but our intention is to continue to double down even more strongly on the great value we have on our menu.

Sandy Cochran: I’m going to add to that a little, Jen, just because while we’re pleased with everything, Jen just said about value, we do continue to be pleased with the work we’re doing on the check building initiatives that we have, our beverage attachments, our premium size, our Barrel Bites and those things. So we’re watching all of that, especially with the price increases we’re taking to be sure that for those guests who either are looking for something maybe more indulgent or kind of afforded that those items are on the menu, and we’re seeing that they are still choosing them. But for those guests that are looking for value, I think our investment over the last few years in ensuring the value is still there and now the marketing around it will be helpful.

Alton Stump: Got it. Thank you. That’s some great color from both of you. Thanks so much. I’ll hop back in queue.

Operator: Our next question comes from Katherine Griffin with Bank of America.

Katherine Griffin: Hi, thank you. I wanted to ask about the fourth quarter commodities outlook. I think that went from expectations of deflationary to low single-digit inflation. So I was just wondering kind of how you could rank order what the main drivers of that were.

Craig Pommells: Yes. The top two are going to be eggs and produce and certainly, I think if you were to — from a spot market perspective, eggs went way up in hundreds of percent and then it’s moderating. Relative to our contracts and formula prices, we are — we were in a much more favorable position with eggs. And now given the current market conditions, even though it’s moderated from a spot market perspective, we do expect egg prices to be higher than our prior projections in Q4, and the same goes for produce. The good news is that we are seeing solid developments that are in line with our expectations on most other — in most proteins.

Katherine Griffin: Okay. Understood. And then just on Maple Street unit outlook, I think — I’m guessing that changes there. You called out some construction headwinds. So I was just wondering if you could elaborate on that. Is that sort of supply chain constraints, labor, permitting? What sort of — what do you mean by construction headwinds?

Sandy Cochran: All of that. Different stories. Some cases, it’s permitting is the issue some communities have — don’t have as many people to do it. It takes longer to get it. In some cases, we can’t get the equipment, in some cases we can’t get the labor to do the construction. So it’s every one of those categories or probably have at least one issue in.

Katherine Griffin: And it’s less so a problem for the Cracker Barrel stores?