Craig Pommells: Yes. I would say its early days on that one, but we’re looking at all of it. Number 1 as we need great food, it needs to be relevant, it needs to be a good employee experience but we’re looking at what exactly needs to be made from scratch in the store versus brought on in some version of value added, but it’s early. So I can’t say that we’ve committed to these individual items, but it’s something that we’re clearly looking at. One of the challenges with the model, it is very heavily scratch-made across a lot of items. And that is fine when traffic volumes are very high, and it is much more challenging to win traffic volumes moderate. So because of that, we are – we’re looking at all those pieces and we’re going to make those decisions based on the analysis once we complete the testing.
Jon Tower: Great. Thanks. Just two more if I may. First, I was wondering if you could drill a little bit more into the loyalty platform in terms of adding any sort of specifics regarding sign-ups. And I know its early days, but perhaps any frequency. And I’m curious in aggregate to date, is the platform including, I guess, some of the elevated marketing spend profitable yet?
Julie Masino: I’ll start a little bit, and then Craig can talk to the profitability. But one way is we are pleased with the enrollment levels. We’re not going to share absolute numbers right now. We are ahead of our plan, which is exciting to us. We were ahead of plan going into this quarter. And then, obviously, the partnership with Dolly Parton was extraordinary and helped drive even more incremental enrollments than we were already seeing. So that’s exciting. We are seeing some incremental traffic. We continue to expect to see that in the second half. That’s in our projections and the way that we’re looking at the back half of the year. And we’re seeing strong engagement, which is really one of the most exciting things for us.
People, our guests have really responded well to this program. The program is so unique. When you look at other loyalty programs out there. The fact that you can earn on the restaurant side and on the retail side, and then we’re letting you redeem on both the restaurant and retail side seems to really be resonating with our guests as well as our employees. So the early days are very positive.
Craig Pommells: Yes. In terms of profitability, this is more of an investment year. The ramp-up costs for a program of this scale has a restaurant component, has a retail component. You can participate as you – when you pay at the cash register, you can participate through the app. It’s a big program. And then there are also costs that are associated with just the scale up. There is the sign-up cost. There is the cost associated with building the point liability. So all of that means this is an investment year for the program. And as we think about FY 2025 as we start to comp over that and some of those ramp-up costs become a smaller proportion, we would anticipate the program being a more meaningful contributor to profits.
Jon Tower: Got it. Thank you. And then just last one for me. In terms of thinking about the cadence of the ad spend for the balance of the year, based upon guidance, it would sound like it’s going to be more fourth quarter weighted, but maybe I’m incorrect in that assumption?
Craig Pommells: Yes. I think we tried to talk more – a little bit more holistically to say prior year, we’re in a mid- to high 2% range. And this year, we’re more in the kind of low to mid-3% range.
Jon Tower: Right. Sorry. But cadence for the balance of the year, third and fourth quarter is it should we expect kind of equal spend across the 2%…
Craig Pommells: Yes, yes, I would think as a percentage, I would kind of stick with that low to mid-3% range.
Jon Tower: Okay, great. Thank you.
Craig Pommells: Both quarters [ph], yes.
Operator: The next question comes from Andrew Wolf with CL King. Please go ahead.
Andrew Wolf: Hi. I want to follow up on the ad spend increase, the rate – and again, I might have missed this, but is that more of a response just to the market? Obviously, certain competitors gone from not doing it to being pretty aggressive and so on? Or is that – do you think the business was under advertising, and that’s sort of the new run rate?
Julie Masino: Thanks, Andrew. As Craig mentioned, when we really looked at Q4 of 2023. One of the key learnings we took away from it was that we were – we did pull back on advertising, and we believe that, that hurt our top line. So as we were looking at this year and really focused on driving relevancy, driving the business, we started evaluating at advertising spending, tactics, messaging, channels, all of those things. So that test and learn approach is really fueling where we find ourselves this year, and we’ll continue into the back half of the year. So we’re pleased with the investments that we’ve made because it is helping us with the top line. We saw that in Q2, we saw it in Q1. Things like college football, things like NASCAR, the local heavy up test that we did in Q1.
We’ve expanded that into Q2 to really look at how we’re able to surround some of those national buys with some of these local heavy upsto really drive traffic and be relevant to our guests and let them know what’s going on at Cracker Barrel.
Andrew Wolf: Thank you. The other question I have is on the strategic pricing that you want to improve a lot. Is that strictly sort of processes and training issue? Or is there also some data either through loyalty or other sources to get the right output. And can you give us a sense of the timing, how quickly that can be rolled through the business?
Julie Masino: Sure. Yes, I would say it’s a combination of both, but mostly a more data-driven approach. So the team has done a great job in the past holding back stores, really trying to understand the impact of pricing and consumer response to it. But we can be even more strategic and data-driven across the way we structure the menu, the way we think about value, as I talked about earlier. And then the way that we achieve that through tiers, zones, stores, menu items, menu deletions, how we think about items on a plate and how they’re priced. So there’s a lot of opportunities to just look at it differently from a data-driven approach and test and learn our way into some of these opportunities. We want to make sure that we have a pricing road map into the future, and that’s really the goal for the team, to build that road map through a test-and-learn mentality so that we can understand how pricing can help us and really be a lever in our P&L going forward.
Andrew Wolf: Thank you.
Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Julie Masino for any closing remarks.
Julie Masino: Thank you all for joining us. Today, we’ve given you a glimpse of our imperatives and initiatives, and we look forward to sharing more with you in May on our robust strategic framework and the various initiatives that ladder up to it. Lastly, I want to thank our teams both in the home office and in all of our stores for their continued dedication to the guest experience and the commitment to the brand. I greatly appreciate all of their hard work day in and day out as well as on the transformation, and I’m looking forward to continuing our journey on the strategic transformation together.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
