Cracker Barrel(US:CBRL)2020-06-02 21:31Financial Data and Key Metrics Changes - Cracker Barrel reported a 41.7% decrease in comparable store restaurant sales, with traffic declining by 43.6% and average check increasing by 1.9% [42][44] - The company incurred a GAAP earnings loss per diluted share of $6.81, while adjusted earnings loss per diluted share was $1.81 after excluding COVID-related expenses and impairment charges [47][50] - The company ended the quarter with approximately $363 million in cash, bolstered by drawing down on its credit facility [52] Business Line Data and Key Metrics Changes - Comparable store retail sales decreased by 45.5% in the third quarter [43] - The company implemented a limited menu during dining room closures to reduce labor and food waste, while introducing new off-premise offerings [14][18] Market Data and Key Metrics Changes - Sales challenges were exacerbated by the significant impact on breakfast and lunch day parts, which account for a large portion of sales [18] - The company noted that interstate locations performed better than those in suburban areas during the pandemic [109] Company Strategy and Development Direction - The company plans to focus on driving topline growth through menu innovation and enhancing off-premise business [26][31] - Cracker Barrel is investing in technology initiatives to improve guest experience and streamline operations, including a new digital store and contactless payment options [34][33] - The company aims to balance cash conservation with selective investments to support business growth [50][54] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the recovery, noting that consumer willingness to return to full-service restaurants remains uncertain [60][64] - The company anticipates that off-premise sales will remain elevated for the foreseeable future, while retail sales may face challenges due to social distancing measures [61][58] Other Important Information - The company has suspended its dividend and share repurchase programs to conserve cash during the pandemic [50] - Cracker Barrel expects to open two new locations in fiscal 2021, which were delayed due to the pandemic [55] Q&A Session Summary Question: Insights on off-premise business retention as dine-in opens - Management noted that off-premise business has retained much of its volume, with dine-in sales improving significantly [68] Question: Consumer behavior and unemployment impact - Management highlighted uncertainty regarding consumer behavior post-unemployment benefits, emphasizing the importance of value in their offerings [74][75] Question: Cash savings and cash flow generation - Management discussed a balanced approach to capital allocation, prioritizing investments in key initiatives while maintaining cash conservation [84][86] Question: Testing of beer and wine offerings - Management confirmed that testing of beer and wine has been ongoing, with positive initial results and plans for further rollout [95] Question: Managing inventory in a choppy demand environment - Management indicated that inventory management has been proactive, with adjustments made to reflect anticipated demand fluctuations [98][101]