Will Cracker Barrel Fans Reject Its New Menu?
When customers go to Cracker Barrel Old Country Store , the last thing they're looking for is health-conscious cuisine. But that's exactly what the popular chain, particularly among travelers, is starting to give them. Will this about-face alienate Cracker Barrel's core customer base? Not by the looks of it.
At the end of August, Cracker Barrel introduced a line of healthy menu options known as "Wholesome Fixin's." "This new category includes delicious complete meals for under 600 calories at breakfast, lunch, or dinner, all at prices in line with our current menu," CEO Sandra Cochran told analysts on the company's most recent conference call.
The restaurant chain complemented its breakfast menu with options like fresh fruit and yogurt parfaits, as well as multi-grain French toast served with fruit and yogurt. For lunch and dinner, meanwhile, it added pepper-grilled sirloin steaks and oven-fried chicken breast, among other items.
What's perhaps most interesting about the move, however, is that it isn't necessarily designed to boost sales to existing customers. It's intended rather to serve as an enticement for people who may not otherwise be interested in eating at a place with so few healthy options.
"Initially, it was designed to address this -- what we were clearly hearing, which is people were restricting their visits and to address what we call the veto vote," Cochran went on to elaborate. "People wouldn't come because one person in the party said I can't get anything healthy."
The objective of the strategy, in turn, was to change perception more than anything else. "To step back and just remind everyone that Wholesome Fixin's was really designed to address the guest perception that they were limiting visits to the brand because they couldn't find, easily find, something healthy," Cochran said.
And at least thus far it appears to be working. In the most recent quarter, Cracker Barrel's same-store sales were up 2.9% -- 2.5% of which derived from price increases and 0.4% as a result of mix (that is, changes in menu selection).
This success, coupled with strong retail sales, has contributed to an impressive performance for Cracker Barrel's stock. Since the beginning of the year, it's up by 65%, or nearly triple that of the S&P 500 , which is up by a comparatively paltry 23%.
On top of this, Cracker Barrel's stock yields a generous 2.6%, or roughly 60 basis points more than the average yield on the S&P 500, which comes in at 1.98%. With this in mind, even if its new menu offerings won't entice you to give Cracker Barrel a try, then maybe its impressive stock performance will be enough to do the trick.
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