What Is the Secret to Cracker Barrel's Success?

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Cracker Barrel, 10/2014 by Mike Mozart of TheToyChannel and JeepersMedia on YouTube #Cracker #Barrel
Few restaurant chains seem to convey retro charm the way that Cracker Barrel Old Country Store (CBRL) does. It's a blast from the past, with rocking chairs swaying on the front porch, general stores selling old-school trinkets and treats and a menu loaded with comfort foods from the South.

Stepping into one of the chain's 634 restaurants can feel like falling into a time capsule, as kids buy peppermint sticks by the retail store register and dining guests play wooden triangle peg games as they wait for their food to arrive.

Everything about Cracker Barrel seems to convey old-fashioned themes and that's apparently just fine for today's consumers. The restaurant and country-store operator posted blowout quarterly results last week, with strong performance at both its dining and retail businesses.

Back to the Future

Revenue climbed 6.3 percent during its fiscal third quarter compared to the same springtime period a year earlier. The uptick was the combination of a 5.2 percent increase in comparable restaurant sales, a 4.5 percent uptick in comparable retail sales and the continuing expansion of the concept itself.

There aren't too many table-service eateries posting that kind of year-over-year growth and things have been even hairier for traditional retailers. Cracker Barrel credits the strength to springtime weekday lunch promotions and the success of its Wholesome Fixin's menu, which features various entrees that pack fewer than 600 calories apiece.

The Wholesome Fixin's menu is a departure from the decadent comfort-food fare that many associate with the Cracker Barrel experience, but it's been able to make it work with items including pecan-crusted catfish and an oven-baked "fried" chicken.

This doesn't mean that Cracker Barrel is keeping a strict calorie count to every menu decision. Discussing the new summer menu additions during the call, Cracker Barrel singled out a strawberries-and-cream French toast breakfast entree and a slow-roasted rib platter that aren't going to woo too many health nuts.

On the retail front, Cracker Barrel credits its success to strong sales in women's apparel, candles and accessories. It continues to focus on merchandise with multigenerational appeal, leading it to turn to embroidered apparel, fedora hats and nautical-themed wares for the summer.

Marketing the Mood

Cracker Barrel doesn't spend a lot of money on TV advertising. It prefers the "always on" nature of billboards, and that makes sense when one considers that the chain strategically places its restaurants on major highway exits and well-traveled intersections. Most casual-dining chains live and die on the flow of locals, but Cracker Barrel's appeal is also strong to travelers passing through. There aren't too many casual-dining chains that reserve the back of their lots for RV and truck parking.

Add it all up and it's working. This doesn't mean that you can't teach an old food company some new media tricks. Cracker Barrel also credits its success to its digital advertising efforts and its music program. One way that the chain combined the two earlier this year was with the Country Checkers Challenge, offering an online checkers contest that culminated in finalists using real-life checker pieces including country music stars Kellie Pickler and Thomas Rhett during the annual Academy of Country Music awards show.

Cracker Barrel isn't perfect. It has courted controversy over the years for everything from alleged discriminatory practices to siding with notorious celebrities. However, consumers seem to like the combination of retro charm, value pricing and Southern staples. It's working at a time when many of its casual-dining peers are battling operational indigestion.

Motley Fool contributor Rick Munarriz owns shares of Cracker Barrel Old Country Store. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. Looking for a winner for your portfolio? Check out The Motley Fool's one great stock to buy for 2015 and beyond.
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