Cracker Barrel Old Country Store, Inc. Q1 2023 Earnings Call Transcript

Sandy Cochran: Well, the Board continues to discuss capital allocation at every board member — at every Board meeting. And our new Board members, first, Bill joined today, right? He hasn’t — never been to a meeting. And Jodi’s first meeting was a week ago or so. So the — they haven’t had an opportunity yet to have much of they’re new. I would say the Board continues to take a balanced approach that prioritizes first, the growth in Cracker Barrel and Maple Street. And then beyond that, we want to return capital to the shareholders through dividends and buybacks, and they are committed to constantly evaluating each of those opportunities and making what they view as the best judgment at the time.

Jon Tower: Got it. I’m sorry, one last one for me. I apologize. When thinking about G&A for the year, how should we think about from a dollar basis where that should settle out?

Craig Pommells: No, we haven’t provided that level of that level of guidance. For G&A, what I will keep a couple of things in mind. We have been G&A has inflation as well, right, as wages and everything works through the P&L. Another — an additional consideration in is in Q4, we are expecting our margins to improve considerably. And at the same time, we are expecting incentive compensation to normalize a bit versus prior year, and some of that will be — a large part of that will be in G&A. There are also additional investments that we’re making to support our digital initiatives like loyalty and so on. So there are a lot of moving pieces in G&A, and we expect to get some leverage what we’re also investing and there’s some normalization that will happen in Q3 and Q4, but particularly in Q4.

Jon Tower: Thanks for taking the questions.

Craig Pommells: Welcome.

Operator: The next question comes from Brian Mullan with Deutsche Bank. Please go ahead.

Brian Mullan: Hey. Thank you. In the prepared remarks, you mentioned expanding the test of the labor system to more stores and being pleased with what you’ve seen this far. So I’m just wondering if you could provide a few examples of the benefits those stores are experiencing in test? And then if you could just speak to how quickly you could roll that out to the rest of the system, if you still expect meaningful savings this year — this fiscal year.

Craig Pommells: Yes. Absolutely, Brian. It’s a part of our cost saves, the $20 million to $25 million, and it’s embedded in that $30 million run rate for — at the end of the year. We are pleased with the labor system performance. We’ve seen solid performance both in terms of productivity but also across a number of other KPIs. So it’s just a better way to run the business. It gives the team visibility at a more detailed level than they had before. We’re — like with everything we’re being thoughtful about it. We won’t be fully rolled out by the end of the fiscal, I don’t think, but we’ll be close to it. So as a result, that is a component in why that $20 million to $25 million to $30 million at the end of the year.

Brian Mullan: Okay. Thank you. And then just a follow-up. On the Maple Street development pipeline, I think the guidance implies you’re going to open anywhere from 12 to 17 more units this fiscal year. Can you just give us a sense into the visibility at this point, how many are under construction right now? And then just related to that, what are kind of the key metrics you’re watching as you go down this path? I think you want to accelerate in ’24 and ’25. But building these yourself is new for the company since it was an acquisition. So just an update on all that.