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Management’s Discussion and Analysis of Financial Conditionand Results of Operations
e following Management’s Discussion and Analysis of
FinancialCondition and Results of Operations(“MD&A”)
provides information which management believes is relevant
to an assessment and understanding of our consolidated
results of operations and nancial condition. MD&A should
be read in conjunction with the Consolidated Financial
Statements and notes thereto. Readers also should carefully
review the information presentedunder the section entitled
“Risk Factors” andother cautionarystatements in this report.
Alldollar amounts (otherthan per shareamounts) reported
or discussedin this MD&A are shown in thousands. References
in MD&A to a yearor quarterare to our scal year or quarter
unless expressly noted or the context clearly indicatesotherwise.
is overview summarizes the MD&A, which includes the
following sections:
•Executive Overview – a general description of our business,
the restaurant andretail industries, our key performance
indicators and the Company’s performance in 2015.
•Results of Operations– an analysis of our consolidated
statementsof income for the three yearspresentedin our
Consolidated FinancialStatements.
•Liquidity and Capital Resources – an analysis of our primary
sources of liquidity, capital expenditures and material
commitments.
•Critical Accounting Estimates– a discussion of accounting
policies that require critical judgments and estimates.
EXECUTIVE OVERVIEW
Cracker Barrel Old Country Store, Inc. (the “Company,”“our”
or “we”)is a publicly traded (Nasdaq: CBRL) company that,
through its operations and those of certain subsidiaries,is
engaged in the operation and development of the Cracker
BarrelOld Country Store®(“CrackerBarrel”) concept. Each
Cracker Barrel store consists of a restaurant with a gishop.
e restaurantsservebreakfast, lunch and dinner. e gi
shop area oers a variety of decorative and functional items
specializing in rocking chairs, holiday gis, toys, apparel
andfoods. As of September 21, 2015, the Companyoperated
637 Cracker Barrelstores located in 42 states and had 8,095
shareholdersof record.
Restaurant and Retail Industries
Our stores operatein both the restaurant andretail industries
in the United States. e restaurant andretail industries are
highly competitive with respectto quality, variety andprice of
the food products and retail merchandise oered. We compete
with a signicant number of nationaland regional restaurant
andretail chains. Additionally, there are many segments
within the restaurant industry, such as family dining, casual
dining, fast casual and quick service,which oen overlap and
provide competition for widely diverse restaurant concepts.
We operatein the full-service segment of the restaurant
industry. Competition also existsin securing prime real estate
locations for new stores, in hiring qualied employees, in
advertising,in the aractiveness of facilities and with competi-
tors having similarmenu oeringsor convenience. e
restaurant and retail industries are oen aected by changes
in consumer taste andpreference;national, regionalor local
economic conditions; demographic trends; trac paerns;
the type, number and location of competing restaurantsand
retailers;and consumers’ discretionary purchasing power.
Additionally, economic, seasonal and weather conditions
aectthe restaurant andretail industries. Adverseeconomic
conditions and unemployment rates aectconsumer discre-
tionary income and dining and shopping habits. Historically,
interstate tourist trac and the propensityto dine out
have been much higher during the summer months, thereby
contributing to higher prots in our fourth quarter. Retail
sales,which are made substantially to our restaurant guests, are
strongest in the second quarter, which includes the Christmas
holiday shopping season. Severe weather also aects restaurant
andretail sales adverselyfrom time to time.
Key Performance Indicators
Management uses a number of key performance measures to
evaluate our operational and nancial performance, including
the following:
Comparable store restaurant andretail sales and restaurant
guest trac consist of sales and calculated number of guests,
respectively,of stores open at least six fullquartersat the
8
CRACKER BARRELOLD COUNTRY STORE, INC.