Cracker Barrel 2004 Annual Report Download - page 38

Total Revenue
The following table highlights the components of total revenue by percentage relationships to total revenue
for the past three years:
2004 2003 2002
Net Sales:
Cracker Barrel restaurant 66.1% 67.3% 67.8%
Logan’s company-operated 13.4 12.4 11.6
Total restaurant 79.5 79.7 79.4
Cracker Barrel retail 20.4 20.2 20.5
Total net sales 99.9 99.9 99.9
Franchise fees and royalties 0.1 0.1 0.1
Total revenue 100.0% 100.0% 100.0%
The following table highlights comparable store sales* results over the past two years:
Cracker Barrel
Period to Period
Increase (Decrease)
Logan’s
Period to Period
Increase
2004 vs 2003 2003 vs 2002 2004 vs 2003 2003 vs 2002
(445 Stores) (430 Stores) (83 Stores) (71 Stores)
Restaurant 2.0% 0.5% 4.8% 0.0%
Retail 5.3 (0.4) −− −−
Restaurant & Retail 2.8 0.3 4.8 0.0
*Comparable store sales consist of sales of units open six full quarters at the beginning of the year; and are measured
on calendar weeks.
Cracker Barrel comparable store restaurant sales increased 2.0% for 2004 versus 2003. Comparable store
restaurant sales increased 0.5% in 2003 versus 2002. The increase in comparable store restaurant sales from
2003 to 2004 was due to an increase in average check of 1.7%, including 1.0% of menu pricing and 0.7% of product
mix changes, and an increase in guest traffic of 0.3%.
Cracker Barrel comparable store retail sales increased 5.3% for 2004 versus 2003. Comparable store retail
sales decreased 0.4% in 2003 versus 2002. The comparable store retail sales increase from 2003 to 2004 was due to
improved merchandise selection with broader appeal and greater variety at lower price points, improved merchandise
planning, and retail staff sales training as well as the restaurant guest traffic increase.
In 2004 total net sales (restaurant and retail) in the 445 Cracker Barrel comparable stores averaged $4,206.
Restaurant sales were 76.5% of total net sales in the comparable 445 stores in 2004 and 77.1% in 2003.
Logan’s comparable store sales increased 4.8% for 2004 versus 2003 at an average of $3,040 per restaurant.
Comparable store sales were flat in 2003 versus 2002. The increase in comparable store sales from 2003 to 2004 was
due to an increase in guest traffic of 3.1% and an increase in average check of 1.7%. The higher check included 1.1%
of menu pricing and 0.6% lower sales deductions for complimentary meals (resulting from focus on execution and less
need to resolve guest product and service issues).
Total revenue, which increased 8.3% and 6.1% in 2004 and 2003, respectively, benefited from the opening of
24, 23 and 20 Cracker Barrel stores in 2004, 2003 and 2002, respectively, and the opening of 11, 12 and 9 company-
operated and 4, 4 and 4 franchised Logan’s restaurants in 2004, 2003 and 2002, respectively. Average unit volumes,
based on weeks of operation, were approximately $61.7 per week for Cracker Barrel restaurants in 2004 (compared
with $60.9 in 2003 and $60.6 in 2002), $19.1 for Cracker Barrel retail (compared with $18.2 for 2003 and $18.3 for
2002), and $59.5 for Logan’s (compared with $57.0 for 2003 and $56.6 for 2002).
Cost of Goods Sold
Cost of goods sold as a percentage of total revenue increased in 2004 to 33.0% from 32.0% in 2003. This
increase was due to higher commodity costs for beef, butter, bacon and other dairy, including eggs, all of which had
high single-digit percentage increases due to unfavorable market conditions. Also affecting cost of goods sold in 2004
was a higher mix of retail sales as a percent of total revenue (retail has a higher product cost than restaurant) and
higher markdowns of retail merchandise versus the prior year. Management believes that increases in 2004 were
unusual in both magnitude and the breadth of commodities affected. These increases were partially offset by higher
menu pricing and higher initial mark-ons of retail merchandise.
Cost of goods sold as a percentage of total revenue decreased in 2003 to 32.0% from 32.7% in 2002. Cracker
Barrel has had various focused initiatives aimed at improving cost of product from vendors. This decrease was due to