Cracker Barrel 2006 Annual Report Download - page 35

33
RESULTS OF OPERATIONS
The following table highlights operating results over
the past three years:
Period to Period
Relationship to Total Revenue Increase (Decrease)
2006 2005
2006 2005 2004 vs 2005 vs 2004
Total revenue 100.0% 100.0% 100.0% 3% 8%
Cost of goods sold 32.0 33.0 33.0 — 8
Gross profit 68.0 67.0 67.0 4 8
Labor and other
related expenses 36.5 36.6 37.0 3 7
Impairment and store
closing charges 0.3 — — — —
Other store operating
expenses 18.1 17.4 17.0 8 10
Store operating income 13.1 13.0 13.0 3 8
General and administrative 5.9 5.1 5.3 18 5
Operating income 7.2 7.9 7.7 (6) 10
Interest expense 0.8 0.4 0.4 157 3
Interest income — — — — —
Income before income
taxes 6.4 7.5 7.3 (13) 11
Provision for income taxes 2.0 2.6 2.6 (23) 7
Net income 4.4 4.9 4.7 (8) 13
Memo: Share-based
compensation
included in general
and administrative 0.5 — — — —
Total Revenue
The following table highlights the components of total
revenue by percentage relationships to total revenue for
the past three years:
2006 2005 2004
Net Sales:
Cracker Barrel restaurant 66.2% 66.1% 66.1%
Logan’s company-operated 15.9 14.6 13.4
Total restaurant 82.1 80.7 79.5
Cracker Barrel retail 17.8 19.2 20.4
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 Logan’s
Period to Period Period to Period
Increase (Decrease) Increase
2006 vs 2005 2005 vs 2004 2006 vs 2005 2005 vs 2004
(482 Stores) (466 Stores) (100 Stores) (93 Stores)
Restaurant (1.1)% 3.1% 0.8% 3.4%
Retail (8.1) (2.7) — —
Restaurant & Retail (2.7) 1.8 0.8 3.4
* Comparable store sales consist of sales of units open six full
quarters at the beginning of the year; and are measured on
comparable calendar weeks.
Cracker Barrel comparable store restaurant sales
averaged $3,279 per store in 2006 representing a
decrease of 1.1% versus 2005. Comparable store restau-
rant sales increased 3.1% in 2005 versus 2004. The
decrease in comparable store restaurant sales from 2005
to 2006 was due to a decrease in guest traffic
of 3.2% and an increase in average check of 2.1%,
including a 2.2% average menu price increase.
Cracker Barrel comparable store retail sales aver-
aged $878 per store in 2006 representing a decrease
of 8.1% versus 2005. Comparable store retail sales
decreased 2.7% in 2005 versus 2004. The comparable
store retail sales decrease from 2005 to 2006 resulted
from restaurant guest traffic decreases, uncertain
consumer sentiment and reduced discretionary spend-
ing, and weaker than expected response to the retail
assortments and lower average spending per retail
purchase as a result of lower product price points and
greater markdowns.
In 2006 total net sales (restaurant and retail) in the
482 Cracker Barrel comparable stores averaged $4,157.
Retail sales were 21.1% of total net sales in the
comparable 482 stores in 2006 and 22.4% in 2005.
Logan’s comparable store sales increased 0.8% for
2006 versus 2005 at an average of $3,214 per restau-
rant. Comparable store sales increased 3.4% for 2005
versus 2004. The increase in comparable store sales
from 2005 to 2006 resulted from an increase in average
check of 2.4% and a decrease in guest traffic of 1.6%,
including a 2.5% average menu price increase.
Total revenue, which increased 2.9% and 7.8% in
2006 and 2005, respectively, benefited from the opening
of 21, 25 and 24 Cracker Barrel stores in 2006, 2005
and 2004, respectively, and the opening of 20, 17 and
11 company-operated and 2, 3 and 4 franchised Logan’s
restaurants in 2006, 2005 and 2004, respectively,
partially offset by the closing of 7 Cracker Barrel stores
and 3 company-owned Logan’s restaurants in February
2006. Average weekly sales (net sales divided by oper-
ating weeks in company-owned units) were approxi-
mately $62.5 per week for Cracker Barrel restaurants in
2006 (compared with $63.3 in 2005 and $61.7 in 2004),
$16.8 for Cracker Barrel retail (compared with $18.4
for 2005 and $19.1 for 2004), and $61.2 for Logan’s
(compared with $61.0 for 2005 and $59.5 for 2004).