Cracker Barrel 2006 Annual Report Download - page 6

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4
To Our Shareholders:
Change is necessary to stay relevant to our guests.
Growth comes from our ability to respond positively
to change. Growth requires learning from the past,
preserving the best, recalibrating and moving forward.
Vision provides focus and guides our growth. We
move forward to our 38th year of operation confident
in our renewed vision.
FISCAL 2006: A YEAR OF CHANGE AND GROWTH
Looking back, fiscal 2006 was definitely a year of
change and growth at CBRL. It was also another
successful year for CBRL. We are pleased to report that
we grew both revenue and diluted net income per
share, returned capital to our shareholders through
increased dividends and a major share repurchase
effected through a modified “Dutch Auction” tender
offer, generated substantial cash flow from operations,
and reinvested in the future growth of the business.
For the past two years, I reported that we had
faced an extraordinary commodity cost environment
and a squeeze on consumers’ discretionary incomes
led by high gasoline and energy prices. This year the
commodity environment moderated, and we actually
benefited from lower chicken, pork and dairy prices.
Modest menu price increases allowed us to manage
this rather benign commodity environment. Land
and development costs, utilities and pressures on
labor costs from new state-mandated minimum wage
increases were the cost challenges that we faced in
fiscal 2006. Our biggest opportunity remains building
top-line sales, especially retail sales.
Fiscal 2006, however, was a year of marked
uncertainty for our guests on many fronts. Consumer
sentiment and discretionary income continued to
be under pressure from high gasoline prices and higher
home heating costs. The added pressures of high
mortgage, credit card and car payments weighed
heavily on consumers, particularly those on tight
budgets. The United States experienced one of the
country’s worst natural disasters with Hurricane
Katrina and its aftermath. The housing market slowed,
interest rates climbed, and gasoline prices rose.
Avian flu and trans fats made headlines as potential
CBRL Group, Inc. Revenue Growth
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
$ Millions
Cracker Barrel Restaurant Logan’s
Cracker Barrel Retail
20032002 2004 2005 2006
Fiscal Year