Cracker Barrel 2006 Annual Report Download - page 7

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5
health issues. Concerns about terrorism continued
to be a part of our daily existence, and the violence
in Iraq escalated.
Consumers responded by reducing their discretionary
spending, including dining out less. Declines in
guest traffic were reported across the industry. The
competitive landscape in the industry changed as
consumers “traded down” to quick-service restaurants
and quick-service restaurants broadened their appeal
and upgraded their product offerings.
We also faced several operational issues. In fiscal
2006 Cracker Barrel introduced complex seasonal
menus that, while popular with our guests, added
cost and created execution issues. Our retail strategy
was not successful. We undertook efforts to address
both, learning from our mistakes. We began to
simplify the seasonal promotions and saw benefits
in reduced food waste and improved labor costs;
and we re-focused our retail strategy on appealing,
high-quality merchandise with a broader array of
price points.
Despite the magnitude of these internal and
external challenges, we still delivered a solid
performance in fiscal 2006:
• Net revenue increased by 2.9% or $75 million,
as we opened 21 new Cracker Barrel Old Country
Store (“Cracker Barrel”) locations and 20 new
company-operated and two franchised Logan’s
Roadhouse (“Logan’s”) restaurants.
• Diluted net income per share of $2.50 was up
2.0% in spite of having to expense stock options
for the first time and absorb the costs associated
with a restructuring of the company, two phases
of management realignment at Cracker Barrel, and
store closings at both Cracker Barrel and Logan’s.
• We returned capital to shareholders in the form
of $704 million in share repurchases, retiring
approximately 35% of shares outstanding.
• In the first quarter of fiscal 2006, we increased
our quarterly dividend by 8.3% and have
increased it by another 7.7% in the first quarter
of fiscal 2007.
CBRL Group, Inc. Diluted Net Income
Per Share (”EPS”) Growth
$2.50
$2.00
$1.50
$1.00
$0.50
$0
$ EPS
20032002 2004 2005 2006
Fiscal Year