Cracker Barrel 2008 Annual Report Download - page 38

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The following discussion and analysis provides information
which management believes is relevant to an assessment
and understanding of our consolidated results of operations
and financial condition. The discussion should be read in
conjunction with the Consolidated Financial Statements
and notes thereto. All dollar amounts reported or discussed
in Management’s Discussion and Analysis of Financial
Condition and Results of Operations (“MD&A”) are shown in
thousands. References in MD&A to a year or quarter are to
our fiscal year or quarter unless otherwise noted.
This overview summarizes the MD&A, which includes
the following sections:
•
Executive Overview – a general description of our
business, the restaurant industry and our key
performance indicators.
•
Results of Operations – an analysis of our consolidated
statements of income for the three years presented in
our consolidated financial statements.
•
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
CBRL Group, Inc. (the “Company,” “our” or “we”) is a
publicly traded (Nasdaq: CBRL) company that, through
certain subsidiaries, is engaged in the operation and
development of the Cracker Barrel Old Country Store®
(“Cracker Barrel”) restaurant and retail concept. As of
September 24, 2008, the Company operated 579 Cracker
Barrel restaurants and gift shops located in 41 states. The
restaurants serve breakfast, lunch and dinner. The retail
area offers a variety of decorative and functional items
specializing in rocking chairs, holiday gifts, toys, apparel
and foods. Until December 6, 2006, we also owned the
Logan’s Roadhouse® (“Logan’s”) restaurant concept, but
we divested Logan’s at that time (see Note 3 to our
Consolidated Financial Statements). As a result, Logan’s is
presented as discontinued operations in the Consolidated
Financial Statements and the accompanying notes to the
Consolidated Financial Statements for all periods
presented. Unless otherwise noted, this MD&A relates
only to results from continuing operations.
RESTAURANT INDUSTRY
Cracker Barrel stores operate in the full-service segment
of the restaurant industry in the United States. The
restaurant business is highly competitive with respect to
quality, variety and price of the food products offered.
The industry is often affected by changes in the taste and
eating habits of the public, local and national economic
conditions affecting spending habits, population and
traffic patterns. There are many segments within
the restaurant industry which often overlap and provide
competition for widely diverse restaurant concepts.
Competition also exists in securing prime real estate
locations for new restaurants, in hiring qualified
employees, in advertising, in the attractiveness of
facilities and among competitors with similar menu
offerings or convenience.
Additionally, economic, weather and seasonal
conditions affect the restaurant business. Historically,
interstate tourist traffic and the propensity to dine
out have been much higher during the summer months,
thereby attributing to higher profits in our fourth
quarter. Retail sales, which in Cracker Barrel are made
substantially to restaurant customers, are strongest in
the second quarter, which includes the Christmas holiday
shopping season. Increases in fuel, including gasoline,
and energy prices, among other things, appear to have
affected consumer discretionary income and dining out
habits. Severe weather also affects retail sales adversely
from time to time.
KEY PERFORMANCE INDICATORS
Management uses a number of key performance measures
to evaluate our operational and financial performance,
including the following:
Comparable store sales and restaurant guest traffic
consist of sales and calculated number of guests,
respectively, of units open at least six full quarters at the
beginning of the year; and are measured on comparable
calendar weeks. This measure highlights performance of
existing stores because it excludes the impact of new
store openings.
C B R L G R O U P, I N C .
Management’s Discussion and Analysis of Financial Condition and Results of Operations