Cracker Barrel 2010 Annual Report Download - page 24

Management’s Discussion and Analysis of Financial Condition and Results of Operations
e following Management’s Discussion and Analysis of
Financial Condition and Results of Operations (“MD&A”)
provides information which management believes is relevant
to an assessment and understanding of our consolidated
results of operations and nancial condition. MD&A should
be read in conjunction with the Consolidated Financial
Statements and notes thereto. Readers also should carefully
review the information presented under the section entitled
“Risk Factors” in our Annual Report on Form 10-K led with
the Securities and Exchange Commission (“SEC”) and other
cautionary statements in this report. All dollar amounts
reported or discussed in this MD&A are shown in thousands.
References in MD&A to a year or quarter are to our scal year
or quarter unless otherwise noted.
is 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
Cracker Barrel Old Country Store, 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 21, 2010, the Company operated 595 Cracker
Barrel restaurants and gi shops located in 41 states. e
restaurants serve breakfast, lunch and dinner. e retail area
oers a variety of decorative and functional items specializing
in rocking chairs, holiday gis, toys, apparel and foods.
Restaurant Industry
Our stores operate in the full-service segment of the
restaurant industry in the United States. e restaurant
business is highly competitive with respect to quality, variety
and price of the food products oered. e restaurant
business is oen aected by changes in consumer taste;
national, regional or local economic conditions; demographic
trends; trac paerns; the type, number and location of
competing restaurants; and consumers’ discretionary
purchasing power. ere are many segments within the
restaurant industry which oen overlap and provide competi-
tion for widely diverse restaurant concepts. Competition also
exists in securing prime real estate locations for new restau-
rants, in hiring qualied employees, in advertising, in the
aractiveness of facilities and with competitors having similar
menu oerings or convenience.
Additionally, economic, seasonal and weather conditions
aect the restaurant business. Adverse economic conditions
aect consumer discretionary income and dining habits.
Historically, interstate tourist trac and the propensity to
dine out have been much higher during the summer months,
thereby contributing to higher prots in our fourth quarter.
Retail sales, which are made substantially to our restaurant
guests, are strongest in the second quarter, which includes the
Christmas holiday shopping season. Severe weather also
aects restaurant and retail sales adversely from time to time.
Key Performance Indicators
Management uses a number of key performance measures to
evaluate our operational and nancial performance, including
the following:
Comparable store sales and restaurant guest trac consist
of sales and calculated number of guests, respectively, of
stores open at least six full quarters at the beginning of the
year and are measured on comparable calendar weeks. is
measure highlights performance of existing stores because it
excludes the impact of new store openings.
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CRACKER BARREL OLD COUNTRY STORE, INC.