Cracker Barrel 2010 Annual Report Download - page 26

Despite the continuing uncertain consumer sentiment,
we currently are experiencing a positive restaurant sales trend
that began in early calendar 2010. Our comparable store
restaurant sales increased from 2009 to 2010 due to an
increase in average check of 2.0%, including a 2.4% average
menu price increase, partially oset by a decrease in guest
trac of 1.2%. is increase in comparable store restaurant
sales followed a decrease in comparable store restaurant sales
from 2008 to 2009, which resulted from a decrease in guest
trac of 4.6% partially oset by an increase in average check
of 2.9%, including a 3.3% average menu price increase.
e comparable store retail sales decreases from 2009 to
2010 and from 2008 to 2009 resulted from decreases in
restaurant guest trac, which we believe resulted from uncertain
consumer sentiment and reduced discretionary spending.
Gross Prot
Gross prot as a percentage of total revenue was 69.0%, 67.7%
and 67.6% in 2010, 2009 and 2008, respectively. e increase
from 2009 to 2010 was due to commodity deation of 2.5%,
our menu price increase referenced above and a decrease in
markdowns of retail merchandise that reduced retail cost
of goods sold 1.0% as a percentage of retail sales as compared
with the prior year. A more favorable commodity climate in
2009 allowed us to keep our gross prot relatively unchanged
from 2008 to 2009. We do not expect the favorable
commodity environment that we experienced in 2010 to
continue in 2011; however, we presently expect that we will
be able to pass through much of any increased commodity
costs by adjusting our menu pricing.
Labor and Related Expenses
Labor and other related expenses include all direct and
indirect labor and related costs incurred in store operations.
Labor and other related expenses as a percentage of total
revenue were 37.8%, 38.7% and 38.2% in 2010, 2009 and
2008, respectively. e year-to-year decrease from 2009 to
2010 was due to decreases of 0.7% and 0.2% as a percentage
of total revenue, respectively, in healthcare costs and store
hourly labor costs. e decrease in healthcare costs resulted
from lower medical claims and the benet of the calendar
2010 group health plan design changes. e decrease in store
hourly labor costs as a percentage of total revenue was due to
menu pricing being higher than wage ination. e year-to-
year increase from 2008 to 2009 resulted primarily from
higher healthcare costs, which was due to higher enrollment
in and higher utilization of the calendar 2009 group health
plan and termination costs associated with the calendar 2008
group health plan.
Impairment and Store Closing Charges
During 2010, 2009 and 2008, we recorded impairment
charges of $2,672, $2,088 and $532, respectively. During
2010, one leased store was determined to be impaired,
resulting in an impairment charge of $2,263. is store was
impaired due to declining operating performance and
resulting negative cash ow projections. Additionally, during
2010, one owned store was closed, resulting in an
impairment charge of $409 and store closing charges of $128.
e decision to close this store was due to its age, expected
future capital expenditure requirements and declining
operating performance.
During 2009, one owned store was determined to be
impaired, resulting in charges of $933. Additionally, during
2009, we recorded a total impairment of $1,155 on oce
space, property adjacent to the oce space and our
management trainee housing facility. During 2008, we closed
two stores, which resulted in impairment charges of $532 and
store closing charges of $345. See Notes 3 and 9 to the
accompanying Consolidated Financial Statements for more
details regarding the impairment and store closing charges.
Other Store Operating Expenses
Other store operating expenses include all store-level
operating costs, the major components of which are utilities,
operating supplies, repairs and maintenance, depreciation
and amortization, advertising, rent and credit card fees. Other
store operating expenses as a percentage of total revenue
increased from 17.8% in 2009 to 18.2% in 2010. e year-to-
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