Cracker Barrel 2012 Annual Report Download - page 16

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” and other cautionary statements in this report.
All dollar amounts (other than per share 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 expressly noted or the context clearly
indicates otherwise.
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 its operations and those of certain subsidiaries,
is engaged in the operation and development of the
Cracker Barrel Old Country Store® (“Cracker Barrel”)
concept. Each Cracker Barrel store consists of a restaurant
with a gi shop. e restaurants serve breakfast, lunch and
dinner. e gi shop area oers a variety of decorative and
functional items specializing in rocking chairs, holiday gis, toys,
apparel and foods. As of September 18, 2012, the Company
operated 620 Cracker Barrel stores located in 42 states and had
9,444 shareholders of record.
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,
such as family dining, casual dining, fast casual and quick
service, which oen overlap and provide competition for
widely diverse restaurant concepts. Competition also exists in
securing prime real estate locations for new stores, 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
and unemployment rates aect consumer discretionary
income and dining and shopping 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 restaurant 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.
Percentage of retail sales to total sales indicates the relative
proportion of spending by guests on retail product at our
stores and helps identify overall eectiveness of our retail
operations. Management uses this measure to analyze a store’s
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CRACKER BARREL OLD COUNTRY STORE, INC.