Cracker Barrel 2014 Annual Report Download - page 16

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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 and retail industries, our key performance
indicators and the Company’s performance in 2014.
• 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, 2014, the
Company operated 633 Cracker Barrel stores located in
42 states and had 8,473 shareholders of record.
Restaurant and Retail Industries
Our stores operate in both the restaurant and retail industries
in the United States. e restaurant and retail industries
are highly competitive with respect to quality, variety and price
of the food products and retail merchandise oered. We
compete with a signicant number of national and regional
restaurant and retail chains. Additionally, there 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. We operate in the full-service segment of the
restaurant industry. 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 conve-
nience. e restaurant and retail industries are oen aected
by changes in consumer taste and preference; national,
regional or local economic conditions; demographic trends;
trac paerns; the type, number and location of competing
restaurants and retailers; and consumers’ discretionary
purchasing power.
Additionally, economic, seasonal and weather conditions
aect the restaurant and retail industries. Adverse economic
conditions and unemployment rates aect consumer discre-
tionary 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,
14
CRACKER BARREL OLD COUNTRY STORE, INC.