Goldman Sachs Investor Conference June 5, 2012
Safe Harbor statement Cracker Barrel Old Country Store, Inc. ( the Company ) urges caution in considering current trends and earnings guidance disclosed in this presentation. Except for specific historical information, matters discussed in this presentation are forward-looking statements that involve risks, uncertainties and other factors that may cause actual results and performance of the Company to differ materially from those expressed or implied in this discussion. All forward-looking information is provided pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995. More detailed information on risks, uncertainties, and other factors is provided in the Company s filings with the Securities and Exchange Commission, press releases and other communications. Reconciliations of non-gaap financial disclosures to comparable GAAP measures found in this presentation may be viewed on the Company s website, crackerbarrel.com. Assume all numbers presented are unaudited unless noted. 2
A truly unique brand and experience Highly differentiated concept providing wholesome connections to our guests Our 615 old-fashioned country stores welcome 215 million guests a year Approximately $2.5B in annual revenues with roughly 20% coming from our retail business Welcome break for travelers across 42 states travelers make up approximately 40% of our business 3
Quality ingredients hand-crafted with care USDA Grade AA real butter Fresh squeezed Florida orange juice Oven roasted turkey breasts Sugar cured ham steaks Arabica coffee beans USDA domestic ground beef Russet Burbank potatoes Grade A pure sour cream USDA Choice chuck roast ½ thick Whole hog smoked sausage USDA choice country fried steak Grade A farm fresh eggs USDA inspected chicken tenderloins USDA Grade AA real butter Trans Fat and cholesterol free vegetable oil Farm raised rainbow trout Dumplins hand-rolled daily Wild Maine blueberries Freshly brewed iced tea Real mashed potatoes Scratch biscuits with real buttermilk Natural Colby cheese Real Half & Half All natural vanilla bean ice cream Biscuit steak cut from the tenderloin Long-cured country ham Wild caught North Atlantic Haddock and Cod Farm raised domestic catfish Westminster Thin Square TM crackers Stewart s TM Root Beer and Orange n Cream Soda Earl Grey TM decaffeinated tea Twining TM Darjeeling tea Dickinson s TM preserves and jam Hickory smoked thick sliced bacon 4
Authentic Americana 5
Retail is integral to the Cracker Barrel experience The experience begins with rockers on the front porch which are also the top seller The retail shop doubles as a guest waiting area and produces sales per square foot of approximately $400 and gross margins around 50% Emphasis on nostalgic and unique merchandise with a large selection of items under $20 Apparel ed Food Toys and Games Music 6
We ve been successful delivering the guest experience #1 Family Dining Restaurant and Top Honors in Food Quality, Cleanliness, Service, Menu Variety, Atmosphere, Reputation, and Likely to Recommend - Nation s Restaurant News, Consumer Picks 2011 National Survey Best Breakfast among Family Dining Chains - Zagat s 2010 & 2011 Consumer Surveys Top of the Full-Service Restaurants in Casual and Family Dining - Consumer Metrics Program, Technomic, Inc. Top Family Dining Chain for 19 Consecutive Years in Choice in Chains Annual Consumer Survey - Restaurants & Institutions Magazine America s Most Admired Companies for the food service industry 12 consecutive years - Fortune Best National Restaurant Chain in Readers Choice awards - Packaged Travel Insider Most RV-Friendly Sit-Down Restaurant in America for 10 Consecutive Years - The Good Sam Club Gold Award Courier Magazine s Favorite Group Friendly Restaurant - NTA Tour Operators 7
Standing out in a sea of sameness CBRL A B C D E F G H I Is Unique % % % % % % % % % % Agree Completely 42 18 A 22 A 23 A 17 A 23 A 28 A 26 A 29 A 29 A Cracker Barrel is perceived to be more unique than its competitors Source: Technomic Consumer Metrics Study Q1 2011 2012; s include: Cracker Barrel, Applebee s, Bob Evans, Chili s, Denny s, IHOP, Olive Garden, Outback, Red Lobster, Steak n Shake; A Rating significantly lower than Cracker Barrel at the 95% level of confidence 8
A leading brand CBRL A B C D E F G H I % % % % % % % % % % Food Quality 71 56 A 62 A 60 A 48 A 57 A 68 69 73 51 A Food Taste & Flavor 72 58 A 64 A 62 A 51 A 57 A 69 74 75 55 A Menu Variety 64 51 A 56 A 56 A 52 A 51 A 53 A 52 A 61 44 A Availability of Healthy Options Pleasant, Friendly Service Welcoming, comfortable atmosphere 52 46 51 43 A 39 A 42 A 48 42 A 48 26 A 74 67 74 70 62 A 63 A 72 76 77 64 A 70 53 A 59 A 56 A 46 A 49 A 63 63 66 46 A Kid-friendly 60 44 A 49 A 45 A 47 A 50 A 49 A 42 A 41 A 48 A Portion for price paid 65 54 A 56 A 54 A 51 A 50 A 61 57 A 59 46 A Ability to provide value through highquality menu items Prices relative to other, similar restaurants 57 42 A 48 A 46 A 38 A 43 A 49 A 51 53 43 A 57 39 A 43 A 41 A 41 A 39 A 41 A 43 A 44 A 41 A Source: Technomic Consumer Metrics Study Q1 2011 2012; s include: Cracker Barrel, Applebee s, Bob Evans, Chili s, Denny s, IHOP, Olive Garden, Outback, Red Lobster, Steak n Shake; A Rating significantly lower than Cracker Barrel at the 95% level of confidence 9
We ve been successful delivering shareholder value Pleasing People Creating Value Nov 1981 Cracker Barrel IPO. Money Magazine lists as one of America s top growth chains Ranked #1 Family Dining chain by Restaurant & Institutions Magazine, held title every successive year the award was given (19 years) 1990 Aug 2000 Mike Woodhouse named President Dec 1998 Announces acquisition of Logan s Roadhouse June 2007 Recapitalization to achieve appropriate capital structure March 2006 Announces divestiture of Logan s Roadhouse Sep 2011 Sandra B. Cochran named President and CEO 1981 A 30 Year Record of Success 2012 Note: Indexed Performance 5-Nov-1981 to 24-April-2012, excludes dividends 10
Our three-year strategy Continued focus on six business priorities Grow traffic by understanding and meeting guests evolving needs Maintain our value promise to the guest and deliver a consistent guest experience that aligns with our brand Continued commitment to profitable new unit growth Extend the power of the Cracker Barrel brand beyond the physical stores New store growth of 2-3% per year with a continued focus on best locations and consistent execution Long term value created through new revenue streams s 11
Ongoing transformation to build on past success Six business priorities announced in September Consistent sales and traffic improvement Energized management team driving change Ongoing board succession planning 12
Six business priorities announced in September to enhance the core 1 New Marketing Messaging Reinforce Authentic Value National cable advertising strategy with new Handcrafted campaign Newly-redesigned website & social media initiative New advertising firm 2 Refined Menu and Pricing Increase Variety & Everyday Affordability Introduction of Daily Lunch Specials Promotional strategy of limited-time offers 3 Enhanced Restaurant Operating Platform Sustainably Improve the Guest Experience Refinement of restaurant operating platform Increased focus on guest experience has driven improvement in guest satisfaction 13
Six business priorities announced in September to enhance the core 4 Innovative Tactics Driving Retail Sales Growth Deliver Value & Connection With the Unique and proprietary items such as Cracker Barrel branded food and new exclusive Butterflies doll line Highlight affordability with strong price points and prominent locations for giftable offerings 5 Focused Cost Reduction Offset Commodity Pressure New labor management system 10-20 bps $15M annual savings from restructuring Implemented Transportation Management System for retail distribution 6 Balanced Approach to Capital Allocation Enhance Shareholder Value Dividend increased over 80% during past year 14
We have regained and are maintaining our positive gap to Knapp-Track Casual Dining Rolling 4-week Traffic Average FY 2012 Q1 FY 2012 Q2 FY 2012 Q3 Knapp-Track Cracker Barrel Source: Knapp Track Casual Dining Index Updated through May 4 th 15
Consistently outperforming Knapp-Track Casual Dining Cumulative Comparable Same Store Sales Index, FY2006 = 100 Base Year 100.0 100.7 101.2 99.4 100.1 100.3 101.9 91.9 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Cracker Barrel Knapp-Track Casual Dining Index* 20 out of the last 23 quarters we have outperformed the Knapp Track Casual Dining Index Note: Knapp-Track Casual Dining Index same store sales figure is an approximation based on the weekly averages. FY12 updated as of May 18, 2012 16
Three quarters of solid growth Business priorities (in millions, except per share data) Financial outcomes 9 months ending 4/27/2012 4/29/2011 % growth Sales $1,880 $1,821 3.2% Operating income* $138 $127 8.4% EPS* $3.14 $2.79 12.5% Cash balance $127 $62 103.8% LT debt $550 $575-4.4% Shares oustanding 23,329 23,705-1.6% Dividends declared $1.15 $0.66 74.2% *Adjusted for severance, proxy charges, and related tax effects in FY2012 and for the gain on a sale of property, net of an impairment, and related tax effects in FY2011 17
Energized management team driving change Sandy Cochran, President and Chief Executive Officer 1 year in position 3 years at Cracker Barrel 20 years of retail and restaurant experience Lawrence Hyatt, Chief Financial Officer 1 year in position 1 year at Cracker Barrel 35 years of finance, retail and restaurant experience Christopher Ciavarra, SVP Marketing 2 years in position 4 years at Cracker Barrel 17 years of marketing, restaurant and retail experience Nicholas Flanagan, SVP Operations Less than 1 year in position 8 years at Cracker Barrel 23 years of restaurant experience Doug Barber, Chief People Officer 1 year in position 9 years at Cracker Barrel 33 years of restaurant experience Laura Daily, SVP Retail Started in May 20 years of retail experience Edward Greene, SVP Strategic Initiatives 7 years in position 7 years at Cracker Barrel 33 years of restaurant and food processing experience 18
Ongoing board succession planning New within past year Sandy Cochran, President and CEO, Cracker Barrel, former CEO, Books-A- Million Charles Jones, President, Corporate Communications, Inc. Tom Barr, current VP, Global Coffee at Starbuck s Coffee Company Martha Mitchell, retired, Senior Partner and SVP, Fleishman-Hillard James Bradford, Attorney, Dean Vanderbilt s Owen Graduate School of Management, former President and CEO of United Glass Corporation Glenn Davenport, former Chairman and CEO, Morrison Group Andrea Weiss, President and CEO, Retail Consulting, former Chairman Cortefiel Group, SA Richard Dobkin, retired; Managing Partner of the Tampa, FL office of Ernest & Young, LLP William McCarten, Chairman of the Board, DiamondRock Hospitality Company, former President and CEO, HMS Host Corporation Michael Woodhouse, Executive Chairman, Cracker Barrel, former President and CEO Cracker Barrel Coleman Peterson, President/CEO, Hollis Enterprises, LLC, former EVP and Chief People Officer, Walmart Announced retiring Robert Dale, retired; President, Windy Hill Pet Food Company and Martha White Foods, Inc. B. F. (Jack) Lowery, Attorney, Chairman and CEO, LoJac Companies 19
A strong brand well-positioned to deliver shareholder value A truly unique brand and guest experience Energized leadership driving change New strategy building on past success to provide long runway of shareholder value creation Near-Term Long-Term 20