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Are Cracker Barrel Fans Rejecting Its New Menu?

Fewer customers are visiting Cracker Barrel Old Country Store (NASDAQ: CBRL  ) after the chain introduced its assortment of healthy menu items known as "Wholesome Fixin's." Are these events related? Or is something else amiss at the popular restaurant chain?

Take a look at the following chart, showing the year-over-year change in Cracker Barrel's customer count since 2012. As you can see, the only two times the measure fell were in the most recent quarters -- namely, after the healthy items were added to the menu last September.

What's causing fewer customers to visit Cracker Barrel? According to CEO Sandra Cochran, it has nothing to do with the menu additions. It's instead the result of unusually severe weather:

Recently, we just announced our second quarter numbers and the quarter was significantly affected by weather. Automobile travel in the second quarter is an important part of our business. It was, obviously, affected by the significant winter storms. That additionally hurts us because our traveling guest tends to spend more on the restaurant side and on the retail side, so retail is disproportionately affected.

In Cochran's defense, Cracker Barrel isn't the only company to identify weather as the culprit for disappointing sales. Executives at Olive Garden and Red Lobster made similar claims this month after same-store sales at the chains plummeted by 5.4% and 8.8%, respectively, in the latest quarter. And even Ford has blamed the weather for lackluster vehicles sales at the end of last year.

With respect to Cracker Barrel's revamped menu, in turn, there's little reason to blame it for the recent downturn in customer counts. If anything, in fact, it appears as if the new assortment of healthy items is accomplishing its objective of altering customers' perception of Cracker Barrel. As Cochran went on to note, "we wanted to change the perception of the menu, that you could find healthy options and then expanding the reach."

The net result is that neither shareholders nor customers have any reason to be alarmed at this point. While that could change if the chain turns in a third consecutive quarter of lackluster traffic, we won't know whether this is the case for another two months.

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  • Report this Comment On March 23, 2014, at 7:59 AM, PEStudent wrote:

    If CBRL had REMOVED former items from its menu, that would affect people from eating there, but ADDING items shouldn't affect it. In fact, a mixed group of healthy eaters and junk food eaters would be more likely to find CBRL an agreeable compromise for low-cost food - the only hangup being the 15-30 minute typical wait for a table because the restaurant is so popular.

  • Report this Comment On April 01, 2014, at 12:50 PM, usc1801 wrote:

    I agree with PEStudent. As a huge Cracker Barrel fan, they took nothing away from their menu, rather added a number of healthier options. While I love their fried steak with gravy, I am aware that I can't eat like this all the time. Having healthier options means I go go there and eat healthy while my family eats whatever they want. As far as the long wait times goes, yest that can be a drag but I try to go during non-peak times. And if I have to wait, I admit to enjoying looking around their store.

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John Maxfield

John is The Motley Fool's senior banking specialist. If you're interested in banking and/or finance, you should follow him on Twitter.

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8/28/2015 11:15 AM
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