Cracker Barrel Old Country Store, Inc.

Good morning and welcome to the Cracker Barrel Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Caleb Yohannes, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning and welcome to Cracker Barrel's third quarter fiscal 2023 conference call and webcast. This morning we issued a press release announcing our third quarter results. In the press release and on the call, we'll refer to non-GAAP financial measures for the third quarter ended April 28, 2023. The non-GAAP financial measures are adjusted to exclude impairment charges, store closure costs, and other non-cash amortization the asset recognized from the gains from our sale and leaseback transaction and related tax implications. The company believes that excluding these items from its financial results provides investors with an enhanced understanding of the company's financial performance. This information is not intended to be considered in isolation or as a substitute for the net income or earnings per share information prepared in accordance with GAAP. The last pages of the press release includes reconciliations from the non-GAAP information to the GAAP financials. On the call this morning, we have Cracker Barrel's President and CEO, Sandy Cochran, Senior Vice President and CFO, Greg Pimels, and Senior Vice President and CMO, Jen Tate. Sandy and Craig will provide a review of the business, financials, and outlook. We will then open up the call for questions for Sandy, Craig, and Jen. On this call, statements may be made by management of their beliefs and expectations regarding the company's future operating results or expected future events. These are known as forward-looking statements, which involve risks and uncertainties that in many cases are beyond management's control and may cause actual results to differ materially from expectations. We caution our listeners and readers in considering forward-looking statements and information. Many of the factors that could affect results are summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnish to the SEC. Finally, the information shared on this call is valid as of today's date. and the company undertakes no obligation to update it except as may be required under applicable law. I'll now turn the call over to Cracker Barrel's President and CEO, Sandy Cochran. Sandy?

Thank you, and good morning, everyone. This morning, we reported total sales growth of 5.4% and an adjusted operating income margin rate of 4.1%. The quarter started out largely as we had anticipated, continuing our momentum from Q2 through February and most of March. We then experienced a meaningful traffic decline, particularly in April, which negatively impacted our sales and profits, both of which came in a bit below our expectations. This softer trend has continued fourth quarter to date, both for restaurant and retail sales. In our view, this reflects weaker consumer sentiment and economic pressures. Although we are cautiously optimistic that as the summer travel season unfolds, we will see some improvement to trends in June and July. Our experience in April and May largely mirrors what we've seen across the full-service casual dining industry, and despite the unanticipated headwinds, our sales and traffic growth outpaced the black box casual dining index for the fourth consecutive quarter. Our teams remain focused on operational excellence, staffing and retention, and the guest experience. Our everyday value and menu innovation is resonating with guests, and we're making great progress on other key initiatives, including catering, our loyalty program, and our cost savings efforts. Although we expect continued pressures and choppiness in the short term, We feel good about our positioning over the medium and longer term. I'd now like to speak to some highlights from the third quarter. Our menu promotion and advertising campaign showcased our everyday value and variety. Our TV messaging reminded guests that we have 20 meals for under $12, including several hearty signature entrees, and we highlighted newer items such as our cheesy bacon homestyle chicken and homestyle chicken and French toast. We also introduced our $5 take-home meals, which have been popular and are an additional example of how we're leaning into everyday value. For off-premise, we saw high demand for our Easter heat and serve bundled offerings and strong growth in our catering business, which increased over 35% compared to the prior year and remains on track to exceed $100 million this fiscal year. From an operations perspective, we're pleased with the improvements we're seeing in our turnover and retention results. Our new labor system is now in place at over 460 stores, and the rollout will be substantially completed in the coming weeks. We're pleased with the functionality that the system provides and our enhanced ability to optimize labor allocation, and we will continue to fine tune our labor model based on our learnings. Turning to Maple Street, we opened three locations during the quarter and have been pleased with the early performance of each unit, with each location seeing some of the strongest opening week sales in recent years. The team continues to work diligently to optimize the business model and prepare to successfully scale the brand. I'll now turn the call over to Craig for a more detailed look at the quarter from a financial perspective and to discuss our Q4 outlook, after which I'll comment on some of our areas of focus for the remainder of the year.