Cracker Barrel Old Country Store, Inc.

Good day and welcome to the Cracker Barrel Fiscal 2024 First Quarter Conference Call. All participants will be in a 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 touch-tone phone. 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, Investor Relations. Please go ahead.

Thank you. Good morning and welcome to Cracker Barrel's first quarter fiscal 2024 conference call and webcast. This morning we issued a press release announcing our first quarter results. In this press release and on the call, we will refer to non-GAAP financial measures for the first quarter ended October 27, 2023. The non-GAAP financial measures are adjusted to exclude the non-cash amortization of the asset recognized from the gains on the sale and leaseback transactions, expenses related to the company's CEO transition, expenses associated with the strategic transformation initiative, and a corporate restructuring charge, and the related tax impacts. The company believes that excluding these items from the 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 net income or earnings per share information prepared in accordance with GAAP. The last pages of the press release include reconciliations from the non-GAAP information to the GAAP financials. On the call this morning are Cracker Barrel's President and CEO, Julie Messino, and Senior Vice President and CFO, Craig Pimels. Julie and Craig will provide a review of the business, financials, and outlook. We will then open up the call for questions. On this call, statements may be made by management of their beliefs and expectations regarding the company's future operating results and 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 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. 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, Julie Messina. Julie?

Thank you and good morning everyone. This morning we reported total Q1 revenue of $823.8 million and adjusted operating income margin of 2.3%. Our sales results were in line with our expectations and our operating margin was at the low end of our internal expectations, reflecting certain investments we made to shore up our top line. Although we continue to face challenges, I've been impressed with the team's work to diagnose the key drivers of our traffic headwinds, and I'm encouraged by our results as we've delivered sequential monthly improvements in our comparable store traffic performance during the quarter, which I am pleased to say has continued into our important second quarter. We have taken numerous actions to drive traffic and deliver the sequential improvement. I'll go through them now. First, as we discussed last call, we took several actions to improve the effectiveness of our marketing in the first quarter. We increased our media spend by approximately 20% and refined our messaging to focus more on our core guests. This included increased advertising in linear TV, including premium sporting events like college football. We also highlighted our compelling value proposition by featuring an $8.99 price point in our breakfast-focused messaging, and we continued highlighting our over $20 under $12 in our lunch and dinner-focused messaging. Second, from an operational perspective, we remained focused on the guest experience. We invested in the labor hours to deliver great hospitality, and we continued to emphasize staffing, retention, training, and development. We're encouraged by the improvements we've seen in certain key guest experience metrics. We are happy with our staffing and turnover levels, and we are optimistic we can sustain our sales momentum and gain further traction in the coming quarters. Finally, we successfully launched Cracker Barrel Rewards, our new loyalty program. The launch was supported by a multi-channel media campaign to drive awareness and enrollment. Our operations teams have done a terrific job as ambassadors and champions of the program, And guests have embraced it. We're very pleased with the guest response and the number of enrollments which have exceeded our expectations thus far. And we've been thrilled with the exposure we've received through our partnership with the iconic Dolly Parton. We continue to believe Cracker Barrel Rewards will be one of the best and most engaging loyalty programs in full service dining and are confident it will be a meaningful brand differentiator and traffic driver over the long term. Turning to retail, the retail environment remains challenging. Although there were some bright spots during the quarter, such as our harvest assortment, we experienced sales declines across most of our categories. Some of this was due to lower restaurant traffic, but we also believe some price-conscious guests may have reduced their retail purchases as a way to manage their overall spend with us. The team has done a good job managing inventories and is focused on emphasizing value and optimizing displays to drive sales improvements during this important holiday season. Looking ahead to Q2, our second quarter is an especially important quarter for us due to the seasonally higher volumes. Over Thanksgiving, our teams around the country worked tirelessly to deliver a great holiday experience for millions of guests and did so with extraordinary results. We hit on all cylinders in every aspect of our business, dine-in, heat and serve, to-go, and catering. And our planning and support systems, including IT, supply chain, and guest relations, and our retail teams all performed very well. In fact, we set a company record for total sales in a single week during Thanksgiving week, with over $110 million in sales, and we served approximately 6 million guests. Our top five stores alone served more than 80,000 guests over Thanksgiving week. To put that into perspective, those five stores served more people than attend most NFL games. I want to give a huge shout out to our field teams and leadership for their efforts and these results. As we begin December, we will look to continue our Thanksgiving momentum over the holidays with our off-premise offerings and catering. We are leaning into seasonal guest favorites such as our country fried turkey and cinnamon roll pie, which continue to resonate with guests. With regard to catering, we're leveraging our catering sales managers to drive growth, especially with large accounts. All of this is being supported by a marketing campaign that is emphasizing our strong all-day value, which we believe is a competitive advantage for us, particularly in the current environment, and is something that we will continue to underscore. We are also continuing to optimize our media mix to improve our share of voice, particularly with core guests. For example, we recently tested local TV and saw a meaningful traffic lift with solid returns on this investment, and we plan to expand this to other key markets. Our marketing is also focused on promoting Cracker Barrel rewards to continue driving awareness and enrollment. As I mentioned, we have partnered with Dolly Parton to highlight Cracker Barrel rewards and promote her collaborative album, Rockstar. We've been very pleased with this partnership with Dolly, which has helped deliver a large number of impressions and high engagement rates. and has incrementally contributed to the strong levels of enrollment we have seen to date. I'll now turn the call over to Craig for a more detailed look at the first quarter from a financial perspective and to discuss our financial outlook for the rest of the year. After he finishes, I will then comment on our priorities and upcoming initiatives, including a strategic transformation initiative we have undertaken to help us invigorate the brand for long-term success. Craig?