They have been paying down large quantities of debt. From 1998 to 2008, CBRL reduced shares outstanding from 61.8 million to 22.4 million. A large part of this came in 2007 with a reverse dutch auction where they took on a lot of debt to buy back a lot of shares. In the past year, they have reduced their net debt from $807 million to $694 million.
By the way, the dividend did not seem "puny" a year ago when the stock was half its current price. Back in 1998, the annual dividend was a whopping $0.02/sh.