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Cracker Barrel (CBRL) Sales Building Efforts to Drive Growth

Zacks Equity Research

Cracker Barrel Old Country Store, Inc. CBRL solid marketing efforts, enhanced focus on retail business, increased emphasis on menu innovation and consistent unit development bode well for the company. As a result, the stock has gained 12% against the industry’s decline of 1.2% in the past three months. Let’s delve deeper and find out factors driving growth.

Menu Innovation & Expansion

Cracker Barrel is continuously focusing on rejuvenating its menu, which serves as the backbone of the company’s riveting growth potential. In fiscal 2018, the company’s in-store menu featured Fried Chicken Benedict bowl, a Ham n' Maple Bacon bowl and a Sausage, Grits Cakes and Green Tomato Gravy bowl. Its hand breaded four-piece half chicken served with two sides made from scratch and a choice of bread became very popular during the fiscal fourth quarter. The company believes that the platform will complement the strength of its breakfast all day offering, drive check favorability and promote guest perceptions of menu variety.

Another vital growth driver includes Cracker Barrel’s continuous expansion strategies. In fiscal 2018, the company unveiled its first California location. It opened one Holler & Dash location in Charlotte, NC, as well. In a year’s time, Cracker Barrel opened 11 locations. In fiscal 2019, the company plans to open eight restaurants.

Sales-Building Efforts

In a bid to address the challenging competitive restaurant industry, Cracker Barrel undertakes extensive marketing efforts, mainly focusing on the brand’s differentiation, menu offering and its value. At present, the company makes use of national cable advertising along with local Spanish television advertising. This, in turn, is delivering greater media buying efficiencies as well as more market coverage and brand awareness.

In order to drive traffic, Cracker Barrel relies heavily on seasonal promotions and limited-time offers to boost its top-line performance as they are appealing to both regular users and less-frequent guests. In fiscal 2019, the company aims to meet consumers' need for convenience via its off-premise business growth.

Cost-Saving Initiatives

Cracker Barrel has an effective cost-cutting mechanism in place. The company undertakes various measures to keep costs under control. In fiscal 2018, this Zacks Rank #2 (Buy) stock delivered $6.3 million in annual cost savings.

Currently, the company is carrying out its cost-savings plan through its two prime initiatives — food waste and labor management. For fiscal 2019, it expects cost savings synergies of $10 million to $12 million. Over the long run, the same is targeted at $40 million.

Other Stocks to Consider

Some other top-ranked stocks that warrant a look in the same space include BJ's Restaurants, Inc. BJRI, Domino's Pizza, Inc. DPZ and Dunkin' Brands Group, Inc. DNKN. All these companies carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BJ's Restaurants reported better-than-expected earnings in the trailing four quarters, the average being 33.2%.

Domino's Pizza has an impressive log-term earnings growth rate of 17.2%.

Dunkin' Brands Group reported better-than-expected earnings in the trailing four quarters, the average being 9.6%.

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