The Cracker Barrel Old Country Store Inc. (NASDAQ:CBRL) is one of my favorite restaurants. It is also very profitable. For those unfamiliar with the Cracker Barrel, it develops and operates an old country store and restaurant concept in the United States. It operates full-service restaurants, which provide breakfast, lunch, and dinner.
The company also operates gift shops that offer various decorative and functional items, such as rocking chairs, holiday and seasonal gifts and toys, apparel, music CDs, cookware, old-fashioned-looking ceramics, figurines, a book-on-audio sale-and-exchange program, and various other gift items. It also sells candies, preserves, pies, cornbread mixes, coffee, syrups, pancake mixes, and other food items. The company operates 626 company-owned locations in forty-two states. The stock has rewarded shareholders, up 65 percent in just two years. To top it off, it pays a bountiful 4 percent dividend yield. But is the stock a buy at current levels? To answer this question a review of the company’s performance is in order.
The company reported total revenue of $643.3 million for the third quarter of fiscal 2014, representing an increase of 0.5 percent over the third quarter of the prior year. Comparable store restaurant sales decreased 0.6 percent, as a 2.9 percent decline in customer traffic was partially offset by a 2.3 percent increase in average check. The average menu price increase for the quarter was approximately 1.8 percent. Comparable store retail sales increased 0.9 percent for the quarter. The company opened two stores during the third quarter, for a total of three new store openings year-to-date. GAAP operating income in the third quarter was $45.2 million, or 7.0 percent of total revenue. Adjusted for special meeting expenses, adjusted operating income was $46.3 million, or 7.2 percent of total revenue, compared with operating income of $44.2 million, or 6.9 percent of total revenue, in the prior year quarter.