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What changed in CRACKER BARREL OLD COUNTRY STORE, INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CRACKER BARREL OLD COUNTRY STORE, INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+287 added−340 removedSource: 10-K (2023-09-26) vs 10-K (2022-09-27)

Top changes in CRACKER BARREL OLD COUNTRY STORE, INC's 2023 10-K

287 paragraphs added · 340 removed · 235 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWhile all of our dining rooms are currently operating without COVID-19-related restrictions, it is possible that renewed outbreaks or increases in cases and/or further new variants of the disease, either as part of a national trend or on a more localized basis, could result in COVID-19-related restrictions including capacity restrictions or otherwise limit our dine-in services, or negatively affect consumer demand.
Biggest changeHealth & Safety While all of our dining rooms are currently operating without COVID-19-related restrictions, it is possible that renewed outbreaks or increases in cases and/or further new variants of the disease, either as part of a national trend or on a more localized basis, could result in COVID-19-related restrictions including capacity restrictions or otherwise limit our dine-in services, or negatively affect consumer demand. 10 Table of Contents In response to the COVID-19 pandemic, we instituted operational protocols to comply with applicable regulatory requirements to protect the health and safety of employees and guests, and we implemented and continually adapted a number of strategies to support the recovery of our business and navigate through the uncertain environment.
Food and Drug Administration to state and local regulatory agencies and health authorities, to ensure we are following the latest recommended practices and procedures to protect the health of employees and guests. We instituted operational changes and enhancements to safety protocols to ensure that both our guests and employees experience a clean and safe environment.
Food and Drug Administration to state and local regulatory agencies and health authorities, to ensure we are following the latest recommended practices and procedures to protect the health and safety of employees and guests. We instituted operational changes and enhancements to safety protocols to ensure that both our guests and employees experience a clean and safe environment.
Cracker Barrel incorporates robust quality assurance and food safety processes to ensure the safety of all our food and retail products delivered to our guests including the following: • Extensive requirements for food supplier approval: • Ongoing third-party food safety audits of food production and distribution centers: • Periodic food product audits conducted by Cracker Barrel quality assurance team: • Rigid processes to ensure new or alternative source suppliers deliver food products to exact specifications: • Third-party testing of retail non-food products to ensure compliance with all specifications and Federal regulations: • Food safety audits conducted on all Cracker Barrel locations three times per year: • Ensuring a pest free environment in our locations though a stringent pest control process: • Monitoring of all national and local food safety regulations pertaining both food products and store operations: • Monitoring of all health department inspections of all Cracker Barrel locations: and • Monitoring and responding to: o Food borne illness outbreaks, o Food and product recalls, and o Pandemic situations, e.g., COVID-19.
Cracker Barrel incorporates robust quality assurance and food safety processes to ensure the safety of all our food and retail products delivered to our guests including the following: • Extensive requirements for food supplier approval; • Ongoing third-party food safety audits of food production and distribution centers; • Periodic food product audits conducted by Cracker Barrel quality assurance team; • Rigid processes to ensure new or alternative source suppliers deliver food products to exact specifications; • Third-party testing of retail non-food products to ensure compliance with all specifications and Federal regulations; • Food safety audits conducted on all Cracker Barrel locations three times per year; • Ensuring a pest free environment in our locations though a stringent pest control process; • Monitoring of all national and local food safety regulations pertaining to both food products and store operations; • Monitoring of all health department inspections of all Cracker Barrel locations; and • Monitoring and responding to: o Food borne illness outbreaks, o Food and product recalls, and o Pandemic situations, e.g., COVID-19.
Should any food items from a particular vendor become unavailable, we generally believe that these food items could be obtained, or alternative products substituted, in sufficient quantities from other sources at competitive prices to allow us to avoid any material adverse effects that could be caused by such unavailability.
Should any food items from a particular vendor become unavailable, we generally believe that these food items could readily be obtained, or alternative products substituted, in sufficient quantities from other sources at competitive prices to allow us to avoid any material adverse effects that could be caused by such unavailability.
Our merchandising department selects and develops products for our gift shop. We are focused on driving retail sales by converting those customers who come to us for a restaurant visit. Our assortment includes core and seasonal themes.
Our merchandising department selects and develops products for our gift shop. We are focused on driving retail sales by converting those customers who come to us for a restaurant visit. Our assortment includes both core and seasonal themes.
We use a formal development and testing process, which includes guest research and in-store market tests to ensure products brought to market have a greater likelihood of meeting our goals. Menu-driven growth is built through three areas: enhancements to our current core menu offerings, the addition of new core menu offerings and limited time offer promotions we call seasonal events.
We use a formal development and testing process, which includes guest research and in-store market tests to ensure products brought to market have a greater likelihood of meeting our goals. Menu-driven growth is built through three areas: enhancements to our current core menu offerings, the addition of new core menu offerings and limited time offer seasonal events or promotions.
The front porch of each store features rows of the signature Cracker Barrel rocking chairs that we invite guests to use while waiting for a table in our dining room or after enjoying a meal and they are a popular item sold by the gift shops.
The front porch of each store features rows of the signature Cracker Barrel rocking chairs, which are a popular item sold by the gift shops and which we invite guests to use while waiting for a table in our dining room or after enjoying a meal.
Risk Factors. 11 Table of Contents RAW MATERIALS SOURCES AND AVAILABILITY Essential restaurant supplies and raw materials are generally available from several sources. Generally, we are not dependent upon single sources of supplies or raw materials. However, in our stores, certain branded items are single source products or product lines.
Risk Factors. 11 Table of Contents RAW MATERIALS SOURCES AND AVAILABILITY Essential restaurant supplies and raw materials are generally available from a number of sources. Generally, we are not dependent upon single sources of supplies or raw materials. However, in our stores, certain branded items are single source products or product lines.
Products : Our restaurants, which generated approximately 78% of our total revenue in 2022, offer home-style country cooking featuring many of our own recipes that emphasize authenticity and quality. Our restaurants serve breakfast, lunch and dinner daily and offer dine-in, pick-up and delivery services. Menu items are moderately priced.
Products : Our restaurants, which generated approximately 79% of our total revenue in 2023, offer home-style country cooking featuring many of our own recipes that emphasize authenticity and quality. Our restaurants serve breakfast, lunch and dinner daily and offer dine-in, pick-up and delivery services. Menu items are moderately priced.
In 2022, we had over 1,500 billboards and this expenditure accounted for approximately one-third of our total advertising spend for the year. We continue to optimize our non-billboard advertising mix which includes television (increasingly digital), digital display and video, mobile, social media, and search marketing.
In 2023, we had over 1,400 billboards and this expenditure accounted for approximately one-third of our total advertising spend for the year. We continue to optimize our non-billboard advertising mix which includes television (increasingly digital), digital display and video, mobile, social media, and search marketing.
Approximately one-third of our 2022 retail items were purchased directly from vendors in the People’s Republic of China. We have relationships with several foreign buying agencies to source product, monitor quality control and supplement product development. 7 Table of Contents Information Technology : We believe that an essential part of pleasing people is established through our ability to leverage technology.
Approximately one-third of our 2023 retail items were purchased directly from vendors in the People’s Republic of China. We have relationships with several foreign buying agencies to source product, monitor quality control and supplement product development. Information Technology : We believe that an essential part of pleasing people is established through our ability to leverage technology.
Beginning in 2020, certain of our Cracker Barrel restaurants began serving an assortment of beer and wine, and the subsequent ongoing expansion of this program throughout our system has resulted in beer and wine service in 574, or approximately 86%, of our restaurants as of the end of 2022. 5 Table of Contents Breakfast items can be ordered at any time throughout the day and include juices, eggs, pancakes, meats, grits, and a variety of biscuit specialties, such as gravy and biscuits and country ham and biscuits.
Beginning in 2020, certain of our Cracker Barrel restaurants began serving an assortment of beer and wine, and the subsequent ongoing expansion of this program throughout our system has resulted in beer and wine service in approximately 590 stores, or approximately 89%, of our Cracker Barrel restaurants as of the end of 2023. 5 Table of Contents Breakfast items can be ordered at any time throughout the day and include juices, eggs, pancakes, meats, grits, and a variety of biscuit specialties, such as gravy and biscuits and country ham and biscuits.
Our new, robust diversity training includes education throughout all levels of the Company about unconscious and implicit bias and focuses on creating an inclusive culture. Employee Benefits / Compensation Cracker Barrel is committed to providing comprehensive and competitive benefits to meet our employees’ needs.
Our new, robust diversity training includes education throughout all levels of the Company about unconscious and implicit bias and focuses on creating an inclusive culture and fostering a sense of belonging for all. Employee Benefits / Compensation Cracker Barrel is committed to providing comprehensive and competitive benefits to meet our employees’ needs.
We believe our technology is highly effective in supporting Cracker Barrel’s daily operations, and we continue to enhance this technology in line with our Company’s strategic vision. We continue to make investments in our cybersecurity program to protect and fortify our brands.
We believe our technology is highly effective in supporting Cracker Barrel’s daily operations, and we continue to enhance this technology in line with our Company’s strategic vision. 7 Table of Contents We continue to make investments in our cybersecurity program to protect and fortify our brands.
Our seasonal themes are designed to create interest and excitement in our stores by providing our guests with additional choices. 6 Table of Contents Store Management : At each store, our store management typically consists of one general manager, four associate managers and one retail manager.
Our seasonal themes are designed to create interest and excitement in our stores by providing our guests with additional choices that vary throughout the year. 6 Table of Contents Store Management : At each store, our store management typically consists of one general manager, four associate managers and one retail manager.
We purchase the majority of our retail items (approximately 80% in 2022) directly from domestic and international vendors and warehouse, or crossdock, such items at our retail distribution center in Lebanon, Tennessee, which we lease.
We purchase the majority of our retail items (approximately 80% in 2023) directly from domestic and international vendors, and we warehouse, or crossdock, such items at our retail distribution center in Lebanon, Tennessee.
Currently, there are seven Business Resource Groups in Cracker Barrel: - AMPT (“Advancing Modern Professionals for Tomorrow”): Aims to connect and empower modern professionals by promoting a community of inclusive, ambitious, and diverse members that unify through Cracker Barrel to equip our community and leaders for the future; - Be Bold: Cultivates and develops Black Leaders within the Cracker Barrel organization utilizing allyship, mentorship, and education to create a path to continued excellence as well as a vibrant and diverse community; - B-WELL: Improving the employee experience by sponsoring health and wellness activities that nurture employees’ physical, emotional, financial and intellectual wellbeing; - HOLA: Promoting Hispanic and Latino culture through hiring, developing and retaining talent within Cracker Barrel; - LGBTQ+ Alliance: Promoting LGBTQ+ Awareness and Building Workplace Inclusion; - SERVE: Advocating for leadership and development opportunities for Veterans, fostering an environment of networking and volunteerism and focusing on recruitment, retention and advancement; and - Women’s Connect : Inspiring Women Leaders.
These employee-led organizations provide opportunities to network, to obtain and develop leadership skills, and to inform and influence on all aspects of the Cracker Barrel brand. 9 Table of Contents Currently, there are seven Business Resource Groups in Cracker Barrel: - AMPT (“Advancing Modern Professionals for Tomorrow”): Aims to connect and empower modern professionals by promoting a community of inclusive, ambitious, and diverse members that unify through Cracker Barrel to equip our community and leaders for the future; - Be Bold: Cultivates and develops Black Leaders within the Cracker Barrel organization utilizing allyship, mentorship, and education to create a path to continued excellence as well as a vibrant and diverse community; - B-WELL: Improving the employee experience by sponsoring health and wellness activities that nurture employees’ physical, emotional, financial and intellectual wellbeing; - HOLA (“Hispanic Organization for Leadership and Advancement"): Promoting Hispanic and Latino culture through hiring, developing and retaining talent within Cracker Barrel; - LGBTQ+ Alliance: Promoting LGBTQ+ Awareness and Building Workplace Inclusion; - SERVE: Advocating for leadership and development opportunities for Veterans, fostering an environment of networking and volunteerism and focusing on recruitment, retention and advancement; and - Women’s Connect : Inspiring Women Leaders.
We purchase our pork through six vendors, poultry through twelve vendors and beef through seven vendors.
We purchase our pork through six vendors, poultry through nine vendors and beef through seven vendors.
The following table highlights the price ranges for our meals in 2022: Price Range Breakfast $5.99 to $15.99 Lunch and Dinner $5.19 to $18.99 The following table highlights each day-part’s percentage of restaurant sales in 2022: Percentage of Restaurant Sales in 2022 Breakfast Day-Part (until 11:00 a.m.) 25% Lunch Day-Part (11:00 a.m. to 4:00 p.m.) 39% Dinner Day-Part (4:00 p.m. to close) 36% We also offer items for sale in our gift shops that are featured on, or related to, the restaurant menu, such as pies, cornbread mix, coffee, syrups and pancake mixes.
The following table highlights the price ranges for our meals in 2023: Price Range Breakfast $ 6.99 to $17.49 Lunch and Dinner $ 5.19 to $19.49 The following table highlights each day-part’s percentage of restaurant sales in 2023: Percentage of Restaurant Sales in 2023 Breakfast Day-Part (until 11:00 a.m.) 25% Lunch Day-Part (11:00 a.m. to 4:00 p.m.) 40% Dinner Day-Part (4:00 p.m. to close) 35% We also offer for sale in our gift shops items that are featured on, or related to, the restaurant menu, such as pies, cornbread mix, coffee, syrups and pancake mixes.
Fluid dairy is delivered two to three times a week through approximately fifty regional dairies, the majority of which are under the ownership of two separate companies. Beer and wine, currently in approximately 574 stores, are purchased and distributed through approximately 314 distributors with deliveries ranging from weekly to monthly.
Fluid dairy is delivered two to three times a week through approximately fifty regional dairies, the majority of which are under the ownership of two separate unaffiliated companies. Beer and wine are purchased and distributed through approximately 565 distributors with deliveries ranging from weekly to monthly.
Our menu also features weekday and weekend dinner specials that showcase a popular dinner entrée. There is some variation in menu pricing and content in different regions of the country. The average check per guest during 2022 was $12.13, which represents a 6.4% increase over the prior year.
Our menu also features weekday and weekend dinner specials that showcase a popular dinner entrée. There is some variation in menu pricing and content in different regions of the country. The average check per guest during 2023 was $13.36, which represents a 10.3% increase over the prior year.
The following table highlights the five food categories which accounted for the largest shares of our food purchasing expense in 2022: Percentage of Food Purchases in 2022 Beef 15% Fruits and vegetables 12% Poultry 12% Pork 12% Dairy (including eggs) 11% Each of these categories includes several individual items.
The following table highlights the five food categories which accounted for the largest shares of our food purchasing expense in 2023: Percentage of Food Purchases in 2023 Poultry 14% Fruits and vegetables 14% Dairy (including eggs) 13% Beef 11% Pork 10% Each of these categories includes several individual items.
The single food item within these categories that accounted for the largest share of our food purchasing expense in 2022 was bacon at approximately 6% of total food purchases. Dairy, fruits and vegetables are purchased through numerous vendors, including local vendors. Eggs are purchased through five vendors.
Chicken is the single food item within these categories that accounted for the largest share of our food purchasing expense in 2023 at approximately 5% of total food purchases. Dairy, fruits and vegetables are purchased through numerous vendors, including local vendors. Eggs are purchased through five vendors.
The following table highlights the five categories which accounted for the largest shares of our retail sales in 2022: Percentage of Retail Sales in 2022 Apparel and Accessories 28% Food 18% Toys 15% Décor 14% Bed and Bath 8% Our typical gift shop features approximately 4,100 stock keeping units.
The following table highlights the five categories that accounted for the largest shares of our retail sales in 2023: Percentage of Retail Sales in 2023 Apparel and Accessories 30% Food 18% Décor 14% Toys 14% Bed and Bath 7% Our typical gift shop features approximately 4,100 stock keeping units.
We use technology to enhance the experiences of our guests and our employees, and to assist management in all aspect of operating the business. Examples include a digital experience that effectively enables our off-premise business, allows for mobile payments in store, and provides guests with a digital waitlist.
We use technology to enhance the experiences of our guests and our employees, and to assist management in all aspects of operating the business. Examples include a digital experience that effectively enables our off-premise business, allows for mobile payments in store, and provides guests with a digital waitlist that can be accessed remotely through our own mobile application.
We served an average of approximately 5,900 restaurant guests per week in a typical store in 2022.
We served an average of approximately 5,800 restaurant guests per week in a typical store in 2023.
As of September 14, 2022, 53 MSBC locations were open, an increase from 44 at the same time last year (seven of which were franchised at that time) -— all are currently leased properties in Alabama, Florida, Georgia, Kentucky, North Carolina, South Carolina, Tennessee, Texas and Virginia. As of September 14, 2022, no locations were franchised.
As of September 13, 2023, 59 MSBC locations were open, an increase from 53 at the same time last year — all are currently leased properties in Alabama, Florida, Georgia, Kentucky, Ohio, North Carolina, South Carolina, Tennessee, Texas and Virginia. As of September 13, 2023, no locations were franchised.
As an organization, we have a responsibility to live up to our mission of Pleasing People each day, ensuring that every member of our team and every guest feels at home, feels cared for like family, and feels like they belong. Also guiding our way is the sense of belonging we strive to deliver as part of our People Promise.
As an organization, we have a responsibility to live up to our mission of Pleasing People each day, ensuring that every member of our team and every guest feels at home, feels cared for like family, and feels like they belong.
HUMAN CAPITAL As of July 29, 2022, we employed approximately 73,000 people (as compared to approximately 70,000 people as of July 30, 2021), of whom approximately 361 were in advisory and supervisory capacities, approximately 3,215 were in-store management positions and 47 were officers. Many store personnel are employed on a part-time basis.
HUMAN CAPITAL As of July 28, 2023, we employed approximately 77,000 people (as compared to approximately 73,000 people as of July 29, 2022), of whom approximately 350 were in advisory and supervisory capacities, approximately 3,300 were in-store management positions and 44 were officers. Many store personnel are employed on a part-time basis.
Our teams work hard to create a culture of hospitality that’s welcoming, respectful and inclusive to everyone who walks through our doors – whether as an employee or as a guest. This includes embracing openness for all people, ideas, and perspectives.
Our teams work hard to create a culture of hospitality that’s welcoming, respectful and inclusive to everyone who walks through our doors – whether as an employee or as a guest. Also guiding our way is the sense of belonging we strive to deliver as part of our People Promise. This includes embracing openness for all people, ideas, and perspectives.
Building, site improvement, furniture, equipment and related development costs for stores opened during 2021 averaged approximately $4,900 and pre-opening costs averaged $428 per store in 2021, the most recent period in which we opened new Cracker Barrel stores. 8 Table of Contents Our current store prototype is approximately 8,900 square feet, including approximately 1,900 square feet of retail selling space and dining room seating for approximately 170 guests.
Building, site improvement, furniture, equipment and related development costs for stores opened during 2023 averaged approximately $5,500 and pre-opening costs averaged $826 per store in 2023. Our current store prototype is approximately 8,900 square feet, including approximately 1,900 square feet of retail selling space and dining room seating for approximately 170 guests.
Our remaining stores are located off-interstate or near tourist destinations. Of the 664 stores open as of September 14, 2022, we own the land and buildings for 360, while the other 304 properties are either ground leases or ground and building leases.
As of September 13, 2023, approximately 83% of our stores are located along interstate highways. Our remaining stores are located off-interstate or near tourist destinations. Of the 661 stores open as of September 13, 2023, we own the land and buildings for 358, while the other 303 properties are either ground leases or ground and building leases.
Certain food items are sold under the “Cracker Barrel Old Country Store” brand name. We believe that we achieve high retail sales per square foot of retail selling space (approximately $503 per square foot in 2022) as compared to mall stores both by offering appealing merchandise and by having a significant source of customers who are typically our restaurant guests.
We believe that we achieve high retail sales per square foot of retail selling space (approximately $523 per square foot in 2023) as compared to traditional retail stores both by offering appealing merchandise and by having a significant source of customers who are typically our restaurant guests.
Employee Development / Training Because of the importance of our employees to our ability to deliver the service levels that are a vital part of the hospitality that drives our brand appeal to guests, we emphasize employee development and training.
Employee Development / Training Because of the importance of our employees’ ability to deliver the service levels that are a vital part of the hospitality that drives our brand appeal to guests, we emphasize employee development and training. To ensure that individual stores operate at a high level of quality, we focus significant attention on the training of store managers.
To ensure that individual stores operate at a high level of quality, we focus significant attention on the training of store managers. We believe that our training programs are key in developing our managers’ leadership skills and commitment to operational excellence, which we believe is important to delivering a positive employee and guest experience.
We believe that our training programs are key in developing our managers’ leadership skills and commitment to operational excellence, which we believe are important to delivering a positive employee and guest experience.
Our store employees use our recently upgraded point of sale system, our new food management and labor management systems, and our retail systems to manage inventory, labor, forecasting, and orders for retail and restaurants. In our distribution center, we manage retail merchandise planning, purchasing, warehousing, and distribution using various retail management solutions.
Our store employees use a range of systems to manage inventory, labor, forecasting and orders for retail and restaurants. In our distribution center, we manage retail merchandise planning, purchasing, warehousing, and distribution using various retail management solutions. Our data solutions provide management with daily reports used to operate stores in a cost-effective manner.
From protecting guest information to ensuring systems are reliably available, data privacy and cybersecurity are organization-wide efforts that are incorporated into every technology and business decision at all our brands. Led by our Chief Information Officer and Director of Security, cybersecurity is a top priority that is reviewed by our Audit Committee on a quarterly basis.
From protecting guest information to ensuring systems are reliably available and effective, data privacy and cybersecurity are organization-wide efforts that are incorporated into every technology and business decision at both our brands.
Our mission statement, “Pleasing People,” embraces guests and employees alike, and our employees are trained on the importance of that mission in a culture of mutual respect. We also are committed to staffing each store with an experienced management team to ensure attentive guest service and consistent food quality.
Our commitment to offering guests a quality experience begins with our employees. Our mission statement, “Pleasing People,” embraces guests and employees alike, and our employees are trained on the importance of that mission in a culture of mutual respect.
Our firmly held organization-wide policy is that discrimination, overt or through unconscious bias, has no place at Cracker Barrel Old Country Store.
Our firmly held organization-wide policy is that discrimination, overt or through unconscious bias, has no place at Cracker Barrel Old Country Store. As of July 28, 2023, more than 30% of our employee population is comprised of racial and ethnic minorities and approximately 68% of our employee population is female.
Information on our website is not deemed to be incorporated by reference into this Annual Report on Form 10-K or any other filings that we make from time to time with the SEC. The following description of our business should be read in conjunction with the information in Part II of this report under the caption “Item 7.
Information on our website is not deemed to be incorporated by reference into this Annual Report on Form 10-K or any other filings that we make from time to time with the SEC. As of September 13, 2023, we operated 661 Cracker Barrel stores in 45 states and 59 Maple Street Biscuit Company stores in 10 states.
Guest Satisfaction : We are committed to providing our guests a home-style, country-cooked meal, and a variety of retail merchandise served and sold with genuine hospitality in a comfortable environment. Our commitment to offering guests a quality experience begins with our employees.
In 2023, Individual To Go, Third-Party Delivery and Catering and Occasion accounted for approximately 40%, 34% and 26% of total off-premise sales, respectively. Guest Satisfaction : We are committed to providing our guests a home-style, country-cooked meal, and a variety of retail merchandise served and sold with genuine hospitality in a comfortable environment.
MSBC will serve as a long-term growth vehicle that complements Cracker Barrel while providing increased exposure to urban and suburban markets. We anticipate accelerating unit growth in the coming years. COVID-19 Impact During 2022, the Company continued to recover from the COVID-19 pandemic (notwithstanding new variant outbreaks), and all dining rooms were open to some extent during 2022.
MSBC will serve as a long-term growth vehicle that complements Cracker Barrel while providing increased exposure to urban and suburban markets. We anticipate accelerating unit growth in the coming years. Currently, we plan to open approximately four to five MSBC locations during the first quarter of 2024.
In addition, we provide all of our employees with access to paid parental leave and adoption benefits, a 401(k) savings plan, an employee discount policy at our Cracker Barrel stores, an employee stock purchase plan, and a competitive vacation policy. 10 Table of Contents Our compensation and performance evaluation systems are carefully designed to maintain pay equity by focusing pay decisions on experience and performance to ensure the Company retains a highly productive workforce to operate our business while providing a high level of service to our guests.
Our compensation and performance evaluation systems are carefully designed to maintain pay equity by focusing pay decisions on experience and performance to ensure the Company retains a highly productive workforce to operate our business while providing a high level of service to our guests.
We continue to focus on growing our off-premise business and investing in our digital infrastructure to improve the guest experience in the face of these ongoing challenges.
We continue to focus on growing our off-premise business and investing in our digital infrastructure to improve the guest experience in the face of these ongoing challenges. Following the COVID-19 pandemic, our teams have maintained close contact with applicable regulatory agencies, from the Centers for Disease Control and Prevention (“CDC”) and the U.S.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.” Cracker Barrel Old Country Store Concept As of September 14, 2022, we operated 664 Cracker Barrel stores in 45 states. Our stores are not franchised.
The following description of our business should be read in conjunction with the information in Part II of this report under the caption “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.” Cracker Barrel Old Country Store Concept Our 661 Cracker Barrel stores are not franchised.
Our capital investment in new stores may differ in the future due to changes in our store prototype, building design specifications, site location and site characteristics.
Our capital investment in new stores may differ in the future due to changes in our store prototype, building design specifications, site location and site characteristics. Maple Street Biscuit Company We acquired 100% ownership of Maple Street Biscuit Company (“MSBC”) on October 10, 2019. MSBC is a breakfast and lunch fast casual concept.
Our program is designed to monitor, assess, and manage cyber-risk with a continuous improvement mindset. Our cybersecurity program is aligned with the National Institute of Standards and Technology (NIST) Cybersecurity Framework. Every year we have a third-party organization assess and measure the maturity of our program.
Our cybersecurity program is aligned with the National Institute of Standards and Technology (NIST) Cybersecurity Framework. Every year we have a third-party organization assess and measure the maturity of our program, which has shown annual improvement for the past three years. We also perform regular technical assessments, including annual penetration testing of our online systems and internal networks.
Our Business Resource Groups allow employees to come together with common interests, perspectives, and experiences around topics such as race, ethnicity, gender identity, and other special interests. These employee-led organizations provide opportunities to network, to obtain and develop leadership skills, and to inform and influence on all aspects of the Cracker Barrel brand.
We provide opportunities for our employees to drive our Diversity, Equity & Inclusion strategy by creating programs that raise awareness and allow for a more inclusive culture. Our Business Resource Groups allow employees to come together with common interests, perspectives, and experiences around topics such as race, ethnicity, gender identity, and other special interests.
Our exclusive holiday music program drives awareness for the brand and builds cultural relevance and affinity with our guests. Store Development: While we did not open any new Cracker Barrel stores in 2022, we plan to open three to four new stores during 2023. As of September 14, 2022, approximately 83% of our stores are located along interstate highways.
Our event activations drive awareness for the brand and build cultural relevance and affinity with our guests. 8 Table of Contents Store Development: We opened two new Cracker Barrel stores in 2023. Currently, we plan to open one to two new stores during the first quarter of 2024.
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We have recently migrated from an on-premise data storage and computing platform to a modern cloud-based data as a service platform providing advanced security and reliability features. Our data solutions provide management with daily reports used to operate stores in a cost-effective manner. Our service desk leverages technology solutions that enable an efficient and effective way to resolve technology concerns.
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Certain food items are sold under the “Cracker Barrel Old Country Store” brand name.
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We also perform regular technical assessments, including annual penetration testing of our online systems and internal networks. Feedback from our maturity and technical assessments is incorporated into our actions to further improve our security posture.
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Our service desk leverages technology solutions that enable an efficient and effective way to resolve technology concerns.
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Maple Street Biscuit Company Effective October 10, 2019, we acquired 100% ownership of Maple Street Biscuit Company (“MSBC”), a breakfast and lunch fast casual concept as we believe this to be an attractive category within the restaurant space.
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Led by our Chief Information Officer and Senior Director of Security, cybersecurity is a top priority that is reviewed by our Audit Committee on a quarterly basis and the Board of Directors on an annual basis. Our program is designed to monitor, assess, and manage cyber-risk with a continuous improvement mindset.
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In response to the COVID-19 pandemic, we instituted operational protocols to comply with applicable regulatory requirements to protect the health and safety of employees and guests, and we implemented and continually adapted a number of strategies to support the recovery of our business and navigate through the uncertain environment.
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Feedback from our maturity and technical assessments is incorporated into our systems and procedures through continual upgrades intended to further improve our security posture. Off-Premise Business : Approximately 20% of our restaurant sales are generated through our off-premise channels. Our off-premise business consists of three channels. Individual To Go includes to go orders that guests pick up from our stores.
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As of July 29, 2022, more than 33% of our employee population is comprised of racial and ethnic minorities and approximately 67% of our employee population is female. 9 Table of Contents We provide opportunities for our employees to drive our Diversity, Equity & Inclusion strategy by creating programs that raise awareness and allow for a more inclusive culture.
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Third-Party Delivery includes to go orders that are placed through an aggregator, i.e., Door Dash, Uber Eats, etc. and delivered to guests by an employee of the aggregator. Catering and Occasion includes offerings for large party sizes, which includes our popular Heat n’ Serve offerings that are available for certain holidays.
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Health & Safety Since the beginning of the COVID-19 pandemic, our teams have maintained close contact with applicable regulatory agencies, from the Centers for Disease Control and Prevention (“CDC”) and the U.S.
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We also are committed to staffing each store with an experienced management team to ensure attentive guest service and consistent food quality.
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In addition, we provide all of our employees with access to paid parental leave and adoption benefits, a 401(k) savings plan, an employee discount policy at our Cracker Barrel stores, an employee stock purchase plan, and a competitive vacation policy.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

92 edited+33 added−23 removed104 unchanged
Biggest changeCompetition for qualified employees exerts upward pressure on wages paid to attract such personnel, resulting in higher labor costs, together with greater recruiting and training expenses 18 Table of Contents Our ability to meet our labor needs while controlling our costs is subject to external factors such as unemployment levels, minimum wage legislation, health care legislation, payroll taxes and changing demographics.
Biggest changeOur ability to meet our labor needs while controlling our costs is subject to external factors such as unemployment levels, minimum wage legislation, health care legislation, payroll taxes and changing demographics. Many of our employees are hourly workers whose wages are affected by increases in the federal or state minimum wage or changes to tip credits.
In addition to the COVID-19 pandemic, the United States and other countries have experienced, or may experience in the future, outbreaks of other viruses, such as norovirus, the bird/avian flu or other diseases.
In addition to the COVID-19 pandemic, the United States and other countries have experienced, and may experience in the future, outbreaks of other viruses, such as norovirus, the bird/avian flu or other diseases.
Any determination to pay cash dividends on our common stock in the future will be based primarily upon our financial condition, and prospects, results of operations, business requirements and our Board of Directors’ conclusion that the declaration of cash dividends is in the best interest of our shareholders and is in compliance with all laws and agreements applicable to the payment of dividends.
Any determination to pay cash dividends on our common stock in the future will be based primarily upon our financial condition, prospects, results of operations and business requirements and our Board of Directors’ conclusion that the declaration of cash dividends is in the best interest of our shareholders and is in compliance with all laws and agreements applicable to the payment of dividends.
Our ability to open and operate new stores successfully also depends on numerous other factors, some of which are beyond our control, including, among other items discussed in other risk factors, the following: our ability to control construction and development costs of new stores; our ability to manage the local, state or other regulatory approvals and permits, zoning and licensing processes in a timely manner; our ability to appropriately train employees and staff the stores; consumer acceptance of our stores in new markets; and our ability to manage construction delays related to the opening of a new store.
Our ability to open and operate new stores successfully also depends on numerous other factors, some of which are beyond our control, including, among other items discussed in other risk factors, the following: our ability to control construction and development costs of new stores; our ability to manage the local, state or other regulatory approvals and permits, zoning and licensing processes in a timely manner; our ability to recruit and appropriately train employees and staff the stores; consumer acceptance of our stores in new markets; and our ability to manage construction delays related to the opening of a new store.
Lastly, unforeseen events, such as hostile acts (including terrorist activities and public or workplace violence), social unrest or other catastrophic events, and our ability to appropriately respond and adapt to such events could negatively impact our business, results of operations and financial condition.
Other unforeseen events, such as hostile acts (including terrorist activities and public or workplace violence), social unrest or other catastrophic events, and our ability to appropriately respond and adapt to such events could negatively impact our business, results of operations and financial condition.
In addition, food safety concerns, widespread outbreaks of livestock and poultry diseases, and product recalls, all of which are out of our control, and, in many instances, unpredictable, could also increase our costs and possibly affect the supply of livestock and poultry products.
Food safety concerns, widespread outbreaks of livestock and poultry diseases, and product recalls, all of which are out of our control, and, in many instances, unpredictable, could also increase our costs and possibly affect the supply of livestock and poultry products.
Even when the allegations or complaints are not valid, unfavorable publicity relating to one or more of our stores, or only to a single store, could adversely affect public perception of the entire brand.
Even when the allegations or complaints are not accurate or valid, unfavorable publicity relating to one or more of our stores, or only to a single store, could adversely affect public perception of the entire brand.
We face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of operations would be adversely affected. The restaurant and retail industries are intensely competitive, and we face many well-established competitors. We compete within each market with national and regional restaurant and retail chains and locally owned restaurants and retailers.
We face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of operations may be adversely affected. The restaurant and retail industries are intensely competitive, and we face many well-established competitors. We compete with national and regional restaurant and retail chains and locally owned restaurants and retailers within each market.
The restaurant industry is subject to extensive federal, state and local laws and regulations, including those relating to food safety, minimum wage and other labor issues (such as unionization), health care, menu labeling and building and zoning requirements and those relating to the preparation and sale of food and alcoholic beverages as well as certain retail products.
The restaurant industry is subject to extensive federal, state and local laws and regulations, including those relating to food safety, minimum wage and other labor issues (such as unionization), health care, animal health and welfare, menu labeling and building and zoning requirements and those relating to the preparation and sale of food and alcoholic beverages as well as certain retail products.
Additionally, social media can be utilized to target specific companies or brands as a result of a variety of actual or perceived actions or inactions that are disfavored by our customers, local culture, employees, or interest groups, which can materially impact consumer behavior.
Additionally, social media can be utilized to target specific companies or brands as a result of a variety of actual or perceived actions or inactions that are disfavored by our customers, local culture, employees, or interest groups, which can materially and immediately impact consumer behavior.
A deterioration in the economy or other economic conditions affecting disposable consumer income, such as unemployment levels, reduced home values, investment losses, inflation, business conditions, fuel and other energy costs, consumer debt levels, lack of available credit, consumer confidence, interest rates, tax rates and changes in tax laws, may adversely affect our business by reducing overall consumer spending or by causing customers to reduce the frequency with which they shop and dine out or to shift their spending to our competitors or to products sold by us that are less profitable than other product choices, all of which could result in lower revenues, decreases in inventory turnover, greater markdowns on inventory, and a reduction in profitability due to lower margins.
Current inflationary pressures and other economic conditions affecting disposable consumer income, such as unemployment levels, reduced home values, investment losses, business conditions, fuel and other energy costs, consumer debt levels, lack of available credit, consumer confidence, interest rates, tax rates and changes in tax laws, may adversely affect our business by reducing overall consumer spending or by causing customers to reduce the frequency with which they shop and dine out or to shift their spending to our competitors or to products sold by us that are less profitable than other product choices, all of which could result in lower revenues, decreases in inventory turnover, greater markdowns on inventory, and a reduction in profitability due to lower margins.
Competition from other regional or national restaurant and retail chains typically represents the more important competitive influence, principally because of their significant marketing and financial resources. We also face competition as a result of the convergence of grocery, deli, retail and restaurant services, particularly in the supermarket industry.
Competition from other regional or national restaurant and retail chains typically represent the more important competitive influence, principally because of their significant marketing and financial resources. We face competition as a result of the convergence of grocery, deli, retail and restaurant services, particularly in the supermarket industry.
We may not have or be able to secure financing for sufficient funds to satisfy all amounts due under the other indebtedness and the Notes. 16 Table of Contents Provisions in the indenture governing the Notes could delay or discourage a takeover of us.
We may not have or be able to secure financing for sufficient funds to satisfy all amounts due under the other indebtedness and the Notes. Provisions in the indenture governing the Notes could delay or discourage a takeover of us.
Multi-unit businesses such as ours can be adversely affected by publicity resulting from complaints or litigation alleging poor food quality, poor service, food-borne illness, viruses, product defects, personal injury, adverse health effects (including obesity) or other concerns stemming from one or a limited number of our stores.
Multi-unit businesses such as ours can be adversely affected by publicity resulting from complaints or litigation alleging poor food quality, poor service, guest discrimination, food-borne illness, viruses, product defects, personal injury, adverse health effects (including obesity), employee relations or other concerns stemming from one or a limited number of our stores.
In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could depress the price of our common stock. 17 Table of Contents Risks Related to Labor and Supply Chains Our reliance on certain significant vendors, particularly for foreign-sourced retail products, subjects us to numerous risks, including possible interruptions in supply, which could adversely affect our business.
In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could depress the price of our common stock. Risks Related to Supply Chains Our reliance on certain significant vendors, particularly for foreign-sourced retail products, subjects us to numerous risks, including possible interruptions in supply, which could adversely affect our business.
As a result, the conversion of some or all of the Notes or the exercise of some or all of such warrants may dilute the ownership interests of existing stockholders.
As a result, the conversion of some or all of the Notes or the exercise of some or all of such warrants may dilute the ownership interests of existing shareholders.
Compliance with these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings. Increases in state or federal minimum wage rates, including recent proposals to increase state or federal minimum wage rates and index future increases to inflation, or other changes in these laws could increase our labor costs.
Compliance with these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings. 20 Table of Contents Increases in state or federal minimum wage rates, including recent proposals to increase state or federal minimum wage rates and index future increases to inflation, or other changes in these laws could increase our labor costs.
The current economic slowdown, a protracted economic downturn, a worsening economy, increased energy prices, and rising interest rates may reduce consumer confidence and affect consumers’ ability or desire to spend disposable income.
A protracted economic downturn, a worsening economy, increased energy prices, and rising interest rates may reduce consumer confidence and affect consumers’ ability or desire to spend disposable income.
The preferences of our customers toward beef and chicken could be affected by changes in consumer health or dietary trends and preferences regarding meat consumption or health concerns and publicity concerning food quality, illness and injury generally.
The preferences of our customers toward beef and chicken could be affected by changes in consumer health or dietary trends and preferences regarding meat consumption or health concerns and publicity concerning food quality, illness and injury generally. Changes in consumer dietary preferences may impact our menu offerings.
As a result, litigation may adversely affect our business, financial condition and results of operations. Our business could be negatively affected as a result of actions of activist shareholders.
As a result, litigation may adversely affect our business, financial condition and results of operations. 21 Table of Contents Our business could be negatively affected as a result of actions of activist shareholders.
We can provide no assurances as to the financial stability or viability of any of the hedge counterparties. Conversion of the Notes or exercise of the warrants evidenced by the warrant transactions may dilute the ownership interest of existing stockholders, including noteholders who have previously converted their Notes.
We can provide no assurances as to the financial stability or viability of any of the hedge counterparties. 17 Table of Contents Conversion of the Notes or exercise of the warrants evidenced by the warrant transactions may dilute the ownership interest of existing shareholders, including noteholders who have previously converted their Notes.
Risks Related to Macroeconomic and Industry Conditions We have experienced and continue to experience inflationary conditions with respect to the cost for food, ingredients, retail merchandise, transportation, distribution, labor and utilities, and we may not be able to increase prices or implement operational improvements sufficient to fully offset inflationary pressures on such costs, which may adversely impact our revenues and results of operations.
Risks Related to Macroeconomic and Industry Conditions We have experienced and continue to experience inflationary conditions with respect to the cost for food, ingredients, retail merchandise, transportation, distribution, labor and utilities, and we may not be able to increase prices or implement operational improvements sufficient to fully offset inflationary pressures on such costs, which may have a material adverse effect on our results of operations.
Our attempts to offset cost pressures, such as through menu price increases and operational improvements, may not be successful. We seek to provide a moderately priced product, and, as a result, we may not seek to or be able to pass along price increases to our customers sufficient to completely offset cost increases.
Our attempts to offset cost pressures, such as through menu price increases and operational improvements, may not be successful. We seek to provide a moderately priced product, and, as a result, we may not seek to or be able to pass along price increases to our customers sufficient to completely offset cost increases without adversely affecting our customers’ demand.
We are dependent upon attracting and retaining qualified employees while also controlling labor costs. Our performance is dependent on attracting and retaining a large and growing number of qualified store employees. Availability of staff varies widely from location to location. Many staff members are in entry-level or part-time positions, typically with high rates of turnover.
Our performance is dependent on attracting and retaining a large and growing number of qualified store employees. Availability of staff varies widely from location to location. Many staff members are in entry-level or part-time positions, typically with high rates of turnover.
Our business is not static – it changes periodically as a result of many factors, including, among other items discussed in other risk factors, the following: • increases and decreases in guest traffic, average weekly sales, restaurant and retail sales and restaurant profitability; • inflationary and other market conditions that affect the costs and availability of commodities, labor, energy, fuel, transportation and other inputs necessary to operate our stores effectively in a manner consistent with our strategy; • continued or increased regulations on our operations, consumer activities or social gatherings as a result of the COVID-19 pandemic or other public health conditions; • the rate at which we open new stores, the timing of new store openings and the related high initial operating costs; • changes in advertising and promotional activities and expansion into new markets; and • impairment of long-lived assets and any loss on store closures.
Our business is not static – it changes periodically as a result of many factors, including, among other items discussed in other risk factors, the following: • increases and decreases in guest traffic, average weekly sales, restaurant and retail sales and restaurant profitability; • inflationary and other market conditions that affect the costs and availability of commodities, labor, energy, fuel, transportation and other inputs necessary to operate our stores effectively in a manner consistent with our strategy; • the rate at which we open new stores, the timing of new store openings and the related high initial operating costs; 26 Table of Contents • changes in advertising and promotional activities and expansion into new markets; and • impairment of long-lived assets and any loss on store closures.
If a proxy contest ensues, or if we become engaged in a proxy contest with another activist shareholder in the future, our business could be adversely affected because: • responding to public proposals, special meeting requests and other actions by activist shareholders can disrupt our operations, be costly and time-consuming, and divert the attention of our management and employees; • perceived uncertainties as to our future direction may result in the loss of potential business opportunities, and may make it more difficult to attract and retain qualified personnel and business partners; • claims made by activist shareholders in connection with a proxy contest or otherwise may harm our reputation, damage our relations with customers, employees and business relations such as suppliers, or otherwise impair our business; and • pursuit of an activist shareholder’s agenda may adversely affect our ability to effectively implement our business strategy and create additional value for our shareholders. 22 Table of Contents Provisions in our charter, Tennessee law and our shareholder rights plan may discourage potential acquirers of the Company.
If we become engaged in a proxy contest or other public engagement with an activist shareholder in the future, our business could be adversely affected because: • responding to public proposals and director nominations, special meeting requests and other actions by activist shareholders can disrupt our operations, be costly and time-consuming, and divert the attention of our management and employees; • perceived uncertainties as to our future direction may result in the loss of potential business opportunities, and may make it more difficult to attract and retain qualified personnel and business partners; • claims made by activist shareholders in connection with a proxy contest or otherwise may harm our reputation, damage our relations with customers, employees and business relations such as suppliers, or otherwise impair our business; and • pursuit of an activist shareholder’s agenda may adversely affect our ability to effectively implement our business strategy and create additional value for our shareholders.
There may also be adverse publicity associated with litigation that could decrease guest or consumer acceptance of our brand, regardless of whether the allegations are valid or we ultimately are found liable. Litigation could adversely impact our operations and our ability to expand our brand in other ways as well.
There may also be adverse publicity associated with litigation that could decrease guest or consumer acceptance of our brand, regardless of whether the allegations are valid or we ultimately are found liable. Litigation could adversely impact our operations and our ability to expand our brand in other ways, such as by diverting management’s attention away from operations.
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with GAAP.
Failure of our internal control over financial reporting could adversely affect our business and financial results. Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with GAAP.
The Company may, from time to time, evaluate and pursue other opportunities for growth, including through strategic investments, joint ventures, other acquisitions, and other Company initiatives, such as our recent rollout of a limited selection of beer and wine in certain locations.
We may, from time to time, evaluate and pursue other opportunities for growth, including through strategic investments, joint ventures, other acquisitions, and other initiatives, such as our recent rollout of a limited selection of beer and wine in certain locations and our new customer loyalty program.
We are subject to laws relating to information security, privacy, cashless payments, consumer credit, and fraud. Additionally, an increasing number of government and industry groups have established laws and standards for the protection of personal and health information.
The protection of customer, employee and company data is critical to us. We are subject to laws relating to information security, privacy, cashless payments, consumer credit, and fraud. Additionally, an increasing number of government and industry groups have established laws and standards for the protection of personal and health information.
The preferred stock purchase rights are triggered ten days after the date of a public announcement that a person or group acting in concert has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of our outstanding common stock.
The shareholder rights plan will expire on April 9, 2024. The preferred stock purchase rights are triggered ten days after the date of a public announcement that a person or group acting in concert has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of our outstanding common stock.
Risks Related to IT Systems, Cybersecurity and Data Privacy A material disruption in our information technology, network infrastructure and telecommunication systems could adversely affect our business and results of operations.
Risks Related to IT Systems, Cybersecurity and Data Privacy A material disruption in our information technology, network infrastructure and telecommunication systems could have a material adverse effect on our business and results of operations.
Risks Related to Our Business Health concerns, government regulation relating to the consumption of food products and widespread infectious diseases could affect consumer preferences and could negatively affect our results of operations.
Risks Related to Our Business Health concerns, government regulation relating to the consumption of food products and widespread infectious diseases could affect consumer preferences and could have a material adverse effect on our results of operations.
Our inability to refinance our indebtedness when necessary or to do so upon attractive terms would materially and adversely affect our liquidity and results of operations. Depending on the impact of macroeconomic environment, we may seek other sources of liquidity and other ways of preserving liquidity.
Our inability to refinance our indebtedness when necessary or to do so upon attractive terms may have a material adverse effect on our liquidity and results of operations. Depending on the impact of macroeconomic environment, we may seek other sources of liquidity and other ways of preserving liquidity.
Our business is subject to the risk of litigation by employees, guests, suppliers, shareholders, governmental agencies, competitors or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation.
Litigation may adversely affect our business, financial condition and results of operations. Our business is subject to the risk of litigation by employees, guests, suppliers, shareholders, governmental agencies, competitors or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation.
The inability to enter into and maintain these technology licenses could adversely affect our business. 20 Table of Contents Legal and Regulatory Risks We are subject to a number of risks relating to federal, state and local regulation of our business, including the areas of minimum wage increases, health care reform and environmental matters, and an insufficient or ineffective response to government regulation may increase our costs and decrease our profit margins.
Legal and Regulatory Risks We are subject to a number of risks relating to federal, state and local regulation of our business, including the areas of minimum wage increases, health care reform and environmental matters, and an insufficient or ineffective response to government regulation may increase our costs and decrease our profit margins.
The full-service dining sector of the restaurant industry and the retail industry are affected by changes in national, regional and local economic conditions, seasonal fluctuation of sales volumes, consumer preferences, including changes in consumer tastes and dietary habits and the level of consumer acceptance of our restaurant concept and retail merchandise, and consumer spending patterns. 24 Table of Contents Discretionary consumer spending, which is critical to our success, is influenced by general economic conditions and the availability of discretionary income.
The full-service dining sector of the restaurant industry and the retail industry are affected by changes in national, regional and local economic conditions, seasonal fluctuation of sales volumes, consumer preferences, including changes in consumer tastes and dietary habits and the level of consumer acceptance of our restaurant concept and retail merchandise, and consumer spending patterns.
General Risk Factors General economic, business and societal conditions as well as those specific to the restaurant or retail industries that are largely out of our control may adversely affect our business, financial condition and results of operations. Our business results depend on a number of industry-specific and general economic factors, many of which are beyond our control.
General Risk Factors General economic, business and societal conditions as well as those specific to the restaurant or retail industries that are largely out of our control may have a material adverse effect on our business, financial condition and results of operations.
Our expansion into new geographic markets may present increased risks due to our relative unfamiliarity with these markets. Some of our new store locations may be located in areas where we have lower market presence and, as a result, less or no meaningful business experience than in our traditional, existing markets.
Some of our new store locations may be located in areas where we have lower market presence and, as a result, less or no meaningful business experience than in our traditional, existing markets.
To the extent that price increases are not sufficient to offset higher costs adequately or in a timely manner, and/or if they result in significant decreases in revenue volume, our revenues and results of operations may be adversely affected.
The extent to which price increases are not sufficient to offset higher costs adequately or in a timely manner, and/or result in significant decreases in revenue volume, may have a material adverse effect on our revenues and results of operations.
Fluctuations in economic conditions, weather, freight efficiency, demand and other factors also affect the availability, quality and cost of the ingredients and products that we buy. Furthermore, many of the products that we use and their costs are interrelated. Changes in global demand for corn, wheat and dairy products could cause volatility in the feed costs for poultry and livestock.
Fluctuations in economic conditions, weather, supply chain disruptions, freight efficiency, demand and other factors also affect the availability, quality and cost of the ingredients and retail merchandise that we buy. Changes in global demand for corn, wheat and dairy products have caused and could continue to cause volatility in the feed costs for poultry and livestock.
We have assembled a senior management team which has substantial background and experience in the restaurant and retail industries. Our future growth and success depend substantially on the contributions and abilities of our senior management and other key personnel, and we design our compensation programs to attract and retain key personnel and facilitate our ability to develop effective succession plans.
Our future growth and success depend substantially on the contributions and abilities of our senior management and other key personnel, and we design our compensation programs to attract and retain key personnel and facilitate our ability to develop effective succession plans.
We cannot guarantee that these intellectual property rights will be maximized or that they can be successfully asserted. There is a risk that we will not be able to obtain and perfect our own, or, where appropriate, license intellectual property rights necessary to support new product introductions or other brand extensions.
There is a risk that we will not be able to obtain and perfect our own, or, where appropriate, license intellectual property rights necessary to support new product introductions or other brand extensions. We cannot be sure that these rights, if obtained, will not be invalidated, circumvented or challenged in the future.
There can be no assurance that the economic conditions that have adversely affected the restaurant and retail industries, and the capital, credit and real estate markets generally or us in particular will remain static in 2023, or thereafter, in which case we could experience declines in revenues and profits, and could face capital and liquidity constraints or other business challenges.
There can be no assurance that the economic conditions that have adversely affected the restaurant and retail industries, and the capital, credit and real estate markets generally or us in particular will remain static in 2024, or thereafter, in which case we could experience declines in revenues and profits, and could face capital and liquidity constraints or other business challenges. 25 Table of Contents Our business is somewhat seasonal and also can be affected by extreme weather conditions and natural disasters, social unrest or other catastrophic events.
Delays or failures in opening new stores, or achieving lower than expected sales in new stores, or drawing a greater than expected proportion of sales in new stores from existing stores, could materially adversely affect our business strategy and could have an adverse effect on our business and results of operations.
Delays or failures in opening new stores, or achieving lower than expected sales in new stores, or drawing a greater than expected proportion of sales in new stores from existing stores, could materially adversely affect our business strategy and could have an adverse effect on our business and results of operations. 24 Table of Contents Our expansion into new geographic markets may present increased risks due to our relative unfamiliarity with these markets.
Our risks are heightened because of our single retail distribution facility and our potential inability or failure to execute on a comprehensive business continuity plan following a major disaster at or near our corporate facility could adversely affect our business .
Any of these factors could have an adverse effect on our results of operations, cash flows from operations and our financial condition. 18 Table of Contents Our risks are heightened because of our single retail distribution facility and our potential inability or failure to execute on a comprehensive business continuity plan following a major disaster at or near our corporate facility could adversely affect our business .
We also compete with other restaurant chains and other retail businesses for quality site locations, management and hourly employees, and other competitive pressures that could affect both the availability and cost of these important resources.
We also compete with other restaurant chains and other retail businesses for quality site locations, management and hourly employees, and other competitive pressures that could affect both the availability and cost of these important resources. If we are unable to continue to compete effectively, our business, financial condition and results of operations would be adversely affected.
These risks may be exacerbated in the future as some climatologists predict that the long-term effects of climate change may result in more severe, volatile weather. 25 Table of Contents In addition, natural disasters such as hurricanes, tornadoes and earthquakes, or a combination of these or other factors, could severely damage or destroy one or more of our stores, warehouses or suppliers located in the affected areas, thereby disrupting our business operations for a more extended period of time.
In addition, natural disasters such as hurricanes, tornadoes and earthquakes, or a combination of these or other factors, could severely damage or destroy one or more of our stores, warehouses or suppliers located in the affected areas, thereby disrupting our business operations for a more extended period of time.
We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the Notes or pay the cash amounts due upon conversion. In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the Notes or pay the cash amounts due upon conversion.
We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the Notes or pay the cash amounts due upon conversion.
As a result of these factors, the COVID-19 pandemic, the resulting public health response and diminished economic activity have had and may continue to have a material adverse effect on our guest traffic, sales and operating costs, and we cannot predict the duration of the pandemic or what other government responses or economic effects may occur.
As a result of these factors, diminished economic activity has had and may continue to have a material adverse effect on our guest traffic, sales and operating costs, and we cannot predict the duration of the ongoing economic uncertainty.
The long lead times required for a substantial portion of our retail merchandise and the risk of product damages or non-compliance with required specifications could affect the amount of inventory we have available for sale. Additionally, our success depends on our ability to anticipate and respond in a timely manner to changing consumer demand and preferences for merchandise.
Our ability to manage our retail inventory levels and changes in merchandise mix may adversely affect our business. The long lead times required for a substantial portion of our retail merchandise and the risk of product damages or non-compliance with required specifications could affect the amount of inventory we have available for sale.
While we make efforts to ensure that our outsourced providers are observing proper standards and controls, we cannot guarantee that breaches, disruptions or failures caused by these providers will not occur. 19 Table of Contents A privacy breach could adversely affect our business. The protection of customer, employee and company data is critical to us.
In addition, some of these essential technology-based business systems are outsourced to third parties. While we make efforts to ensure that our outsourced providers are observing proper standards and controls, we cannot guarantee that breaches, disruptions or failures caused by these providers will not occur. A privacy breach could adversely affect our business.
Stores opened in new markets may open at lower average weekly sales volumes than stores opened in existing markets and may have higher store-level operating expense ratios than in existing markets.
Stores opened in new markets may open at lower average weekly sales volumes than stores opened in existing markets and may have higher store-level operating expense ratios than in existing markets. Sales at stores opened in new markets may take longer to reach average unit volume and margins, if at all, thereby affecting our overall profitability.
Our current insurance programs may expose us to unexpected costs, which could have a material adverse effect on our financial condition and results of operations. Our insurance coverage is structured to include deductibles, self-insured retentions, limits of liability, stop loss limits and similar provisions that we believe are prudent based on our operations.
Our insurance coverage is structured to include deductibles, self-insured retentions, limits of liability, stop loss limits and similar provisions that we believe are prudent based on our operations.
In addition, we have adopted a shareholder rights plan, which provides, among other things, that when specified events occur, our shareholders will be entitled to purchase from us shares of junior preferred stock. The shareholder rights plan will expire on April 9, 2024.
In addition, we are subject to certain provisions of Tennessee law that limit, in some cases, our ability to engage in certain business combinations with significant shareholders. In addition, we have adopted a shareholder rights plan, which provides, among other things, that when specified events occur, our shareholders will be entitled to purchase from us shares of junior preferred stock.
The COVID-19 pandemic has had and may in the future have a material adverse effect on our business, financial condition, results of operations, and our ability to make distributions to our shareholders for an extended period of time. In March 2020, the World Health Organization declared COVID-19 to be a pandemic.
Inflationary pressures and other fluctuations impacting the cost of these items could have a negative impact on our business in 2024. 13 Table of Contents The COVID-19 pandemic has had and may in the future have a material adverse effect on our business, financial condition, results of operations, and our ability to make distributions to our shareholders for an extended period of time.
Compliance with these requirements may result in cost increases due to necessary system changes and the development of new administrative processes. In addition, customers and employees have a high expectation that we will adequately protect their personal information. For example, in connection with credit and debit card sales, we transmit confidential card information.
In addition, customers and employees have a high expectation that we will adequately protect their personal information. For example, in connection with credit and debit card sales, we transmit confidential card information.
Typically, licenses must be renewed annually and may be revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable regulations, which could adversely affect our business and results of operations. 21 Table of Contents Our advertising is heavily dependent on billboards, which are highly regulated, and our evolving marketing strategy involves increased advertising and marketing costs that could adversely affect our results of operations.
Typically, licenses must be renewed annually and may be revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable regulations, which could have a material adverse effect on our business and results of operations.
Failure to maximize or to successfully assert our intellectual property rights could adversely affect our business and results of operations. We rely on trademark, unfair competition, trade secret and copyright laws to protect our intellectual property rights. We have registered certain trademarks and service marks with appropriate governmental authorities.
We rely on trademark, unfair competition, trade secret and copyright laws to protect our intellectual property rights. We have registered certain trademarks and service marks with appropriate governmental authorities. We cannot guarantee that these intellectual property rights will be maximized or that they can be successfully asserted.
These factors include consumer income, interest rates, inflation, consumer credit availability, consumer debt levels, tax rates and policy, unemployment trends and other matters that influence consumer confidence and spending.
Our business results depend on a number of industry-specific and general economic factors, many of which are beyond our control. These factors include consumer income, interest rates, inflation, consumer credit availability, consumer debt levels, tax rates and policy, unemployment trends and other matters that influence consumer confidence and spending.
The effect of, introduction of, or changes to tariffs or exchange rates on imported retail products or food products could increase our costs and possibly affect the supply of those products. Changes in demand for over-the-road transportation and distribution services could cause volatility, increase our costs and adversely affect our operating margins.
Operating margins for our restaurants are subject to changes in the price and availability of food commodities, including beef, pork, chicken, dairy and produce. The effect of, introduction of, or changes to tariffs or exchange rates on imported retail products or food products could increase our costs and possibly affect the supply of those products.
Many of our employees are hourly workers whose wages are affected by increases in the federal or state minimum wage or changes to tip credits. Tip credits are the amounts an employer is permitted to assume an employee receives in tips when the employer calculates the employee’s hourly wage for minimum wage compliance purposes.
Tip credits are the amounts an employer is permitted to assume an employee receives in tips when the employer calculates the employee’s hourly wage for minimum wage compliance purposes. Increases in minimum wage levels and changes to the tip credit have been made and continue to be proposed at both federal and state levels.
We cannot be sure that these rights, if obtained, will not be invalidated, circumvented or challenged in the future. Our failure to protect or successfully assert our intellectual property rights could make us less competitive and could have an adverse effect on our business and results of operations.
Additionally, we cannot guarantee that third parties will not claim our trademarks or menu offerings will infringe on their intellectual property rights, regardless of merit. Our failure to protect or successfully assert our intellectual property rights could make us less competitive and could have an adverse effect on our business and results of operations.
The strength of our revenues and results of operations are dependent upon, among other things, the price and availability of food, ingredients, retail merchandise, transportation, distribution, labor and utilities . In fiscal 2021 and fiscal 2022, the costs of commodities, labor, energy, fuel, transportation and other inputs necessary to operate our stores have significantly increased.
The strength of our revenues and results of operations are dependent upon, among other things, the price and availability of food, ingredients, retail merchandise, transportation, distribution, labor and utilities . In fiscal 2023, we faced significant inflationary pressures.
Our failure to repurchase Notes or to pay the cash amounts due upon conversion when required will constitute a default under the indenture governing the Notes.
In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the Notes or pay the cash amounts due upon conversion. 16 Table of Contents Our failure to repurchase Notes or to pay the cash amounts due upon conversion when required will constitute a default under the indenture governing the Notes.
One of the means of achieving our growth objectives is opening and operating new and profitable stores. This strategy involves numerous risks, and we may not be able to open all of our planned new stores and the new stores that we open may not be profitable or as profitable as our existing stores.
This strategy involves numerous risks, and we may not be able to open all of our planned new stores and the new stores that we open may not be profitable or as profitable as our existing stores. A significant risk in executing our business strategy is locating, securing and profitably operating an adequate supply of suitable new store sites.
Our inability to anticipate and respond effectively to one or more adverse changes in any of these factors could have a significant adverse effect on our results of operations. We expect the inflationary pressures and other fluctuations impacting the cost of these items to continue to impact our business in 2023.
Our failure to anticipate and respond effectively to one or more adverse changes in any of these factors could have a material adverse effect on our results of operations.
Also, the failure to obtain and maintain required licenses, permits and approvals could adversely affect our operating results.
Also, the failure to obtain and maintain required licenses, permits and approvals could have a material adverse effect on our results of operations.
Our charter documents contain provisions that may have the effect of making it more difficult for a third party to acquire or attempt to acquire control of the Company. In addition, we are subject to certain provisions of Tennessee law that limit, in some cases, our ability to engage in certain business combinations with significant shareholders.
Provisions in our charter, Tennessee law and our shareholder rights plan may discourage potential acquirers of the Company. Our charter documents contain provisions that may have the effect of making it more difficult for a third party to acquire or attempt to acquire control of the Company.
Adverse publicity and its effect on overall consumer perceptions of food safety or customer service could have a material adverse effect on our business, financial condition and results of operations.
Social media allows users to organize collective actions and engage in other brand-damaging behaviors that, if targeted at us, could impact our business. Adverse publicity and its effect on overall consumer perceptions of food safety or customer service could have a material adverse effect on our business, financial condition and results of operations.
If we misjudge the market, we may overstock unpopular products and be forced to take significant markdowns, which could reduce our gross margin. Conversely, if we underestimate demand for our merchandise we may experience inventory shortages resulting in lost revenues.
Additionally, our success depends on our ability to anticipate and respond in a timely manner to changing consumer demand and preferences for merchandise. If we misjudge the market, we may overstock unpopular products and be forced to take significant markdowns, which could reduce our gross margin.
If we are unable to continue to compete effectively, our business, financial condition and results of operations would be adversely affected. 15 Table of Contents Unfavorable publicity could harm our business. In addition, our failure to recognize, respond to and effectively manage the impact of social media could materially impact our business.
Unfavorable publicity could harm our business. In addition, our failure to recognize, respond to and effectively manage the impact of social media could materially impact our business.
We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in business and increased costs ; our use of third-party technologies has increased and if we are unable to maintain our rights to these technologies our business may be harmed. Some of our business processes are currently outsourced to third parties.
As privacy and information security laws, regulations and practices change and cyber risks continue to evolve, we may incur additional costs to ensure we remain in compliance and protect guest, employee and Company information. 19 Table of Contents We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in business and increased costs ; our use of third-party technologies has increased and if we are unable to maintain our rights to these technologies our business may be harmed.
If new rules or interpretations of existing rules require us to change our financial reporting, our reported results of operations and financial condition could be affected substantially, including requirements to restate historical financial reporting. 26 Table of Contents Failure of our internal control over financial reporting could adversely affect our business and financial results.
Our financial reporting complies with the United States generally accepted accounting principles (“GAAP”), and GAAP is subject to change over time. If new rules or interpretations of existing rules require us to change our financial reporting, our reported results of operations and financial condition could be affected substantially, including requirements to restate historical financial reporting.
If we did so or if our current advertising and promotion programs become less effective, we could experience a material adverse effect on our results of operations. Litigation may adversely affect our business, financial condition and results of operations.
Additionally, if our competitors increased their spending on advertising and promotions, we could be forced to substantially increase our advertising, media or marketing expenses. If we did so or if our current advertising and promotion programs become less effective, we could experience a material adverse effect on our results of operations.
These initiatives involve various inherent risks, including, without limitation, general business risk, integration and synergy risk, market acceptance risk and risks associated with the potential distraction of management. Such transactions and initiatives may not ultimately create value for us or our stockholders and may harm our reputation and materially adversely affect our business, financial condition and results of operations.
These initiatives involve various inherent risks, including, without limitation, general business risk, integration and synergy risk, market acceptance risk and risks associated with the potential distraction of management.
As a merchant and service provider of point-of-sale services, we are also subject to the Payment Card Industry Data Security Standard issued by the Payment Card Industry Council. The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements, including the recently enacted California Consumer Privacy Act (“CCPA”).
As a merchant and service provider of point-of-sale services, we are also subject to the Payment Card Industry Data Security Standard issued by the Payment Card Industry Council.
Thus, signage or billboard restrictions or loss of existing signage or billboards could adversely affect our visibility and ability to attract customers. Additionally, as we continue to evolve our marketing strategy, we are increasingly utilizing more traditional and higher cost methods of advertising, such as national cable television, radio and online and digital media.
Additionally, as we continue to evolve our marketing strategy, we are increasingly utilizing more traditional and higher cost methods of advertising, such as national cable television, radio and online and digital media. These types of advertising, their effects upon our revenues and, in turn, our profits, are uncertain.
If a change in control or change in management is delayed or prevented by these provisions, the market price of our securities could decline. Risks Related to Our Business Strategy If we fail to execute our business strategy, which includes our ability to find new store locations and open new stores that are profitable, our business could suffer.
If we fail to execute our business strategy, which includes our ability to find new store locations and open new stores that are profitable, our business could suffer. One of the means of achieving our growth objectives is opening and operating new and profitable stores.
Strategic investments or initiatives that the Company may pursue now or in the future, may not yield their expected benefits, resulting in a loss of some or all of the Company’s investment.
Such transition in our executive management team may divert the attention of management or otherwise be disruptive to our business. 23 Table of Contents We may pursue strategic investments or initiatives now or in the future, which may not yield their expected benefits, resulting in a loss of some or all of our investment.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition to the properties mentioned above, we own or lease the following store properties (including both our 664 Cracker Barrel Old Country Store locations and 53 locations for our MSBC locations) as of September 14, 2022: State Owned Leased State Owned Leased Tennessee 29 30 California 0 7 Florida 31 51 New Jersey 0 6 Texas 19 40 Kansas 3 2 Georgia 26 26 Wisconsin 5 0 North Carolina 17 27 Colorado 3 1 Kentucky 22 16 Massachusetts 0 4 Virginia 15 19 New Mexico 1 3 Alabama 19 14 Oregon 0 4 Ohio 22 9 Utah 4 0 South Carolina 13 16 Idaho 2 1 Indiana 20 8 Iowa 3 0 Pennsylvania 8 17 Connecticut 1 1 Illinois 19 2 Montana 2 0 Missouri 14 4 Nebraska 1 1 Michigan 12 3 Nevada 0 2 Arizona 2 12 Delaware 0 1 Mississippi 10 4 Maine 0 1 Arkansas 5 7 Minnesota 1 0 Louisiana 8 2 New Hampshire 1 0 Maryland 3 6 North Dakota 1 0 New York 8 1 Rhode Island 0 1 West Virginia 3 6 South Dakota 1 0 Oklahoma 6 2 360 357 27 Table of Contents We believe that our properties are suitable, adequate, well-maintained and sufficient for the operations contemplated.
Biggest changeIn addition to the various corporate facilities, we have three owned properties for future development, a motel used for housing management trainees and for the general public, and four parcels of excess real property and improvements that we intend to sell. 27 Table of Contents In addition to the properties mentioned above, we own or lease the following store properties (including both our 661 Cracker Barrel Old Country Store locations and 59 locations for our MSBC locations) as of September 13, 2023: State Owned Leased State Owned Leased Tennessee 29 30 California 0 7 Florida 31 50 New Jersey 0 6 Texas 19 44 Kansas 3 2 Georgia 26 27 Wisconsin 5 0 North Carolina 17 27 Colorado 3 1 Kentucky 22 17 Massachusetts 0 4 Alabama 19 15 New Mexico 1 3 Ohio 22 12 Utah 4 0 Virginia 15 19 Idaho 2 1 Indiana 20 8 Iowa 3 0 South Carolina 13 15 Connecticut 1 1 Pennsylvania 8 17 Montana 2 0 Illinois 19 2 Nebraska 1 1 Missouri 13 4 Nevada 0 2 Michigan 12 3 Delaware 0 1 Arizona 2 12 Maine 0 1 Mississippi 9 4 Minnesota 1 0 Arkansas 5 7 New Hampshire 1 0 Louisiana 8 2 North Dakota 1 0 Maryland 3 6 Oregon 0 1 New York 8 1 Rhode Island 0 1 West Virginia 3 6 South Dakota 1 0 Oklahoma 6 2 358 362 We believe that our properties are suitable, adequate, well-maintained and sufficient for the operations contemplated.
We lease our retail distribution center, which consists of approximately 370,000 square feet of warehouse facilities and an additional approximately 10,000 square feet of office and maintenance space. We also lease an additional distribution center of approximately 52,000 square feet in Lebanon, Tennessee. This distribution center is primarily used for ecommerce fulfillment and overflow retail storage.
We lease our retail distribution center, which consists of approximately 370,000 square feet of warehouse facilities and an additional approximately 10,000 square feet of office and maintenance space. We also lease an additional distribution center of approximately 52,000 square feet in Lebanon, Tennessee. This additional distribution center is primarily used for ecommerce fulfillment and overflow retail storage.
ITEM 2. PROPERTIES Our home office headquarters and warehouse facilities are located on approximately 90 acres of land owned by the Company in Lebanon, Tennessee. We use approximately 250,000 square feet of office space for our home office headquarters and decorative fixtures warehouse.
ITEM 2. PROPERTIES Our home office headquarters and warehouse facilities are located on approximately 90 acres of land owned by the Company in Lebanon, Tennessee. We use approximately 260,000 square feet of office space for our home office headquarters and decorative fixtures warehouse.
From time to time we may also rent offsite storage to handle overflow product. We currently have 80,000 square feet of storage temporarily rented in Savannah, Georgia for overflow storage. We also lease office space for our MSBC headquarters which consists of approximately 15,000 square feet.
We also lease 105,000 square feet located in Mount Juliet, Tennessee that is used for overflow storage for retail merchandise and supplies. We lease office space for our MSBC headquarters which consists of approximately 15,000 square feet.
Removed
In addition to the various corporate facilities, we have three owned properties for future development, a motel used for housing management trainees and for the general public, and two parcels of excess real property and improvements that we intend to sell.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changePursuant to Instruction to Item 401 of Regulation S‑K and General Instruction G(3) to Form 10‑K, the following information is included in Part I of this Form 10‑K. Information about Our Executive Officers The following table sets forth certain information concerning our executive officers: Name Age Position with the Company Sandra B.
Biggest changePursuant to Instruction to Item 401 of Regulation S‑K and General Instruction G(3) to Form 10‑K, the following information is included in Part I of this Form 10‑K.
Removed
Cochran 64 President and Chief Executive Officer Craig A. Pommells 47 Senior Vice President and Chief Financial Officer P. Doug Couvillion 58 Senior Vice President, Sourcing and Supply Chain Laura A. Daily 58 Senior Vice President, Retail Cammie Spillyards-Schaefer 45 Senior Vice President, Operations Richard M. Wolfson 56 Senior Vice President, General Counsel and Secretary Jennifer L.
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Tate 51 Senior Vice President, Chief Marketing Officer Bruce A. Hoffmeister 61 Senior Vice President, Chief Information Officer Donna L. Roberts 47 Senior Vice President and Chief Human Resources Officer Kara S.
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Jacobs 42 Vice President, Corporate Controller and Principal Accounting Officer The following information summarizes the business experience of each of our executive officers for at least the past five years: Ms.
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Cochran has been employed with us since 2009 and assumed her current position as President and Chief Executive Officer in September 2011, when she also became a member of our Board of Directors. Prior to September 2011, Ms.
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Cochran served as our President and Chief Operating Officer since November 2010 and as our Executive Vice President and Chief Financial Officer from April 2009 to November 2010. Before joining us in April 2009, she was the Chief Executive Officer of Books-A-Million, Inc. Ms.
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Cochran has 28 years of experience in the retail industry and thirteen years of experience in the restaurant industry. Mr. Pommells has been employed with us since December 2021 in his current capacity. From October 2020 to December 2021, he served as Executive Vice President and Chief Financial Officer of Red Lobster Seafood Company.
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Prior to serving as Chief Financial Officer of Red Lobster Seafood Company, he served as Senior Vice President, Finance and Strategy from January 2015 to October 2020. Prior to Red Lobster, he spent more than ten years with Darden Restaurants in various finance and business analytics roles. Mr.
Removed
Pommells has more than 20 years of experience in the restaurant industry. 28 Table of Contents Mr. Couvillion has been employed with us since 2001.
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From 2001 to 2022, he served in various capacities including Senior Vice President of Sourcing and Supply Chain, Senior Vice President and Interim Chief Financial Officer, Vice President of Supply Chain and Quality Assurance and Corporate Controller and Principal Accounting Officer. Mr.
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Couvillion has 27 years of experience in the restaurant industry and 20 years of experience in the retail industry. Ms. Daily has been employed with us as Senior Vice President, Retail since May 2012.
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Prior to May 2012, she served as Vice President for Ballard Designs, an internet and catalog home furnishings retailer that is part of HSN, Inc., where she was in charge of all merchandising and trends for the company. She has over 28 years of experience as a merchant with a number of retail organizations. Ms.
Removed
Spillyards-Schaefer has been employed with us since 2017 and assumed her current position in January 2022. From 2017 to 2021, she served in various capacities in both operations and home office functions including Regional Vice President of Restaurant Operations and Vice President of Culinary. Ms. Spillyards-Schaefer has over 20 years of experience in the restaurant industry. Mr.
Removed
Wolfson has been employed with us in his current capacity since July 2017. From January 2006 to April 2017, he served as Vice President, General Counsel and Corporate Secretary at CLARCOR Inc., an industrial company. From 2001 to 2006, he was a partner of the InterAmerican Group, an advisory services and private equity firm. Mr.
Removed
Wolfson has over 29 years of legal experience. Ms. Tate joined us in September 2020 as Senior Vice President, Chief Marketing Officer. Prior to joining us, she held various positions with Darden Restaurants, Inc., since March 2010, including serving as Executive Vice President and Chief Marketer for Olive Garden.
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Prior to joining Darden Restaurants, Inc., she served as the Senior Brand Manager of Pizza Hut for Yum! Brands from October 2007 to March 2010 and as the Brand Manager for Frito-Lay from August 2002 to October 2007. Ms. Tate has 20 years of experience in the restaurant industry. Mr.
Removed
Hoffmeister joined us in January 2021 as Senior Vice President and Chief Information Officer.
Removed
Prior to joining us, he worked at Marriott International for over 30 years where he served in a number of finance and technology executive positions, including Senior Vice President of Lodging Finance, Senior Vice President of Global Revenue Management and his most recent role as Global Chief Information Officer. Ms.
Removed
Roberts has been employed with us since 2012 and assumed her current position in May 2020. Prior to her current role, she held other positions in the human resources and legal departments including Vice President of Human Resources and Vice President and Deputy General Counsel.
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Before joining us, she practiced law for ten years, most recently as a partner focused on commercial litigation and employment law. Ms. Jacobs joined us in December 2019 as Vice President, Corporate Controller and Principal Accounting Officer.
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From July 2017 to November 2019, she was the Vice President and Corporate Controller of Bridgestone Americas, Inc., and from 2003 until 2017, she held various positions with increasing responsibility at Deloitte & Touche, LLP, including as a Managing Director from September 2016 until July 2017. As previously disclosed, Ms.
Removed
Jacobs has informed the Company that she will resign effective October 1, 2022 to pursue another professional opportunity. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUnregistered Sales of Equity Securities There were no equity securities sold by the Company during the period covered by this Annual Report on Form 10-K that were not registered under the Securities Act of 1933, as amended.
Biggest changeUnregistered Sales of Equity Securities There were no equity securities sold by the Company during the period covered by this Annual Report on Form 10-K that were not registered under the Securities Act of 1933, as amended. Issuer Purchases of Equity Securities We did not repurchase any shares of our common stock in the fourth quarter ended July 28, 2023.
See the table labeled “Equity Compensation Plan Information” to be contained in the 2022 Proxy Statement, incorporated by reference in Part III, Item 12 of this Annual Report on Form 10-K. 29 Table of Contents Part III, Item 12 of this Annual Report on Form 10-K is incorporated herein by this reference.
See the table labeled “Equity Compensation Plan Information” to be contained in the 2023 Proxy Statement, incorporated by reference in Part III, Item 12 of this Annual Report on Form 10-K. Part III, Item 12 of this Annual Report on Form 10-K is incorporated herein by this reference.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “CBRL.” There were 6,891 shareholders of record as of September 14, 2022. See Note 5 to Consolidated Financial Statements with respect to dividend restrictions.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “CBRL.” There were 6,615 shareholders of record as of September 13, 2023. See Note 4 to Consolidated Financial Statements with respect to dividend restrictions.
On June 2, 2022, our Board of Directors approved the repurchase of up to $200,000 of our common stock with such authorization to expire on June 2, 2023 to the extent any portion remains unused. This authorization was effective immediately and replaced the previous $100,000 share repurchase authorization.
On June 2, 2022, our Board of Directors approved the repurchase of up to $200,000 of our common stock with such authorization to expire on June 2, 2023. On June 2, 2023, our Board of Directors extended this repurchase authorization for an additional year.
Removed
Issuer Purchases of Equity Securities The following table sets forth information with respect to purchases of shares of the Company’s common stock made during the quarter ended July 29, 2022 by or on behalf of the Company or any “affiliated purchaser,” as defined by Rule 10b-18(a)(3) of the Exchange Act.
Removed
All purchases were made in accordance with Rule 10b-18 of the Exchange Act.
Removed
Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs 4/30/22 – 5/27/22 123,723 $ 108.57 123,723 — 5/28/22 – 6/24/22 103,006 $ 87.39 103,006 — 6/25/21 – 7/29/22 405,579 $ 88.00 405,579 — Total for the quarter 632,308 $ 91.92 632,308 — (1) On September 15, 2021, our Board of Directors approved the repurchase of up to $100,000 of our common stock, with such authorization to expire on October 7, 2022, to the extent it remains unused.
Removed
Repurchases are subject to prevailing market prices, may be made in open market or private transactions and may occur or be discontinued at any time. There can be no assurance that we will repurchase any shares. (2) Average price paid per share is calculated on a settlement basis. ITEM 6. RESERVED

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRESULTS OF OPERATIONS The following table highlights operating results over the past three years: Relationship to Total Revenue 2022 2021 2020 Total revenue 100.0 % 100.0 % 100.0 % Cost of goods sold (exclusive of depreciation and rent) 32.1 30.7 30.9 Labor and other related expenses 35.2 34.8 36.7 Other store operating expenses 23.2 24.0 24.4 General and administrative 4.8 5.2 5.8 Gain on sale and leaseback transactions — (7.7 ) (2.8 ) Impairment — — 0.9 Operating income 4.7 13.0 4.1 Interest expense 0.3 2.0 0.9 Income before income taxes 4.4 11.0 3.2 Provision for income taxes (income tax benefit) 0.4 2.0 (1.1 ) Net loss from unconsolidated subsidiary — — (5.6 ) Net income (loss) 4.0 9.0 (1.3 ) 33 Table of Contents Total Revenue The following table highlights the key components of revenue for the past three years: 2022 2021 2020 Revenue in dollars (1) : Restaurant $ 2,565,628 $ 2,227,246 $ 2,032,030 Retail 702,158 594,198 490,762 Total revenue $ 3,267,786 $ 2,821,444 $ 2,522,792 Total revenue percentage increase (decrease) 15.8 % 11.8 % (17.9 %) Total revenue by percentage relationships: Restaurant 78.5 % 78.9 % 80.5 % Retail 21.5 % 21.1 % 19.5 % Comparable number of stores 659 655 646 Comparable store sales averages per store: (1) Restaurant $ 3,804 $ 3,312 $ 3,065 Retail 1,052 890 737 Total $ 4,856 $ 4,202 $ 3,802 Restaurant average weekly sales (2) $ 72.9 $ 63.4 $ 58.4 Retail average weekly sales (2) 20.3 17.2 14.3 Average check increase 7.0 % 3.1 % 2.7 % Comparable restaurant guest traffic increase/(decrease) (3) 8.0 % 5.3 % (21.6 %) (1) Comparable store averages exclude MSBC and Holler & Dash.
Biggest changeIn 2023 and 2022, we experienced inflationary conditions with respect to the cost for food, ingredients, retail merchandise, transportation, distribution, labor and utilities resulting, in part, from economic pressures related to the COVID-19 pandemic. 33 Table of Contents RESULTS OF OPERATIONS The following table highlights operating results over the past three years: Relationship to Total Revenue 2023 2022 2021 Total revenue 100.0 % 100.0 % 100.0 % Cost of goods sold (exclusive of depreciation and rent) 32.8 32.1 30.7 Labor and other related expenses 35.1 35.2 34.8 Other store operating expenses 23.2 23.2 24.0 General and administrative 5.0 4.8 5.2 Gain on sale and leaseback transactions — — (7.7 ) Impairment and store closing costs 0.4 — — Operating income 3.5 4.7 13.0 Interest expense 0.5 0.3 2.0 Income before income taxes 3.0 4.4 11.0 Provision for income taxes 0.1 0.4 2.0 Net income 2.9 4.0 9.0 Total Revenue The following table highlights the key components of revenue for the past three years: 2023 2022 2021 Revenue in dollars (1) : Restaurant $ 2,740,866 $ 2,565,628 $ 2,227,246 Retail 701,942 702,158 594,198 Total revenue $ 3,442,808 $ 3,267,786 $ 2,821,444 Total revenue percentage increase 5.4 % 15.8 % 11.8 % Total revenue by percentage relationships: Restaurant 79.6 % 78.5 % 78.9 % Retail 20.4 % 21.5 % 21.1 % Comparable number of stores 659 659 655 Comparable store sales averages per store: (1) Restaurant $ 4,047 $ 3,804 $ 3,312 Retail 1,049 1,052 890 Total $ 5,096 $ 4,856 $ 4,202 Restaurant average weekly sales (2) $ 77.7 $ 72.9 $ 63.4 Retail average weekly sales (2) 20.3 20.3 17.2 Average check increase 9.8 % 7.0 % 3.1 % Comparable restaurant guest traffic increase/(decrease) (3) (3.5 %) 8.0 % 5.3 % (1) Comparable store averages exclude MSBC.
The increase in our comparable store retail sales in 2022 as compared to 2021 resulted primarily from the guest traffic increase and strong performance in the apparel and accessories, food and convenience, toys, décor, and bed and bath merchandise categories.
The increase in our comparable store retail sales in 2022 as compared to 2021 resulted primarily from the increase in guest traffic and strong performance in the apparel and accessories, food and convenience, toys, décor, and bed and bath merchandise categories.
In 2022, we paid regular dividends of $4.90 per share and declared a dividend of $1.30 per share that was subsequently paid on August 5, 2022 to shareholders of record on July 15, 2022 of $1.30 per share.
In 2022, we paid regular dividends of $4.90 per share and declared a dividend of $1.30 per share that was subsequently paid on August 5, 2022 to shareholders of record on July 15, 2022.
Furthermore, we believe that cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility will be sufficient to finance our continuing operations, capital expenditures, interest expense on long-term debt obligations, operating lease obligations, continuing expansion plans, share repurchases and working capital needs beyond the next twelve months.
Furthermore, we believe that cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility will be sufficient to finance our continuing operations, capital expenditures, interest expense on long-term debt obligations, operating lease obligations, continuing expansion plans and working capital needs beyond the next twelve months.
At this time, we are unable to make a reasonably reliable estimate of the amounts and timing of payments in individual years because of uncertainties in the timing of the effective settlement of tax positions. As such, the liability for uncertain tax positions of $17,991 is not included in the contractual cash obligations and commitments table above.
At this time, we are unable to make a reasonably reliable estimate of the amounts and timing of payments in individual years because of uncertainties in the timing of the effective settlement of tax positions. As such, the liability for uncertain tax positions of $17,572 is not included in the contractual cash obligations and commitments table above.
However, because future events and their effects cannot be determined with certainty, actual results could differ from those assumptions and estimates, and such differences could be material. Our significant accounting policies are discussed in Note 2 to the Consolidated Financial Statements.
However, because future events and their effects cannot be determined with certainty, actual results could differ from those assumptions and estimates, and such differences could be material. Our significant accounting policies are discussed in Note 1 to the Consolidated Financial Statements.
The portion of the net proceeds to the Company from the offering of the Notes that was used to pay the premium on the Convertible Note Hedge Transactions, net of the proceeds to the Company from the Warrant Transactions, was approximately $30,300. See Note 5 to our Consolidated Financial Statements for further information on our long-term debt.
The portion of the net proceeds to the Company from the offering of the Notes that was used to pay the premium on the Convertible Note Hedge Transactions, net of the proceeds to the Company from the Warrant Transactions, was approximately $30,300. See Note 4 to our Consolidated Financial Statements for further information on our long-term debt.
To calculate comparable store restaurant sales increase/(decrease), which we express as a percentage, we divide the absolute dollar change by the comparable store restaurant sales for the historical period. • Comparable store average restaurant sales : To calculate comparable store average restaurant sales, we determine total restaurant sales of stores open at least six full quarters before the beginning of the applicable period, measured on comparable calendar weeks, and divide by the number of comparable stores for the applicable period. 31 Table of Contents • Comparable store retail sales increase/(decrease) : To calculate comparable store retail sales increase/(decrease), we determine total retail sales of stores open at least six full quarters before the beginning of the applicable period, measured on comparable calendar weeks.
To calculate comparable store restaurant sales increase/(decrease), which we express as a percentage, we divide the absolute dollar change by the comparable store restaurant sales for the historical period. • Comparable store average restaurant sales : To calculate comparable store average restaurant sales, we determine total restaurant sales of stores open at least six full quarters before the beginning of the applicable period, measured on comparable calendar weeks, and divide by the number of comparable stores for the applicable period. • Comparable store retail sales increase/(decrease) : To calculate comparable store retail sales increase/(decrease), we determine total retail sales of stores open at least six full quarters before the beginning of the applicable period, measured on comparable calendar weeks.
The decrease in store management expenses as a percentage of total revenue in 2022 as compared to 2021 was primarily driven by lower bonus expense in 2022 and the increase in total revenue in 2022 partially offset by wage inflation.
The decrease in store management compensation as a percentage of total revenue in 2022 as compared to 2021 was primarily driven by lower bonus expense in 2022 and the increase in total revenue in 2022 partially offset by wage inflation.
(2) Average weekly sales are calculated by dividing net sales by operating weeks and include all stores except for MSBC and Holler & Dash. (3) Comparable store sales and traffic consist of sales of stores open at least six full quarters at the beginning of the period and are measured on comparable calendar weeks.
(2) Average weekly sales are calculated by dividing net sales by operating weeks and include all stores except for MSBC. (3) Comparable store sales and traffic consist of sales of stores open at least six full quarters at the beginning of the period and are measured on comparable calendar weeks. Comparable store sales and traffic exclude MSBC.
Cash Generated from Operations The decrease in net cash flow provided by operating activities in 2022 as compared to 2021 primarily reflected higher retail inventory, the timing of payments for certain taxes and higher bonus payments made in 2022 as a result of the prior year’s performance.
The decrease in net cash flow provided by operating activities in 2022 as compared to 2021 primarily reflected higher retail inventory, the timing of payments for certain taxes and higher bonus payments made in 2022 as a result of the prior year’s performance.
Our internally generated cash, along with cash on hand at July 30, 2021 and borrowings under our revolving credit facility, were sufficient to finance all of our growth, share repurchases, dividend payments, working capital needs, interest payments on long-term debt obligations and other cash payment obligations in 2022.
Our internally generated cash, along with cash on hand at July 29, 2022 and borrowings under our revolving credit facility, were sufficient to finance all of our growth, share repurchases, dividend payments, working capital needs, interest payments on long-term debt obligations and other cash payment obligations in 2023.
Adverse economic conditions and unemployment rates affect consumer discretionary income and dining and shopping habits. Historically, interstate tourist traffic and the propensity to dine out have been much higher during the summer months, thereby contributing to higher profits in our fourth quarter.
Adverse economic conditions, such as elevated inflation, and higher unemployment rates affect consumer discretionary income and dining and shopping habits. Historically, interstate tourist traffic and the propensity to dine out have been much higher during the summer months, thereby contributing to higher profits in our fourth quarter.
Our standby letters of credit reduce our borrowing availability under the 2022 Revolving Credit Facility. During 2022, in addition to the refinancing of the revolving credit facility, we borrowed $100,000 and repaid $55,000 of borrowings under the 2019 Revolving Credit Facility.
Our standby letters of credit reduce our borrowing availability under the 2022 Revolving Credit Facility. During 2023, we borrowed $180,000 and repaid $190,000 under the 2022 Revolving Credit Facility. During 2022, in addition to the refinancing of the revolving credit facility, we borrowed $100,000 and repaid $55,000 of borrowings under the 2019 Revolving Credit Facility.
We believe that cash at July 29, 2022, along with cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility, will be sufficient to finance our continuing operations, our continuing expansion plans, debt service, dividend payments, share repurchases and working capital needs for the next twelve months.
We believe that cash at July 28, 2023, along with cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility, will be sufficient to finance our continuing operations, our continuing expansion plans, debt service, dividend payments and working capital needs for the next twelve months.
While all our dining rooms are currently operating without COVID-19-related restrictions, it is possible that renewed outbreaks or increases in cases and/or further new variants of the disease, either as part of a national trend or on a more localized basis, could result in COVID-19-related restrictions including capacity restrictions or otherwise limit our dine-in services, or negatively affect consumer demand.
While our dining rooms operated without COVID-related restrictions in 2023, it is possible that renewed outbreaks, increases in cases and/or new variants of the disease, either as part of a national trend or on a more localized basis, could result in COVID-19-related restrictions including capacity restrictions or otherwise limit our dine-in services, or negatively affect consumer demand.
Company Performance in 2022 Management believes that the Cracker Barrel brand remains one of the strongest and most differentiated brands in the restaurant industry, and we plan to continue to leverage and build on that strength as a core component of our business strategy.
Strategic Priorities Management believes that the Cracker Barrel brand remains one of the strongest and most differentiated brands in the restaurant industry, and we plan to continue to leverage and build on that strength as a core component of our business strategy.
This overview summarizes the MD&A, which includes the following sections: • Executive Overview – a general description of our business, the restaurant and retail industries, our key performance indicators and the Company’s performance in 2022. • Results of Operations – an analysis of our consolidated statements of income (loss) for the three years presented in our Consolidated Financial Statements. 30 Table of Contents • Liquidity and Capital Resources – an analysis of our primary sources of liquidity, capital expenditures and material commitments. • Critical Accounting Estimates – a discussion of accounting policies that require critical judgments and estimates.
This overview summarizes the MD&A, which includes the following sections: • Executive Overview – a general description of our business, the restaurant and retail industries, our strategic priorities and our key performance indicators. • Results of Operations – an analysis of our consolidated statements of income for the three years presented in our Consolidated Financial Statements. • Liquidity and Capital Resources – an analysis of our primary sources of liquidity, capital expenditures and material commitments. • Critical Accounting Estimates – a discussion of accounting policies that require critical judgments and estimates.
Capital Expenditures and Proceeds from Sale of Property and Equipment The following table presents our capital expenditures (purchase of property and equipment), net of proceeds from insurance recoveries, for the last three years: 2022 2021 2020 Capital expenditures, net of proceeds from insurance recoveries $ 97,104 $ 70,130 $ 296,008 Our capital expenditures consisted primarily of capital investments for existing stores, new store locations and strategic initiatives.
Capital Expenditures and Proceeds from Sale of Property and Equipment The following table presents our capital expenditures (purchase of property and equipment), net of proceeds from insurance recoveries, for the last three years: 2023 2022 2021 Capital expenditures, net of proceeds from insurance recoveries $ 125,387 $ 97,104 $ 70,130 Our capital expenditures consisted primarily of capital investments for existing stores, new store locations and strategic initiatives.
The restaurants serve breakfast, lunch and dinner. The gift shop offers a variety of decorative and functional items specializing in rocking chairs, holiday gifts, toys, apparel and foods. As of September 14, 2022, the Company operated 664 Cracker Barrel stores located in 45 states.
The restaurants serve breakfast, lunch and dinner. The gift shop offers a variety of decorative and functional items specializing in rocking chairs, holiday gifts, toys, apparel and foods. As of September 13, 2023, the Company operated 661 Cracker Barrel stores located in 45 states.
The decrease in incentive compensation as a percentage of total revenue in 2022 as compared to 2021 was primarily the result of lower performance against financial objectives in 2022 as compared to 2021.
The year-to-year percentage change in 2022 as compared to 2021 resulted from lower incentive compensation. The decrease in incentive compensation as a percentage of total revenue in 2022 as compared to 2021 was primarily the result of lower performance against financial objectives in 2022 as compared to 2021.
Other Store Operating Expenses Other store operating expenses include all store-level operating costs, the major components of which are operating supplies, repairs and maintenance, utilities, depreciation and amortization, advertising, rent, credit card and gift card fees, real and personal property taxes and general insurance.
Other Store Operating Expenses Other store operating expenses include all store-level operating costs, the major components of which are occupancy costs, operating supplies, advertising, third-party delivery fees, credit card and gift card fees, real and personal property taxes and general insurance. Occupancy costs include maintenance, utilities, depreciation and rent.
In 2021, in order to preserve available cash during the COVID-19 pandemic and in light of the uncertainties as to its duration and economic impact, we deferred the payment of the dividend of $1.30 per share declared in the third quarter of 2020 until September 2, 2020 to shareholders of record on August 14, 2020 and temporarily suspended future dividend payments.
In 2021, in order to preserve available cash during the COVID-19 pandemic and in light of the uncertainties as to its duration and economic impact, we deferred the payment of the dividend of $1.30 per share declared in the third quarter of 2020 until the first quarter of 2021 and temporarily suspended future dividend payments.
The following table highlights the dividends per share we paid for the last three years: 2022 2021 2020 Dividends per share paid $ 4.90 $ 1.30 $ 3.90 43 Table of Contents Our criteria for share repurchases are that they be accretive to expected net income per share and are within the limits imposed by our debt commitments.
The following table highlights the dividends per share we paid for the last three years: 2023 2022 2021 Dividends per share paid $ 5.20 $ 4.90 $ 1.30 Our criteria for share repurchases are that they be accretive to expected net income per share and are within the limits imposed by our debt commitments.
The following table highlights our share repurchases for the last three years: 2022 2021 2020 Shares of common stock repurchased 1,248,184 232,543 378,974 Cost of shares repurchased $ 131,542 $ 35,000 $ 55,007 Working Capital In the restaurant industry, substantially all sales are either for cash or third-party credit card.
The following table highlights our share repurchases for the last three years: 2023 2022 2021 Shares of common stock repurchased 171,792 1,248,184 232,543 Cost of shares repurchased $ 17,449 $ 131,542 $ 35,000 Working Capital In the restaurant industry, substantially all sales are either for cash or third-party credit card.
In the fourth quarter of 2022, we were authorized by our Board of Directors to repurchase shares of the Company’s outstanding common stock at management’s discretion up to a total value of $200,000; this authorization replaced the previous unused portion of the previous $100,000 authorization.
In the fourth quarter of 2022, we were authorized by our Board of Directors to repurchase shares of the Company’s outstanding common stock at management’s discretion up to a total value of $200,000 with such authorization to expire on June 2, 2023; this authorization replaced the previous unused portion of the previous $100,000 authorization and expired on June 2, 2023.
Under the 2022 Revolving Credit Facility, provided there is no default existing and the total of our availability under the 2022 Revolving Credit Facility plus our cash and cash equivalents on hand is at least $100,000 (the “Cash Availability”), we may declare and pay cash dividends on shares of our common stock and repurchase shares of our common stock (1) in an unlimited amount if at the time the dividend or the repurchase is made our consolidated total senior secured leverage ratio is 2.75 to 1.00 or less and (2) in an aggregate amount not to exceed $100,000 in any fiscal year if our consolidated total leverage ratio is greater than 2.75 to 1.00 at the time the dividend or repurchase is made; notwithstanding (1) and (2), so long as immediately after giving effect to the payment of any such dividends, Cash Availability is at least $100,000, we may declare and pay cash dividends on shares of our common stock in an aggregate amount not to exceed in any fiscal year the product of the aggregate amount of dividends declared in the fourth quarter of the immediately preceding fiscal year multiplied by four.
Under the 2022 Revolving Credit Facility, provided there is no default existing and the total of our availability under the 2022 Revolving Credit Facility plus our cash and cash equivalents on hand is at least $100,000 (the “Cash Availability”), we may declare and pay cash dividends on shares of our common stock and repurchase shares of our common stock (1) in an unlimited amount if at the time the dividend or the repurchase is made our consolidated total senior secured leverage ratio is 2.75 to 1.00 or less and (2) in an aggregate amount not to exceed $100,000 in any fiscal year if our consolidated total leverage ratio is greater than 2.75 to 1.00 at the time the dividend or repurchase is made; notwithstanding (1) and (2), so long as immediately after giving effect to the payment of any such dividends, Cash Availability is at least $100,000, we may declare and pay cash dividends on shares of our common stock in an aggregate amount not to exceed in any fiscal year the product of the aggregate amount of dividends declared in the fourth quarter of the immediately preceding fiscal year multiplied by four. 41 Table of Contents In 2023, we paid regular dividends of $5.20 per share and declared a dividend of $1.30 per share that was subsequently paid on August 8, 2023 to shareholders of record on July 21, 2023.
Based on our outstanding borrowings and our standby letters of credit at July 29, 2022 and our current unused commitment fee as defined in the 2022 Revolving Credit Facility, our unused commitment fees in 2023, 2024-2025 and 2026-2027 would be $1,376, $2,753 and $2,613, respectively; however, the actual amount will differ based on actual usage of the 2022 Revolving Credit Facility.
Based on our outstanding borrowings and our standby letters of credit at July 28, 2023 and our current unused commitment fee as defined in the 2022 Revolving Credit Facility, our unused commitment fees in 2024, 2025-2026 and 2027 would be $1,694, $3,325 and $1,462, respectively; however, the actual amount will differ based on actual usage of the 2022 Revolving Credit Facility.
Total revenue benefited from the opening of seven new MSBC units in 2022, two new units for both Cracker Barrel and MSBC in 2021, and four new Cracker Barrel units and one new MSBC unit in 2020, partially offset by the closing of one Cracker Barrel unit in 2021 and one unit each for Cracker Barrel and Holler & Dash in 2020.
Total revenue benefited from the opening of two new Cracker Barrel and 12 new MSBC units in 2023, the opening of seven new MSBC units in 2022 and two new units for both Cracker Barrel and MSBC in 2021, partially offset by the closing of six Cracker Barrel and four MSBC units in 2023 and one Cracker Barrel unit in 2021.
Benefits for any individual (employee or dependents) in the self-insured group health program are limited. We record a liability for the self-insured portion of our group health program for all unpaid claims based upon a loss development analysis derived from actual group health claims payment experience. We also record a liability for unpaid prescription drug claims based on historical experience.
We record a liability for the self-insured portion of our group health program for all unpaid claims based upon a loss development analysis derived from actual group health claims payment experience. We also record a liability for unpaid prescription drug claims based on historical experience.
However, actual obsolescence or shrinkage recorded may produce materially different amounts than we have estimated. Lease Accounting We have ground leases for our leased stores and office space leases that are recorded as operating leases under various non-cancellable operating leases. Additionally, we lease our retail distribution center, advertising billboards, vehicle fleets, and certain equipment under various non-cancellable operating leases.
However, actual obsolescence or shrinkage recorded may produce materially different amounts than we have estimated. Lease Accounting We have ground leases for our leased stores and office space leases that are recorded as operating leases under various non-cancellable operating leases.
We also monitor actual claims development, including incurrence or settlement of individual large claims during the interim periods between actuarial studies as another means of estimating the adequacy of our reserves. 45 Table of Contents Our group health plans combine the use of self-insured and fully-insured programs.
We also monitor actual claims development, including incurrence or settlement of individual large claims during the interim periods between actuarial studies as another means of estimating the adequacy of our reserves. Our group health plans combine the use of self-insured and fully-insured programs. Benefits for any individual (employee or dependents) in the self-insured group health program are limited.
The following table highlights our working capital deficit: 2022 2021 2020 Working capital (deficit) $ (185,048 ) $ (111,666 ) $ 191,956 The change in working capital at July 29, 2022 compared to July 30, 2021 primarily reflected the decrease in cash, higher accounts payable and the timing of payments for income taxes partially offset by higher inventory levels.
The following table highlights our working capital deficit: 2023 2022 2021 Working capital deficit $ (206,679 ) $ (185,048 ) $ (111,666 ) The change in working capital at July 28, 2023 compared to July 29, 2022 primarily reflected the decrease in retail inventory levels and the decrease in cash partially offset by the timing of payments for certain taxes.
During 2020 and 2021, the COVID-19 pandemic negatively impacted our sales and traffic as a result of both changes in consumer behavior and federal, state and local governmental authorities’ continuation of various restrictions on travel, group gatherings and dine-in services.
During 2021, our business began recovering from the COVID-19 pandemic, but we continued to see negative impacts on our sales and traffic as a result of both changes in consumer behavior and federal, state and local governmental authorities’ continuation of various restrictions on travel, group gatherings and dine-in services.
General and Administrative Expenses The following table highlights general and administrative expenses as a percentage of total revenue for the past three years: 2022 2021 2020 General and administrative expenses 4.8 % 5.2 % 5.8 % The year-to-year percentage change in 2022 as compared to 2021 resulted from lower incentive compensation.
General and Administrative Expenses The following table highlights general and administrative expenses as a percentage of total revenue for the past three years: 2023 2022 2021 General and administrative expenses 5.0 % 4.8 % 5.2 % 37 Table of Contents The year-to-year percentage change in 2023 as compared to 2022 resulted from higher corporate-level incentive compensation resulting from better performance against financial objectives in 2023 as compared to 2022.
The following table highlights our borrowing capacity and outstanding borrowings under the 2022 Revolving Credit Facility, our standby letters of credit and our borrowing availability under the 2022 Revolving Credit Facility as of July 29, 2022: July 29, 2022 Borrowing capacity under the 2022 Revolving Credit Facility $ 700,000 Less: Outstanding borrowings under the 2022 Revolving Credit Facility 130,000 Less: Standby letters of credit* 31,896 Borrowing availability under the 2022 Revolving Credit Facility $ 538,104 *Our standby letters of credit relate to securing reserved claims under workers’ compensation insurance and securing certain sale and leaseback transactions.
The 2022 Revolving Credit Facility also contains an option for the Company to increase the revolving credit facility by $200,000. 40 Table of Contents The following table highlights our borrowing capacity and outstanding borrowings under the 2022 Revolving Credit Facility, our standby letters of credit and our borrowing availability under the 2022 Revolving Credit Facility as of July 28, 2023: July 28, 2023 Borrowing capacity under the 2022 Revolving Credit Facility $ 700,000 Less: Outstanding borrowings under the 2022 Revolving Credit Facility 120,000 Less: Standby letters of credit* 31,896 Borrowing availability under the 2022 Revolving Credit Facility $ 548,104 *Our standby letters of credit relate to securing reserved claims under workers’ compensation insurance and securing certain sale and leaseback transactions.
In 2020, in response to the COVID-19 pandemic, we temporarily suspended all share repurchases until the fourth quarter of 2021. Subject to the limits imposed by our revolving credit facility, in September 2021, we were authorized by our Board of Directors to repurchase shares at the discretion of management up to $100,000.
Subject to the limits imposed by our revolving credit facility, in September 2021, we were authorized by our Board of Directors to repurchase shares at the discretion of management up to $100,000.
(b) Our 2022 Revolving Credit Facility expires on June 17, 2027. Using our weighted average interest rate of 3.49% and the outstanding borrowings at July 29, 2022, we anticipate having interest payments of $4,543, $9,086 and $9,086 in 2023, 2024-2025 and 2026-2027, respectively.
(b) Our 2022 Revolving Credit Facility expires on June 17, 2027. Using our weighted average interest rate of 6.79% at July 28, 2023 and the outstanding borrowings at July 28, 2023, we anticipate having interest payments of $8,398, $16,478 and $7,243 in 2024, 2025-2026 and 2027, respectively.
Interest Expense The following table highlights interest expense for the past three years: 2022 2021 2020 Interest expense $ 9,620 $ 56,108 $ 22,327 The year-to-year decrease in 2022 as compared to 2021 resulted primarily from lower weighted average debt levels, lower weighted average interest rates and the prior year including costs associated with the termination of the Company’s interest rate swaps.
The year-to-year decrease in 2022 as compared to 2021 resulted primarily from lower weighted average debt levels, lower weighted average interest rates and the prior year including costs associated with the termination of the Company’s interest rate swaps.
Provision for Income Taxes (Income Tax Benefit) The following table highlights the provision for income taxes (income tax benefit) as a percentage of income before income taxes (“effective tax rate”) for the past three years: 2022 2021 2020 Effective tax rate 8.0 % 18.0 % (35.3 %) The decrease in our effective tax rate in 2022 as compared to 2021 is primarily the result of the decrease in income before income tax and the benefit of higher income tax credits.
Provision for Income Taxes The following table highlights the provision for income taxes as a percentage of income before income taxes (“effective tax rate”) for the past three years: 2023 2022 2021 Effective tax rate 4.4 % 8.0 % 18.0 % Our effective tax rate is lower than statutory rates primarily due to the benefit of tax credits.
During 2020, we repaid $252,000 of the borrowings. 42 Table of Contents Our 2022 Revolving Credit Facility contains customary financial covenants, which include maintenance of a maximum consolidated total senior secured leverage ratio and a minimum consolidated interest coverage ratio.
During 2021, we repaid $924,395 under the 2019 Revolving Credit Facility and borrowed an additional $60,000 under the 2019 Revolving Credit Facility. Our 2022 Revolving Credit Facility contains customary financial covenants, which include maintenance of a maximum consolidated total senior secured leverage ratio and a minimum consolidated interest coverage ratio.
Effective October 19, 2019, the Company acquired 100% ownership of Maple Street Biscuit Company (“MSBC”), a breakfast and lunch fast casual concept. As of September 14, 2022, the Company operated 53 MSBC locations in nine states, none of which are franchised.
On October 19, 2019, the Company acquired 100% ownership of Maple Street Biscuit Company (“MSBC”), a breakfast and lunch fast casual concept. As of September 13, 2023, the Company operated 59 MSBC locations in ten states.
The increase in store hourly labor in 2021 as compared to 2020 as a percentage of total revenue resulted primarily from wage inflation exceeding menu price increases.
The increase in store hourly labor expense as a percentage of total revenue in 2023 as compared to 2022 resulted primarily from wage inflation exceeding menu price increases and investments in additional labor hours to support the guest experience.
LIQUIDITY AND CAPITAL RESOURCES The following table presents a summary of our cash flows for the last three years: 2022 2021 2020 Net cash provided by operating activities $ 205,253 $ 301,903 $ 161,002 Net cash provided by (used in) investing activities (98,499 ) 78,330 (157,226 ) Net cash provided by (used in) financing activities (206,242 ) (672,636 ) 396,336 Net increase (decrease) in cash and cash equivalents $ (99,488 ) $ (292,403 ) $ 400,112 39 Table of Contents Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under our revolving credit facility.
We presently expect our effective tax rate for 2024 to be approximately 6%. 38 Table of Contents LIQUIDITY AND CAPITAL RESOURCES The following table presents a summary of our cash flows for the last three years: 2023 2022 2021 Net cash provided by operating activities $ 250,457 $ 205,253 $ 301,903 Net cash provided by (used in) investing activities (124,319 ) (98,499 ) 78,330 Net cash used in financing activities (146,096 ) (206,242 ) (672,636 ) Net decrease in cash and cash equivalents $ (19,958 ) $ (99,488 ) $ (292,403 ) Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under our revolving credit facility.
Cost of Goods Sold (Exclusive of Depreciation and Rent) The following table highlights the components of cost of goods sold in dollar amounts for the past three years: 2022 2021 2020 Cost of Goods Sold: Restaurant $ 706,125 $ 567,825 $ 515,663 Retail 343,759 297,436 264,274 Total Cost of Goods Sold $ 1,049,884 $ 865,261 $ 779,937 The following table highlights restaurant cost of goods sold as a percentage of restaurant revenue for the past three years: 2022 2021 2020 Restaurant Cost of Goods Sold 27.5 % 25.5 % 25.4 % The increase in restaurant cost of goods sold as a percentage of restaurant revenue in 2022 as compared to 2021 was primarily the result of commodity inflation of 13.1% partially offset by our menu price increase referenced above.
Cost of Goods Sold (Exclusive of Depreciation and Rent) The following table highlights the components of cost of goods sold in dollar amounts for the past three years: 2023 2022 2021 Cost of Goods Sold: Restaurant $ 769,295 $ 706,125 $ 567,825 Retail 358,322 343,759 297,436 Total Cost of Goods Sold $ 1,127,617 $ 1,049,884 $ 865,261 The following table highlights restaurant cost of goods sold as a percentage of restaurant revenue for the past three years: 2023 2022 2021 Restaurant Cost of Goods Sold 28.1 % 27.5 % 25.5 % The increase in restaurant cost of goods sold as a percentage of restaurant revenue in 2023 as compared to 2022 was primarily the result of higher cost menu items.
We use comparable store sales metrics as indicators of sales growth to evaluate how our established stores have performed over time. We use comparable restaurant guest traffic increase/(decrease) to evaluate how established stores have performed over time, excluding growth achieved through menu price and sales mix change.
We use comparable restaurant guest traffic increase/(decrease) to evaluate how established stores have performed over time, excluding growth achieved through menu price and sales mix change. Finally, we use average check per guest to identify trends in guest preferences, as well as the effectiveness of menu changes.
The increase in capital expenditures in 2022 from 2021 resulted primarily from higher capital expenditures for existing stores and an increase in the number of new store locations partially offset by lower capital expenditures for strategic initiatives.
The increase in capital expenditures in 2022 from 2021 resulted primarily from higher capital expenditures for existing stores and an increase in the number of new store locations partially offset by lower capital expenditures for strategic initiatives. We estimate that our capital expenditures during the first quarter of 2024 will be approximately $27,000 to $32,000.
Our comparable store restaurant sales increase in 2021 as compared to 2020 resulted from an average check increase of 3.1% (including a 2.1% average menu price increase) and an increase in guest traffic of 5.3%. Our retail sales are made substantially to our restaurant guests.
Our comparable store restaurant sales increase in 2022 as compared to 2021 resulted from an average check increase of 7.0% (including a 5.9% average menu price increase) and an increase in guest traffic of 8.0%.
The following table highlights other store operating expenses as a percentage of total revenue for the past three years: 2022 2021 2020 Other store operating expenses 23.2 % 24.0 % 24.4 % The year-to-year percentage change in 2022 as compared to 2021 resulted primarily from the following: 2022 Compared to 2021 (Decrease) Increase as a Percentage of Total Revenue Depreciation (0.6 %) Rent (0.3 %) Advertising (0.2 %) Maintenance 0.2 % Other store expenses 0.2 % The decreases in depreciation expense, rent and advertising expenses as a percentage of total revenue for 2022 as compared to 2021 were primarily driven by the increase in total revenue in 2022.
The year-to-year percentage change in 2022 as compared to 2021 resulted primarily from the following: 2022 Compared to 2021 (Decrease) Increase as a Percentage of Total Revenue Store occupancy costs (0.7 %) Advertising (0.2 %) Other store expenses 0.2 % The decreases in store occupancy costs and advertising expenses as a percentage of total revenue for 2022 as compared to 2021 were primarily driven by the increase in total revenue in 2022.
The following table highlights labor and other related expenses as a percentage of total revenue for the past three years: 2022 2021 2020 Labor and other related expenses 35.2 % 34.8 % 36.7 % The year-to-year percentage change in 2022 as compared to 2021 resulted from the following: 2022 Compared to 2021 Increase (Decrease) as a Percentage of Total Revenue Store hourly labor 1.1 % Store management expenses (0.7 %) The increase in store hourly labor in 2022 as compared to 2021 as a percentage of total revenue resulted primarily from wage inflation exceeding menu price increases and lower productivity, i.e., fewer guests served per labor hours incurred.
The following table highlights labor and other related expenses as a percentage of total revenue for the past three years: 2023 2022 2021 Labor and other related expenses 35.1 % 35.2 % 34.8 % The year-to-year percentage change in 2023 as compared to 2022 resulted from the following: 2023 Compared to 2022 (Decrease) Increase as a Percentage of Total Revenue Employee health care expense (0.2 %) Store management compensation (0.1 %) Store hourly labor 0.2 % The decrease in employee health care expenses as a percentage of total revenue in 2023 as compared to 2022 resulted primarily from lower enrollment.
The decrease in cash resulted primarily from higher share repurchases partially offset by net borrowings under of revolving credit facility. The change in working capital at July 30, 2021 compared to July 31, 2020 primarily reflected the decrease in cash and timing of payments for certain taxes.
The decrease in cash resulted primarily from share repurchases during 2023. The change in working capital at July 29, 2022 compared to July 30, 2021 primarily reflected the decrease in cash, higher accounts payable and the timing of payments for income taxes partially offset by higher inventory levels.
Finally, we use average check per guest to identify trends in guest preferences, as well as the effectiveness of menu changes. We believe these performance indicators are useful for investors to provide a consistent comparison of sales results and trends across comparable periods within our core, established store base, unaffected by results of store openings, closings, and other transitional changes.
We believe these key performance indicators are useful for investors to provide a consistent comparison of sales results and trends across comparable periods within our core, established store base, unaffected by results of store openings, closings, and other transitional changes. 32 Table of Contents Restaurant and Retail Industries Our stores operate in both the restaurant and retail industries in the United States.
Additionally, any loss resulting from an impairment of the right-of-use assets is recognized by a charge to income, which could be material.
Changes in these assumptions and management judgments may produce materially different amounts in the recognition of the right-of-use assets and lease liabilities. Additionally, any loss resulting from an impairment of the right-of-use assets is recognized by a charge to income, which could be material.
The following table highlights retail cost of goods sold as a percentage of retail revenue for the past three years: 2022 2021 2020 Retail Cost of Goods Sold 49.0 % 50.1 % 53.8 % 2022 Compared to 2021 (Decrease) Increase as a Percentage of Total Revenue Markdowns (1.4 %) Provision for obsolete inventory 0.4 % The decrease in retail cost of goods sold as a percentage of retail revenue in 2022 as compared to 2021 resulted primarily from lower markdowns partially offset by the change in the provision for obsolete inventory. 35 Table of Contents 2021 Compared to 2020 (Decrease) Increase as a Percentage of Total Revenue Markdowns (2.9 %) Higher initial margin (0.3 %) Freight expense (0.3 %) Provision for obsolete inventory (0.2 %) Inventory shrinkage (0.2 %) Discounts and allowances 0.2 % The decrease in retail cost of goods sold as a percentage of retail revenue in 2021 as compared to 2020 resulted from lower markdowns, higher initial margin, lower freight expense, the change in the provision for obsolete inventory and lower inventory shrinkage partially offset by an increase in discounts and allowances.
The following table highlights retail cost of goods sold as a percentage of retail revenue for the past three years: 2023 2022 2021 Retail Cost of Goods Sold 51.1 % 49.0 % 50.1 % 35 Table of Contents The year-to-year percentage change in 2023 as compared to 2022 resulted primarily from the following: 2023 Compared to 2022 Increase as a Percentage of Total Retail Revenue Markdowns 1.7 % Freight expense 0.5 % The increase in retail cost of goods sold as a percentage of retail revenue in 2023 as compared to 2022 resulted primarily from higher markdowns and higher freight expense.
The following table presents our proceeds from sale of property and equipment for the last three years: 2022 2021 2020 Proceeds from sale of property and equipment $ 105 $ 149,960 $ 207,253 In 2021 and 2020, we completed sale and leaseback transactions.
The following table presents our proceeds from sale of property and equipment for the last three years: 2023 2022 2021 Proceeds from sale of property and equipment $ 1,068 $ 105 $ 149,960 The increase in proceeds from sale of property and equipment in 2023 from 2022 resulted primarily from the sale of excess real property in 2023.
Insurance Reserves We self-insure a significant portion of our expected workers’ compensation and general liability programs. We purchase insurance for individual workers’ compensation claims that exceed $300, $750 or $1,000 depending on the state in which the claim originated. We purchase insurance for individual general liability claims that exceed $500.
We purchase insurance for individual workers’ compensation claims that exceed $750 or $1,000 depending on the state in which the claim originated. We purchase insurance for individual general liability claims that exceed $500. We record a reserve for workers’ compensation and general liability for all unresolved claims and for an estimate of incurred but not reported (“IBNR”) claims.
The following table highlights comparable store sales* results over the past two years: Period to Period Increase (Decrease) 2022 vs 2021 2021 vs 2020 (659 Stores) (655 Stores) Restaurant 15.0 % 8.4 % Retail 18.2 20.9 Restaurant & Retail 15.7 % 10.8 % *Comparable store sales consist of sales of stores open at least six full quarters at the beginning of the year, are measured on comparable calendar weeks and exclude MSBC and Holler & Dash. 34 Table of Contents Our comparable store restaurant sales increase in 2022 as compared to 2021 resulted from an average check increase of 7.0% (including a 5.9% average menu price increase) and an increase in guest traffic of 8.0%.
Additionally, in the fourth quarter of 2022, the Company acquired direct ownership of MSBC’s seven franchised units from their respective franchisees. 34 Table of Contents The following table highlights comparable store sales* results over the past two years: Period to Period Increase (Decrease) 2023 vs 2022 2022 vs 2021 (659 Stores) (659 Stores) Restaurant 6.3 % 15.0 % Retail (0.4 %) 18.2 Restaurant & Retail 4.9 % 15.7 % *Comparable store sales consist of sales of stores open at least six full quarters at the beginning of the year, are measured on comparable calendar weeks and exclude MSBC.
On August 4, 2020, we entered into a second sale and leaseback transaction involving 62 of our owned Cracker Barrel stores and recorded a gain of $217,722. See Note 9 to the Consolidated Financial Statements for additional information regarding these sale and leaseback transactions.
Gain on Sale and Leaseback Transactions On July 29, 2020, we entered into a sale and leaseback transaction involving 64 of our owned Cracker Barrel properties and recorded a gain of $69,954. On August 4, 2020, we entered into a second sale and leaseback transaction involving 62 of our owned Cracker Barrel stores and recorded a gain of $217,722.
Because of the uncertainties of seasonal demands and promotional calendar changes, our best estimate of usage for food, supplies and other operating needs and services is ratably over either the notice period or the remaining life of the contract, as applicable, unless we had better information available at the time related to each contract. 40 Table of Contents (f) Other long-term obligations include our Non-Qualified Savings Plan ($27,843, with a corresponding long-term asset to fund the liability; see Note 12 to the Consolidated Financial Statements), Deferred Compensation Plan ($2,166) and our long-term incentive plans ($3,937).
Because of the uncertainties of seasonal demands and promotional calendar changes, our best estimate of usage for food, supplies and other operating needs and services is ratably over either the notice period or the remaining life of the contract, as applicable, unless we had better information available at the time related to each contract.
Climate change, changing weather patterns or unpredictable weather patterns may increase the incidence of any of these events and otherwise also impact guest visitation patterns on a macro scale. In addition to its impact on store operations, severe weather may also disrupt our supply chain, both in distribution to ports and central warehouses and in distribution to local stores.
In addition to its impact on store operations, severe weather may also disrupt our supply chain, both in distribution to ports and central warehouses and in distribution to local stores.
This estimate includes existing store maintenance and aging equipment replacement, the acquisition of sites and construction costs of three to four new Cracker Barrel stores and fifteen to twenty MSBC locations that we plan to open during 2023, as well as acquisition and construction costs for store locations to be opened in 2024, investments in digital and technology infrastructure and the development of a loyalty program.
This estimate includes existing store maintenance and aging equipment replacement, the acquisition of sites and construction costs of one to two new Cracker Barrel stores and approximately four to five MSBC locations that we plan to open during the first quarter of 2024.
We evaluate our leases at contract inception to determine whether we have the right to control use of the identified asset for a period of time in exchange for consideration.
Additionally, we lease our retail distribution center, advertising billboards, vehicle fleets, and certain equipment under various non-cancellable operating leases. 44 Table of Contents We evaluate our leases at contract inception to determine whether we have the right to control use of the identified asset for a period of time in exchange for consideration.
The decrease in depreciation expense as a percentage of total revenue in 2021 as compared to 2020 was primarily driven by the increase in total revenue in 2021.
The decrease in store management compensation as a percentage of total revenue in 2023 as compared to 2022 was primarily driven by the increase in total revenue in 2023 partially offset by wage inflation.
The decrease in proceeds from sale of property and equipment in 2022 from 2021 resulted from the sale and leaseback transaction in 2021.
In 2021, we completed a sale and leaseback transaction. The decrease in proceeds from sale of property and equipment in 2022 from 2021 resulted from the sale and leaseback transaction in 2021. See Note 8 to the Consolidated Financial Statements for additional information regarding the sale and leaseback transaction.
The increase in our comparable store retail sales in 2021 as compared to 2020 resulted primarily from the guest traffic increase and strong performance in the toys, apparel and accessories, food and convenience and décor merchandise categories.
The decrease in our comparable store retail sales in 2023 as compared to 2022 resulted primarily from the decrease in guest traffic partially offset by strong performance in the apparel merchandise category.
We were in compliance with the 2022 Revolving Credit Facility’s financial covenants at July 29, 2022, and we expect to be in compliance with the 2022 Revolving Credit Facility’s financial covenants for the remaining term of the facility.
We were in compliance with the 2022 Revolving Credit Facility’s financial covenants at July 28, 2023, and we expect to be in compliance with the 2022 Revolving Credit Facility’s financial covenants for the remaining term of the facility. On June 18, 2021, the Company issued and sold $300,000 in aggregate principal amount of 0.625% Convertible Senior Notes due 2026.
Additionally, severe drought conditions (such as the severe drought affecting much of the southwestern United States) and associated restrictions on water use may impair restaurant operations or increase costs in locations affected by such conditions.
Additionally, severe drought conditions and associated restrictions on water use may impair restaurant operations or increase costs in locations affected by such conditions. Climate change, changing weather patterns or unpredictable weather patterns may increase the incidence of any of these events and otherwise also impact guest visitation patterns on a macro scale.
Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data.
Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data. We assess the impairment of the right-of-use asset at the asset group level whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.
Key Performance Indicators Management uses a number of key performance measures to evaluate our operational and financial performance, including the following: • Comparable store restaurant sales increase/(decrease) : To calculate comparable store restaurant sales increase/(decrease), we determine total restaurant sales of stores open at least six full quarters before the beginning of the applicable period, measured on comparable calendar weeks.
Additionally, during 2023, we continued our focus on generating shareholder returns by paying $5.20 per share in dividends for fiscal 2023 and declaring a dividend of $1.30 per share that was subsequently paid on August 8, 2023 to shareholders of record on July 21, 2023, totaling $144,302 dividends declared or paid in 2023, and repurchasing $17,449 in shares of our common stock. 31 Table of Contents Key Performance Indicators Management uses a number of key performance indicators to evaluate our operational and financial performance, including the following: • Comparable store restaurant sales increase/(decrease) : To calculate comparable store restaurant sales increase/(decrease), we determine total restaurant sales of stores open at least six full quarters before the beginning of the applicable period, measured on comparable calendar weeks.
The increase in restaurant cost of goods sold as a percentage of restaurant revenue in 2021 as compared to 2020 was primarily the result of commodity inflation of 2.4% partially offset by lower food waste and a decrease in employee discounts. Lower food waste and the decrease in employee discounts both accounted for decreases of 0.1%.
The year-to-year percentage change in 2022 as compared to 2021 resulted from the following: 2022 Compared to 2021 (Decrease) Increase as a Percentage of Total Retail Revenue Markdowns (1.4 %) Provision for obsolete inventory 0.4 % The decrease in retail cost of goods sold as a percentage of retail revenue in 2022 as compared to 2021 resulted primarily from lower markdowns partially offset by the change in the provision for obsolete inventory.
A summary of our contractual cash obligations and commitments as of July 29, 2022, is as follows: Payments due by Years Contractual Obligations (a) Total 2023 2024-2025 2026-2027 After 2027 2022 Revolving Credit Facility (b) $ 130,000 $ — $ — $ 130,000 $ — Convertible Debt (c) 307,500 1,875 3,750 301,875 — Leases (d) 1,187,392 90,446 135,474 128,985 832,487 Purchase obligations (e) 79,280 68,364 9,625 1,291 — Other long-term obligations (f) 33,946 -— 3,887 50 30,009 Total contractual cash obligations $ 1,738,118 $ 160,685 $ 152,736 $ 562,201 $ 862,496 Amount of Commitment Expirations by Years Total 2023 2024-2025 2026-2027 After 2027 2022 Revolving Credit Facility (b) $ 700,000 $ — $ — $ 700,000 $ — Convertible Debt (c) 300,000 — — 300,000 — Standby letters of credit (g) 31,896 — 31,896 — — Total commitments $ 1,031,896 $ — $ 31,896 $ 1,000,000 $ — (a) At July 29, 2022, the entire liability for uncertain tax positions (including penalties and interest) is classified as a long-term liability.
A summary of our contractual cash obligations and commitments as of July 28, 2023, is as follows: Payments due by Years Contractual Obligations (a) Total 2024 2025-2026 2027-2028 After 2028 2022 Revolving Credit Facility (b) $ 120,000 $ — $ — $ 120,000 $ — Convertible Debt (c) 305,625 1,875 303,750 — — Leases (d) 1,134,447 82,360 144,086 134,309 773,692 Purchase obligations (e) 156,455 108,561 29,946 13,831 4,117 Other long-term obligations (f) 32,366 — 2,711 76 29,579 Total contractual cash obligations $ 1,748,893 $ 192,796 $ 480,493 $ 268,216 $ 807,388 Amount of Commitment Expirations by Years Total 2024 2025-2026 2027-2028 After 2028 2022 Revolving Credit Facility (b) $ 700,000 $ — $ — $ 700,000 $ — Convertible Debt (c) 300,000 — 300,000 — — Standby letters of credit (g) 31,896 25,502 6,394 — — Total commitments $ 1,031,896 $ 25,502 $ 306,394 $ 700,000 $ — (a) At July 28, 2023, the entire liability for uncertain tax positions (including penalties and interest) is classified as a long-term liability.
Our long-term strategy remains centered on driving sustainable sales growth, continued business model improvements, building profitable Cracker Barrel and MSBC stores, and ultimately driving shareholder returns. Fiscal 2022 included challenges from historically high commodity and wage inflation, COVID-19 case count resurgences and record gas prices in the second half of the fiscal year (adversely impacting consumers’ discretionary income).
Our long-term strategy remains centered on driving sustainable sales growth, continued business model improvements, building profitable Cracker Barrel and MSBC stores, and ultimately driving shareholder returns.
The increase in net cash flow provided by operating activities in 2021 as compared to 2020 primarily reflected the timing of payments for accounts payable and certain taxes and lower bonus payments made in 2021 as a result of the prior year impact of the COVID-19 pandemic on our operations in 2020.
Our standby letters of credit reduce our borrowing availability under our revolving credit facility. 39 Table of Contents Cash Generated from Operations The increase in net cash flow provided by operating activities in 2023 as compared to 2022 primarily reflected lower retail inventory partially offset by the timing of payments for accounts payable and certain taxes.
The increase in maintenance expense as a percentage of total revenue for 2022 as compared to 2021 resulted primarily from higher expenditures, which were the result of increased repair costs associated with limited availability of replacement equipment.
Additionally, the decrease in store occupancy costs was partially offset by higher maintenance expenditures, which were the result of increased repair costs associated with limited availability of replacement equipment.
We continue to partially offset inflationary pressures through menu price increases and operational improvements, and we presently expect the rate of commodity inflation to be approximately 8% in 2023 as compared to 13.1% in 2022.
The increase in restaurant cost of goods sold as a percentage of restaurant revenue in 2022 as compared to 2021 was primarily the result of commodity inflation of 13.1% partially offset by our menu price increase referenced above. We presently expect the rate of commodity deflation to be approximately 1% to 2% in the first quarter of 2024.
In addition to menu price increases, we continue to partially offset inflationary pressures through labor productivity initiatives, and we presently expect the rate of wage inflation to be approximately 5% in 2023.
In addition to menu price increases, we continue to partially offset inflationary pressures through labor productivity initiatives, and we presently expect the rate of wage inflation to be approximately 4.0% to 5.0% in the first quarter of 2024. 36 Table of Contents The year-to-year percentage change in 2022 as compared to 2021 resulted from the following: 2022 Compared to 2021 Increase (Decrease) as a Percentage of Total Revenue Store hourly labor 1.1 % Store management compensation (0.7 %) The increase in store hourly labor in 2022 as compared to 2021 as a percentage of total revenue resulted primarily from wage inflation exceeding menu price increases and lower productivity, i.e., fewer guests served per labor hours incurred.
The increase in our effective tax rate in 2021 as compared to 2020 is primarily the result of the increase in income before income tax. We presently expect our effective tax rate for 2023 to be approximately 10% to 15%.
The decreases in our effective tax rate in 2023 as compared to 2022 and in 2022 as compared to 2021 reflect the impact of higher tax credits on lower income before income tax.
The decrease in cash resulted primarily from higher debt repayments partially offset by lower capex spending, cash generated from operations and lower dividend payments. Off-Balance Sheet Arrangements We have no material off-balance sheet arrangements. Recent Accounting Pronouncements Adopted See Note 2 to the accompanying Consolidated Financial Statements for a discussion of recent accounting guidance adopted.
The decrease in cash resulted primarily from higher share repurchases partially offset by net borrowings under of revolving credit facility. 42 Table of Contents Off-Balance Sheet Arrangements We have no material off-balance sheet arrangements. CRITICAL ACCOUNTING ESTIMATES We prepare our Consolidated Financial Statements in conformity with GAAP.
These performance indicators exclude the impact of new store openings and sales related to MSBC and Holler & Dash Biscuit House TM (“Holler & Dash”), since we acquired MSBC in the first quarter of 2020 and converted our Holler & Dash locations into MSBC locations.
These performance indicators exclude the impact of new store openings and sales related to MSBC. We use comparable store sales metrics as indicators of sales growth to evaluate how our established stores have performed over time.
(g) Our standby letters of credit relate to securing reserved claims under workers’ compensation insurance and securing certain sale and leaseback transactions. Our standby letters of credit reduce our borrowing availability under our revolving credit facility.
(f) Other long-term obligations include our Non-Qualified Savings Plan ($27,129, with a corresponding long-term asset to fund the liability; see Note 11 to the Consolidated Financial Statements), Deferred Compensation Plan ($2,450) and our long-term incentive plans ($2,787). (g) Our standby letters of credit relate to securing reserved claims under workers’ compensation insurance and securing certain sale and leaseback transactions.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur policy has been to manage interest cost using a mix of fixed and variable rate debt (see Notes 5, 6 and 9 to our Consolidated Financial Statements). To manage this risk in a cost-efficient manner, historically, we have entered into interest rate swaps. During the fourth quarter of 2021, we terminated all of our interest rate swaps.
Biggest changeOur policy has been to manage interest cost using a mix of fixed and variable rate debt (see Notes 4, 5 and 8 to our Consolidated Financial Statements). Additionally, in the fourth quarter of 2021, we issued and sold the Notes, which bear cash interest at a fixed rate of 0.625% per annum.
From time to time, competitive circumstances, or judgments about consumer acceptance of price increases, may limit menu price flexibility, and in those circumstances, increases in commodity prices can result in lower margins. In 2022, we continued to partially offset commodity pressures through menu price increases and operational improvements. 47 Table of Contents
From time to time, competitive circumstances, or judgments about consumer acceptance of price increases, may limit menu price flexibility, and in those circumstances, increases in commodity prices can result in lower margins. In 2022 and 2023, we continued to partially offset commodity pressures through menu price increases and operational improvements. 46 Table of Contents
The following table highlights the five food categories which accounted for the largest shares of our food purchases in 2022 and 2021: Percentage of Food Purchases 2022 2021 Beef 15% 15% Fruits and vegetables 12% 13% Poultry 12% 12% Pork 12% 11% Dairy (including eggs) 11% 12% Other categories affected by the commodities markets, such as grains and seafood, may each account for as much as 7% of our food purchases.
The following table highlights the five food categories which accounted for the largest shares of our food purchases in 2023 and 2022: Percentage of Food Purchases 2023 2022 Poultry 14% 12% Fruits and vegetables 14% 12% Dairy (including eggs) 13% 11% Beef 11% 15% Pork 10% 12% 45 Table of Contents Other categories affected by the commodities markets, such as grains and seafood, may each account for as much as 8% of our food purchases.
At July 30, 2021, the weighted average interest rate of our outstanding $85,000 borrowings was 3.18%. The impact of a one-percentage point increase in the $130,000 of our outstanding borrowings at July 29, 2022 is approximately $1,300. Credit Risk.
At July 28, 2023, the weighted average interest rate of our outstanding $120,000 borrowings was 6.79%. At July 29, 2022, the weighted average interest rate of our outstanding $130,000 borrowings was 3.49%. The impact of a one-percentage point increase in the $120,000 of our outstanding borrowings at July 28, 2023 is approximately $1,200. Credit Risk.
At July 29, 2022 and July 30, 2021, our outstanding borrowings totaled $130,000 and $85,000, respectively (see Note 5 to our Consolidated Financial Statements).
At July 28, 2023 and July 29, 2022, our outstanding borrowings totaled $120,000 and $130,000, respectively (see Note 4 to our Consolidated Financial Statements).
Removed
Under the 2019 Revolving Credit Facility, loans bore interest, at our election, either at the prime rate or London Inter-Bank Offer Rate (LIBOR) plus a percentage point spread based on certain specified financial ratios.
Removed
See Note 6 to our Consolidated Financial Statements for further discussion of our interest rate swaps. Additionally, in the fourth quarter of 2021, we issued and sold the Notes, which bear cash interest at a fixed rate of 0.625% per annum. At July 29, 2022, the weighted average interest rate of our outstanding $130,000 borrowings was 3.49%.

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