Cracker Barrel Old Country Store Inc (CBRL) 2009 Q4 法說會逐字稿

Welcome to the Cracker Barrel conference call.

Today's conference is being recorded and will be available for replay beginning at 2 p.m.

Eastern time through September 29th, by dialing 719-457-0820 and entering a pass code of 8525545.

Now at this time I'd like to turn the conference over to Barb Gould.

Thank you.

Welcome to our fourth quarter 2009 conference call and webcast this morning.

Our press release announcing our fiscal 2009 fourth quarter results and outlook for fiscal 2010 was released before the market opened this morning.

In our press release and during this call, statements may be made by management of their beliefs and expectations as to the Company's future operating results.

These are what are known as forward-looking statements, which involve risks and uncertainties which in many cases are beyond the control of the Company and may cause actual results to differ materially from management's expectations.

We urge caution to our listeners and readers in considering forward-looking statements or information.

Many of the factors that can affect results are summarized in the cautionary description of risks and uncertainties found at the end of this morning's press release and are described in detail in our annual and quarterly reports that we file with the SEC and we urge you to read this information carefully.

We also remind you that we don't review or comment on earnings estimates made by other parties.

In addition, any guidance that we give speaks only as of the date it is given and we do not update our own guidance or express continuing comfort with it as except as required by law and broadly disseminated disclosures such as this morning's press release and call.

The Company disclaims any obligation to update disclosed information on trends or guidance and should we provide any updates after today, they will be made only by broad dissemination such as press releases or in our filings with the SEC.

On the call with me this morning are Cracker Barrel's Chairman, President, and CEO, Mike Woodhouse and our Executive Vice President and CFO Sandy Cochran.

Mike will begin with a review of the business.

Sandy will review the financials and outlook, and then Mike will return to close.

We will then respond to your questions.

Mike?

Thanks, Barb.

Good morning everyone.

Thanks for joining us today.

We have a lot of good news to share with you.

On Saturday, Cracker Barrel Old Country Store will be 40 years old.

While I'm certain that there were some challenging times in the early days, I'm also certain that this last fiscal year presented more challenges than most of us have ever seen, and so I look at our year end results as a major win for everyone working here in Lebanon and everyone working at our 590 Cracker Barrel restaurants.

A year ago, we established an initial guidance range of $2.80 to $3.00 in EPS for fiscal 2009.

Today, despite the headwinds that we were handed all year long, we're reporting EPS of $2.89.

Along the way, we were able to beat expectations in each of the four quarters.

The sudden an unexpected slowdown of industry traffic in late September and early October caused our initial sales outlook to turn out to be optimistic.

We kept our focus on driving sales, controlling store operating costs, and controlling G&A expenses and also tightly managing cash to ensure that we would have no risk of violating our debt covenants.

The sales efforts were three-fold.

First, ensuring the best possible guest experience with our Weekend Execution Initiative to make certain that we're executing at the highest possible standard at the busiest times of the week.

Second, developing and rolling out a series of strong new product offerings and supporting these first with radio and then with targeted radio and TV advertising in key markets.

The positive impacts from these efforts can clearly be seen in our performance compared with the Knapp-Track index.

In the 42 weeks from the third week of October 2008 to the end of the fiscal year, we exceeded the index in guest traffic by an average of 3%.

Since the casual dining industry has been a net discounter since May, we're even further ahead, measured in sales terms.

We've tightly controlled store operating costs with a focus on execution at the store level supported by new tools and systems and we supplemented the tight management of cash including aggressively reducing retail inventories in line with lower sales levels with a leaseback of 15 stores and our retail DC.

As a result, we were able to pay down $143 million of our long-term debt and there were no issues with our covenants.

Most importantly, we achieved all of these things without compromising the guest experience.

No changes in product specs or portions, no reduction in service levels, and no discounting our offerings in order to boost traffic.

So we believe we're in a very strong position to deal with the future.

As I said many times, it's all about the brand.

I believe that the reason that Cracker Barrel has done so well over the years is because we've stayed true to the brand and true to the principles that have been there since the beginning.

Cracker Barrel started in the South and southern cooking and hospitality are the main stays.

But the attributes beyond the brand, friendliness, quality and value translate well wherever we go.

I already said that our success in out-performing the casual dining industry and traffic did not come at the expense of the brand, nor did our success come at the expense of margin.

In the fourth quarter we achieved year on year margin improvement despite higher costs for labor and some impairment charges.

There's something about genuine Cracker Barrel hospitality that inspires a strong sense of loyalty to the brand and it's one reason why people continue to rate us the best.

For 19 years in a row now, we've won restaurants and institution's choice in chains award for the best in family dining.

There's more evidence to show that our efforts are producing positive results.

Our top box guest satisfaction scores increased 2% this year.

2% may not sound like much but it amounts to millions of our guests being more satisfied with their experience in 2009 than in fiscal 2008.

All of this was accomplished through a combination of factors that contributed to guest satisfaction.

Whether it's how quickly people are served, finding something new on the menu, or buying the latest music from your favorite country artists.

Speaking of country music, the CD "Our Heroes" by Montgomery Gentry released exclusively by Cracker Barrel over the Memorial Day weekend set an all time sales records of almost 80,000 copies to date.

A portion of the proceeds from the sale of the CD benefited the Wounded Warrior Project which supports the recovery of our returningm severely injured returning servicemen and women.

The CD stayed in the top 35 on Billboard Magazine's top current country album chart for 11 weeks.

At the end of August, we released our latest exclusive CD, "A Collection of My Best Recollection" by country music legend George Jones.

This looks like another success in the making.

The CD entered the Billboard Top Country Album Chart at number 24 in its first week.

Let me now give you some examples of how we provide more menu variety for our guests.

In the fourth quarter, we offered Campfire Grill chicken and beef and a grilled chicken pineapple salad, which we supported with TV advertising of 25% of our markets.

These items accounted for more than double the mix compared with last year's promotion.

For breakfast, we continued through July 5th with our Breakfast Skillets, which also performed better than last year's promotion.

Our pipeline of new products is growing.

We want our regular guest to have a reason to visit us more frequently and we also want to expand the range of offerings at a range of affordable price points to stimulate trial from non-users.

For example, in our latest promotion which began on August 31st we introduced what we're calling then and now offerings to accelerate our 40th anniversary.

New this fall for breakfast is a Fresh Fruit and Yogurt Breakfast and an Apple Streusel French Toast Breakfast.

These are going to be promoted along side the traditional country meat and biscuits with fried chicken, tenderloin, country ham or sausage patties.

For lunch and dinner we're bringing back a guest favorite, Autumn Applefest Grilled Chicken and Dressing, and at the same time introducing the Autumn Applefest Grilled Chicken Salad, which broadens our salad range and builds on the success of the Pineapple Salad that we offered during the summer.

For desert, to celebrate our anniversary, we'll be offering our very popular and exclusively, Double Chocolate Fudge Coca-Cola Cake all year long.

Let's go from what's on the menu to what's going on behind the scenes at Cracker Barrel.

While our people on the front lines are developing a high quality guest experience, the remainder of our Company's been hard at work developing better ways to support them.

The Seat to Eat initiative is an integrated tool to drive store traffic and increase productivity.

When tested in the stores in four of our districts, we were able to consistently deliver food to guests in less than 14 minutes in all day parts.

Beginning next month, the initiative will be deployed over the next 18 months on a region by region basis.

This is a people business and that's why employees with more experience make all the difference.

Our turnover for the year was 76% for hourly employees and 18% for management.

And while we're very pleased with the results that come from a more stable workforce, we continue to look for more effective ways to schedule and deploy labor.

Our goal is to always have the right people in the right places at the right time in order to provide the service our guests expect.

We're especially focused on achieving this goal at peak demand times and the weekend execution initiative that we rolled out in the second quarter has been very effective in doing this.

To further improve our ability to achieve this goal, we have a new labor deployment system in test with a roll-out expected to begin late in the fiscal year.

Moving on to retail, in an extremely difficult retail environment, our comparable store sales were down 7% in the fourth quarter.

On the bright side, sales of our media products, CDs, books and stationery and the gifts which are new this year were up double digits and now account for about 10% of sales.

The softest areas in retail were toys and apparel.

Demand for women's apparel continues to be soft and toys were down in the quarter largely owing to fewer new offerings from Webkinz and Ty plush toys.

We hope to see a boost in toys in this new quarter, with our new exclusive offering of a Webkinz Opossum starting out fiscal 2010.

Our retail people did an excellent job in reducing inventories.

By limiting our buys where we could, delaying purchases and managing markdowns, we reduced our year-end retail inventory to $108 million, $16 million below last year's level.

Until we see that our guests are willing to commit to more discretionary purchases, we're going to be careful in balancing our new product themes, looking for ways to tie the restaurant and country store together and continue to manage inventory levels in line with sales trends.

We've also taken steps to reduce the risk around seasonal merchandise.

In fiscal 2010, we're offering fewer seasonal items in favor of a new program that we called Great Gifts.

These are products designed to be used as gifts and priced at $20 and below.

The idea is to make Cracker Barrel a top of mind place to go for a convenient gift year round, and of course we'll provide free gift wrapping while you enjoy a meal with us.

There will be new offerings throughout the year but these products won't be subjected to the same seasonal markdowns as we go through the year as our normal seasonal products are.

We're also placing more products on the floor.

By removing the storage trailers, which we've used for a number of years at the stores and saving over $1 million annually in the process, we've had to become more disciplined about what gets displayed and for how long.

In fiscal 2010, we'll be looking at options to refinance portions of our debt.

Our guidance for the year has no assumptions for the effects of any such refinancing, such as timing, the amount of the refinancing or the associated fees.

And Sandy will cover more about this and about our guidance in her financial review.

Sandy?

Thanks, Mike.

I'd like to review the financials in more detail.

Overall for the fourth quarter of 2009, we reported a 9% increase in diluted earnings per share of $0.99, compared with $0.91 per diluted share in the fourth quarter of last year.

Revenues during the fourth quarter decreased slightly to $596 million, reflecting topline growth in restaurant revenues, which was driven by store growth, offset by year-over-year decline in retail.

Comparable store restaurant sales declined 1.4%.

Our average check increased 2.4% including a menu price increase of approximately 2.9%, which was partially offset by negative mix.

Our average check was negatively affected by lower incidence of beverages and add-ons.

Guest traffic was down 3.8% for the quarter.

We have outperformed the Knapp-Track index since the last quarter of fiscal '06 and the gap has widened to more than 3 percentage points in the fourth quarter.

Cracker Barrel comparable store retail sales were down 7% in the fourth quarter of 2009.

Growth in our media category could not offset the softness in toys and apparel.

Media includes the exclusive CDs by Montgomery Gentry and Dolly Parton that Mike mentioned as well as books, gifts and stationery items which were not available last year.

Gross margin for the quarter improved 40 basis points compared to last year.

On the restaurant side, cost of sales as a percentage of sales was lower than last year because of higher menu pricing and favorable menu mix.

This year's summer promotion featuring Campfire Chicken and Beef and the Grilled Chicken Pineapple Salad contributed to the higher gross margin.

Food cost inflation in the quarter was only 0.1%, increases in produce and poultry were offset by lower dairy and egg costs.

Higher retail cost of sales partially offset the favorable restaurant cost of sales.

Retail gross margin in the fourth quarter was lower due to lower initial margins and higher markdowns that were related to the planned shift in timing of our clearance activity into the fourth quarter.

Both restaurant and retail cost of sales benefited from lower freight costs.

Labor expenses as a percentage of sales were 70 basis points higher than during the comparable quarter last year.

Although we improved restaurant and retail labor costs by 10 basis points, they were more than offset by 40 basis points of higher healthcare costs, which was in line with the guidance that we gave in the third quarter call, and in addition, workers' comp and store bonus expenses were higher.

Despite the minimum wage increase, our hourly wage inflation in the quarter was only 0.6%.

Hourly turnover below 80% reduces our hiring and training costs and helped contribute to the higher guest satisfaction scores and a positive guest experience.

Other store operating expenses were 20 basis points favorable in the quarter.

Deflation in utilities and improvements in supplies and expenses related to our lower turnover were partially offset by losses on the sale of three sale leaseback stores.

The loss of $1 million was expensed when the transaction closed, but gains on the remaining sale leaseback properties are deferred over the life of the leases.

During the fourth quarter, the Company incurred impairment charges of approximately $2.1 million.

This charge includes the impairment on one Cracker Barrel location and the impairment on various corporate properties due to changes in their intended use.

In general and administrative expenses, lower incentive comp expense, lower expenses for training new store managers, and our focus to control discretionary spending paid off as G&A at 5.3% of sales was down 60 basis points from the fourth quarter of 2008, and down in absolute terms by $3.6 million.

As a result of higher gross margin, as well as lower G&A expenses, partially offset by higher labor and other related expenses and impairment charges, operating income was $41.4 million, or 7% of revenues in the fourth quarter, compared to $41.6 million or 6.9% of revenues in the same quarter of 2008.

Interest expense of $12.1 million was $1.7 million less than last year's fourth quarter due to lower borrowing rates.

In the fourth quarter income tax rate was 22.1%, compared with 25.7% in the fourth quarter last year.

The lower tax rate in the fourth quarter of 2009 was due to the rolling off of more FIN 48 reserves relating to expiring statutes of limitations this year than last year that is not expected to repeat in fiscal '10.

Income from continuing operations of $22.8 million in the fourth quarter was $2.2 million higher than last year.

Our balance sheet and cash flow statements show the benefits from the execution of the action plans that we undertook during the year to improve our cash flow and reduce debt.

On the balance sheet, we reduced our retail inventory to $108.4 million at year end, which is down $16.2 million from year end fiscal 2008, and our total inventory was $137.4 million at year end.

Our total borrowings, including current maturities at year end were $645 million, $25 million lower than we had projected at the end of the third quarter.

There were no outstanding borrowings under our revolver.

We used excess cash and the proceeds from our sale leaseback to reduce our long-term debt by $133 million in the quarter, and $143 million for the year.

We remain in compliance with our debt covenants.

At the end of the year, our total leverage ratio was 3.02, and our interest coverage ratio was 7.

The maximum leverage ratio and minimum interest coverage ratio are 3.75.

Now let's move to our cash flow.

For fiscal 2009, our cash flow provided by operating activities was $164.2 million, compared with $124.5 million in 2008.

The increase reflects the reduction in retail inventories in fiscal 2009 and timing differences in interest and income tax payments.

Capital expenditures for the year were $67.8 million compared with $87.8 million last year, reflecting fewer new units in fiscal 2009.

We paid cash dividends of $17.6 million, or $0.20 a share, quarterly, which at current stock prices represents a yield of approximately 2.5%.

Now let's look at the outlook.

We're still anticipating a difficult consumer environment in fiscal 2010 as do most of our peers.

We expect traffic in retail sales to be negative, at least for the first half of the fiscal year.

We're focused on controlling our costs, managing our inventory levels, and improving sales trends as the year progresses.

We currently expect fiscal 2010 total revenues to increase between 0.5%, and 2.5%, from total revenue of $2.4 billion in fiscal 2009.

We intend to open seven new Cracker Barrel units in fiscal 2010, two of which opened on Labor Day, one in Pearland, Texas and one in Sanford, North Carolina, which set an off-interstate opening day record.

Comparable store restaurant sales are projected to range between a decrease of 0.5% to an increase of 1.5%, including approximately 2.5% of menu pricing.

In September, we took a price increase of 1.2% and lapped to 1.8% price increase.

We expect comparable store retail sales for the year to range between a decline of 1.5% and an increase of 0.5%.

Commodity cost inflation for fiscal 2010 is projected to be approximately flat.

We currently have approximately 62% of our fiscal 2010 commodity requirements under contract.

Operating expenses in fiscal '10 will include approximately $4.9 million related to sale leaseback to -- to the sale leaseback transactions, compared to $1.4 million in fiscal '09.

Operating margin in fiscal '10 is projected to be between 5.7% and 6.0% compared to 6.0% in fiscal 2009.

We expect the impact of the sale leaseback transaction to be 20 basis points of margin in fiscal '10.

We believe the range for our operating margin in our 2010 guidance balances uncertainties about consumer spending and the costs from rolling out important initiatives during the year, against the benefits of our ongoing cost management efforts and expectations of easing inflationary pressures on key cost lines.

Our net interest expense is projected at a range of $46 million to $48 million, and as Mike mentioned today, we do intend to explore opportunities to refinance or extend the maturities of a portion of our long-term debt during fiscal 2010.

There are no assumptions included in our guidance as to the terms, timing, fees or amount of the refinancing and our guidance is of course subject to the effects of those transaction that's we might undertake.

We're projecting diluted earnings per share for fiscal 2010 to be in the range of $2.85 to $3.10; diluted shares outstanding are forecast to average 23 million.

We plan to repurchase shares to offset dilution in the year associated with stock option exercises and other share-based compensation.

Capital expenditures are forecast to be in the range of $70 million to $75 million, which allows for approximately $30 million of maintenance capital, seven new stores, plus investment in innovation initiatives such as Seat to Eat.

In conclusion, we're pleased that we were able to provide positive earnings growth in a very tough environment in fiscal 2009 which, combined with slower unit growth and aggressive balance sheet management, generated strong cash flow.

As one of the strongest and most highly-differentiated brands in the industry, we are well-positioned to take advantage of an improved operating environment and to deliver premium returns to our shareholders when the economy returns.

Thank you for your time this morning.

I'll turn the call back over to Mike.

Thanks, Sandy.

And at this time I would like to open up the call for questions

Very good.

(Operator Instructions).

Our first question will come from Steve Anderson with MKM Partners.

Good morning and congratulations on the quarter.

Thank you.

And the year.

Very quick question on the labor cost line, that's been coming up the last couple of quarters, primarily on the health cost side, but as the costs related to the increased enrollment in the new healthcare program start to roll off in January, can you give any guidance in terms of where you see labor costs heading for the fiscal year?

Thank you.

We've don't want to, Steve, give any more guidance beyond what we've given although we do anticipate making changes to our health plan and those are built into our guidance for next year.

Thank you.

Our next question then will come from Joe Buckley with Banc of America.

Thank you.

Given that it's your fourth quarter, you're obviously reporting pretty far into your quarter.

The Street is anticipating casual dining sales or -- got better or less bad, I guess, since the end of your fiscal year.

I was wondering if you would be willing to comment on quarter to date, what kind of sales progression you're seeing?

Joe, we would love to do that but our protocol is obviously quarterly reporting and fourth quarter as you correctly say, we're further into the year than we normally are so I really can't comment.

I will point back to how pleased we were with our fourth quarter sales and also that in our guidance we're not anticipating any major turnaround in the economy to drive sales.

I think that there are a number of factors going on that are pretty obvious.

The biggest one I think is consumer sentiment may have improved a little bit but on the other side, unemployment and therefore ability to spend is getting worse.

So we want to be cautious with our numbers.

Okay.

And then just a question on the CapEx numbers.

You made reference to some portion of it being related to Seat to Eat.

Could you walk through that in a little bit more detail?

Well, several things going on in CapEx and the Seat to Eat piece, as I said in my remarks, we are satisfied with our test.

We're going to start rolling out in October.

But it's going to be an extended roll-out, continuing into 2011.

But from a CapEx point of view, we will be spending more than half of the capital for that whole project during 2010, but relatively late in the year.

So that's driving our capital up.

I think the total expenditures for this year, Sandy, for Seat to Eat are -- ?

In the CapEx?

In CapEx, yeah.

About 13.

For the whole program?

Right.

But we won't be spending all of that in 2010.

But we will be spending more than half of it.

Okay.

And is that to reconfigure the kitchen layouts, primarily?

Kitchen and the pass-through window.

Okay.

Thank you.

Thank you.

(Operator Instructions).

We'll next go to Robert Derrington with Morgan Keegan.

Thank you.

Mike, if you could help me understand for a second, the Company's view on restaurant sales, the guidance you provided.

We watched obviously this past fiscal year was a difficult year and it's now five quarters in a row in which restaurant same store sales have been negative, yet your guidance is far down 0.5 to up 1.5 and in addition you've also lost 0.6% of menu pricing with the menu price lap and the new pricing.

So I'm just trying to understand what are the components that you see giving you comfort that comps will be a better trend than what we've seen for a while now?

Well, I think obviously we are in this fiscal year going to be lapping some very negative numbers for last year.

In my answer to a previous question, I was trying to point out that we're not looking for a lot of pickup from the economy but we're not looking for obviously much further down in terms of traffic.

So if the same people who were coming last year, when the industry was down 6% and 8% come this year, adjusted maybe for unemployment, we expect to see the kind of numbers that we're going to see.

The other thing that's really important is the reason I, in my remarks, chose the middle of October was that was when we really started separating from Knapp-Track and that was when the three things I mentioned kicked in, the Weekend Execution, we started seeing improved traffic at the weekends as a result.

It was when the pipeline of our new promotional products really kicked in.

And as I said, we're seeing -- it's very difficult to measure traffic lift from those because we're running them the whole system but we are seeing better sales mix from those promotions than we've seen in the past and then we had the TV and radio advertising in about a quarter of the system against us.

Those three things together kicked in just at the time when we saw our gap improve and I believe that's no coincidence.

I think those things had a direct effect.

So as we go forward, I would expect us to continue to be able to perform at that kind of level.

If I could follow up real quickly, inside your stores right now, you have a very different free-standing insert than what you've typically used.

I'm just curious, is that one of the things that's benefiting that mix that you just mentioned?

Well, I'm glad you pointed that out.

We changed earlier in the year.

In fact, when we introduced Skillets, we had a different kind of separate -- free-standing insert instead of a one that was stapled into the menu and then in the most recent promotion we've developed that to a wrap that goes around the menu when it's presented.

So there's a lot more attention given to the promotional products.

We've got more photography.

We've got more descriptives.

We think our price points are pretty attractive.

We're offering a range of price points.

For instance, the new Yogurt and Fruit and Granola Breakfast is at $5.99 for a platter.

And for $1, can you add two eggs and bacon or sausage or whatever so all of that is -- can't say too much about execution.

The focus on execution around those promotions is really the thing that's delivering the results.

Likely, you tested that before you rolled it out.

Any kind of color on what that test showed?

Obviously, something positive otherwise you wouldn't roll it out.

You're right in your conclusion.

Okay.

Thank you.

Thank you.

Our next question will come from Michael Wolleben with Sidoti & Company.

Good morning.

I was wondering if you could just comment here on the uses of cash.

I know you said you're going to likely purchase some stock back to offset dilution.

Is there any interest here in retiring any more of that debt that you guys have?

Well, we would -- you know, we will use our cash for our capital expenditures, as I mentioned; the stock repurchase is to offset dilution, we'll pay our dividend and then the balance we'll intend to continue to reduce our debt as we go through the year.

Okay.

Great.

And just one other thing here.

I know you said two stores have already opened.

Do you have a guidelines on when those other five will be coming on-line?

They are front end loaded.

Sandy is going to give us the detail.

Yes, with the next -- the next ones coming on will be in the next couple of months.

We've got two more here in November and then the balance of them will be next summer.

Great.

Thank you.

Thank you.

Our next question is from Brad Ludington with Keybanc Capital Markets.

Thank you.

I wanted to ask you a question, building on the debt question.

The last couple years in the first quarter we've seen that you needed to draw some on the revolver, just because the first quarter is seasonally slower.

Should we expect that we see some debt added on to the revolver here in the first quarter of fiscal '10?

Well, we will use the revolver in the first quarter and -- but we're anticipating maybe lower usage.

We've done a good job of managing how our inventories and our payables and -- but I don't think it will be significantly different than prior years.

Okay.

And then related to that, we saw here in the fourth quarter working capital gain of about -- I think about $42 million.

I know a lot of that was related to the better inventory levels and rolling off some of the assets held for sale, but should we expect to see some of that reverse itself in the first quarter as well?

Yes, a little bit will.

We won't have as big an improvement in the inventory levels as we did last year.

Okay.

And then just finally, on your interest line and your interest guidance, are you assuming that there are any charges related to the swap built in beyond just the higher interest rate that we built -- that we factor into those levels?

No.

There's nothing additional built into the guidance.

Okay.

Thank you.

(Operator Instructions).

We'll next go to Bryan Elliott, Raymond James.

Good morning.

I wanted to get a little more color on the -- the advertising, marketing efforts.

I know you mentioned, Mike, that was one of the things that seemed to kick in last Fall, but maybe more broadly just discuss findings and what seems to be working and any plans for 2010 on altering the mix a bit or just a discussion on that would be helpful.

Thanks.

As a reminder, our business model is to spend about 2% of sales on advertising and about half of that goes on our outdoor.

So starting with the outdoor, which is our biggest spend, we're in the middle of rolling out some new creative.

We ultimately felt that the previous campaign, where we went with more pictorial representation of products didn't work as well as we would have liked because one of the strengths of our billboard strategy as always been that we have so many billboards out there, we have about 1,500, the reputation and awareness building is an important component.

Having billboards that are immediately from a distance recognizable as Cracker Barrel is important.

Our new campaign is going back to that goal and we have about two-thirds of them rolled out right now.

We'll be finished by the end of October.

That's one piece of kind of the update and the focus.

On the media, on the broadcast media, because of our geographic distribution, we're not able to be efficient in most -- in a lot of our markets, especially in some of the larger markets.

We are efficient at the kind of spending levels that tie into our 2% overall spend in about 25% of our markets with a combination of radio and TV, seems to work best, and the -- they're both brand campaigns, but with a stronger promotional product focus in '09 and we're going to continue that in '10.

So that combination seems to be working well.

And one of the factors in this brand that is really critical is that our conversion of awareness is very high; awareness to trial.

So building our awareness and doing it within the constraints of our 2% spending level is critical and I think the changes we've made on billboards and the new radio and TV campaign should be helping us build our awareness which had, frankly, slipped for a couple or three years before last year.

All right.

That's helpful.

Thank you.

Okay.

And with that, there are no further questions.

I'd like to turn the call then to Michael Wood house for any additional or closing comments.

Thanks.

Well, we've covered a lot of ground this morning, reviewing last year, talking about what's new at Cracker Barrel for the new year.

We've very pleased with how we've done in these very difficult times and we're very proud of what we have to offer our guests.

So as I just discussed in the last question, we're going to be focusing on getting our message out with the new billboard creative and with the continued TV and radio advertising and internally, we're going to be focused on doing things that will improve our business model, while at the same time improve the experience from the guest point of view and we've talked about some of those things.

So we think we had a pretty good quarter.

We're looking forward to reporting on the first quarter when we get to the end of that.

Just finally, a commercial for our Investor Day, which is on October the 13th.

We're starting at 11 a.m.

with lunch, and we're going to be showcasing a number of our products and touring our new test kitchen that we've talked about before.

We'll have presentations from our management team on the plans for 2010 and then we have a new retail facility with training and a new mock shop here on campus.

If you would like to attend and you haven't signed up at this point, please call or e-mail Barb Gould.

With that, thank you for joining us and we'll talk to you next time.

Thanks.