by pup55 » Mon 05 Mar 2007, 07:02:48
Cracker Barrel is an interesting barometer of the effects of PO. First of all, they populate the famous "interstate offramp" environment, meaning that they are just a step away from the fast food business, and they are 100% dependent on car travelers to bring in business.
A lot, not all, of their stores are located out in the middle of nowhere, and in a way, they inhabit the same space as wallymart: rural areas in the south and midwest with that kind of culture, also, demographically they are focused on the "white redneck" population, if you will. Their target market strongly indentifies with country music, and they are trying to increase their sales of country CD's, etc. in their retail stores.
Here are some statements from their annual report:
$this->bbcode_second_pass_quote('', 'C')onsumers responded by reducing their discretionary
spending, including dining out less. Declines in
guest traffic were reported across the industry. The
competitive landscape in the industry changed as
consumers “traded down” to quick-service restaurants
and quick-service restaurants broadened their appeal
and upgraded their product offerings
.
$this->bbcode_second_pass_quote('', 'C')onsumer sentiment and discretionary income continued to
be under pressure from high gasoline prices and higher
home heating costs. The added pressures of high
mortgage, credit card and car payments weighed
heavily on consumers, particularly those on tight
budgets. The United States experienced one of the
country’s worst natural disasters with Hurricane
Katrina and its aftermath. The housing market slowed,
interest rates climbed, and gasoline prices rose.
Avian flu and trans fats made headlines as potential health issues. Concerns about terrorism continued
to be a part of our daily existence, and the violence
in Iraq escalated.
$this->bbcode_second_pass_quote('', 'C')racker Barrel uses 6% of the entire world’s syrup
supply every year. Now consider this: it takes about 30-40 gallons of maple sap, slowly drawn drop
by drop and carefully boiled down, to make just one gallon of maple syrup.
Their stores are still profitable, but their sales of cheap junk in the lobby declined by 8% last year. This stuff makes up 20% of their sales, so this is painful to them.
Their "margin", as it were, is about 13%, which is respectable, but not as good as Mickey D's.
But a lot of the stuff prominently discussed in these forums, including gasoline-dependence, terror, bird flu, animal-based food produced in an energy-intense way (meatloaf), economic pressures on their main customers, etc. etc. are directly connected right through the heart of these places. Interestingly, they are running into "limits to growth" namely, there are only so many interstate offramps. They only opened up a dozen or so new ones last year.
The CEO seems to think that by improving service and efficiency, cutting down on waste, and improving the quality of the junk in the retail section they will do a little better next year. Suffice it to say that if he looked at his business in the framework of PO and its effects, he would turn white in the face and get into another line of work while he still can. Their idea of "diversification" is to open 'Logan's" restaurants, which are located mainly in suburbia.
$this->bbcode_second_pass_quote('', 'W')e just didn’t keep it top of mind
that Cracker Barrel represents much more than just a
meal to our guests – it is an experience. Our guests
look forward to stepping through our doors and
being greeted by both friendly faces and a retail shop
where the ambience and decoration takes them to
a different place and time. It is a place for fond
memories, to find something special for oneself or to
pick up a gift for someone special, and a place of
comfort and authentic food and hospitality, all at a
fair price.
The fireplace is obviously part of the "dining experience". These guys have no doubt figured out that the cost of running this fireplace is offset if it attracts X number of little old ladies into the restaurant. When it stops doing this, either because of it no longer attracting the little old ladies, or the cost getting too high, they will shut it off and put something else there,