One of my favorite restaurant chains, Cracker Barrel Old Country Store (CBRL) , reported fourth-quarter and full-year 2021 results Tuesday, and markets, while not exactly amused, were somewhat forgiving as shares fell just under 3%. (My wife was not amused, either, when I suggested we dine at the nearest Cracker Barrel last night, a battle I lost). Fourth-quarter revenue of $784.4 million missed consensus estimates by about $10 million, while earnings per share of $2.25 were off the mark by 10 cents.
Restaurant same-store sales fell 6.8% versus the same quarter in 2019 -- 2020 comps are not meaningful due to COVID -- while retail store sales rose a solid 18.2% and represented a not-inconsequential 21% of revenue. "Off-premise" restaurant sales rose nearly 109% and were nearly 19% of total restaurant revenue.
Perhaps Cracker Barrel's decision to increase the quarterly dividend 30% to $1.30 a share, which equates to a 3.85% yield, helped appease investors. However, that increase does not tell the whole story. Like many companies, CBRL stopped paying a dividend during COVID before reinstating it at $1.00 in late May. Raising the dividend back to $1.30, where it was before the pandemic, is more of a return to normalcy than it is a big surprise. For several years the company also had paid a substantial special dividend each July (the last was $3.00 in July 2019), but it is unclear whether a special payout will make a return.
Cracker Barrel ended the quarter with $145 million in cash, down substantially from $437 million a year earlier. However, the company also reduced long-term debt during the same time frame from $910 million to $327 million. During the fourth quarter, the company sold $300 million of 0.625% convertible notes and repurchased $35 million of stock. The board also authorized another $100 million in buybacks.
If there was any ominous information in the company's earnings release, it was regarding the fiscal 2022 outlook. For one, the company has decided not to provide its typical annual guidance. Second, the company stated that it expects fiscal 2022 commodity and wage costs to rise in the "mid-to-high" single digits. That's inflation, folks, and it won't just affect Cracker Barrel -- it likely will weigh on the entire restaurant sector. That means higher menu prices, a smaller bottom line or a combination of the two. Keep an eye on this sector.
CBRL currently trades at just under 16x next year's consensus earnings estimates.