Southern Dining at Bob Evans, Cracker Barrel Goes South

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Bob Evans Restaurant
Flickr
It's apparently getting harder to woo diners with heaping servings of country-fried steak, chicken and dumplings, or chicken potpie. Bob Evans Restaurants (BOBE) and Cracker Barrel Old Country Store (CBRL) have chimed in with unimpressive quarterly results in recent days, suggesting that Southern comfort foods have gone out of favor.

Bob Evans posted horrendous results after Tuesday's market close. Net sales plunged 22 percent to $340.1 million, fueled primarily by the sale of its Mimi's Cafe chain. Analysts were bracing for that, but they weren't ready to see comparable-restaurant sales decline 1.8 percent during the period. Wall Street was forecasting net sales of $350.5 million for the period, but it seems as if bad weather outside of Florida was too much to overcome.

The news gets worse for Bob Evans as we work our way down to the bottom line. Rising pork prices and labor costs combined with hiccups on the retail front led to sharply contracting margins. Bob Evans' adjusted profit of 30 cents a share was well short of both the 56 cents a share it rang up a year earlier and the 57 cents a share that the pros were targeting.

It's Not Just the Chairs Rocking

Cracker Barrel -- which combines Southern cooking staples with a rustic gift shop -- earlier reported a step back in its holiday quarter.

The restaurant side held up better than the retail end. Comps for the eatery slipped 0.6 percent, outperforming the 3 percent slide at the country store. However, Cracker Barrel suffered a decline despite tweaking menu prices slightly higher. Restaurant traffic actually mirrored the 3 percent drop at the retail level. Slightly negative traffic trends in November worsened in December as January. For the first time in several quarters, Cracker Barrel failed to beat Wall Street's profit targets.

Cracker Barrel joins Bob Evans in blaming the weather for its disappointing finish, and that's fair to a certain extent. If it's snowing outside you're not likely to drive out for some steak and eggs or blackberry cobbler. Cracker Barrel also happens to be a chain that needs consumers to be taking road trips since it locates many of its establishments near major highways.

I'm a Little Bit Country

Things could have been worse. Bob Evans lowered its outlook for all of fiscal 2014,
but it raised its longer-term growth expectations. Cracker Barrel followed many in the industry into delivering negative comparable restaurant sales, but this is the ninth quarter in a row that it outperforms the industry as a whole.

Cracker Barrel is introducing healthier menu items to appeal to guests that visit less frequently. It tried to make the most of the nasty Christmas weather by adding more seasonal comfort foods, including a beef and mushroom potpie and buttermilk chicken sliders.

Both Bob Evans and Cracker Barrel have also tried to make it easier to feed folks who don't have time to sit at one of its tables. Bob Evans has been promoting $5 takeout meals, and Cracker Barrel is beefing up the availability of licensed food products that it sells from the store.

Motley Fool contributor Rick Munarriz owns shares of Cracker Barrel Old Country Store. The Motley Fool has no position in any of the stocks mentioned.


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34 Comments

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KeyLemPi

Blame reality programming. People see Honey BooBoo and all the other "south-based" shows and are deciding they don't want to end up like them.

March 06 2014 at 6:00 PM Report abuse rate up rate down Reply
Mike

Cracker Barrel has decent food (and it is where I used to get all my golf tees), Bob Evans isn't very good. I'd guess that the latter is dropping business due to quality also. My personal opinion is that there are way too many Crakerbarrel stores...practically one at every exit in some parts of the country. It has gotten a bit pricier and sometimes the wait is too long to get in.

March 06 2014 at 4:40 PM Report abuse rate up rate down Reply
bpdarling

Republicans in SOuthern States have DEPRESSED their State economies so much, and kept wages so low for the people, that they cannot AFFORD to go out to eat! Also, Cracker Barrel openly discriminates against people of color, LGBT, and other groups that do not meet their "moral values"......they prefer the Duck Dynasty bigot types....I bet that's a BIG reason these 2 companies are FAILING! Bogotry and discrimination....along with Tea Party OPRESSION...is NEVER good for ANY business.

March 06 2014 at 3:51 PM Report abuse +3 rate up rate down Reply
1 reply to bpdarling's comment
asielec

Keep drinking the DNC cool aid Bubba. it is always someone elses fault,
RNC that oppress the pure masses, starves the poor, kills the children,
old people and women. That must be why Abraham Lincoln and Dr.MLK
were conservative God fearing men. But you don't want hear about God
do you? or morality or right and wrong. You prefer the Godless baby
killing Humanistic hedonist DNC that cares for children by abortion or
old folks with Goverment medical rationing, or that takes care of
the enviroment by destroying business and individual property
rights.Maybe the Executive branch has no control over the economy?
that is true I guess mankind has no impact on the enviroment either.

March 06 2014 at 4:28 PM Report abuse -1 rate up rate down Reply
Jim Castro

2 things that stick out at every Craker Barrel I have stopped at..
poor service and lousy portions..


jimc11

March 06 2014 at 3:43 PM Report abuse +3 rate up rate down Reply
Linda

Cracker Barrel is okay, but the meals I've had at Bob Evans are gag-worthy. Just awful. They make great refrigerator-case mashed potatoes in the grocery store, but the restaurant food is worse than my junior high school cafeteria....and that was pretty bad.

March 06 2014 at 3:17 PM Report abuse rate up rate down Reply
marine1952

Gave up going into Bob Evens. Its so cold you could hang meat in there. Even the coffee gets cold before you can drink it. Am not going to shiver all the time I am trying to eat a meal. Not enjoyable.

March 06 2014 at 2:53 PM Report abuse +1 rate up rate down Reply
martrenaraleigh

Two things I will never ever do again is eat at a Crackkker Barrel and Watch Duckkk Dynasty.

March 06 2014 at 2:39 PM Report abuse +4 rate up rate down Reply
ccullari

We need more Cracker Barrel restaurants in the Northeast, especially Fairfield County, Ct.
Their pancakes are much better than any other locals.

March 06 2014 at 2:34 PM Report abuse rate up rate down Reply
ledbre1954

Bob Evans? ice! Cracker Barrel? Wonderful! I hardly ever buy anything in the retail part due to the fact the clothes are cheaply made and expensively sold. The other stuff is cute, but I don't need any dust collectors!

March 06 2014 at 2:23 PM Report abuse +1 rate up rate down Reply
William Hagenmaier

Cracker barrell is the best as is duck dynasty

March 06 2014 at 2:05 PM Report abuse rate up rate down Reply