Earnings Call Transcript - CBRL Q3 2021

Operator, Operator

Good day, and welcome to the Cracker Barrel Fiscal Year 2021 Third Quarter Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded. I would now like to turn the conference over to Jessica Hazel, Senior Director, Investor Relations. Please, go ahead.

Jessica Hazel, Senior Director, Investor Relations

Thank you. Good morning, and welcome to Cracker Barrel's third quarter fiscal 2021 conference call and webcast. This morning, we issued a press release announcing our third quarter results. In this press release and on this call, we will refer to non-GAAP financial measures for the third quarter ended April 30, 2021. The third quarter non-GAAP financial measures are adjusted to exclude the non-cash amortization of the asset recognized from the gains on our sale-leaseback transactions and the related tax impacts. The company believes that excluding these items from its financial results provides investors with an enhanced understanding of the company's financial performance. This information is not intended to be considered in isolation or as a substitute for net income or earnings per share information prepared in accordance with GAAP. The last pages of the press release include reconciliations from the non-GAAP information to the GAAP financials. On the call with me this morning are Cracker Barrel's President and CEO, Sandy Cochran; Senior Vice President and Interim CFO, Doug Couvillion; and Senior Vice President and CMO, Jen Tate. Sandy will begin with a review of the business and Doug will review the financials and outlook. We will then open up the call for questions for Sandy, Doug, and Jen. On this call, statements may be made by management regarding their beliefs and expectations regarding the company's future operating results or expected future events. These are known as forward-looking statements, which involve risks and uncertainties that in many cases are beyond management's control and may cause actual results to differ materially from expectations. We caution our listeners and readers in considering forward-looking statements and information. Many of the factors that could affect results are summarized in the cautionary description of risks and uncertainties found at the end of the press release and are described in detail in our reports that we file with or furnish to the SEC. Finally, the information shared on this call is valid as of today's date, and the company undertakes no obligation to update it, except as may be required under applicable law. I'll now turn the call over to Cracker Barrel's President and CEO, Sandy Cochran. Sandy?

Sandy Cochran, President and CEO

Thank you and good morning, everyone. I appreciate you joining us for today's call. We delivered strong third quarter results, which exceeded our expectations. Our operators did an excellent job this quarter, managing a significant step-up in dine-in traffic, continuing to support elevated off-premise sales and driving double-digit retail sales growth compared to 2019.

Doug Couvillion, Senior Vice President and Interim CFO

Thank you Sandy, and good morning, everyone. We are pleased with our sales performance in the third quarter, which exceeded our expectations. The improvement in sales during the quarter has us at our closest point to normalized fiscal year 2019 levels since the pandemic started. In addition, we made significantly more progress on operating margin than we anticipated in the third quarter and our adjusted operating income was 7.8% of total sales. Our better-than-expected sales performance, especially in our retail business, was the primary driver of our margin outperformance. As I get into the detailed financials, I will be commenting on our performance relative to both the prior year and the third quarter of fiscal 2019, which we believe is the benchmark to understand the business at this point in time given our stores are operating in an off-premise-only model from late March through April of the prior year. For the third quarter, we reported total revenue of $713 million. Our restaurant revenue increased 58% and our retail revenue nearly doubled compared to the prior year's third quarter. Compared to the third quarter of fiscal 2019, comparable store restaurant sales decreased 8.6%. With more dining rooms open and our guests knowing they can return to a safe experience that delivers on our mission of pleasing people, our dine-in sales volumes significantly accelerated in the third quarter. Even with the dining rooms reopening and reaching improved capacity rates, we retained approximately 95% of our second-quarter individual to-go and delivery sales in the third quarter.

Operator, Operator

Thank you. Today's first question comes from Jeff Farmer of Gordon Haskett. Please go ahead.

Jeff Farmer, Analyst

Hey, good morning. Thank you. A handful of labor questions to start with. In the prepared remarks, you did touch on a couple of these. But what are your current staffing levels as we sit here in late May versus where they were in pre-COVID levels?

Sandy Cochran, President and CEO

Okay, I was waiting for you to continue on Jeff. Good morning. This is Sandy. I'll say it this way, that our staffing situation although it's improved, it's still challenging. The way we categorize our store, about 10% of the chain we've designated as critical in terms of how we believe our staffing is relative to the demand we're either experiencing or anticipating. About 25% are in the category of concern. We've got a number of initiatives focused on that to help our operators both in recruiting and retention. But that continues to be one of the biggest challenges that we're dealing with in the current environment.

Jeff Farmer, Analyst

And then just two more quick ones. So in terms of thinking about the end or the early end of extended and supplemental unemployment benefits as we get into June and into early July, how helpful do you expect that to be in terms of the hiring process?

Sandy Cochran, President and CEO

So the enhanced unemployment benefits certainly was one of the factors that's been impacting our staffing environment, and the moves that I guess now we're at about 23 states that have made the decision to discontinue those additional benefits in the next month or so, will have an impact on the staffing environment. But I want to be clear, what we're really expecting is that mostly is going to help us with applicant flow. What we will still be facing is a lot of competition in the industry sort of everybody's hiring at once in the restaurant industry as America opens up. But we've also got new competitors, if you will, for a lot of the similar skill sets, companies like Amazon and the kind of employment increases they've got. All of that competition is going to continue to impact wage inflation. So in some sense, it will help, but it doesn't alleviate all the problem.

Jeff Farmer, Analyst

And then final one, this is pretty straightforward. So I might have missed some of this, but the 5% commodity inflation in the fiscal fourth quarter. So – look carrying into fiscal 2022, how should we be thinking about commodity inflation as you move into your next fiscal year?

Doug Couvillion, Senior Vice President and Interim CFO

Yes. Thanks. That's a great question. I think in terms of the fourth quarter commodity inflation, I'd just call out that that was really being focused on the pork commodity for us. We're lapping some relatively low pricing on bacon. And as we're coming over that and with some of the changes in bellies and exports it's caused an unusual amount of inflation. I expect that commodity inflation as we move into 2022 will moderate from that level.

Jeff Farmer, Analyst

Okay. Thank you.

Operator, Operator

And our next question today comes from Brett Levy with MKM.

Brett Levy, Analyst

Great. Thanks for taking the call. I guess, if we just go back into the labor again starting with what do you think you need to do strategically to not just get the applicants to enter the door but to retain them? How much do you think it's going to incrementally cost you at the unit level, whether it's just incremental training, added benefits? And then also just, what can you do to accelerate your technology efforts to try to drive some additional productivity to try to manage the labor side?

Sandy Cochran, President and CEO

Brett, I’ll address that and see if Doug wants to add anything later. Your question touches on both short-term and long-term issues. We are facing several short-term challenges, some of which I’ve already mentioned. In terms of recruitment, we are taking various actions. In the short term, we have had some successful front porch events. We’re also reaching out to former employees we lost contact with during the pandemic, aiming to bring them back since they can get up to speed quickly. For our most struggling stores, we’ve established a centralized staffing function to enhance support at those locations. We have employee referral programs and are making sure our wage rates are competitive for the skills we need. Retaining our current employees is also a priority. In the short term, we can offer incentives like shift meals, extra bonuses, or guaranteed perks to ensure we are an attractive employer and that once employees join us, they want to stay. Our field teams are focused on cross-training and raising productivity to mitigate the challenges posed by having many new employees joining simultaneously. In the long term, we need to ensure that our wage and benefit packages remain competitive, provide effective training, and foster a workplace culture that encourages employees to build a career with us. We are also looking at technology solutions. For instance, enhancements to our digital store capabilities will enable guests to pay online, reducing pressure on our cash management and allowing for online ordering, which eases the labor demands in our stores. We are continuously exploring how to optimize back-of-house operations with our new food and labor systems to streamline the workload for our restaurant managers. These are just a few examples of how we are leveraging technology to positively impact labor.

Brett Levy, Analyst

I have a couple of technical questions. First, how many hourly employees did you have before COVID, and what is the current shortfall? Also, you mentioned a gradual increase in pricing. How should we consider your pricing strategy not just for the fourth quarter, but as we wrap up 2021 and move into 2022? I'll let others ask questions as well.

Sandy Cochran, President and CEO

Regarding the first question, I understand you're looking for a specific number of employees, but that's not how we approach it. We're more focused on identifying which stores have the most critical needs going forward, particularly in certain skill areas. To put it in perspective, we estimate about 25% of our stores are at a concern level and around 10% are critical. We're committed to supporting those stores and are currently evaluating our pricing strategy to address the inflation pressures we’re facing in both commodities and wages. I'll let Doug talk about what we've announced in this regard. We need to be cautious in distinguishing between short-term and long-term pressures, while also being mindful of how much our brand and guests value affordability. It's important for us to maintain our reputation for offering value on our menu. Doug, would you like to address our pricing strategy announcement?

Doug Couvillion, Senior Vice President and Interim CFO

I think we've discussed that the short-term carry pricing is about 3% for the fourth quarter. As Sandy mentioned, when considering pricing for the next fiscal year, we will closely monitor wage trends and the cost of goods to maintain a balanced pricing structure. However, we haven't shared much information regarding our expectations for next year at this point.

Brett Levy, Analyst

And then just one last question, of the 35% the challenged and the informed. Are those broad-based, or are those in any particular regions?

Sandy Cochran, President and CEO

Well, those are broad. There's probably certain D&As. And you might see more, but it's broad.

Operator, Operator

Our next question today comes from Alton Stump with Longbow Research. Please go ahead.

Alton Stump, Analyst

Thank you and congratulations on the impressive results. I wanted to ask about the relationship between pricing and costs, particularly regarding labor costs and commodities. Is this pressure expected to be short-term, or will it extend into a significant part of fiscal year 2023?

Doug Couvillion, Senior Vice President and Interim CFO

Alton, I think that the pressures we're seeing related to the 5% are relatively short-term. And I think again that was related to bacon. And some specific issues there. I think it will moderate as we move into fiscal 2022. We're not really prepared to give specific guidance on that. But I think as the markets move forward over the next two or three months, we'll probably have a stronger opinion about which areas are specific risks for 2022.

Alton Stump, Analyst

Makes sense, helpful. And then just as you mentioned Sandy, that you are doing a billboard refresh. As I recall that's a pretty big piece of our advertising business especially, as presumably people will be out doing ultimate road trips this summer. So could you just give some color on as to what that refresh entails and how it's different than what you had previously?

Jen Tate, Senior Vice President and CMO

Hi, this is Jen. The billboard refresh is part of a larger longer-term campaign that Sandy spoke about which is our care campaign, which is across lots of channels including our TV and our digital and of course, to your question about billboards. We are right now in the process of flipping over our over 1,500 billboards. And they too will bring to life this idea that care and the care we take in making our food from scratch and the care we take in our hospitality and our service model and curating a retail item these boards bring that to life, right? So, they tell that story that our secret ingredient is care. And so those are flipping right now just in time for what we hope and really believe will be a very busy summer travel season as families and friends take to the roads again after being cooped up for a long time. So, we're excited for people to see our billboards on the road and how they bring the care campaign to life.

Alton Stump, Analyst

Great. Thanks so much. I’ll hop back in the queue.

Operator, Operator

And our next question today comes from Jake Bartlett with Truist Securities. Please go ahead.

Jake Bartlett, Analyst

Great. Thanks for taking the question. I know you've been hesitant in the past to give kind of quarter-to-date or monthly same-store sales. But I'm hoping you can help us really with the cadence and I'm thinking about from April to May. Just how important kind of as we try to think about stimulus. And also, as we think about the impact of stimulus as we think about the fourth quarter guidance in trying to gauge how conservative that may be. Could you give us any color on May perhaps whether it was stronger than April or weaker? Just whatever you could offer that would be great.

Sandy Cochran, President and CEO

All right. Well, let me take a stab at that Jake. So, not surprising we are encouraged and certainly through the third quarter at the pace of recovery and sequential monthly sales, and we definitely think that it reflects strong pent-up demand and willingness to spend, which we think was certainly amplified by the stimulus, probably also helped by the savings that people were able to accumulate during the pandemic and we're seeing that. Although our guests as I mentioned are very value-conscious, we are seeing check and add on the premium side and beer and wine and so on. And to Jen's point that she just made we're very optimistic about our fourth quarter in general. But May has been choppy. It started out strong. We're very pleased with our Mother's Day performance both dine-in and off-premise. The last couple of weeks have softened somewhat. We're assuming that this is related to the shift in Memorial Day from what would have been yesterday to next week somewhat to the Colonial pipeline impact and the impact that may have had on travel during that week. But in general, we're looking forward as Jen mentioned to families traveling this summer and to people getting back to their normalized routines in terms of work which we think will have a positive impact on our breakfast business.

Jake Bartlett, Analyst

That's really helpful. In terms of your recovery, it's on an impressive trajectory, but it's lower than what we're seeing with casual dining competitors. Can you share your thoughts on why that might be? Whether it's regarding breakfast or the type of markets you're in, any insights on why Cracker Barrel, or even family dining in general, is lagging would be appreciated.

Sandy Cochran, President and CEO

Well, I think that there's been a number of issues for us that we've talked about on all the calls and you're alluding to a couple of them. Probably the two biggest relate to breakfast. It continues to be the daypart that is the most challenged. It's the one it's easiest for people to do at home. It's probably the one most connected to a work routine that continues to be disrupted. So, the breakfast day part is probably the biggest one. And then the travel, we have not I think had the recovery in travel that we are hoping and expecting to see over the next few months.

Jake Bartlett, Analyst

Great. Lastly, could you provide an update on the percentage of your commodity that is contracted for?

Doug Couvillion, Senior Vice President and Interim CFO

Sure. Yes. As we're looking at the fourth quarter, we've got a little over half of our commodity market basket locked up. That's a little bit lower than we would have had in the past. I think with prices at elevated levels we haven't advanced some of our positions as far, but we feel good about that. Like I said just north of 50%.

Jake Bartlett, Analyst

Great. Appreciate it.

Operator, Operator

And our next question today comes from Brian Mullan with Deutsche Bank. Please go ahead.

Brian Mullan, Analyst

Thank you. I was hoping you could give us an update on the beer and wine initiative. Can you talk about what you're seeing where you have that in place from a sales lift perspective and update us on the rollout schedule? And then just from a restaurant sales mix perspective, where it was in the quarter? And do you still feel good about getting the 2% or more of restaurant sales?

Jen Tate, Senior Vice President and CMO

Yes, sure. This is Jen. We have about 405 stores rolled out as of the end of Q3 and we are expecting that we'll be at about 600 stores by the time we get to the end of Q1 FY '22. We've made some great updates to our beer and wine menu. So we've added things like Sangria and Blue Moon that have done well. And actually, six of the last seven states that we've added have brought the mix up. So we've been bringing on states that happen to have a higher mix of beverage alcohol. And so that's helping us. So we're pleased with the results we've seen in places like the Northeast and Texas, where mix is running in some of those states that doubled some of our early states average. So we are now optimistic that we can get beer and wine mix to 2% of dine-in sales.

Brian Mullan, Analyst

Great. I have a follow-up question regarding Maple Street. Are you still expecting to open 15 units annually for fiscal 2022? Could you also share your insights on whether you are identifying enough quality sites? Additionally, how is the construction cost inflation affecting your plans? What is your perspective on development for the upcoming year and the following couple of years?

Sandy Cochran, President and CEO

Brian, I'll address some of those issues. As I mentioned in the prepared remarks, I am very pleased with our performance. I am confident about the brand and its growth potential. We are focused on securing the best locations, and while this is progressing well, it may not be as quick as I hoped. I still aim for double-digit growth in fiscal year 2022, but we'll see if we reach 15. We will be exploring both new markets and infill opportunities. We will provide more detailed updates on construction costs in our next call.

Operator, Operator

And our next question today comes from Todd Brooks with C.L. King & Associates. Please go ahead.

Todd Brooks, Analyst

Hey. Good morning, everyone. Just a few questions if I may. One Sandy, you were talking about just how encouraged you are with the off-premise revenue streams and the maintenance of those streams as dining rooms have reopened. I guess as you think about that business being in the kind of low 20s percent of mix versus a little bit less than 10 pre-pandemic. What's your best guess for what that settle out point is for what percent of mix you expect off-premise to be? Just trying to get a sense of what AUVs were building back to beyond what we saw in fiscal 2019?

Sandy Cochran, President and CEO

I'm going to let Jen address what you seem to be asking about regarding off-premise stickiness.

Jen Tate, Senior Vice President and CMO

Yes. I think as Sandy said, we're really pleased with the strong demand for our off-premise offerings in Q3 and in particular, April where even with a majority of our system open for dining rooms, we still did more sales in off-premise this year than in April last year where the dining rooms were closed. So that has continued to reinforce our optimism about that ability to maintain that stickiness. I know on the last call Sandy talked about our belief that we could retain at least 50% of the growth we saw in off-premise from that sort of high single-digits that we were at in a percentage of sales before the pandemic to the 20%-ish approximately 20% that we're at now. She had said at least 50%. I think we're comfortable today saying we're even more bullish about that. We believe we will retain at least 60% of the growth that we saw from pre-pandemic to current, if not higher. So we continue to feel very positive about that. Although, we know we will see some consumers trade out of individual categories like delivery back into dine-in. We are seeing stronger-than-expected stickiness and we anticipate strong growth from the catering channel.

Todd Brooks, Analyst

Okay. And is there any assumption within that assumption? What's the thought about I know we're early on with the virtual brand, but are you building any thoughts on for that when you're talking about 60%, or would that be kind of an incremental off-premise stream if that does fully roll out?

Sandy Cochran, President and CEO

We would treat that as incremental if that fully rolls out. We've been working on optimizing the menu and the offering for the chicken and biscuits brand and gaining some operational learnings in the last couple of months. And this week, we're expanding that test from one location to 19 stores because we do believe chicken and biscuits has a simple, but winning combination because it's very broadly appealing food. Hand battered, hand-breaded fried chicken and tenders just our top-selling sides and scratch-made biscuits combined with the fact that the menu is very streamlined, which enables us to deliver on guest expectations for speed. So because of that we think that this brand may launch in at least half of our system, pending the results of a test being successful.

Todd Brooks, Analyst

That's great. And then two more quick ones. One Doug for you. If we look at the guidance and just thinking about getting back to fiscal 2019 revenue levels in Q4. As we look longer-term to returning to full year fiscal 2019 revenue levels, can you just walk through the puts and takes, how much tougher the inflation environment is the wage pressure, and that incremental pressure on occupancy and other from packaging and the sale leaseback. Just where do you feel like operating margins, when you get there fall out on equivalent revenues to fiscal 2019?

Doug Couvillion, Senior Vice President and Interim CFO

Yes, let me address that. What you're referring to is what we like to call the post-COVID business model. We have been focused on restructuring our business for success as we move past the pandemic. We are optimistic about the actions we are taking to significantly enhance our business model in the long term. We are also actively working to manage labor, commodity, and other challenges that the entire industry is encountering, challenges we anticipate will persist in fiscal 2022. Currently, it is uncertain how intense or prolonged these challenges will be. However, we are committed to demonstrating that we will make improvements to our business model. While we cannot specify when we will return to the margins experienced in fiscal 2019, we are confident in our efforts to address labor and commodity inflation, and I am hopeful that we will see margin improvements by the end of 2022.

Todd Brooks, Analyst

Okay, great. And then, one final one and this just gets back to the labor and the two buckets: the critical and the concerned bucket. Any operational changes required? I know Sandy, when you talked about front porch dining in the past that was fairly labor-intense that it's hard to get out to the ports to really service those customers well. In those third of the stores where there's some challenges are you having to curtail anything operationally that maybe in the near-term diminishes the sales potential for those units? Thanks.

Sandy Cochran, President and CEO

We're allowing our field leaders significant flexibility in managing their operations given the constraints they face. In some instances, they might express the inability to support the front porch as desired. You may notice them closing a dining room if they're short-staffed on the grill or with servers, particularly during certain periods when they lack adequate staffing or if employees unexpectedly can't work their shifts for various reasons. However, I want to emphasize that I am very pleased with how our field leaders are navigating this chaotic environment and believe they are effectively delivering the brand as demand has increased.

Todd Brooks, Analyst

Okay, great. Very helpful. Thank you all.

Operator, Operator

Our next question today comes from Jon Tower, Wells Fargo. Please go ahead.

Jon Tower, Analyst

Great, thanks for taking the question. Just have a few if I may. First starting off with marketing spend, it sounds like you've obviously got a new program out there right now. I am curious to know if you're back at a full strength of spend on a dollar basis relative to say, the 2019 levels, or are you not spending at the full level yet because of either capacity constraints at the restaurants or maybe even labor issues?

Sandy Cochran, President and CEO

We're not at the level we were before. I didn't want to invest in refreshing the billboards until I saw that people would be back on the highways. Therefore, we postponed some of our investment for the year because we didn't think we would see the benefits from it earlier. The marketing team has done a fantastic job of shifting to more flexible digital marketing programs, which allow us to be more targeted. As we've navigated through this year, our approach has been somewhat opportunistic and has evolved with the changing environment. I believe that when we discuss this in more detail next year, you'll notice a much more normalized investment and distribution of our marketing budget.

Jon Tower, Analyst

Great. Following up on that, do you expect to return to pre-crisis levels of spending, or do you think you have discovered, through the digital channel, a more effective approach with lower expenses?

Sandy Cochran, President and CEO

I don't think Jen has fully concluded yet, but most marketing professionals tend to use their entire budget. It really depends on how and where they allocate those funds. I can say that the work she and her teams, along with our digital app teams and new agency, have done to explore what's possible and the results we can achieve digitally supports the idea of shifting more of our budget to that channel and maximizing our return on investment. Jen, would you like to add anything?

Jen Tate, Senior Vice President and CMO

Yes. I won't comment on the exact dollar amount we're going to spend next year. But I will say, you're right, that we are transitioning more and more of our investment into the digital space, especially now that we have the fully rolled out digital store that brings together our eat, cater and shop, so that people can on their same browsing visits. They can put things from our restaurant in their cart. They can put cool items from the retail shop in their cart. They can even put a catering order in their cart, right? So that now that we have that and we're making significant improvements to both our site and our app. We will continue to move dollars into those digital channels that drive conversion there. And we have seen a nice uptick in conversion and average order value. So, we'll continue to invest in that.

Jon Tower, Analyst

Okay. Thank you. And then just pivoting to the retail sales. Obviously, the gross margins this quarter were very strong. I think some of the strongest you have on record, if I'm not mistaken for the retail business. And I'm just curious how much of this you would attribute to full-price sales, but it sounds like full price sales mix was a driver of this. So, is there any way to parse out how much of this was tied to short-term tailwinds like stimulus say versus longer-term initiatives around better inventory management or product selection for the consumer? Just trying to gauge, when looking at these numbers, how much can stick in the future? And I understand obviously the supply chain stuff you had mentioned earlier Doug might be a bit of a near-term headwind, but any way to kind of think about it over the longer term would be great?

Sandy Cochran, President and CEO

I want to emphasize that our retail team has excelled in managing various challenges. The convenience of shopping and dining in the same place has been a significant factor. They've successfully offered a unique and enjoyable assortment that resonates with nostalgia and offers great value, which has allowed consumers to enjoy themselves. This approach has positively impacted our sales, particularly through full-price sales that have improved our margins. The team has gained valuable insights during this period. For example, we've seen enhancements in the men's assortment, and the visual merchandising with fewer products seems to help customers appreciate the offerings more. Looking ahead, we expect to reap long-term benefits regarding inventory levels needed to drive sales. While there has been influence from stimulus and savings, the retail team has effectively seized this opportunity and learned from it, and we plan to apply these insights moving forward.

Jon Tower, Analyst

Got it. Thank you. And then just following up, I think to an earlier conversation about kind of the off-premise mix. And I think Doug you had mentioned earlier that 25% of your off-premise around that was coming from delivery or third-party platform. So I'm wondering if there's any way to determine how many of these customers are existing in-store customers? And really, I guess, I'm trying to figure out, how many of these customers might shift back to that in-store occasion when the option is available to them versus sticking to that third-party delivery? And then just one more on top of that. I don't know if you've offered this before, but is there any way to think about or tell us what the pricing differential is between an in-store transaction and a delivery transaction excluding all the fees? Simplistically put, is there a 5% or 10% pricing on a delivery menu versus say in-store transaction?

Sandy Cochran, President and CEO

I'm going to ask Jen to address the different channels and their stickiness. Then Doug, you can explain that we don't disclose specific pricing premiums, but we do offset the fees. Jen, could you start with the first part of that question?

Jen Tate, Senior Vice President and CMO

Yes. Your question about third-party delivery consumers and how much of those we think will trade back to dine-in visit? What we have seen is that the third-party delivery guest tends to be incremental to the Cracker Barrel base. They are the least likely to be our core guests. Whereas the curbside pickup or an in-store pickup guest is more likely to have at times dined in with us. Third-party guests tend to be new to Cracker Barrel brands. They may have discovered Cracker Barrel during the pandemic, and so they have been additive or incremental to us. And we have been impressed with the stickiness. We really have seen as our dining rooms have opened. An impressive portion of those third-party sales have remained. So, no one can predict what will happen a year from now as the pandemic is truly in our rearview mirror, but the third-party guests for us tends to be more incremental than the curbside guests.

Doug Couvillion, Senior Vice President and Interim CFO

And as we entered the third-party delivery business a few years ago, we spent a lot of time thinking through the implications it had on our margins. And we have taken additional pricing on third-party delivery. We just haven't quantified it. If you were to give us a try in your local area and go to and have a DoorDash delivery, I think you'll see what our structure looks like relative to our in-store menu. That would probably help you out a bit.

Jon Tower, Analyst

Yes. Unfortunately, I don't have one around me, but I'll try next time I'm on the road and see what I can do. But thank you for taking the time. I appreciate it.

Operator, Operator

Ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for the final remarks.

Sandy Cochran, President and CEO

All right. Well, thank you all for joining us today. We appreciate your interest, support, and look forward to speaking with you again soon.

Operator, Operator

Ladies and gentlemen, this concludes today's conference call. You may now disconnect your lines and have a wonderful day.