Why Cracker Barrel Just Took A Major Financial Hit
Rising food costs have been a hot topic for much of the past year, affecting consumers and restaurants alike. According to Restaurant Business Online, menu prices have increased by 8.7% from April 2021 to April 2022 — a 40-year high for the industry. In the past year, Texas Roadhouse prices have inflated by 7.5%, and Chili's prices rose by 6% as of May. The problem doesn't lie in restaurants alone; the cost of eating at home has increased by 10.8% while wholesale food prices have risen by 17%.
Wages are also up 13%, in part due to "The Great Resignation" — a mass quitting event that was implemented as employees demanded better pay. Restaurant365 CEO Tony Smith told Forbes that restaurants face massive turnover rates of 70% annually. "Restaurants are not evolving to meet the needs of current and future employees," he said. "Retention starts by changing the narrative about restaurant jobs. Employees want a career, not a job. And restaurateurs need to provide that opportunity." Many restaurants have attempted to lessen the impact despite the pressure, which has now led to profit loss in several companies, including Cracker Barrel.
The company remains loyal to customers
Although prices have hiked significantly in restaurants nationwide, Cracker Barrel has attempted to go easy on consumers. According to The Wall Street Journal, Cracker Barrel's profit dipped by 8% in the recent quarter. Though the restaurant has certainly curved some of this loss by increasing menu prices, it doesn't want to overdo it at risk of negatively impacting its demographic. "We decided to pass on much, but not all, of the cost impact in our pricing," chief executive Sandra Cochran said. In the next year, Cochran believes that inflation will begin to wither away, though the restaurant will still be raising menu prices slowly to hopefully make up for what was lost.
Aside from Cracker Barrel, restaurant group Darden, which owns Olive Garden, Season's 52, Longhorn Steakhouse, and others, has chosen to limit price increases across the board (per Entrepreneur). Because the company is so large, it's been able to combat inflation in ways other food service chains haven't. In the 2022 fiscal year, its profits managed to grow by 14.2%. "As we begin our new fiscal year, our focus remains on driving profitable sales, investing in the guest experience and simplifying operations," CEO Rick Cardenas said.