This brings us to Cracker Barrel, which has experienced a substantial decline of 3.2% in its customer base, resulting in a notable impact on their profit margin.
The diminishing number of customers at Cracker Barrel can be attributed to both the challenging economic conditions and the increasing costs of food here in the United States.
From Eat This, Not That:
So why are customers cutting back on Cracker Barrel visits? According to Cochran, it's because of economic pressures and "weaker" consumer sentiment, which Investopedia defines as an economic indicator that assesses how positively consumers feel about the economy and their finances.
Supply chain snags and inflation have raised costs for food, labor, and other commodities in recent years, making running restaurants much pricier as a result. Certain chains, like Chipotle and Domino's, have passed those elevated costs onto customers by raising their menu prices in order to offset the financial pressures. Cracker Barrel is no exception to this trend—Chief Financial Officer Craig Pommells revealed during the earnings call that prices were up about 8.8% in comparison to where they were a year ago.
Cracker Barrel's chief marketing officer Jennifer Tate said that they haven't seen "significant pushback" from guests regarding the elevated prices. Still, Tate suggested that higher prices throughout the wider restaurant industry have spurred customers to visit chains like Cracker Barrel less and less.
"We believe they're cutting back not on check, but rather on the number of visits that they opt to spend on our category. So that seems to be where they're pulling back," she said.
The pressing question at hand is how these restaurants will manage to survive amidst our turbulent economy.
Perhaps Cracker Barrel could become the next Ruby Tuesdays...
