When Cracker Barrel Old Country Store Inc. bought Maple Street Biscuit Company in October, it promised to leave Maple Street’s restaurant operations basically intact.
However, C.L. King & Associates analyst Todd Brooks said in a research report last week that Cracker Barrel is considering one major change for Maple Street’s 33 restaurants: opening on Sundays.
When Cracker Barrel bought Maple Street for $36 million, it said it was targeting annual sales of about $1 million per restaurant and earnings before interest, taxes, depreciation and amortization of at least 17% of sales.
“Currently, the MSBC units are not at these targeted economics, but they are also currently closed on Sundays,” Brooks said in his report.
“Cracker Barrel will test opening two of the units on Sundays to confirm if the additional operating day will quickly get the concept to the targeted unit economics,” he said.
As a private company, Maple Street had not reported financial data, but Cracker Barrel’s latest quarterly report showed Maple Street’s business produced about $3.9 million in sales for the quarter.
Brooks also said in his report that Maple Street CEO Scott Moore and other executives are relocating from their corporate office in Orange Park to Cracker Barrel’s headquarters outside of Nashville, Tennessee.
Cracker Barrel CEO Sandy Cochran said during the company’s quarterly conference call in November that the Maple Street team would be moving, but Maple Street and Cracker Barrel officials did not respond to phone messages seeking more information on the move.
Brooks, who initiated coverage of Cracker Barrel with a “neutral” rating, said the company bought Maple Street as part of a new growth strategy.
“The Cracker Barrel concept itself is mature, as evidenced by the fact that the company plans to open just six new locations in fiscal 2020; there is simply not much more unit growth left to the brand beyond the roughly 1% per year that we are seeing,” he said.
“Management has thus made the decision to pursue new growth opportunities for the company with the acquisition of new brands with room for unit growth,” he said.
Maple Street is a good fit because it “shares the same focus on made-from-scratch cooking and hospitality that Cracker Barrel has long been known for, but the brand positioning is more targeted to the millennial and Generation Z customer,” Brooks said.
“On balance, we are positive on the acquisition, as the brand and cultural fit seem to both be in place.”