Good morning and welcome to Cracker Barrel Fiscal 2017 First Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jessica Hazel, Senior Manager, Investor Relations. Please go ahead.

Thank you, Todd. Good morning and welcome to Cracker Barrel’s first quarter fiscal 2017 conference call and webcast. This morning, we issued a press release announcing our first quarter results and our outlook for the 2017 fiscal year. The press release can be found in the Investors section of our website crackerbarrel.com. In that press release and during this call, statements maybe made by management of their beliefs and expectations of the company’s future operating results or future expected events. These are what are known as forward-looking statements, which involve risks and uncertainties and in many cases are beyond management’s control and may cause actual results to differ materially from expectations. We urge caution to 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 this morning’s press release and are described in detail in our reports that we filed with or furnished to the SEC. We urge you to read this information carefully. We also remind you that we do not comment on earnings estimates made by other parties. In addition, any guidance or outlook we provide or statements we make regarding trends speak only as of the date they are given and we do not update or express continuing comfort with our guidance, outlook or trends, except in broadly disseminated disclosures such as this morning’s press release, filings with SEC or as otherwise required by law. On the call with me this morning are Cracker Barrel’s President and CEO, Sandy Cochran; Senior Vice President and CFO, Jill Golder; Vice President, Marketplace and Product Development, Chris Ciavarra; and Vice President and Principal Accounting Officer, Jeff Wilson. Sandy will begin with a review of the business and Jill will review the financials and outlook. We will then open up the call for questions for Sandy, Jill, Chris and Jeff. We ask that you please limit your questions to matters relating to the company’s performance, outlook and plans. With that, I will now turn the call over to Cracker Barrel’s President and CEO, Sandy Cochran. Sandy?

Thank you, Jessica. Good morning, everyone. Thank you for joining us on the call. This quarter marks the 10th consecutive quarter of positive sales growth and our 20th consecutive quarter of outperforming the casual dining industry. We believe that differentiation of our brand experience and our excellent operations execution and our broadened marketing efforts helped us in outpacing the industry. We grew our first quarter earnings per diluted share by 18% to $2.01, which was above our previously stated guidance and above consensus. In short, this favorability was driven by additional commodity favorability and the timing of some anticipated expenses just partially offset by increased retail markdown spend. Jill will be providing more detail around the financials for the quarter, but before she does, I would like to share highlights from the quarter and update you on some of our plans for the remainder of the year. This quarter included the final month of our summer campfire menu promotion, which ran through mid-August and drove continued favorable sales mix. Following the summer promotion, we introduced our full menu offerings, which included an indulgent pumpkin spice pancake breakfast, a guest favorite French dip sandwich platter, and a new harvest kale chicken salad. We are pleased with the guest responses toward this promotion, which ran for much of the quarter. Our stores are currently gearing up for the busy holiday season as we focus on growing our off-premise business. This year we will offer an expanded family sized meals to go program, during the Thanksgiving and Christmas holidays. We are excited about the growth of this platform to include a heat and serve offering that serves up to 10 guests and can be picked up in stores during the holiday week and prepared at home. We believe our strong equity and real…

Good morning, everyone and thank you, Sandy. I would like to begin by discussing our financial performance for the first quarter of fiscal 2017 and then our outlook for the 2017 fiscal year. In this morning’s release, we reported first quarter net income of $48.4 million or $2.01 per diluted share, representing an 18% increase over prior year earnings per diluted share of $1.70. For the quarter, we reported total revenue of $710 million, an increase of 1% when compared to prior year revenue of $702.6 million. Our restaurant revenue increased 2% to $573.7 million. This was partially offset by a 2.9% decrease in retail revenue to $136.3 million. Our total revenue increase was driven by positive comparable store sales growth and the net opening of 2 new Cracker Barrel stores, one in Mayfields, Kentucky and one in Las Vegas, Nevada. Comparable store restaurant sales in the quarter increased 1.3% as average check increased 3% and traffic decreased 1.7%. The increase in average check reflected menu price increases of approximately 2.2% and the favorable mix menu impact of 0.8%. The first quarter mix favorability was driven primarily by seasonal featured offerings, including a limited time mushroom Swiss hamburger steak country dinner plate, our core menu grandpa’s country fried breakfast, and our limited time pumpkin spice pancake breakfast. All of which, we believe were offered at a great value to the guests. Comparable store retail sales decreased 4%. As Sandy shared, the quarter included negative store traffic in addition to fewer guests making a retail purchase. We continue to be cautious in our outlook of our retail business through the holiday season. Total cost of goods sold in the quarter was 30% of total revenue, a 170 basis point improvement from the prior year quarter. Our restaurant cost of goods was…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] First question comes from Joseph Buckley with Bank of America. Please go ahead.

Hi. Thank you. I have two questions. Jill, could you go through the $0.10 of timing EPS benefit in the first quarter, I think you mentioned marketing and employee related expenses, but could you expand a little bit on that and when do you think that will surface, is that like a third quarter, fourth quarter timing when those expenses will come back into play?

Sure, Joe. The timing shift, which we believe drove approximately $0.10 of our first quarter earnings growth included shifts in anticipated incremental marketing spend. Some expected impacts from employee related expenses like training as well as general and administrative expense timing. And we do believe these expenses will occur in the second half of our fiscal year.

Okay. On the marketing side, was there any difference in number of weeks you were on TV year-over-year or was this spending outside of that TV medium?

Yes. Joe, this is Chris. We had one fewer week in Q1 versus prior year. As we move into Q2, we will have the same number of weeks on a year-over-year basis with more [waits] [ph].

Okay. And then, we have one more question just kind of just big picture. Sandy, are you seeing any change in consumer behavior, any sign that consumer might be picking up again at this point?

I was wondering, how long it would take for that question, Joe. We don’t comment in between the periods. So I won’t comment on the performance in the second quarter. As we stated on our last call and as we do currently believe, we are hopeful that the consumer environment will be improved in the second half of the year.

Okay. Thank you.

The next question will be from Steve Anderson with Maxim Group. Please go ahead.

Yes. Good morning. I have a couple of questions, first I wanted to ask about any impact that you saw from Hurricane Matthew, given your exposure from the – in the Southeast U.S.? And I have a follow-up on labor costs.

Great. Good morning Steve. Yes, there were several unfortunate weather events during the first quarter, which included flooding in Southern Louisiana, Hurricane Hermine and Hurricane Matthew. We believe these events negatively impacted our traffic results in the quarter by about 20 basis points, with the majority of that impact from Hurricane Matthew in October.

Okay. And with regard to the potential change in the managerial overtime costs, in fact as it’s slated to go in some – by December 1, I just wanted to ask if you have a detailed estimate of what you would see that going forward?

Detailed estimate of – I am sorry.

I am sorry, this is the regulation that requires increased compensation for managerial overtime?

Yes. Okay. We have done that analysis, of course and are in well positioned to – when it goes into effect on December 1, it had a modest impact on our managers.

Okay. Thank you.

The next question is from Michael Gallo with C.L. King. Please go ahead.

Hi, good morning. Just a question on the spread between – obviously check up 3%, commodities down 5%, I know you have talked about in the past that you thought that would moderate, so given that commodities have continued to be probably if anything a little bit more deflationary, I was wondering how we should think about your plan for pricing, as you come to the back half of the year and some of the pricing rolls off? Thanks.

I will let Chris. Chris, why don’t you take that one?

Okay. Good morning, Michael. I think we launched our market level pricing programs a few years ago. And look, we continue to refine that program, believe through continued selective adjustments that we can reach our guidance. As a matter of confidence, we continue to read our pricing actions and believe that we can pull through those planned increases. Obviously, we remained careful in this environment, as Joe noted a plan for a slightly lower level pricing in the back half, which is baked into our guidance.

Thank you.

And the next question is from Alton Stump of Longbow Research. Please go ahead.

Hi. Thank you. Good morning and congrats on first quarter results.

Thank you, Alton. Good morning.

Good morning. Just a quick question following up on the consumer question of certainly it’s been a choppy last couple of quarters in the restaurant space, but based on what you guys reported and also a couple of other family dining concepts that obviously have a lower average ticket, you seem to be holding up better than sort of mid to high-teen average ticket in the bar grill space, etcetera. Is that in line with what you are seeing and is that part of your strategy to focus more on value with your advertising?

Well, with respect to the consumer, as we talked about on the last conference call, the environment that we certainly were in during the first quarter and to a certain degree expect to continue to be in through the second is uncertainty. Clearly, with the election behind us, some of that has been resolved, but there are a number of issues that will continue to be on I think consumers mind and potentially impact the degree to which they eat out at restaurants. In terms of our emphasis, we have believed that value was important to our consumer and that we needed to ensure that our marketing programs and our offerings were reinforcing our value position. We also do want to highlight the new news in the menu things like our campfire offering and then reinforce the strength of our brand with things like breakfast all day, as I mentioned in my remarks. In addition, our marketing plans, I think in the emphasis that we placed on integrating our marketing plans this year and putting more emphasis on the digital side, we were able to engage with our guests in new ways that continue to make the brand more relevant.

Helpful. Thanks. And just a real quick follow-up, I know it’s awfully early with your new two stores on Vegas, but any sort of a really read out to how that’s going in comparison to other stores that you have opened up, perhaps into the core markets, if there is any differences that you are seeing?

We have been very pleased with the guest reaction out in Las Vegas. And we now have two stores there. And I don’t know [inaudible] rather than we are pleased. We appear to be attracting some of our guests are clearly tourists in Las Vegas. It appears that some of them are traveling to dine with us from California. And we haven’t had a restaurant that was close enough prior to these two. And so I am optimistic about our move to the West.

Great. Thanks Sandy.

The next question is from Jake Bartlett of SunTrust. Please go ahead.

Great. Thanks for taking the question. Understanding that you don’t give very much detail about the current quarter, I believe you said that you didn’t mention that retail was going to be negative, are you giving any indication of what you expect for the restaurant same-store sales, as you have done in some quarters in the past?

No, we are not really providing much more than the guidance that Jill gave. I think we were more clear about the retail given that, that environment was unusual and we did feel that the retail environment, the weakness there would persist or at least we are anticipating that it is going to persist through Christmas and through potentially the end of the second quarter.

Okay. And is that weakness, is it purely just the conversion or I guess would it also be a function of traffic and what you are expecting there?

It’s both really. So as I mentioned, it is we – our traffic was down, so we had fewer guests to begin with and then within that group, our conversion was down in the first quarter. I think to some degree that reflects the impulse nature of a lot of our retail offering and in an environment where the consumer is challenged, anxious. They – you might come and dine with us, but then decide to wait on the retail purchase. The team did a good job, I think of using our mark-down spend to drive retail sales in the categories that we did. And I am optimistic about the new product that’s coming onto the floor and hope that that will be interesting to the consumers that we drive in over the next couple of months.

And just on pushes and pulls in the quarter and I know Christmas and the timing of Christmas has had different impacts for competitors. I believe you mentioned in the last quarter call that you expect it to be a benefit. And I want to understand that given that I would think that Sunday will be a pretty good day for you anyway. Maybe if you can clarify how Christmas is a benefit having it shift to Sunday this year? And maybe if you could go into some of the differences with the take-out or the full meal offering that you are doing this year in Thanksgiving and in Christmas versus what you have done in the past?

Right. Why don’t I start with Christmas question and then I will ask Chris to speak on the off-premise offering. So generally, when people talked about it being a benefit, it’s the number of days between Thanksgiving and Christmas and in this year what we are getting is an extra Friday, which we consider to be – it’s a very strong day, so that – in our projections we view that as a positive and that’s baked into our plan for the Christmas season. Chris, I will let you speak to the off-premise product.

Sure. So I think you all know we have a pretty successful off-premise business in Q2 particularly tied to Thanksgiving and to a, what we call, ready to serve program. It’s a hot program that goes out our doors for about $65, this year $67.99. One of the limitations that program has been that is only able to be served on that day. So, it places a lot of pressure on our stores both in terms of the ability to service that business and our dine-in business. So, we have been testing over the past couple of years a cold program, we call heat and serve carries a higher check at Thanksgiving $99.99 that serves 10 and allows the guests to pick it up to 2 days in advance that holiday. So thereby opening up more occasions we can serve and reducing demands and constraints on our stores. We are excited to extend that program also into Christmas and so obviously that program will have some benefit for us in the form of mix, which is baked into our projection.

Great. And lastly, in the first quarter here, how much was the lower – how much did the lower commodities help, what were you expecting, I think you got the 5.1% deflation, what were you expecting in the first quarter?

Go ahead, Jill.

Well, I would just say that we did expect to have lower commodities, but more modest than what we actually experienced, but we don’t like to give out the detailed line items.

Thank you very much.

Thanks, Jake.

[Operator Instructions] The next question comes from Bob Derrington of Telsey Group. Please go ahead.

Yes, thank you. Chris, could you give us a little bit of color on your – the TV spots here locally in the national market, I think I have seen recently some of your TV spots featuring your country dinner plates with the price point. The spots look better than – I shouldn’t say better, but it looked more appealing from a food photo standpoint. Are those different? Have those changed over the last couple of months?

So – hey, Bob, good to talk with you. Yes, I think we did – I think as Sandy talked about it in prepared remarks we were focused on driving a message around affordability and variety at the dinner day part in Q1. We utilized the new spot we call troubadour, which was really a way of kind of bringing the guest – or the customer experience in the store to light, having some fun, being a lot more engaging and using that as a vehicle to drive excitement and interest in the brand. So as Sandy said in her prepared remarks, we are really trying to drive affordability and value and variety.

It’s interesting you say that, because when I think about affordability and value and I look at the pricing that you have got this year for your Thanksgiving dinners in the store. It looks like the adult menu, the adult meal is priced 8% higher and the kids meal is priced 14% higher. So, is it a function of having a captive market out in suburbia, where you can charge that much and you are not afraid of any pushback from consumers?

Yes. I would say, I will talk about it in a couple of ways. One is obviously we continue to believe we have got a very competitive offer in the marketplace and are pretty proud of what we have. We pay a lot of attention to the other offers that are in the marketplace and ensure that we are driving what we believe is both competitive and a good value and we continue to believe that what we present is that. So I am not sure talking about the captive market so much is just ensuring we are presenting something that works.

Well, in this area, there is not too many restaurants open on Thanksgiving, so yours is a go-to place. Thank you.

Thanks Bob.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Sandy Cochran for any closing remarks.

Yes. Thank you all for joining us today. I am pleased with our first quarter results and encouraged by the initial progress we have made in our business plans. We look forward to building on the success of this quarter throughout the remainder of our fiscal year. We appreciate your interest and support and wish you all a safe and happy holiday season.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.