Good morning, and welcome to the Cracker Barrel Fiscal 2022 Fourth Quarter Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jessica Hazel. Please go ahead.

Thank you. Good morning, and welcome to Cracker Barrel's fourth quarter fiscal 2022 conference call and webcast. This morning, we issued a press release announcing our fourth quarter and full year results. In this press release and on this call, we will refer to non-GAAP financial measures for the fourth quarter and fiscal year ended July 29, 2022. The non-GAAP financial measures are adjusted to exclude the noncash amortization of the asset recognized from the gains on our sale and 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 this 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 CFO, Craig Pommells; and Senior Vice President and CMO, Jen Tate. Sandy and Craig will provide a review of the business, financials and outlook. We will then open up the call for questions for Sandy, Craig and Jen. On this call, statements may be made by management of 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 furnished 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?

Thank you, Jessica, and good morning, everyone. This morning we announced earnings per share that were above our expectations with an operating income margin of 4.4% that came in within our anticipated range of 4.0% to 4.5% of total revenue, despite softer sales than we’ve predicted and inflation that was at the top end of our range for the quarter. Our teams worked extremely hard and did a good job navigating the headwinds from the third quarter that persisted through the end of our fiscal year. Across the restaurant industry right now, management teams are confronting the challenge of navigating an environment of softer consumer demand and higher costs coupled with the uncertainty about when either of these dynamics will abate. Puts even more pressure than normal on pricing and menu decisions as we balance the desire for cost recovery against the potential impact on value perception and guest visitation which, if not properly managed, can lead to more challenging long-term behavioral shifts. While we always manage our business at Cracker Barrel to perform well in whatever environment we find ourselves, we do so while focusing on the longer term success of the brand. To the extent that we've taken pricing, we’ve done so deliberately and selectively and preserve the value sections of our menu and maintained attractive entry points. We've also focused on the longer term initiatives to improve our business model that we outlined back in June and about which I'll share some additional details in a moment. We remain optimistic that the steady perspective is the right one, particularly in this turbulent environment. Looking back at the fourth quarter, the challenging environment I discussed in June continued to impact us through the end of our fiscal year, including a slower-than-expected summer travel season, fewer visits from guests…

Thank you, Sandy, and good morning, everyone. For the fourth quarter, we reported total revenue of $830.4 million. Restaurant revenue increased 6.5% to $661.9 million, and retail revenue increased 3.3% to $168.5 million versus the prior year fourth quarter. Comparable store total sales, including both restaurant and retail grew by 5.5%. Comparable store restaurant sales grew by 6.1% over the prior year driven primarily by 7% pricing. The fourth quarter's 7% pricing consisted of 3% carry forward from a first quarter price increase and roughly 4% carry forward pricing from actions in the third quarter. Off-premise sales were roughly 18% of restaurant sales, which is in line with our long-term retention expectation of the growth in off-premise sales we experienced during the pandemic. Comparable store retail sales increased 3% compared to the fourth quarter of the prior year. Home decor, toys and men's [ph] apparel offerings delivered the largest increases by category. Like Sandy, I want to thank our team for all their hard work this year. Moving on to our fourth quarter expenses. Total cost of goods sold in the quarter was 32.9% of total revenue versus 30.1% in the prior year quarter. Restaurant cost of goods sold in the fourth quarter was 28.7% of restaurant sales versus 25.1% in the prior year quarter. This 360 basis point increase was primarily driven by commodity inflation of 18% as well as elevated freight costs, partially offset by pricing. While we experienced inflation across our entire market basket, the primary drivers of the increases were poultry at 35% inflation, oils at 76% inflation and grains at 27% inflation. Having faced a year with such historically high commodity inflation impacting the fiscal '22 bottom line. It is worth spending a minute on the broader inflation and pricing dynamic. While we do not…

Thanks, Craig. As Craig just outlined for you, we expect to see compressed margins in the first half of the year, but believe they will expand significantly in the back half as commodity inflation subsides in the manner we expect. A bigger question is whether we eventually will get back towards pre-pandemic levels of profitability, the answer is yes, over time. Of course, we are taking and will continue to take shorter-term actions to drive traffic, reduce costs and selectively raise pricing in an appropriate manner to help offset high levels of commodity and wage inflation, but our focus is on the sustainable cost savings that Craig referenced and the longer term top line initiatives that we're speaking to today. I've already mentioned our focus on investment in value where we want to maintain our leadership position versus our competitors. I'm pleased to report that this investment is paying off and that our value scores remain excellent even in the face of the elevated price increases we've taken so far. According to Technomic Data, our relative gap versus competitors increased on nearly every value metric compared to the prior year for the most recently published period, including prices relative to other similar concepts and affordability. We will continue to approach pricing in a way that will keep our value perception scores high. While we try to restore visitations from our guests over age 65 to pre-pandemic levels, we will continue to seek increased visitations from younger guests through targeted marketing, culinary innovation and investments in technology. Although it will take time to move from an over-indexed position of visitation by guests who are over 65 to one that is more balanced, we believe the things that we are doing to appeal to younger guests and families are working. Our breakfast…

[Operator Instructions] And our first question here will come from Brian Mullan with Deutsche Bank. Please go ahead.

Hey, thank you. The release mentioned better traffic and sales trends in the final few weeks of the quarter, which was encouraging to hear. I guess, could you just speak to what you think was behind this improvement, the decline in gas prices is a logical factor on my guess. But I’m wondering if you could -- if there's anything going on with that guest behavior with the older demographic from the prepared remarks, it sounds like maybe that guests is not all the way back to where it was prior to COVID. But I'm just curious if there's been any improvement of late at all. And if you could just describe the mindset of the situation, I guess, is in right now. That would be really helpful to hear.

Hey, Brian. Thanks. This is Craig. Good morning. I will start us off and I will turn it over to -- I will turn it over to Jen. The -- I guess there's a two-parter there. What's driving the acceleration or the improvement in the second half. And then what does it mean in the second part of the quarter and what does it mean for the first quarter. So as it relates to the first quarter, so we'll -- we are not going to disclose much there other than to say that as you think about the comps, right, as you think about how the comps and how they impact us in particular, a year ago, we were -- August, for example, was impacted by Delta. So that has an impact on how we are going to comp base versus that. On a month-to-month basis, there are a lot of other factors to consider there. So we are lapping on a lot of extraneous activities, things such as Delta, as I mentioned, things such as invasion of Ukraine and gas prices and so on. So I think overall, we are pleased with the progress, but it still won't be. So with that, I will turn it over to Jen can add some more context.

Yes. I think as regards to your question about the 65-plus consumer, first of all, we don't have that data sort of by week, but I can speak to how that group performed for us for the quarter as a whole. We still see them holding back visits. I think that's true for the category as a whole, and it's certainly true for our brand, where they represent a really important group. They have a disproportionately large number of boomers and matures and we are still seeing their visits lower than a year ago. On the flip side, as Sandy said in her prepared remarks, we were pleased to see higher than year ago visits from our younger millennial guests, also the Gen Xers, but in particular, the 25 to 34 year olds, the millennial guests, although those increased frequency is not quite enough to offset the negative headwinds of the fact that our 65-plus guests have not returned to their pre-COVID visit levels.

Okay. Thank you for that. And then just a follow-up question on the retail business, as you put together the 2023 guidance, I'm wondering if you could just speak to how you thought about retail gross margins and what some of the important factors to consider are including your current level of inventory. Craig, I think you mentioned an expectation of moderation in the prepared remarks, but if you could just speak to the magnitude or elaborate on that, that would be helpful.

I will start it off and elaborate. So first of all, on the margins, I was really pleased with what the retail team was able to deliver in the fourth quarter in the face of a very challenged consumer and a very promotional retail environment. I think that speaks to the quality of the products and value that we have out there. With that being said, though, what we're anticipating as we run go into '23 is some return to a more normal kind of markdown cadence, which we will manage through the year as we always do as we exit our theme businesses and just work the product through. What we are seeing is some abatement on the freight side. So our container costs appear to be coming down, and that's helping offset a little bit of that markdown risk that we see elevating in this year. In terms of our inventory level, which was higher at the end of '22 than we saw in the prior year, the majority of that or the biggest single piece of that was we accelerated our holiday merchandise the shipments so that we would be sure we receive them in time and that ended up in those hitting the fourth quarter instead of the first quarter or even some of them would have had last year in the second quarter.

Thank you.

Our next question will come from Alton Stump with Loop Capital. Please go ahead.

Great. Thanks for taking my question. And sorry if I missed this, but just on the commodity front for full year '23, did you say how much is covered for your like -- any color that you can give us as to what the spot exposure variability could be over the course of fiscal '23?

Hi, Alton. I will start off with that one. So we are about 30% covered for fiscal '23 at this point. And the way that's working is if you think about calendar '22, so through December, we are -- our coverage ratio is very high. And for calendar '23, it's very, very low. And so we are working through right now exactly how much we are going to lock and when because we are factoring in a couple of things. One is, here's what's happening in the spot market, but to lock for '23, there is a premium for that. So those are conversations that we are having right now. So right now 30% locked and heavily weighted to calendar '22.

Got it. Thanks for that color. And then just as a quick follow-up, and I will hop back in the queue. But I think I heard you mentioned, Craig, that you expect your menu prices to be up 8% this year. Obviously, that would imply additional increase being taken and what you have flow through from what you've taken over the last 12 months. But just the timing of when you expect that pricing to go through over the course of full year 2023?

Yes, I don't think -- and so as we are -- just to make sure I'm super clear on this point, so that 8% is total. So that includes anything new and anything that we are comping on. And there is some movement by quarter, but nothing dramatic. So I won't really drill down much further than there.

Okay, got it. Thank you so much.

Our next question will come from Jeff Farmer with Gordon Haskett. Please go ahead.

Great. Thanks. A handful of guidance follow-up. So you guys provided the revenue growth and operating income growth guidance for '23. But what does that suggest or mean for what you're looking for, for an operating income margin for the year?

Jeff, I will take that one. I would -- and I would just really candidly, I would just extrapolate from the OI growth, the 8% to 10%. And I think that will get you what you need when you combine that with the revenue of 7% to 8%.

Okay. Okay. I will move on from that one. So then sticking with the guidance, you guided to 7% to 8% revenue growth, the 8% menu pricing. There's some small single-digit percent unit growth contribution to that revenue growth. So then the question I have for you and the components that we don't have would be traffic and average check. So I'm just curious in terms of your expectation for 7% to 8% revenue growth. Knowing, again, the guidance for 8% menu pricing and what equates to low single-digit unit growth. What does that mean? Or what's implied for both traffic and average check in that?

And we've got another component, which is retail. Jeff, I will let Craig take the question, but that's another line in our calculation.

Okay.

Yes, so we will drill down from there a little bit building on Sandy's point. So the unit growth between Cracker Barrel and Maple Street is about 100 basis points. So let me -- again, just to make sure I'm super clear on this, the 7% to 8% is total corporate revenue growth. And embedded in that, there is about 100 basis points of unit growth between Maple Street and Cracker Barrel. And we can lay out the 8% and figure out what that contributes. And obviously, that's going to impact the restaurant side of the business, not the retail side. So it doesn't flow through. You don't get an 8% contribution from that to get something closer to in the 6% range or 600 basis point range. And we are -- continue to be pleased with the retail business, and that will be -- we expect that to be a contributor as well. Then in terms of traffic, we don’t provided an exact number. What I would -- I think what we would say there is we are contemplating that as we comp on some of these unusual items, for example, Omicron, gas prices that were in the $4 to $5 range, and those things impacted our business we anticipate that there will be a positive traffic comp from that comparison.

Okay. That's helpful. And final one for me. I apologize for being [indiscernible]. So it sounds like you guys might not be giving too much detail or I might have missed it. But in terms of thinking about a year ago at this time, you did provide us with quarter-to-date, I believe it was same-store sales metrics versus 2019. And that was helpful in terms of establishing the baseline off of which we were going to work with for the balance of the year. You guys are 9 weeks into the quarter. Again, I apologize if I missed it, but is there anything you can share in terms of either AWS or quarter-to-date AWS or same-store sales versus either a year ago or 2019 in terms of helping us better understand where both restaurant and retail numbers stand, again, 9 weeks through the quarter where we are right now.

Good question, Jeff. We will try to add a little bit more texture without disclosing the quarter-to-date. So a couple of things there is quarter-to-date can be a little tricky again because we talked about all of these unusual things that we are wrapping on and it's particularly impactful for Cracker Barrel, for example, the Delta away from last year. But what I would say is that we do anticipate our first quarter sales to be relatively in line with our fiscal year guidance.

So last one is when you say sales, you mean same-store sales or the revenue number?

The revenue number, total revenue.

Okay. All right. Appreciate that. Thank you.

Our next question will come from Katherine Griffin with Bank of America. Please go ahead.

Hi. Thank you for taking my question. I was wondering just about some of the trends that you saw with the younger customer base, I understand that some of that is reflective of, I guess, some return on targeted marketing. I think I'm also just curious how sticky do you expect that customer base to be going forward? I just wonder if there are any differences, if there's less summer travel, do you then get customers, perhaps that aren't traveling? And how can we compare that between what you're seeing right now and next year, which perhaps contemplate some normalization of summer travel?

Thanks, Katherine. I will let Jen speak to the specifics. But just in general, first, as we've already said, we were really pleased to see the data that indicated that we were seeing an increase in that guest. And I think it's a result of a number of things, as you mentioned, marketing, both the content of it and the way we are delivering the marketing, Jen will speak to that as well as some of our menu initiatives. I'll let Jen get more specific. But we had a number of check driving initiatives and innovation that we think particularly appeal to that group. Certainly, our beer and wine efforts we were targeting that group in particular, which we thought would have an interest. And then some of our technology that we’ve been working on, whether it's mobile pay and things like that, we think are particularly important to that group. So, Jen, do you want to speak to how sticky you hope it is or believe it is?

Yes. Hi, Katherine. I think we believe it will be sticky. In fact, we think this represents steady progress. We also saw some increases in the third quarter. And so the fourth quarter increases were actually building upon some good progress in the third quarter. And in fact, we have had this multigenerational guest base for some time. What we are now seeing is increased frequency, especially among these 24 to 34 year olds. We rate really high in terms of food, value and just the environment. I think a lot of these folks are in that stage of their life where they're starting to have families. And so what Cracker Barrel represents is very appealing for them. Our menu innovation, our breakfast news, build your own breakfast, strawberry Cheesecake Pancakes, a lot of the items that we launched in the fourth quarter were particularly intended for this group. And then, of course, as Sandy said, we did put a sharp focus on our targeted digital behind these younger families, and we are seeing that continue to come to fruition. So we believe this is part of our continued progress against growing frequency with this group.

I will add 1 more thing, Katherine, just on the retail side. One, as Craig mentioned, one of our biggest categories in the fourth quarter were toys, which we think also was a reflection of the visitation we were getting from these young families.

Okay. Yes. No, I appreciate that color because actually I -- one of the follow-ups I wanted to ask was, yes, did you have a sense of how, I guess, the demographic that is supporting the retail business versus dine in? I mean, it sounds like if you got higher visitation from millennial customer base, they're likely to shop at the store as well. But are you -- so is that -- am I right in terms of, I guess, making that assumption that it's pretty much 1:1 in terms of the types of customers that are likely to shop in the retail store? And then I have one more question to ask after that.

Well, let me say one of the things that I think is incredibly impressive about our retail team is how hard they work to be sure that our assortment sort of has broad appeal. No guests left behind is sometimes what they'll use to be sure that somewhere in the store, there's something for everyone. The areas that we saw the most strength were really varied home decor, which Craig pointed out, a lot of that was our seasonal assortment. So our Halloween assortment, which has some of the most amazing costumes, for example, I think, in the industry and some items was incredibly popular our toy assortment that I've already mentioned. And then third, men's apparel, which I think reflects the retail team trying to be sure we had something for that guest. And it was probably a bigger percent increase than dollar, but that's a relatively new area of focus. It's things like [indiscernible] vests and camp shirts and some of our licensed men's product, but it was very successful, a broad appeal. So just generally, I think we were on trend. We were on brand. We had attractive price points, and we had a lot of variety for everyone.

Yes. Katherine, I think this is maybe more anecdotal, but what you see in restaurant is you -- there are in a lot of ways, different use cases. For example, you see the kids they go out and they get their Sunday breakfast or Saturday breakfast and they get a treat on their way out, right? And then you've got mom and dad, they pick something up and then you have Grandma and Grandpa, and they're shopping for something as well. I think what's interesting with the retail business is the assortment and how good of a job the team does with covering the bases with appealing to different cohorts.

Okay. Thank you. I can get back in the queue for that third question. Thank you.

Our next question will come from Jake Bartlett with Truist Securities. Please go ahead.

Great. Thanks for taking the questions. [Indiscernible] I wanted to start just back on the sales growth guidance for 2023. And Craig, I think you just made a comment that you expect the first quarter to be the same as the full year. So do you mean -- do you expect the first quarter revenue to grow 6% to 8%, similar to the full year? Just want to make sure I understood that.

Jake, it's in line. So the 7% to 8% total company total sales growth, I think in very rough terms, what we would say is we expect Q1 to be in line with that annual guidance.

Okay, great. Great. And then you mentioned -- and Sandy, kind of you chimed in and to just remind us that retail is a component of this growth. So are you expecting retail to grow faster than to be a positive driver of that 6% to 8%, meaning it would be growing faster than that. Obviously, you're growing up of a really strong result in 2022. And then just on a kind of year-over-year growth in the fourth quarter, it was up, what, 3.3%. So basically, the question is, is retail growth going to help drive that 6% to 8% be essentially be greater than that?

Yes. I think retail will be a contributor. But as you noted, the retail business has been a very strong performer since 2019. So it's going to be a contributor. But as a component, it will -- we do not expect that it will be above that total. It is a -- we do expect that it will grow and contribute to the total 7% to 8%, but we are not expecting above 8%.

I guess said otherwise, do you expect restaurant sales to grow faster than 7% to 8%?

I mean, I would say the -- in line, I guess, is where I would land with that one. Restaurant sales, we think, are in that general range. We have the price of 8 and that's going to be the biggest contributor kind of one-to-one on restaurant sales.

Great. And then I had a question on the pricing. Sandy, in your comments about kind of being careful and wanting to maintain the value proposition for consumers, I was anticipating that the commentary about menu pricing was going to be that it would be kind of rolling off, especially given your expectation for commodity costs to start rolling off. But I think what I'm hearing is that you expect 7% -- 8% for the whole year. So that I think would imply that as price rolls off over the next -- through the whole fiscal year, then you're going to be adding price in. So Craig, I think your comment was that we should kind of expect roughly 8% for each quarter. So I just want to make sure I got that right. And I guess how comfortable if that is true, how comfortable that, that would be maintaining the right value. I think we're probably going to be seeing grocery store coming up pretty sharply, assuming that narrative of grocery being more expensive than restaurants will likely [indiscernible] if commodities come down. So one, am I right, I mean, is it right that you expect about 8% incremental pricing throughout the year and then our total pricing? And then how comfortable are you with that?

So Jake, I will start, and then Sandy will build on it and Jen can jump in as well. So again, we've got the total revenue growth of 7% to 8% for the year. In Q1, we've said it's kind of generally in line, and it will kind of leave it -- leave the guidance part of it there. I think the other factor here is the cumulative pricing over the last few years. And over really through our 22 year, if you take 2021 and '22, we've had get a very rough terms about 10% price, and we've had inflation that's well in excess of that, right? So as we think about the overall business model as it relates to inflation and cost saves and then price to ensure that we -- our delivery on maintaining a great value. I think with that lens, we think there is room there and we are comfortable at that level. So I will turn it over to Sandy and she can add a little bit more.

Yes. I guess what I will reiterate is the thoughtfulness that goes into our pricing strategy. We’ve moved away from really two big increases a year, two modest increases a year to more frequent smaller increases that we monitor. We always have a holdout group, so we try to assess the impact that's having on menu mix and [indiscernible] frequency. And so we are being very thoughtful about it. And I think Jen and her team are being very careful to ensure that even after the price increase, that guests can find value on the menu in all day parts, sort of throughout the menu. We will be doing the increases through, I guess there's about four, five planned for the year, but we will monitor each one and adjust as we see either the commodity environment changing significantly or the guest reaction to the price changing.

Yes, I would just add one thing, which is that we've already taken our August pricing action, right, which was likely to be the largest of the year. Now we will carefully monitor that across our holdout group, our guest satisfaction surveys. We monitor sprinkler, we check our guest relation. So we have four or five different sources that we are monitoring every week to see if there's any trade down risk or traffic risk. And then we hold the option to not take those back half price increases. Should we see some of those trends that you mentioned in your question, we can always pull off.

Great. That’s very helpful. Thank you so much.

Our next question comes from Jon Tower with Citi. Please go ahead.

Right. Thanks. Thanks for taking the questions. Just a few, if I may. On the G&A outlook, can you just remind us of what the incentive comp reset was and how that's kind of factored into the guidance for fiscal '23?

Hi, Jon, what I would say -- again, that's one without getting too specific there. What I would do is kind of look at what a typical G&A number has been for Cracker Barrel and then look at Q4, and I think that could give you a pretty good sense of normalization.

Okay. So no savings embedded in that. It's essentially, I think you alluded earlier to the call that most of that is coming at the restaurant level that $20 million to $25 million. Is that a gross or a net number on the cost savings?

Can you elaborate a little bit on gross versus net, just to make sure we are defining at the same?

Yes. Are there any offsets on the inflationary side that might be offsetting some of the outright cost savings that you would think in a basic or noninflationary environment?

There are -- so on an ongoing basis, right, we are doing we have cost save initiatives. We have a bigger one now, and then we have investments that we are making at the same time to support the growth of the company, a lot of things in technology supporting the loyalty program and so on. So I think big picture there, there are investments that we haven't necessarily called out, but I would focus on if you kind of take the pieces that we've given and the overall OI growth, I think there are other components in there that are smaller in between the guidance components that we've provided.

Okay. And then just getting to the kind of following up on the questions earlier regarding the customer base and some increased visitation with the millennial cohort. I'm just curious if you could provide some color on where you think you're sourcing these customers from? And frankly, how these customers may be using the menu differently than, say, the older customer base? It sounds like they're responding to some of the promotions and new menu items that you've added. But are you seeing, say, greater alcohol attach or different day part usage? And are you seeing higher average checks with this consumer group versus the older demographic?

Yes. I will take that one to start. It's Jen. I think that they are enjoying the breakfast launch that we introduced a whole new breakfast menu on June 21. And younger guests tend to like customization, and we brought them that with the build your own home style breakfast section. We not only see that mixing above our expectations and above our test, but we see these younger families being able to get breakfast just the way they want it. And so we see them mixing into that with a high percentage. We also see them loving the news we've brought to the beer and wine category and also to our NAV categories, which are in spite of tough economic environment. We are seeing really strong retention of our overall beverage incidents, which I think is a testament to a lot of those new items that we launched performing above our expectations. And then finally, these groups tend to have a high incidence with what we call barrel bites, which are shareable sort of snackable items such as the new ones we put on our menu in the first quarter, which are fried pickles, and what you might call cheese curtain. So they seem to enjoy disproportionately our beer and wine and then also our barrel bites. And so that's contributing favorably to our check. Is it -- was there a second part of your question?

Yes. Do you happen to know where you're sourcing some of these customers from? Are they people who wouldn't be going out and getting food away from home normally, and they see your advertising they're responding to a promotion or something you're hitting with over digital channels? Or are you pulling in from other full service restaurants or perhaps even limited service locations?

I think that in general, I would say we are seeing increased frequency among our millennial guest base. But I don't have information to share about where they're not going, if you will.

Got it. And then just a follow-up on the development side. Obviously, it's a call for a faster development this year versus '22. And I believe, Sandy, you had mentioned, obviously, there were some supply chain issues in '22, in particular, that kind of delayed the openings of particularly Maple Street. So I was wondering if you could provide some color on what signs you're seeing to suggest that the guidance for '23 is more attainable than last year, maybe you're seeing permitting delays improve or even just the ability to source equipment has gotten better relative to what it was 6 months ago?

Well, I think all of that's the case. The pandemic impacted the numbers we've opened for a whole variety of reasons. Supply chain was a lot of it. I guess, the labor to get the construction done was another piece, supply chain as [indiscernible]. We just couldn't get the equipment we needed to open. But it was also just on getting real clarity about real estate. So in each of those areas, I think it's improved for both Maple Street and for Cracker Barrel. So I am more optimistic about the Maple Street hitting their opening schedule for the fiscal -- this year than I was how we ended in the fourth quarter, we're only able to get three of the ones done and we had hoped to do, I think, six, as well as I think what we'll see in the Cracker Barrel side is more ability to get higher new unit growth, modestly higher new unit growth in fiscal '24 than what we've just announced.

Thank you for taking the questions.

Our next question will come from Todd Brooks with the Benchmark Company. Please go ahead.

Hey, thanks for squeezing me in. I just have a couple of quick follow-ups here. Craig, you've given fairly specific guidance for where operating income is expected to come in for fiscal '23. The one component of that, maybe if we can just boil it up to maybe a full year thought. Where do you expect G&A to come in relative to that guidance of kind of $165 million to $168 million in operating income for the full year?

I think with G&A, what -- without getting, again, too specific there beyond the guidance is to look at the history and recognizing that Q4 had some incentive compensation adjustments. And we do have some investments that we are making as well in Maple Street and technology and things of that nature. But without kind of getting an exact number of trying to provide some direction.

Okay, great. And then secondly, getting back to the inventory levels, Sandy, you pointed out the fact that some of the elevation that we may have seen kind of coming out of Q4 was related to landing products earlier for holiday year-over-year. Can we boil this down to maybe retail units? How much they're up year-over-year in inventory at the end of July? But then as you wouldn't come to a more apples-to-apples by the end of October, what you would expect the unit inventories to be up year-over-year for retail? Thanks.

Let's say, I probably can't answer exactly that way, but let me try to give you a little more color. The increase in inventory versus prior year, I'd say about 10% of it is price increase. So that's what's embedded just from across the board price increases. Again, then, about 40% of it is probably the holiday acceleration. And then another big component of it, maybe $20 million or so is the inventory invested in supporting our everyday business, which we have seen very good growth, that would be like our food. And our chocolate candy right now is doing really well. Some of that product, we were under inventoried before that due to a lot of the supply chain that we've been able to get into stock with that. So those are probably the three biggest components of the increase.

Okay, great. So when we're talking about inventories and potential markdowns picking up and maybe the first half of the year, it's just picking up relative to historically strong full price selling performance last year versus kind of the discomfort with the inventory levels on the retail side just given the environment.

Yes. Thanks for letting me clarify. So what we are anticipating is a markdown rate being higher than last year, but lower than pre-pandemic meaningfully lower than the pre-pandemic. And that, though, is something we are monitoring every day. We understand that the environment with the consumer can change. And as we had particularly into the Christmas season, which is course, so a very big and important season for retail teams in particular. We are monitoring it, and then we are monitoring the macro retail environment, as it gets more and more promotional, we understand we have to operate with that backdrop. So our expectation is that we are going to have a strong retail selling season through the holiday. Our seasonal business, as I mentioned, in Halloween and Harvest were very strong, and I am optimistic that our Christmas seasonal system performance will be also that way.

Okay, great. Thank you both.

Our next question is a follow-up from Katherine Griffin with Bank of America. Please go ahead.

Hi, thank you. Sorry to continue as well this. But just again, on the younger customer base, one thing I wanted to drill down into is, are there differences? I mean, Jon asked about daypart, but I'm also curious about weekday versus weekend. Do you -- can you give us a sense of just like the differences, I guess, in the types of frequency in that cohort?

I would say based on the pretty thorough and detailed learnings we have from our segmentation study that we completed about 9 months ago. We don't see any major difference in terms of which days of the week they're coming or daypart. They're not markedly or meaningfully different from our other guests.

Okay, great. Thanks for squeezing me in.

This will conclude our question-and-answer session. I would now like to turn the conference back over to Sandy Cochran for any closing remarks.

Well, thank you, everyone. I look forward to building on our efforts from last year and executing on our fiscal '23 priorities between our sustainable cost savings and investments in critical areas like value, guest experience and broader guest appeal. I believe we are well-positioned to drive strong performance this year and beyond.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.