Cracker Barrel: Success comes from ignoring discount mania.

Posted on 22. Jul, 2010 by in Industry News

Deep Discounting Doesn’t Work.

Michael Woodhouse, president and CEO of Lebanon, Tenn.-based Cracker Barrel Old Country Store, is proud of how the chain of 594 restaurants has weathered what’s being called The Great Recession.

In a speech at this morning’s Nashville Business Breakfast at Lipscomb University, Woodhouse credited the company’s success partly to what it hasn’t done to weather the storm — slash prices, something competitors have been eager to do.

“Once you devalue something, you’re digging a big hole and it’s (tough) to get out of that,” said Woodhouse, who succeeded Cracker Barrel founder Dan Evins as CEO in 2001.

Cracker Barrel made $14.4 million in last quarter, up more than 20 percent from a year earlier. By comparison, Nashville-based O’Charley’s lost $4.3 million, blaming its troubles in part on its recession-inspired value menu. O’Charley’s CEO Jeff Warne resigned a few weeks later.

Instead of getting “caught up in price warfare,” Woodhouse said Cracker Barrel focused on one of the central tenants of its brand, honest value.

“We’re not depending on anything happening in the economy, other than the day-to-day business of treating our guests right,” Woodhouse said.

Such efforts have been recognized by patrons and the restaurant industry. A recent consumer survey conducted by Technomic, Inc. rated Cracker Barrel at the top of the list of 10 national full-service restaurants. In the study, 4,000 respondents rated Cracker Barrel more favorably than competitors like Applebee’s, Olive Garden and Red Lobster, among others.

3 Responses to “Cracker Barrel: Success comes from ignoring discount mania.”

  1. DaleFurtwengler 22 July 2010 at 5:10 pm #

    A common misconception is that buyers become more price conscious in a down economy. The reality is that the become more value conscious. Because sellers believe that buyers are more price conscious they lower their prices to retain 'market share,' which focuses buyers' attention on price and it becomes a self-fulfilling prophecy. Those, like Cracker Barrel, who understand these concepts hold or even raise their prices enjoy greater profits and great customer loyalty. Kudos to the folks at Cracker Barrel.

  2. JeffreySummers 28 July 2010 at 6:59 am #

    Amen Dale! It certainly doesn't help that everyone and his brother talks about value solely in terms of price. And survey after survey showing consumers are using coupons more than ever, etc… lull operators into thinking that price is all that guests talk about. When in fact, it's all that operators give them to talk about.