Sandy Cochran - President and CEO Larry Hyatt - SVP and CFO Chris Ciavarra - SVP, Marketting Jessica Hazel - IR.

Jeffrey Farmer - Wells Fargo Securities Joseph Buckley - Bank of America/Merrill Lynch David Carlson - KeyBanc Capital Markets Brittany Whitman - Longbow Securities Michael Gallo - C.L. King & Associates Robert Derrington - Wunderlich Securities Stephen Anderson - Miller Tabak.

Good day, and welcome to the Cracker Barrel Fiscal 2015 First Quarter Earnings Conference Call. Today’s conference is being recorded and will be available for replay today from 2 PM Eastern through December 10th at 2 PM Eastern by dialing 719-457-0820 and entering pass code 7975757.

At this time, for opening remarks and introductions, I’d like to turn the conference over to Ms. Jessica Hazel. Please go ahead ma’am..

Thank you, Tom. Good morning, and welcome to Cracker Barrel's first quarter fiscal 2015 conference call and webcast. This morning, we issued a press release announcing our first quarter and our updated guidance for the 2015 fiscal year.

In this press release and on this call, we will refer to non-GAAP financial measures for the prior fiscal year, adjusted to exclude charges and tax effects related to proxy contests expenses.

The Company believes that excluding these charges and tax effects from its financial results provides information that may be more indicative of the Company's ongoing operating performance while improving comparability to prior periods.

This information is not intended to be considered in isolation or as a substitute for financial information prepared in accordance with GAAP. The last page of the press release includes a reconciliation from the non-GAAP information to the GAAP financials. The press release can be found in the Investors section of our Web site, crackerbarrel.com.

In that press release and during this call, statements may be made by management of their beliefs and expectations of the Company's future operating results or expected future 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’re 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 the SEC or as otherwise required by law.

On this call with me this morning are Cracker Barrel's President and CEO, Sandy Cochran; Senior Vice President and CFO, Larry Hyatt; and Senior Vice President of Marketing, Chris Ciavarra. Sandy will begin with a review of the business and Larry will review the financials and outlook.

We will then open-up the call for questions for Sandy, Larry and Chris. We ask that you please limit your questions to matters relating to the Company's performance, outlook and plans. With that, I'll now turn the call over to Cracker Barrel's President and CEO, Sandy Cochran.

Sandy?.

Thank you, Jessica. Good morning, everyone and thanks for joining us today. I’m pleased to report that our fiscal year is off to a good start. As you saw in this morning’s press release we finished our first quarter with strong financial results.

Our total revenue and operating margin exceeded our expectations which we believe reflects our continued focus on enhancing the guest experience and operational improvements. We saw guest traffic growth in the quarter and posted increases in both restaurant and retail sales.

Once again, our sales and traffic growth outpaced the Knapp-Track casual-dining index making this the 12th consecutive quarter of outperformance. Our guest survey scores during the quarter increased in many key categories including overall value and tend to return and likely to recommend.

Our operating income for the first quarter was approximately 18% higher than the prior year when adjusted for prior year proxy contest expenses. In addition, our diluted earnings per share grew more than 16% versus the adjusted prior year quarter.

Larry will be taking you through the detail of our financial results for the quarter, but before he does, I’d like to share highlights and maybe update you on some of our plans for the remainder of the fiscal year.

This quarter, our management team remains focused on our long-term strategic plan to enhance the core business, expand the footprint of our stores, and extend the Cracker Barrel brand outside of our four walls.

During our last earnings call in September, I outlined our business priorities for the fiscal year and I will recap this briefly and then cover each in more detail. First, extend the reach of the Cracker Barrel brand to drive traffic and sales in both our restaurant and retail businesses.

Second, optimize average guest check to the implementation of geographic pricing tiers. Third, apply technology and process enhancements to drive store operating margins and fourth, to further grow our store base with the opening of six or seven new stores. So I’ll begin with our first priority, which is to drive traffic and sales.

We believe that our seasonal menu promotions continue to drive frequency by providing our guests with variety through limited time offerings that appeal to both our most frequent guests and our like users.

We also utilize our promotional efforts to incorporate entrees that would not necessarily fit into our core menu, but appeal to a broader demographic consumer. And as such, we’re pleased with the success of our fall promotion which began in mid September and ran through October.

The promotion featured four breakfast entrees including our limited time only Apple Streusel French Toast breakfast which was topped with a sweet cinnamon apple dumpling syrup and for lunch dinner entrees including our Wholesome Fixin's Apple Cider Barbecue Chicken, which has been added to our core menu category.

During the quarter, our field management teams and our frontline employees focused on driving store traffic through improvements to the overall guest experience.

We reemphasize the importance of superior front of house execution and we believe that as a result we saw improvements in our guest survey responses to their intention to return and likelihood to recommend.

Throughout the year our operations teams remain focused on driving traffic and throughput by pursuing continual improvements in our guest dining and retail experience. Additionally, our first quarter included a number of advertising activities to extend the reach of our brand.

We once again ran a first quarter national cable advertising campaign which aired for the same number of weeks during the quarter as during the prior year quarter. However, we made a few changes this fiscal year, including the utilization of a different sliding schedule.

In the prior year first quarter we ran five continuous weeks of media and this year we moved to a pulsing schedule to stay engaged with our target guests over a longer period of time and therefore to extend brand awareness.

And last we adjusted our media schedule to better align with our heavier volume period, so by placing media weeks in August and October we improve the dollar return on our investment. Moving to our billboard marketing activity, as you’ve heard me say before, we view our investment in billboard advertising as a competitive advantage.

Our more than 1,600 billboards work to build the brand, drive key occasions and association and improve unaided awareness among our traveling and local guest. This always on medium remains a powerful marketing tool and supports the Cracker Barrel brand with over 24 billion impressions a year.

And it’s our strategy to regularly reinvigorate our messaging through fresh creative. Our first quarter included the rollout of new billboard creative to nearly three-fourths of the system.

The messaging focuses on our food, the Cracker Barrel experience, and providing reassurance about our value and affordability with messages targeted to the level of brand development in that specific marketplace. We continue to work on both engaging our guests and expanding our reach to new guests through social media.

We concentrated our efforts on driving reach by improving engagement through more focused content and through opening up new channels to reach specific market segments. As a result of these efforts, we saw our Facebook and Twitter followers grow by 18% in the first quarter and our social engagement rating more than doubled.

During the second quarter, we will extend our social and digital advertising reach within online video campaign utilizing platform such as Hulu and Youtube and we will also utilize purchased media such as paid search, paid social advertising via Facebook ads and Google shop search results.

Our advancements in digital and social media will allow us to maintain constant dialogue with our guests wherever and whenever they choose. Our exclusive music program continues to be a success creating significant brand impressions, driving retail sales and building brand awareness.

The selection of artists is designed to provide a diversity of offerings across multiple music genres and demographic types within both our core guest base as well as with future Cracker Barrel guests. Our first quarter included two exclusive music projects, the first with the Secret Sisters and the second with the country group Alabama.

Our Deluxe Edition release of the Secret Sisters new album was positioned to drive interests with millennials. We focused our marketing efforts on increasing brand impressions within this demographic, including a live performance on the Tonight Show with Jimmy Fallon.

Our second exclusive album was a gospel project with country superstars Alabama and the release of Alabama’s CD, we targeted sales within our retail shop and we’re pleased with the results.

Moving to retail, I’m very pleased with our first quarter sales results which were driven by strong performance in the categories of women’s apparel, décor and candles. Our women’s apparel continues to be our largest sales category and our fall seasonal merchandise produced solid results during the quarter.

It was clear that a compelling value was very important to our guests and we believe that offering this along with a diverse product mix, helped us deliver and improve sales performance during the fourth quarter -- first quarter.

Looking to the second quarter, we’re well positioned for the holiday season and our stores are stocked with a broad and unique assortment of décor, tree trimming, and gift items. We believe that the upcoming holiday season will be very promotional and will therefore be highlighting our merchandise with a focus on affordability.

We are enhancing our great gifts program, which features $19.99 giftable offerings with an additional collection of unique $9.99 and under merchandise. So for example, you can purchase a remote controlled race car or a desktop drum set each for less than $10.

Turning to our second business priority, optimizing average guests check through the implementation of geographic pricing tiers. Phase 1 of our market level pricing tests began in September and we expect the testing to continue throughout this year and into fiscal 2016.

We continue to believe that we have an opportunity to match our pricing to marketplace demand, but it's still too early to discuss results. We are utilizing a rigorous testing methodology that will be analyzed over multiple purchase cycles and anticipate providing updates during the year.

With regard to our third fiscal 2015 business priority, we have several initiatives that we are focused on during the fiscal year to improve margins and reduce expenses. These initiatives include plate reduction, dining room management, lighting enhancement, and retail labor scheduling.

During the quarter, we completed the rollout and training of our new plate presentation guidelines to the entire system. By establishing new guidelines and reducing our approximately 1 billion annual touches by just over 20%. We expect to reduce dish room labor, chemical usage cost and dish replacement expenses.

Implementation of our dining room management system is well underway. Utilizing this technology at the host stand allows us to optimize our waitlist and seating process, reduce the number of host labor hours, and maximize throughput by converting capacity. We anticipate full implementation by the end of the fiscal year.

As part of our energy management initiative, we’ve begun rebuilding the entire system with new LED lighting technology and from this we expect to reduce our utilities expense while maintaining our overall guest experience.

During September, we completed the system wide update to our labor -- retail labor scheduling and with this we're able to drive further labor efficiency by removing hours on the position. Each of these initiatives will support our plan to reduce annual store operating costs of approximately $50 million to be recognized within the next three years.

Our fourth business priority is to further grow our store base. During the first quarter we opened two new stores, one in Alabama, and the other in Texas. And since the start of the second quarter we have opened our third new Cracker Barrel this fiscal year.

We continue to expect to open six or seven new stores this fiscal year, including our first fusion prototype in the fourth quarter. In summary, our consistent focus on our long-term strategy and our initial execution of our 2015 business priorities led us through a solid quarter of steady revenue growth and strong operating performance.

And as a result of our first quarter performance and updated projections for the remainder of the fiscal year, I’m pleased to announce that we were able to increase our full-year earnings guidance. And with that, I’ll hand the call over to Larry, for more details on the quarter..

Good morning everyone, and thank you Sandy. I’d like to begin by discussing our financial performance for the first quarter of fiscal 2015 and then our outlook for the 2015 fiscal year.

For the first quarter of fiscal 2015, we reported net income of $34 million or $1.42 per diluted share, a 16.4% increase compared to $1.22 in adjusted earnings per diluted share in the prior year quarter. Our revenue in the quarter was $683.4 million, a 5.3% increase over the $649.1 million in the prior year first quarter.

Our restaurant revenues increased 4.7% to $546.7 million and our retail revenues increased 7.5% to $136.7 million. Our comparable store restaurant sales increased 3.3%, as traffic increased 0.8%, and average check increased 2.5%. The increase in average check reflects menu price increases of approximately 2.1% and a favorable mix impact of 0.4%.

Our comparable store retail sales increased 6.1% for the quarter. Our total cost of goods sold in the quarter was 32.5% of revenue, an 80 basis point increase over the prior year quarter. Our restaurant cost of goods was 28.1% of restaurant sales, compared to 27.3% in the prior year quarter.

This 80 basis point increase was primarily due to a shift to higher cost menu items, food commodity inflation, and higher food waste partially offset by our menu price increase.

On a constant mix basis, our food commodity costs were up approximately 3.7% in the quarter compared to the prior year quarter as costs for beef, diary, and sea food were up sharply from last year. Our retail cost of goods was 50.4% of retail sales, compared to 49.8% in the prior year quarter.

This 60 basis point increase was primarily a result of increased mark-downs partially offset by lower freight expense and higher initial mark-ups. Our retail inventories at the end of the quarter which reflects our seasonal build for the holidays where $136.8 million as compared to $135.5 million in the prior year quarter.

Our labor and related expenses were $242.3 million or 35.5% of sales, a 100 basis point reduction compared to 36.5% of sales in the prior year quarter. This year-over-year improvement is primarily due to our continued progress in store level labor productivity.

Our other store operating expenses in the quarter were $130.2 million or 19% of revenue, compared with other $125.3 million or 19.3% of revenues in the prior year quarter. Our other store operating expenses in the prior year quarter, included 40 basis points relating to our general managers conference, which is held every other year.

Store operating income was $88.6 million or 13% of revenue, compared with $81.1 million or 12.5% of revenue in the prior year quarter. Our general and administrative expenses in the quarter were $33.2 million or 4.9% of revenue, compared with adjusted G&A expenses of $34.1 million or 5.2% of revenues in the prior year quarter.

This year-over-year decrease is primarily attributable to lower staffing expenses in the first quarter of 2015, as compared to the same period in the prior year. Operating income was $55.4 million or 8.1% of revenue, compared with adjusted operating income of $47.1 million or 7.2% of revenue in the prior year quarter.

Our interest expense in the quarter was $4.4 million, which is flat to the prior year quarter. Our effective income tax rate was 33.3%, in the first quarter compared to 31.8% in the prior year quarter. The current year tax rate reflects the expiration of the work opportunity tax credit on December 31, 2013.

Our capital expenditures in the quarter were $18.4 million compared to $17.1 million in the prior year quarter, which reflects higher spending on new store and maintenance capital partially offset by the timing of spending on information systems upgrades. Our balance sheet continues to be strong.

We ended the quarter with $105.9 million of cash and equivalents, compared with $57.5 million at the end of the prior year first quarter. Our total debt is approximately $400 million.

But with respect to our outlook, everyone should be mindful of the risks and uncertainties associated with this outlook as described in today’s earnings release and in our reports filed with the SEC. As we announced this morning’s release, we’re raising are full-year earnings guidance.

We now expect total revenue for fiscal 2015 of approximately $2.8 billion which reflects anticipated increases in comparable store restaurant and retail sales in the range of 2.5 to 3.5% and the expected opening of six or seven new Cracker Barrel stores.

A severe winter weather had a significant impact on traffic and sales in the prior year, particularly, in the second quarter and our guidance for the assumed more normal weather patterns as compared to the prior year. We expect increases in food commodity costs on a constant mix basis of approximately 4 to 4.5% for the fiscal year.

We have locked in our pricing on 58% of our expected commodity requirements for the balance of fiscal 2015 compared to 63% at this time of last year. We expect our operating margin for the year to be in the range of 8% to 8.5% of revenues.

Deprecation expense of between $71 million and $73 million and net interest expense of between $17 million and $18 million. We continue to expect an effective tax rate for the year of between 32% and 33%. This tax rate estimates assumes that the work opportunity tax credit, which expired on December 31, 2013 its not renewed.

We estimate that renewal of the WOTC would reduce our tax expense by between $5 million and $6 million or between $20.25 per diluted. We anticipate capital expenditures for the year in the range of $100 million to $110 million. For the fiscal year, we now expect to report earnings per diluted share of between $5 and $0.95 and $6 and $10 cents.

For the second quarter we expect to report earnings per diluted share of between $1.50 and $1.60. Our second quarter guidance, anticipates continued pressure on a retail gross margin. As Sandy noted we expect this holiday season to be emotional. And we’re highlighting value and strong price points in the second quarter.

And with that, I’ll now turn the call back over to the operator to take your questions. Thank you very much..

Thank you, sir [Operator Instructions] We’ll take our first question from Jeff Farmer with Wells Fargo..

Thank you. As the market seems to appreciate judging by how your stock has behaved. Historically there’s been a fairly strong relationship between changes in gas prices or, I guess, more specifically how every mile is driven and your traffic trends.

I was curious what your latest thinking is on that relationship, meaning, is it as strong as it’s been in prior years? And is there a lag in terms of weeks or months before your restaurant see the greatest traffic response through those changes in gas prices, meaning, can we see even greater response next quarter or this quarter?.

Well, why don’t I start that off, and I’ll let Larry maybe add to it. So, first of all you’re right, that we have the gas prices helps. However the correlation that we see strongest is miles driven which of course then is connected to gas prices. But the gas price really speaks to disposable income from consumers.

So certainly during the quarter we saw the benefit of lower gas prices, and would hope to see continued benefit if gas prices stay low certainly in the second quarter from that.

But I want to add to that, that Jeff it was gas prices that contributed to the way the consumer feels, but I think that the -- I don’t want to underestimate how well I think that the company was positioned to capitalize in that environment. So we continue to be a very highly differentiated brand.

I think that the value that we offer in terms of the quality of our offering for the price was phenomenal. I think that the additional choice and the appeal through both the LTOs and the work we’re doing on our core menu worked during the quarter. And then the execution of our field teams which has been phenomenal.

I think has gone a long way to increasing the trust with our guests. So what they were able to count on was consistent, even improving execution, and we saw that through the improvements in our OSAT and the perceptions about value.

So, I think that we did get some help through things like the gas prices, but what we saw were a lot of things that were working to take advantage of that environment. And actually before I let Larry add anything, I’ll ask Chris to speak to how we thought our advertising resonated during the quarter..

Sure. Thanks, Sandy. As Sandy said it was a good quarter for us. I think when we looked back in terms of the parts of our guest base we’re able to activate in the queue.

Really saw a lot of movement amongst women, households under with children under the age of 13, it really -- a lot of our heavy and medium guests in those were certainly a little bit older as well. So when we think about our media buy and we think about our marketing activities tend to be lined up against those groups.

So we thought that was another nice signal of kind of the activities we’ve put in the market and how they performed..

Larry, do you have anything you want to add about?.

I’ll -- just to reinforce the point Sandy made. Most restaurant concepts see a positive sales impact from lower gasoline prices as that puts additional disposable income in the consumer’s wallet. The additional impact for Cracker Barrel, since the Barrel -- since 40% of our guests are non-local travelers.

Through the impact of gasoline prices on miles driven which seems to be a correlation, but as we’ve noted previously appears to be a less strong one..

And we’ll take our next question from Joe Buckley with Bank of America/Merrill Lynch..

Hi. Thank you. Couple of questions. The first quarter retail same store sales up so strong, you didn’t mention categories that were strong.

Did you see greater attachments, more guests buying retail? Or did the guest buying retail just buy more and drive kind of to check up?.

Joe, we did not see really more attachment. I think they bought more items, and I was pleased with our retail results for the quarter as well.

I think part of what we were able to do as both I mentioned and Larry in the script is, we were able to really address the need for value and affordability in the first quarter, and I think that will continue to be important in our plans in the second quarter..

Okay. And then just on the second quarter guidance, Larry you mentioned the gross margin on retail will be down.

Will it be down substantially more year-over-year, are you thinking than what we saw in the first quarter, I mean, because the EPS guidance is kind of for a flattish quarter, and so the sales comparisons look a lot easier in the second quarter.

So I’m just trying to reconcile the guidance and just put the gross margin commentary on retail and perspective..

Sure, Joe the company disclosed in the second quarter 10-Q last year that its incentive comp was below both the prior year second quarter or the 2013 second quarter and additionally was below last years first quarter candidly as a result of the sales and margin performance in last years second quarter.

We don’t anticipate that we will have a similar incentive compensation impact on this years second quarter, and the year-over-year impact from the second quarter of 2014 to 2015 for incentive compensation mostly at the store management level is in the 60 to 70 basis point range which in and off itself is about $0.10 to $0.14 per diluted share.

Additionally the expiration of the WOTC on December 31, of 2013 has an impact on the anticipated tax rate for the second quarter of ’14 versus the actual tax rate for the -- I’m sorry, fiscal ’15 versus what it was in the second quarter of ’14 of about another $0.03 to $0.04 per diluted share.

And that combined with the anticipated modestly lower retail gross margins are the reasons why our second quarter guidance looks relatively flattish..

And we’ll take our next question from David Carlson with KeyBanc Capital Markets..

Hi, I hope everyone is doing well. Thanks for that explanation on the fiscal second quarter really. I wanted to talk about the full year guidance though you guys just grew EPS 16 plus percent, when you back up a 30 basis point benefit from lapping the GM conference that comes in closer to 12%.

So the guidance for the remainder of the year implies the EPS growth was kind of in this low to mid single-digit range.

Given the performance relative to your guidance in fiscal first quarter, I mean, do we look at this outlook as somewhat conservative or there are unexpected costs throughout the remainder of the year that can potentially decelerate the EPS growth rate? And I had a follow up question..

David, adjusted EPS in the -- for the full 2014 fiscal year was about $5.51 as compared to our current guidance for the current fiscal year of $5.95 to $6.10.

And if we discussed Q2, and the reason why the year-over-year guidance appears flattish there, I believe if you look at the implied guidance for the third and fourth quarters you’ll see that those percentage increases are in the mid to high single-digits..

Fair enough. Thanks for that. And then also when you look at the 100 basis point reduction in labor to 35.5% during the quarter, can you kind of help us pick apart how much of it was related to the initiatives such as the, your reduced discount. I know dining management system is underway, but probably didn’t have much benefit then.

You’re doing a lot of utilities, retail labor scheduling.

Can you kind of help us understand how much of that was related to those initiatives versus comp sales gains?.

Sure. Two thirds of the 100 basis point improvement was a result of improvement in hourly labor productivity which is a combination of the initiatives you mentioned as well as the fact that our average check increased by higher percentage than did our hourly wage rate, and one third was driven by improvements in management productivity..

Thank you guys very much..

Thank you..

We’ll take our next question from Alton Stump with Longbow Securities..

Hey, guys its Brittany Whitman on for Alton today. Just wanted to see if your CapEx allocation for 2015 remains unchanged. Cochran, I think that you had said before that $45 million to $50 million was going to be towards maintenance CapEx and the rest for new store investments.

I just wasn’t sure if that had changed or if you were going to ramp up either portion of that at all?.

Yes, to qualify that Brittany, the number that we expect to spend for maintenance CapEx remains about the same. The balance is a mix of new stores and of spending on our cost savings and sales driving initiatives..

Got it. I think that was all I have. Thanks guys..

All right..

You are welcome..

Thanks, Brittany..

And we’ll go next to Michael Gallo with C.L. King & Associates..

Hi, good morning..

Good morning..

Good morning, Michael..

Couple of questions. I wanted to just delve into the plate initiative.

How much stores have it now, and what's the expected rollout of that, and how many you think you’ll have it in by the end of the year?.

It’s throughout the whole chain. I think we rolled -- we tested it for, I don’t know -- it could have been about a year. But we rolled it in the chain, and in October I’m looking at Larry, so it’s everywhere now..

Could you walk through how much benefit that you’ve gotten so far or what you saw in terms of labor savings?.

Well we’re measuring it in a lot of detail across a variety of skill codes, but we’re not -- I guess we haven’t disclosed the detail any more than what I really gave in the call which is that we’re looking and are seeing improvements in labor, in chemical usage, utility expense and dish replacement costs.

We’re also getting good feedback from our employees about how it is affecting both the employee experience and the guest experience..

Michael, just to add on to that.

We had said in the fourth quarter conference call back in September that we anticipate that the annual savings in 2015 fiscal year from our cost savings initiative which include our plate reduction initiative, our dining room management initiative, our energy management initiative, our retail labor initiative will in the aggregate come to approximately $20 million and that continues to be our expectation..

Okay, great. And then I just wanted to dig in on licensing.

Can you update us there, how many doors you’re in now? How are the products doing?.

Well, I’m pleased with the progress we’re making. I think we’re up in the 14,000 or so range. Our bulk deli products are doing well. We’ve recently added summer sausage and jerky. I know Kroger did a big promotion about that.

We’ve got hams, which of course is seasonal item on sale now in a number of locations, and we still plan to launch new products with a second licensee, we haven’t announced in the Spring..

Is it too early to talk about what kind of overall contribution you expect to get from that?.

Yes. I think it’s too early..

Okay, great. Thanks very much..

Thanks, Michael..

And we’ll take our next question from Bob Derrington with Wunderlich Securities..

Yes, thank you. Sandy and Larry I’m not sure who to direct this question to. What I’m trying to understand is, the color around your guidance, directionally you just reported a very strong quarter for same store sales for both year or two, retail and restaurant segments. And your guidance for the year, I think directionally is 2.5% to 3.5%.

Yes, each of the success -- the upcoming quarters for the balance of the year are considerably easier theoretically, year-over-year.

So, I’m just trying to understand, what is it that you envision in the future versus what seems to be a little bit more supportive macro backdrop, lower gas prices et cetera that would keep your guidance where it is, for the quarters to come..

I’ll let Larry add on to this. But first of all some of what was baked into our initial guidance just as we assumed that we would have some of these improvement, certainly better weather environment and a number of the initiatives that we were planning especially on the marketing and menu side we had hoped would resonate.

Larry, what do you want to add to?.

Yes, Bob, I’ll offer a couple of observations.

One is, although we have tightened our expected range of commodity cost increases, we’ve not changed our basic projection that anticipates our commodity cost on a year-over-year basis are going to accelerate in the second quarter versus the first quarter, and in the third quarter versus the second quarter before showing some moderation in the fourth quarter and that’s reflected in our guidance.

Additionally to just reinforce Sandy’s point, we are cautious as to retail margins both as we go into what we believe is a promotional holiday season and to some extent into the balance of the year..

But Larry, I guess my question isn’t focused so much on the margins and the earnings as it is the top line.

And clearly the first quarter was a very good quarter, and so I’m just trying to understand, do you anticipate your check average coming down for both restaurants and retail that would make your same store sales guidance for the full fiscal year to be -- what seems to be maybe overly conservative from our view?.

Bob, I can't comment on conservatism of your view, but I will observe that on the restaurant side we had same store sales in the first quarter of 3.3% and our guidance for the year is 2.5% to 3.5% which doesn’t necessarily imply a de-acceleration..

Very good. Thank you, Larry..

Thanks, Bob..

We’ll take our next question from Steve Anderson with Miller Tabak..

Good morning, Sandy. Good morning, Larry. Just to follow up another question on commodities. You said that you’re contracted for only 58% of your food commodity needs for the fiscal year.

Can you discuss what categories you are yet to contract?.

Sure. The categories that we have not -- that we’ve locked in half or less of the major categories that would be, beef, pork, poultry, dairy. The categories that we believe that now is not the time to be entering into long-term with fixed price contracts..

Okay. All right. Thank you..

Thank you, Steve..

And there are no further questions left in the queue at this time. I’d like to turn the call back over to Ms. Cochran for any closing remarks..

Well, thank you all for joining us today. I’m pleased with the first quarter results, encouraged by the initial progress we’ve made on our business priorities, look for forward to building on the success throughout the remainder of the fiscal year. We appreciate your interest and support, and wish you a safe and happy holiday season..

Ladies and gentlemen, this does conclude today's conference. We appreciate your participation..