Good morning, and welcome to the Cracker Barrel Fiscal 2021 Second Quarter Earnings Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Adam Hanan. Please go ahead..

Thank you. Good morning, and welcome to Cracker Barrel's Second Quarter Fiscal 2021 Conference Call and Webcast. This morning, we issued a press release announcing our second quarter results. In this press release and on this call, we will refer to non-GAAP financial measures for the second quarter ended January 29, 2021..

Thanks, Adam. Good morning, everyone. Thank you for joining us, and I hope everyone's continuing to stay safe and healthy. Before I begin, I'd like to take a moment to introduce Doug Couvillion, our Interim Chief Financial Officer.

Doug has been with Cracker Barrel for over 20 years, and has served in a number of executive positions, including Corporate Controller and Principal Accounting Officer; and most recently as Senior Vice President of Sourcing and Supply Chain.

Doug has a deep knowledge of both Cracker Barrel and the restaurant industry, and I'm confident that his perspective and leadership will contribute to our success and help drive long-term value creation..

Thank you, Sandy, and good morning to all. I'm pleased to be on the call with you today. For the second quarter, we reported total revenue of $677.2 million a decrease of 20% compared to the prior year quarter. Our restaurant revenue decreased 21.4%. And our retail revenue decreased 14.8%.

In the second quarter, we experienced a significant increase in the number of dining room closures as well as more restrictive limits on capacity, due to the resurgences of COVID-19. At the peak in December, approximately 120 stores were operating with closed dining rooms..

Thank you. We will now begin the question-and-answer session. Our first question is from Gregory Francfort from Bank of America. Please go ahead..

Hey, thanks for the question. Sandy, the first question, I guess, it's really a two-part question. And it seems like the way a lot of investors are looking at this group is a recovery sales and a recovery margin framework.

And so I wonder if you could give your thoughts on maybe why -- I don't know if it happens in 2022 or 2023 or late in 2021, why there might be an upside case for AUVs post pandemic versus pre pandemic? And then why on maybe even a 100% sales recovery rather than 105% margins could be even higher. Just any thoughts on that would be great.

Appreciate it..

Okay. Well, we're -- I think, everyone is trying to think about what is life as we sort of move past the pandemic and I'm exciting -- I'm excited that we have a number of sales driving initiatives to start with. So, beginning with the dine in the completion of our dinner initiative, which we started a couple of years ago.

So our third phase will launch in April, which I think will provide guests with a reason to come back. We're making progress on beer & wine. I'm excited about that. We've got a lot of progress on our digital store, which I think will do a lot in terms of guest loyalty and it will help facilitate our off-premise business.

In terms of our off-premise business, we've seen explosive growth. I think that we view that we will be able to maintain over 50% and we're hoping that we'll be able to keep about in excess of 50% of the growth in that category. So I think there's a lot of good news on the top line.

In addition, we've been working on productivity enhancements and cost savings initiatives. Doug spoke about the cost savings progress we're making.

Things in the productivity side, you heard about our menu simplification progress that we made over the last few months, which I think really position our field teams to be able to deliver a more consistent experience, to improve productivity and to allow room for future innovation.

So I think we've got a lot of work on a variety of areas that will position the company when our guests come back to experience the brand however they want to..

Thanks for the thought. I’ll hop back in the queue..

The next question is from Todd Brooks from C.L. King. Please go ahead..

Hey, good morning everybody. I just have a couple of questions.

One, if we look at the Cracker Barrel footprint and the kind of obscene winter weather that we've had in a lot of the southern tier the Southeast, can you maybe talk about what percent of the store base has been impacted due to the storms here in February? And maybe if we can walk through whatever the projected impact from the storms caused on the thinking around the operating margin improvement guidance sequentially from fiscal Q2 to fiscal Q3?.

I can start and then Doug I'll let you add more color. I don't know that Todd if I can give you exactly the percentage. We had stores -- of course, Texas was impacted. I think it is peak we may have had 126 stores that were closed either because of the snow conditions or because our employees weren't able to get to the stores.

Beyond that though we had a number of communities when the temperatures in the south reached the kind of places they were over the last week. Even when they weren't closed it keeps people from being out in it. So our business was broadly and dramatically impacted. It's also really disruptive in terms of production and a lot of those things.

All of that though was baked into the guidance that we gave through the third quarter. So, and one of the reasons we're not comfortable giving quarter-to-date guidance is that we really just started the quarter. We were into it a couple of weeks and then the storms hit.

So I think our quarter-to-date number would be a little -- wouldn't be as meaningful as you might hope.

But Doug, do you want to add any more?.

Sandy, thanks. I think that as far as the regional perspective and from the weather, you've nailed it down there. I think -- and just to reiterate what Sandy said, our expectations for February from a sales and operating perspective were included in our margins.

I think it might help if I talk to you a little bit more about what we're expecting with the 50 to 100 basis points range that we gave related to the improvements that we expect to see sequentially.

When we look at things, we really see the largest driver being a favorability in our cost of goods sold because of a significant change -- continuing changes on our channel shift. We expect seasonally to have lower retail cost of goods sold.

Some of that's a continuation of the effective sell-throughs our team were having and reduced promotional activity that we expect to see that carry through the quarter.

We also expect as our off-premise business continues to shift back into the dining room, we will have lower restaurant cost of goods and that's kind of reflecting a change from the second quarter when they are higher because of Heat 'n Serve. We also start to have a little bit of menu leverage. We took menu pricing late in January.

So we'll see the benefit of that for the full third quarter. So that pretty much kind of takes you through our expectations on the margins there as we move through Q3. .

That's very helpful, Doug. Thanks. And then just my follow-up question, if we knowing that there's too much variability to talk about quarter-to-date trends.

If we look back to the fiscal second quarter and if you look across the store base, could you maybe talk about spread and performance maybe some of the earlier to reopen markets or maybe the more liberal capacity markets versus some of the more restricted markets so that we can get an idea of maybe in a reopening scenario what some of the base might recover to as we see capacity restrictions lift? Thank you..

Well, we're monitoring very closely the individual stores and regions. And not surprisingly, the business is better in those markets and communities where there are the fewest restrictions and we are seeing that, but it's a little more complicated because you could say well then Florida would potentially be a strong zone.

And we're pleased with the progress, we're making in particularly the Southeast where the restrictions have gone. But if a store is dependent on tourism, it's probably not feeling it.

So we are not necessarily seeing the travel to some of our destination stores yet that we are hoping to see certainly in the summer and as we move through the spring and vaccinations sort of open up and people get comfortable moving around a bit more. .

The only thing I would add to that is I think we've talked to you in the past about on-interstate versus off-interstate stores. And with the softness in travel, we see a little bit less of a recovery in our on-interstate stores, but we're picking up in the off-interstates, which is a good thing to see. .

The next question is from Jeff Farmer from Gordon Haskett. Please go ahead..

Thank you. I have a couple of questions and a follow-up. So I will start with the follow-up. Your F2Q off-premise sales were I think in the range of $17,000 to $18,000 per week. Pre-COVID I think you guys were $7000 to $8000 per week. I think you just said that you were looking to keep in excess of 50% of that sort of increase in off-premise.

But 50% of what I guess is the question.

What number you're referring to? Because you did see that seasonality -- seasonally high sort of F2Q off-premise number, so 50% of what is the follow-up question?.

I'll take that Jeff. It's probably good that I clarify. What we're looking to try to model here as we look sort of longer out further is how sticky is our off-premise business. And so first of all, it varies by channel in terms of our view about it.

Individual continues to be the largest channel, which we think some of that is going to convert back to the dining rooms when they open. We think our catering channel is going to grow when people start doing gatherings. And we think our Heat n' Serve, we're hoping it's pretty solid.

We've been doing a lot of work on the assortment there and we think that is a really interesting place for the brand to be. In general though what I meant by my comment is that long-term, we'd like to believe that we can retain in excess of 50% of the growth that we've experienced in our off-premise business over the last year. .

Okay. And then on the questions, the fiscal third quarter same-store sales guidance I think that implies average weekly sales of roughly $62,000 a week if my math is somewhere close.

Is that the run rate you're seeing now, or is that a run rate you anticipate growing to as you move throughout the quarter?.

Yes. That's -- it's a good question and I'll clarify a couple of different ways. No, that's not what we're seeing right now. We certainly were encouraged by the trends that we saw in January coming into February. We think that will grow into the sales expectations that we provided over the remainder of the quarter.

And I think just to add a little clarification as well; we did guide versus 2019 and gave you a range of 11% to 14%. And when you convert that into what we think comps look like versus 2020 that gets you around 50% on the restaurant side. And when you look at that on retail, it's in the range of 65% to 70%. .

Right. Okay. And then the final question. You did touch on this in the prepared remarks, but as it relates to the $50 million in cost savings that you're pursuing this year and the offsets, I think you gave a little bit of color here, but there's obviously the rent offset. I think there's roughly $8 million in incremental G&A expense.

I might have missed some stuff.

But just some additional clarity there in terms of what that gross $50 million of cost savings could look like on a net basis in fiscal 2021?.

I think -- so to remind you as we've talked about those cost savings, we do have several offsets and a lot of the offsets were related to our sales driving activities. And the largest piece of that was related to our beer and wine expenses.

We also are making the investments in our digital business and we also have some offsets related to the health and safety measures, which have been in the numbers. And as we think about our business model post-COVID, we believe those health and safety measures will come out of the expenses.

Really not prepared to talk about exactly what that looks like until we get probably into the fall when we have a little better perspective from our own planning and we give guidance for 2022..

Okay. Thank you..

The next question is from Jake Bartlett from Truist. Please go ahead..

Great. Thanks for taking the questions. My first is about your expectations for the third quarter. And this goes back to the February results. And I know you're not sharing them. But -- because if we had those we'd be able to understand what you expected for March and April.

But can you just talk broadly even how close to fully recovered do you think you'll be by April? It seems like within this guidance there's a scenario where you're actually very close.

If you can speak to your the confidence of -- the speed of the recovery that you're expecting?.

Hey, Jake, we thought we were going to make you happy by giving you third quarter guidance on that..

I am. I love it..

No. We're not -- month-over-month, it improves as vaccines, stimulus money, people feel better, restrictions loosen. So we're hoping that it just continues to improve as we go continue through the third and into the fourth. But we're not prepared to break it down month-by-month at this time..

Okay. And the comment on margins, I think the comment was that you'd expect flat operating margins in 2022, which I think sales were at 2019 level. Maybe if you can kind of repeat that. But I wanted to make sure I understood the moving piece is just in light of the margin savings, the $50 million in savings that you've gotten.

It seems like you could be at a higher margin in 2022 than you were in 2019.

But maybe if you could just clarify that comment?.

Yeah. Let me give you a little bit of perspective on that. I guess, first off, we really haven't given any details that relates to 2022 yet. And I think the couple of things you have to keep in mind as we -- when we do guide to 2022 is that we have the changes related to the sale-leaseback, which will change our operating margins compared to 2019.

So there will be some step down for that, which would then be offset by some of the cost savings initiatives that we have and then the rollout of some of the ongoing costs we've talked about the investments and a few things like that. But it's really not going to be a flat number..

Got it.

So maybe to put it in another way, if -- would you expect margins to be higher or lower than 2019 at the same sales levels if 2022 was the same sales level as 2019?.

We're not providing guidance on margins right now for 2022..

Okay. I was just trying to understand the moving pieces. But just lastly Doug, if you can clarify where we are in the $50 million of savings. I think you mentioned what was saved in G&A, but maybe I missed it the impact in labor. So maybe just trying to make sure, we understand what's left to come of that in the third quarter.

And then on pricing, I just want to make sure I understand, I think what it implies a 3% pricing in the back half of the year. And I just want to double check that.

And is that -- what is driving -- if that is the case what is driving the kind of much -- the more aggressive pricing outlook?.

Well, I'll start on the -- just on general on the pricing and then Doug can give you the -- any additional detail on cost savings, which -- so first of all on pricing as we mentioned in prior quarters, we were going to be conservative in the first half.

So we guided for the year to 2%, but we were conservative in our initial pricing actions for the first half. In the end of January, we took another pricing change and I'm trying to not say something that Doug wishes I didn't disclose. Then we do plan some additional pricing actions over the course of the year selectively.

All of that getting to the guidance for the year of -- it was about 3%?.

Yes, yes. .

3% percent the price.

2%?.

Yes, sorry..

In terms of our cost savings, Doug what else do you want to -- you would or moving along. The cost savings are in G&A and they're also in-store operating expenses..

Yes. So the largest part, I think, we've provided this on the September call was that the larger part of it was coming out of the store operating area. We achieved about $20 million of cost savings in the prior year.

So that left the balance to be earned this fiscal year and about half of that was in Q1 and the other half in Q2 roughly -- I'm sorry Q2 and Q3 over the course of this fiscal year. But we've really wrapped up the cost savings with this fiscal quarter. There's a little bit left that will carry over the balance of the year but it's pretty small. .

Great. I appreciate. Thank you..

The next question is from Brett Levy from MKM. Please go ahead..

Great. Thanks. You started to talk a little bit about some of the progress you're making at Maple Street.

How should we think about what you can do from a development standpoint and not just throughout this year and into next year, but also what can we see longer term out of it went to a point where it starts to become a more meaningful needle mover from a profit contribution? And how are you thinking about what you may have learned over this course of this last year for the traditional Barrel locations?.

Let me start and I'll hit the Maple Street. And then touch on the Cracker Barrel. So first as I said in the prepared remarks, we're really pleased with the performance and they've exceeded our expectation both in the comps and in the progress they're making on their operating income margins.

We've been really so focused on making sure we had the best sites as we opened new locations and that we understood what the best site look like which is why we've probably gone a little slower than we had originally plan to. I'm excited about the sites that we have identified.

As I mentioned there'll be three that opened this year the first one in Louisville. Second one today is in Murfreesboro. I think that as we will be entering new markets as well as looking for additional locations around existing markets.

And I'd like to say that in the next fiscal year, we'll be looking at growth in the double-digits back to where we'd originally thought in that sort of 15% to 20% range. So then it starts to become meaningful on both -- on certainly the top-line numbers for us.

In terms of the Barrel, I wasn't -- what did you mean in terms of real estate or in terms of the P&L?.

Well I was -- I'll start with P&L and then I was going to lead that into with all that you've learned from off-premise and the continued progress you're making digitizing the store what are you seeing from a -- what are you learning from an ability to get closer to the customer understand their habits more and maybe even drive some labor efficiencies just through the technology and the tests we've discussed in the past..

Yes. Well so I'll go back on the P&L is we're really focused on initiatives that drive incremental top-line and then improve productivity and then the cost savings I've already outlined those. In terms of what we're learning on our real estate, we're certainly trying to understand the impact of off-premise and how that should impact our store design.

So is everything from how the parking lot should be set up dedicated to-go space. We've been maybe not pleasantly surprised at how popular our front porch dining has been. So we're thinking about that as how that should play into our prototypes.

Certainly as we understand technology more that will get incorporated into our -- into both the design of our boxes as well as the equipment that we're putting in -- in the back of the kitchen.

And as we continue through with our menu evolution, like I said, we're about to complete phase 3 of our dinner work then we'll start on breakfast work, we will be thinking about what, kind of, equipment and kitchen layout would allow our operators to deliver that menu more productively.

So we've got a lot of work against how to improve the productivity of new boxes hoping that that will potentially allow us to continue and maybe even increase the number of new units Cracker Barrel units that we feel comfortable opening. .

Thank you. That was helpful..

The next question is from Alton Stump from Longbow Research. Please go ahead. .

Thank you. Hey, good morning. I just wanted to ask first on kind of the off-premise margin front obviously being lower which is understandable.

But as kind of think long term given the fact that that probably will be a bigger piece of your business even after COVID goes away eventually that -- how do you think about kind of ways that you could kind of close a gap on margin or whether it's targeting more pricing on off-premise and or hopefully getting scale cutting that cost which kind of moving pieces you think that could over time potentially kind of close the gap on your off-premise margin versus on-premise?.

Sure. So I'll take that. We're doing a lot of work. We're doing a lot across the brand on a whole variety of areas about how to improve our margins, but specifically in off-prem so individual to go probably the biggest thing we're working on is how to increase the check.

Because if you just look at the rate on individual to go, it's actually pretty well in line with dine-in it's that we would like to get more of attachment either beverage or an add-on or a retail item or something to get the check up. We're working on our supply costs. So that -- because that's a big part of our off-prem business.

We're looking to reduce labor and that's a technology play whether that's getting more guests to go through our digital app so that they order that way and pay that way which reduces the labor that we need to provide. We think in some of our offers like our Heat n' Serve we've got pricing power. And we're working on new offers that will appeal.

I mean just these individual box meals that we've launched in the last week or so is a catering offer. That was in response to both the pandemic interest in having individual kind of meals versus buffet, but also just a lot of guests they need an individual offer to just -- that's what best fits the occasion they have.

So I think that our teams; our culinary teams, our technology teams and our operators are working and attacking every part of delivering an off-premise experience which is why we believe we will be able to make some progress on our off-premise margins. .

Great. Very helpful. And then a quick follow-up. I'll hop back in the queue which Doug, I think I heard you correctly that you said that the tax rate will be 100% in 3Q and 5% in 4Q.

Just what are the moving pieces drive that big of a volatility 3Q versus 4Q on the tax rate front?.

Yes. So when you think about taxes the large gain that we had for the sale-leaseback caused a relatively high tax rate compared to the rest of the year. And then we had the carryback that we recorded in Q2 both of which have an impact on cash taxes paid. And so it to some degree taxes are kind of a solve when you're recording them on an interim basis.

So as we look at our effective rate for the year and you apply that against our earnings through each of the next quarters, that's just the rate that it takes to solve. So really those -- the things that happened in the prior periods that are driving it as opposed to activities in the next two quarters. .

Got it. Thank you..

You get the prize Alton for -- we didn't know who was going to ask the tax question. I got to tell you nobody here was really excited about right..

The next question is from Bob Derrington from Telsey. .

Yes, thanks. Doug if you could clarify that last point on the tax. If we think about it, I assume you're talking about the GAAP tax during the quarter.

Would you be reporting the third quarter on an adjusted basis?.

I was talking about the GAAP tax rates and the guidance that we gave. And ultimately when we report the third quarter it would be on a GAAP and adjusted basis so you have the visibility. .

Okay. All right. That's terrific. I assume that, but I hate to make any assumptions. And also as it relates to the menu pricing could you clarify for us. As I look around the industry most of your peers generally are taking menu pricing a little bit more so in markets where minimum wage rates are going up.

Is that generally kind of the thought here as far as the incremental menu pricing that you've taken and are anticipating?.

Yes. We introduced pricing tiers Bob I don't know 4, 5 years ago largely as we started moving out west and our growth was in areas where there was pretty significant increases in minimum wage. So we're already positioned to do it.

And yes as we think about our pricing increases we are looking at and taking more price in areas where we need to offset minimum wage increases. .

Got you. Okay. And Doug I appreciate the clarification on the same-store sales converted to adjusted for this year versus last. As I look at some of the numbers, it appears as though that's pretty much in line with current consensus expectations.

But, as I'm thinking and as we look out to the fourth quarter, the July quarter, last year travel trends were significantly impacted by the COVID spread.

And as I look at some of the national surveys recently, talking about pent-up demand for travel, it certainly seems like it's going to be pretty aggressive expectations by consumers to get out on the road and head for the beaches or someplace else.

Sandy, how do you find enough people to staff the stores, if in fact, the trend sequentially continue to build within this particularly strong travel season during the summer?.

Well, first, let's all hope that once we are getting through this that America does in fact want to get out on the road. And while they're out, we are going to be ready to feed them. Our operators, I can tell you, are extremely focused on ensuring that we are both staffed and trained as we head into that.

And one of the benefits that we had through the actions that we took from the very beginning of the pandemic is that we've really focused on employee retention.

And I think our operating teams have done a phenomenal job of retention of our employees through whether it's a keep in touch plan or the kind of benefits that we provided over the course of this thing and the kind of flexibility that we've been able to provide.

We have focused on what is the right level of staffing and how do we get there in connection with our HR team so that we are ready..

Got you. Thank you for that, and then last question.

You had previously talked Sandy, about a store in which you were doing some testing with different ideas and things about virtual brands, anything else that you can share with us at this point about some of those thoughts?.

Well, yeah, so what we -- what you're probably referring to is our CB kitchen. So, I'll just remind you that what we tested in the Indianapolis market, as we convert a Cracker Barrel box, which we converted to just an off-premise only facility. I'm pleased with what it's done. It's only been in operation for a few months.

But I do believe that its ability to provide Heat n' Serve offerings, for example, during the holidays really help us serve that market.

We're continuing to test in there and understand the opportunities that we have there, especially when catering comes back to that market, how to dedicate a facility and how that might allow us to do additional offerings there to supplement the capacity that we have in a market. Actually, we're excited.

We're launching a virtual brand test there on Friday. It's chicken and biscuits. It will be provided sort of delivery-only. And it's a unique opportunity to see how an offer of something that Cracker Barrel is known for resonates as a delivery-only offering and we'll keep you posted as we go along..

That's exciting.

And then last thing, so you mentioned the Heat n' Serve, the prime rib meal, would be available during Easter time, this coming Easter?.

That's correct..

Terrific. Well, we really enjoyed it around the holidays. Thanks so much. Take care..

The next question is from Jon Tower from Wells Fargo. Please go ahead..

Hey. Thanks for taking the call and question. I just have a few if I may. And just kind of following up a little bit on the wage question earlier. Just perhaps you can help us understand the structure of wages in the store today.

I know it differs by state, but perhaps the minimum wage or the percentage of employees at the store that are subject to the minimum wage levels? And then, how much of that is tip credit? And then, maybe Sandy or Doug, from a higher level kind of your thoughts on longer term wage rate inflation, because there's a few different forces playing out the market still uncertain as to what's going to happen from a government level, but then there's a large retailer that's bumping up their wage rates right now and that might be good for your top line.

But on the other side, there might be some pressures on trying to retain or bring in new talent on the other side of the equation. So, I'm just -- hopefully, you could provide a little bit of color around that as well..

So I assume what you mean on mix is that in a Cracker Barrel restaurant, we have tipped and non-tipped employees. And depending on the rules in each market, the minimum wage actually what's more important to us is the tip credit. Or what can have a bigger financial impact to us is a change to the tip credit versus the change to the minimum wage.

So we're monitoring both. The tipped versus non-tipped mix, I don't -- Doug, I don't know if you know that off the top of your head.

One of the issues for us has been in an environment where we've shifted out of the dining rooms and into off-premise business that has shifted that mix, into more non-tipped employees, which tend to be more expensive at a higher wage rate. So we're of course watching the way this is unfolding.

And in the states that we're in, and the communities we're in it will take a few years to work its way through. We will be able we believe to offset some of these pressures through pricing increases. And certainly we're focused on how to offset all of our labor needs through productivity improvements and technology.

So I'm not -- does that respond to your question?.

Yeah. It's just a split potentially at the store level if you have that, maybe I can follow-up later the difference between, the tip versus non-tip, but that's fine if you don't have it right now. I can move on to another question..

And what you probably want is a normalized one. Why don't, we follow-up later, because you don't want the one we have right now was probably….

Okay..

… when dining rooms reopen..

Right, exactly. Yeah. No, I appreciate that. And then, just following up earlier, Sandy you've made comments about porches potentially being -- or bigger porch being part of the prototype going forward. And that's sparked the question of the porches.

And I think spring last year were a nice addition to keep sales coming as in-dining room restrictions were there.

So what's your thinking about spring and summer this year? Are those going to be options again in fiscal 2021 and into 2022, or are those going to be taken off the table?.

No. Actually we're actually talking about that right now, here in the store. I think we've got about, maybe a 125 or sort of official front porch dining stores, meaning stores that we have provided outdoor furniture for.

I think there's, probably 200 or so unofficial front porch dining rooms, where the stores have just move some of the dining room furniture since we had excess furniture, as we've reduced capacity of the dining room out to the front porch to service guests. I think that it will definitely be a part of the third and fourth quarter.

And we're evaluating to what degree it's going to be permanent. It -- the guests love it. It's not always very easy for our field teams to take care of guests out there. We really didn't design access to the front porch in a way that works as well as it should and the coverings if you in a rain and some of that.

So I think our operators are working through, where we should continue to have front porch dining. And what that looks like..

Got it. Thank you. And then, just lastly on the beer & wine test, I know you'd mentioned that it expanded to a few more stores and it was coming within your expectations.

Can you talk about the impact that it's having to those stores from a sales standpoint? And even I would assume a lot of it is being consumed at dinnertime, but if maybe you'd be willing to break out the mix between lunch and dinner.

And any surprises you're seeing so far with the program as it's rolled out?.

Well, so the mix -- and this is I think what we actually said in the last call. It's about 1% of sales. And we believe we can double it. And I still believe we can double that. We continue to be optimistic about this.

One of the things that we've seen is because Florida was the first market to launch beer & wine and the COVID restrictions have reduced significantly. In fact, I don't even know if there are any in Florida right now. We've enhanced our emphasis on marketing and training there. And I'm seeing real positive results in Florida.

So that bodes well for the rest of the system. It's surprisingly the number one seller though, continues to be mimosas. So it's not necessarily the dinnertime that you say, although, people do drink mimosas even when they get pancakes at dinner. But mimosas, is by far our leading seller strawberry and orange.

We have found -- we've tested some new items. We put a few tests in then the -- probably the highlights from that may be menu additions like Sangria. And Blue Moon which we believe, have -- we might be adding to the lineup. So the team the culinary team is working on the assortment.

The field operators are working on, how to deliver that new beverage program effectively and appropriately. And our marketing team is really working hard on how to tell our guests that we even have this, particularly an environment where we really can't have any point-of-sale or very much point-of-sale information on the table..

Got it. I appreciate all the color. And best of luck. Thank you..

There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Sandy Cochran, for any closing remarks..

Yeah. Thank you all for joining us today. Cracker Barrel continues to be one of the strongest and most differentiated brands in the industry. I remain confident in our strategy and initiatives. And I believe we're well positioned to drive strong performance when the industry normalizes. We appreciate your support.

And look forward to speaking to you in a few months..

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