Welcome to the Cracker Barrel Fiscal 2021 Second Quarter Earnings Call. All participants will be on listen-only mode. Should you need assistance, please signal conference specialist by pressing star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I'd 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 29th, 2021. The second quarter non-GAAP financial measures are adjusted to exclude the non-cash amortization of the asset recognized from the gains on our sale-leaseback transactions and their related tax impact. 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 page of the press release includes a reconciliation 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 Interim CFO, Doug Couvillion, and Vice President of FP&A, Jeff Wilson. Sandy will begin with a review of the business and Doug will review the financials and outlook. We will open up the call for questions for Sandy, Doug, and Jeff. 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 furnish 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? 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's 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. Today, I'll begin my prepared remarks by briefly discussing our second quarter performance. Then I'll discuss some of our upcoming plans and provide updates on several initiatives. At the time of our last call, the industry had experienced an increased number of dining room closures and restrictions due to the nationwide resurgence of COVID-19, and this situation continued throughout most of our second quarter. As a reminder, the second quarter is a key period for us due to its special connection with the holidays and our historically higher seasonal volumes, which are driven in part by seasonal travel. As a result of the increased dining room closures and capacity restrictions, as well as the impact of reduced travel, our comparable store sales performance declined compared to the first quarter. Our margins were also pressured by the higher mix of retail and off-premise sales and operational inefficiencies related to the COVID challenges we face. Despite the volatile environment, I'm proud of how our teams provided our customary hospitality and a safe experience for our guests, whether they dined in our stores or enjoyed our scratch-made meals in their homes. We continued to make progress on our key initiatives, and we had a number of highlights during the second quarter, which I'd now like to speak to. First, we saw high demand for Heat n' Serve, including our new, smaller family dinner offering, which proved to be very popular during the holidays. We believe the continued success of Heat n' Serve reflects the trust guests have in Cracker Barrel to provide a delicious home-style meal for these occasions, and we're pleased to be a part of so many of our guests' holiday celebrations. Second, we continued our Menu Evolution Initiative by further simplifying and streamlining our menu. We believe this initiative, which has eliminated approximately 20% of our menu items since this summer, reduces complexity and increases consistent execution while still preserving the breadth and variety of offerings that our guests seek. Third, our Christmas and gift-giving assortments helped us deliver strong retail performance despite the COVID-19-impacted environment, as our unique merchandise and compelling price-value relationships resonated with guests. Additionally, I'm proud of how our retail teams continue to effectively manage inventory levels in a very dynamic environment, which helped us achieve higher margin rates compared to the prior year quarter. Lastly, Maple Street continued to successfully manage through the pandemic. They had a strong quarter, including several weeks of positive comparable store sales at the end of the quarter when compared to the weeks in the prior year, even when excluding the benefit of being open on Sundays, and their results exceeded our expectations. Looking ahead, we're optimistic about our sales recovery, which we believe will be driven by a decrease in COVID cases, more widespread availability of vaccinations, stimulus spending, and pent-up demand. I now want to speak to some of the sales drivers we plan to drive both dine-in and off-premise performance. We remain focused on menu innovation, and I'm excited that we'll be executing the third phase of our Menu Evolution Initiative. This includes introducing new offerings to our core menu in the coming months, such as Hand-Breaded Chicken Tenders, which will include both a classic and sweet and smoky offering. We believe these items further extend our strong equity in the signature fried chicken platform that we launched in the back half of fiscal 2019. We continue to make progress on and are pleased with our beer and wine initiative. The beer and wine program is now available in approximately 350 stores. Performance has been in line with our expectations, and we're looking forward to having these offerings in approximately 600 stores. Unfortunately, due to COVID-related delays in the permitting process, we now expect it'll take until the first quarter of fiscal 2022 to achieve the full rollout. We also continue to be pleased with our new digital platform that provides an integrated and improved user experience. We've seen strong website traffic and conversion, and we believe the digital store contributed to our off-premise performance in the second quarter. Looking ahead, we intend to further leverage its capabilities and introduce additional enhancements to reduce friction and improve convenience for both dine-in and off-premise guests. We believe our digital store will allow us to extend our hospitality in new ways and empower guests by giving them more control over their journey with us. We recently introduced boxed meals for our catering menu, which include new catering-only Meatloaf Sliders. We believe these provide convenient and complete home-style meal solutions, and that the individually packaged meals will appeal to guests both during and after the pandemic. We plan to further strengthen our differentiated offerings by featuring Hand-Breaded Chicken Tenders and additional planned catering offers, such as our Sunday Homestyle Chicken sandwich. While catering has been pressured during the pandemic due to gathering size restrictions and remote work arrangements, we continue to believe there's growth potential in this category. We're looking forward to the Easter off-premise occasion, and to provide variety, we will be complementing this year's traditional Heat n' Serve ham meal, available both as a feast and a family dinner, with a new Prime Rib Heat n' Serve Family Dinner, which serves up to six for $109.99, and which was well received in various test stores over Christmas. While the Easter occasion is smaller than the Thanksgiving and Christmas occasions, we're optimistic that we will again see strong demand for our Heat n' Serve offerings. In addition to these sales-driving initiatives, we are also working to strengthen our margins. I'm pleased with the progress we're making on our cost savings, and we're focused on driving increased efficiency by improving productivity and enhancing off-premise profitability. We believe these initiatives will contribute to our continued recovery on the top line, as well as margin improvements over the remainder of the fiscal year. Turning to Maple Street, the team continues to work on building the new unit pipeline and refining operating processes and systems to support the scaling of the brand. From a development perspective, our focus has been on securing the best sites with appropriate occupancy rates. Fiscal year- to- date, Maple Street has opened two company-owned units, one of which actually opened today. Although our progress opening new units has been slower than anticipated, we remain highly confident in the brand, their business model, and their growth potential. In closing, our second quarter was challenged due to the resurgences of COVID, which pressured our sales and margin results. Despite this, I'm proud of the work of our teams, and we continue to make progress on key initiatives. While we anticipate ongoing challenges stemming from dining room capacity restrictions and the economic impacts of the pandemic, we're optimistic that assuming no resurgences, our sales trend will continue to improve and will help drive sequential quarterly improvements in our operating income margin in the second half of the fiscal year. We're diligently working to further strengthen our business and ensure we're prepared to drive strong performance when the industry normalizes. While we don't know when the inflection point will be, we're looking forward to welcoming more of our loyal guests back into our stores and providing the hospitality and scratch-made food we know they're craving. And with that, I'll turn it over to Doug to review our second quarter results. 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. The elevated closures and restrictions resulted in second quarter comparable store sales declines that were larger than our first quarter declines. For the second quarter, comparable store restaurant sales decreased 21.9%, which consisted of a traffic decline of 24.2% and a 2.3% increase in average check. Pricing in the second quarter was 1.2%. And as a reminder, we purposefully were more modest with our pricing in the first half of the fiscal year and still anticipate approximately 2% for the full fiscal year. Our off-premise sales performance during the quarter was strong. Comparable store off-premise sales grew 78% compared to the prior year and represented approximately 30% of total restaurant sales. While our off-premise growth decelerated relative to the first quarter, the second quarter is our seasonally strongest off-premise quarter. We again saw high demand for our Heat n' Serve meals, even with our higher price points this year. Our Heat n' Serve offering is strongest in the second quarter, and this year it was even stronger. As we mentioned in December, our Heat n' Serve margins are lower than other off-premise channels, but we are pleased with the contribution of the dollar margins. We had solid retail performance, and our retail team continued to do a great job in a difficult situation. For the full quarter, comparable store retail sales decreased 15.3%, which included sequential monthly improvements. In addition to the strength in our Christmas and giving assortments, which Sandy mentioned, we also saw strong sales in our furniture, grocery, and personal care categories. Now moving on to expenses. The increased dining room closures and capacity restrictions resulted in significant sales deleverage that pressured our margins in the quarter. Our total cost of goods in the quarter was 33.2% of total revenue versus 32.2% in the prior year quarter. The increase in total cost of goods was primarily due to elevated retail sales as a proportion of total sales and a shift in the mix to off-premise channels. Our restaurant cost of goods sold was 26.9% of restaurant sales versus 26% in the prior year quarter, a 90 basis point increase. This was driven by commodity inflation of 2%, outpacing our core menu pricing, changes to menu mix, higher food waste, and one-time expenses related to our menu simplification initiative. Our retail cost of goods sold was 54.3% of retail sales versus 54.4% in the prior year quarter. In light of the challenges the retail team faced, we are pleased they were able to achieve these results with less promotional activity and increased sell throughs at full price. Labor and related expenses were $236.9 million or 35% of revenue in the second quarter, compared to $284.8 million or 33.6% of revenue in the prior year quarter. This 140 basis point increase was driven by several factors. First, sales deleverage of fixed costs, including store management. Second, an increase in labor deployed into higher wage To-Go Specialist positions to support our elevated off-premise business. And third, wage inflation on a constant mix basis of 1.9%, which outpaced our core menu pricing. These impacts were partially offset by the cost savings initiatives we've previously spoken about. Other operating expenses were $166.9 million or 24.7% of revenue in the second quarter. Adjusting for the non-cash amortization of the asset recognized from the gains on the sale-leaseback transaction, other operating expenses were $163.7 million or 24.2% of revenue, compared to $171.6 million or 20.3% of revenue in the prior year quarter. This 390 basis point increase was primarily driven by several items. First, sales deleverage on fixed costs. Next, increased expenses associated with the growth of off-premise, including third party delivery fees and to-go supplies. Finally, higher rent expense resulting from the previously completed sale-leaseback transactions we spoke about in our September earnings call. General and administrative expenses in the second quarter were $34 million compared to $38.4 million. Our second quarter G&A results include approximately $3.3 million of realized cost savings, as well as reductions in general expenses due to the ongoing impact of COVID-19 compared to the prior year quarter. As a percent of sales, G&A increased 50 basis points compared to the prior year, which was primarily driven by sales deleverage from fixed payroll and related expenses. GAAP operating income was $14.4 million, or 2.1% of revenue. Adjusting for the non-cash amortization of the asset recognized from the gains on our previously disclosed sale-leaseback transactions, adjusted operating income was $17.6 million, or 2.6% of total revenue. Net interest expense for the quarter was $10.8 million, compared to $3.5 million in the prior year quarter. The increase in interest expense was primarily due to higher debt after drawing on our revolving credit facility last year to bolster our liquidity. In the second quarter, we recorded an income tax benefit of $10.4 million, resulting from the carryback of 2020 federal net operating losses and favorable resolution of state income tax audits. We recorded second quarter GAAP earnings per diluted share of $0.59. Adjusting for the non-cash amortization of the asset recognized from the gains on the sale-leaseback transactions and the related tax effects, adjusted earnings per diluted share were $0.70, and our EBITDA was $45 million for the quarter. Looking ahead, we expect that the improving sales trends we experienced in January and in the first part of February prior to the weather will continue, and we are optimistic we will see sequential improvements in our quarterly comparable store sales through the remainder of the fiscal year, assuming there are no resurgences of COVID-19 and that the vaccination programs remain on track. A nticipate that third quarter comparable store restaurant sales will be down 11%-14%, and comparable store retail sales will be down 7%-9% compared to fiscal 2019. Assuming the third quarter sales expectations I just mentioned, we believe third quarter operating income margin will improve 50 basis points to 100 basis points from the second quarter of fiscal 2021 to the third quarter of fiscal 2021. Our third quarter margins will be pressured by our continued focus on hourly staffing and the retention of our store managers to support the higher sales volumes we're expecting in the fourth quarter. Additionally, our third quarter margins reflect investment ramp-up expenses associated with the continued rollout of key initiatives such as beer and wine, digital, and our new menu. Looking ahead, we expect continued improvement in sales and operating income margins in our fourth quarter, although we expect it will be fiscal 2022 before our quarterly margins reach pre-COVID levels. Now for the rest of our outlook. We expect to achieve the remainder of our target to sustainable cost savings of $50 million in the third quarter. As a reminder, these cost savings are partially offset by continued investments in enhanced health and safety measures, expenses related to our strategic initiatives, which are largely included in G&A, and lastly, the net rent expense related to our sale-leaseback transaction. We anticipate commodity inflation in the second half of the fiscal year of approximately 2% and second half wage inflation on a constant mix basis of 2%-2.5%. We expect second half general and administrative expenses of approximately $75 million and capital expenditures in the second half of approximately $60 million. For fiscal 2021, we now expect to open two Cracker Barrel stores, both of which have already opened, and three new Maple Street locations. We now expect a GAAP effective tax rate of 17%-18% for the full fiscal year. To date, the impact from fiscal 2021 unusual items, including the magnitude of the gain on the sale-leaseback and the impact of loss carrybacks, resulted in unusual volatility on our quarterly effective tax rates. The outcome of that volatility is that the third quarter effective tax rate is expected to be approximately 100%, and fourth quarter effective tax rate is expected to be approximately 5%. We continue to have a strong liquidity position as a result of our actions and active balance sheet management. In the second quarter, we generated $64.3 million in cash from operations, which further strengthened our balance sheet. Our cash at the end of the quarter was $569 million. Given our strong liquidity position, we have begun to reduce our debt levels. During the second quarter, we paid down $75 million, which brought our total debt down to $875 million at the end of the quarter. Since the end of the quarter, we have further reduced our debt by $100 million, and we plan to pay down an additional $200 million by the end of fiscal 2021, with the majority of that occurring in the third quarter. Regarding overall capital allocation, our board continues to evaluate the environment, and they plan to maintain a balanced approach. In addition to investing in Cracker Barrel and Maple Street new unit growth, we will continue to invest in strategic initiatives, including digital, off-premise, and store technology, which will enable us to more effectively manage growth when business returns to more normalized levels. Returning cash to our shareholders remains a priority, and we are optimistic we'll be able to reinstate a dividend in fiscal 2022. With that, I will turn over to the operator for questions. Thank you. We will now begin the question- and- answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. 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. It seems like the way a lot of investors are looking at this group is a recovery sales and a recovery margin framework. 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 100% sales recovery rather than 105 margins could be even higher. Just any thoughts on that would be great. Appreciate it. Okay. Well, I think everyone's trying to think about what is life as we sort of move past the pandemic, and I'm exciting that, I'm excited that we have a number of sales-driving initiatives to start with. Beginning with the dine-in, the completion of our dinner initiative, which we started a couple of years ago. 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 and 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%, or we're hoping that we'll be able to keep about in excess of 50% of the growth in that category. 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. 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 color. I'll jump 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 at its 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. 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. 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. 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 nailed it down there. I think, 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 50-100 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 in 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 were higher because of Heat n' Serve. We also start to have a little bit of the menu leverage. We took menu pricing late in January, so we'll see the benefit of that for the full third quarter. That pretty much kind of takes us 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", and we're pleased with the progress we're making, in particular 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 grow comfortable moving around a bit more. Yeah. 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. With the softness in travel, we see a little bit less of a recovery in our on interstate stores. 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. I will start with the follow-up. Your F2Q off-premise sales were, I think in the range of $17,000-$18,000 per week. Pre-COVID, I think you guys were $7,000-$8,000 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 are you referring to? Because you did see that seasonally high sort of F2Q off-premise number. 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. 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, so 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 increased 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? Yeah, that's a good question, and I'll clarify it in 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%-14%. When you convert that into what we think comps look like versus 2020, that gets you around 50% on the restaurant side. When you look at that on retail, it's in the range of 65%-70%. Right. Okay. And then the final question, you did touch on this in the prepared remarks, 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. There's obviously the rent offset. I think there's roughly $8 million in incremental G&A expense. I might have missed some stuff, just some sort of 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 are related to our sales driving activities. 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. As we think about our business model post-COVID-19, we believe those health and safety measures will come out of the expenses. We're 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 kind of goes back to the February results. I know you're not sharing them, because if we had those, we'd be able to understand what you expected for March and April. But can you just talk broadly on 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 kind of speak to the confidence of the speed of the recovery that you're expecting. Okay, Jake. We thought we were going to make you happy by giving you third quarter guidance, so now you want to. I am. I love it. No, we're not. Month-over-month, it improves as vaccines, stimulus money, people feel better, restrictions loosen. We're hoping that it just continues to improve as we go, continue through the third and into the fourth. We're not prepared to break it down month-by-month at this time. Okay. The comment on margins, I think the comment was that you'd expect flat operating margins in 2022, if sales were at 2019 levels. Maybe if you can kind of repeat that. I wanted to make sure I understood the moving pieces, 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, 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 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. 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. It's really not going to be a flat number. Got it. Maybe to put it in another way, would you expect margins to be higher or lower than 2019 at the same sales levels? If 2022 was the same sales levels as 2019. We're not providing guidance on margins right now for 2022. Okay. Yeah, I was just trying to understand the moving pieces. Just lastly, Doug, if you can clarify where we are in the $50 million of savings, too. I think you mentioned what was saved in G&A, but maybe I missed it, the impact in labor. 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 is 3% pricing in the back half of the year, and just want to double check that. If that is the case, what is driving the more aggressive pricing outlook? I'll start just on general on the pricing, and then Doug can give you any additional detail on the cost savings. First of all, on pricing, as we mentioned in prior quarters, we were going to be conservative in the first half. 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. I'm trying to not say something that Doug wishes I didn't disclose. 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... I'm sorry. Was about 3%? Yes. Yeah, 3%. You do expect the price. 2%. Yeah, sorry. In terms of our cost savings, Doug, what else do you wanna- Yeah. we're moving along. The cost savings are in G&A, and they're also in store operating expenses. Yes. The largest part, and I think we 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. We really wrapped up the cost savings with this fiscal quarter. There's a little bit left that'll carry over the balance of the year, but it's pretty small. Great. I appreciate it. 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, not just throughout this year and into next year, but also, what can we see longer term out of it, when to a point where it starts to become a more meaningful needle mover, from a profit contribution? 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 on, I'll hit the Maple Street and then touch on the Cracker Barrel. 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 open new locations, and that we understood what the best site looked like, which is why we've probably gone a little slower than we had originally planned to. I'm excited about the sites that we have identified. As I mentioned, there'll be three that open 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. 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%-20% range. So then it starts to become meaningful on certainly the top line numbers for us. In terms of the Barrel, did you mean in terms of real estate or in terms of the P&L? Well, 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? Well, 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. It's 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'll 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 III of our dinner work, and 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. 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. Great. Thank you. Hey, good morning. I just want to ask first, on the off-premise margin front, obviously it being lower, which is of course understandable. As you 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, how do you think about ways that you can close the gap on margin, whether it's targeting more pricing on off-premise and/or hopefully getting scale, cutting back cost. Just which kind of moving pieces you think that could over time potentially close the gap on your off-premise margin versus on-premise? Sure. I'll take that. We're doing a lot of work, we're doing a lot of work across the brand on a whole variety of areas about how to improve our margins, but specifically in off-prem, individual to-go, probably the biggest thing we're working on is how to increase the check. If you just look at the rate on individual to-go, it's actually pretty well in line with dine-in. 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, 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. We're working on new offers that will appeal. Just these individual boxed meals that we've launched in the last week or so as 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. That's what best fits the occasion they have. I think that our teams, our culinary teams, our technology teams, and our operators are working at 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. Thank you, Sandy. A quick follow up on that, hop back in the queue. Doug, I think I heard you correctly that you said that the tax rate will be 100% in 3Q, FY, 4Q. What are the moving pieces to drive that big of a volatility, 3Q versus 4Q on the tax rate front? Yeah. 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. To some degree, taxes are kind of a solve when you're recording them on an interim basis. 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. It's really 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. We didn't know who was going to ask the tax question. I got to tell you, nobody here was real excited about answering. I'll bet. Raw. The next question is from Bob Derrington from Telsey. Please go ahead. Yeah. 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. 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 assumed 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? Yeah. We introduced pricing tiers, Bob, I don't know, four or five years ago, largely as we started moving out west and our growth was in areas where there was pretty significant increases in minimum wage. We were already positioned to do it. 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. 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 trends sequentially continue to build within a 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 that 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. 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. 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. What you're probably referring to is our CB Kitchen. I'll just remind you that what we tested in the Indianapolis market was 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 or 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 n' Biscuits. It'll be provided sort of delivery only. 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. Last thing, 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 or the question. I just have a few, if I may. Just kind of following up a little bit on the wage question earlier. 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 minimum wage levels, and then how much of that is tip credit. Then maybe Sandy or Doug, from a higher level, your thoughts on longer term wage rate inflation, because there's a few different forces playing out in 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. Hopefully you could provide a little bit of color around that as well. I assume what you mean on mix is that in a Cracker Barrel restaurant, we have tipped and non-tipped employees. Depending on the rules in each market, the minimum wage, actually, what's more important to us is the tip credit. What can have a bigger financial impact to us is a change to the tip credit versus a change to the minimum wage. We're monitoring both. The tipped versus non-tip mix, I don't, Doug, I don't know if you know that off the top of your head. No. 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, a higher wage rate. 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. 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. 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, that's fine if you don't have it right now. I can move on to another question. What you probably want is a normalized one. Why don't we follow up later? You don't want the one we have right now. Exactly. It's probably you're going to want to have when dining rooms reopen. Right. Exactly. Yeah, no, I appreciate that. And just following up, earlier, Sandy, you'd made comments about bigger porch being part of the prototype going forward, and that kind of sparked the question of porches and I think tents last year were a nice addition to keep sales coming as in-dining room restrictions were there. 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. We're actually talking about that right now here in the store. I think we've got about maybe 125 or so 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 moved some of the dining room furniture since we had excess furniture as we reduced capacity in the dining room out to the front porch to service guests. I think that they will definitely be a part of the third and fourth quarter. And we're evaluating to what degree it's going to be permanent. If 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 in the rain and some of that. 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. Then just lastly, on the beer and 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? Even, I would assume a lot of it is being consumed at dinner time. 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 that, 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 are, we conti- I continue to be optimistic about this. One of the things that we've seen is because Florida was the first market to launch beer and 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. That bodes well for the rest of the system. Surprisingly, the number one seller, though, continues to be mimosas. It's not necessarily the dinner time 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, and 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. 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, our marketing team is really working hard on how to tell our guests that we even have this, particularly in 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. 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. We 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.