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Dynamic quotes 
OFFON

CRACKER BARREL OLD COUNTRY STORE, INC.

(CBRL)
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CRACKER BARREL OLD COUNTRY STORE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

09/24/2021 | 04:20pm EDT
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") provides information which management believes is
relevant to an assessment and understanding of our consolidated results of
operations and financial condition.  MD&A should be read in conjunction with the
Consolidated Financial Statements and notes thereto.  Readers should also
carefully review the information presented under the section entitled "Risk
Factors" and other cautionary statements in this report.  All dollar amounts
(other than per share amounts) reported or discussed in this MD&A are shown in
thousands.  References in MD&A to a year or quarter are to our fiscal year or
quarter unless expressly noted or the context clearly indicates otherwise.

This overview summarizes the MD&A, which includes the following sections:

• Executive Overview - a general description of our business, the restaurant and

retail industries, our key performance indicators and the Company's performance

in 2021.

• Results of Operations - an analysis of our consolidated statements of income

(loss) for the three years presented in our Consolidated Financial Statements.

• Liquidity and Capital Resources - an analysis of our primary sources of

liquidity, capital expenditures and material commitments.

• Critical Accounting Estimates - a discussion of accounting policies that

   require critical judgments and estimates.



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  Index


EXECUTIVE OVERVIEW

Cracker Barrel Old Country Store, Inc. (the "Company," "our" or "we") is a
publicly traded (Nasdaq: CBRL) company that, through its operations and those of
certain subsidiaries, is principally engaged in the operation and development of
the Cracker Barrel Old Country Store® ("Cracker Barrel") concept.  Each Cracker
Barrel store consists of a restaurant with a gift shop.  The restaurants serve
breakfast, lunch and dinner.  The gift shop offers a variety of decorative and
functional items specializing in rocking chairs, holiday gifts, toys, apparel
and foods.  As of September 15, 2021, the Company operated 664 Cracker Barrel
stores located in 45 states.  Effective October 19, 2019, the Company acquired
100% ownership of Maple Street Biscuit Company ("MSBC"), a breakfast and lunch
fast casual concept.  As of September 15, 2021, the Company operated 37 owned
MSBC locations, and there were an additional seven franchised locations open,
located in seven states.

COVID-19 Impact and Company Response


Despite experiencing improvements in conditions during 2021 from the initial
wave of infections and public health response during the second half of 2020,
the COVID-19 pandemic continued to negatively impact our sales and traffic as a
result of both changes in consumer behavior and federal, state and local
governmental authorities' continuation of various restrictions on travel, group
gatherings and dine-in services.  During 2021, dining room service was
operational to varying degrees in most markets where we operate, yet most
locations were impacted at times during the year by capacity restrictions,
social distancing guidelines and decreased consumer demand for in-person
dining.  As of September 15, 2021, all of our stores were open for dine-in
service.

In response to the COVID-19 pandemic, we instituted operational protocols to
comply with applicable regulatory requirements to protect the health and safety
of employees and guests, and we implemented a number of strategies to support
the recovery of our business and navigate through the uncertain environment.  We
continue to focus on growing our off-premise business and investing in our
digital infrastructure to improve the guest experience in the face of these
ongoing challenges. However, it is possible that renewed outbreaks or increases
in cases, either as part of a national trend or on a more localized basis, could
result in additional capacity restrictions or limit our dine-in services.

Restaurant and Retail Industries


Our stores operate in both the restaurant and retail industries in the United
States.  The restaurant and retail industries are highly competitive with
respect to quality, variety and price of the food products, availability of
carryout and home delivery, internet and mobile ordering capabilities and retail
merchandise offered.  We compete with a significant number of national and
regional restaurant and retail chains.  Additionally, there are many segments
within the restaurant industry, such as family dining, casual dining,
full-service, fast casual and quick service, which often overlap and provide
competition for widely diverse restaurant concepts.  Cracker Barrel primarily
operates in the full-service segment of the restaurant industry, and our growing
MSBC concept operates in the fast casual segment.  Competition also exists in
securing prime real estate locations for new stores, in hiring qualified
employees, in advertising, in the attractiveness of facilities and with
competitors having similar menu offerings or convenience features.  The
restaurant and retail industries are often affected by changes in consumer taste
and preference; national, regional or local economic conditions; demographic
trends; traffic patterns; the type, number and location of competing restaurants
and retailers; and consumers' discretionary purchasing power.

Additionally, economic, seasonal and weather conditions affect the restaurant
and retail industries.  Adverse economic conditions and unemployment rates
affect consumer discretionary income and dining and shopping habits.
Historically, interstate tourist traffic and the propensity to dine out have
been much higher during the summer months, thereby contributing to higher
profits in our fourth quarter.  Retail sales, which are made substantially to
our restaurant guests, are historically strongest in the second quarter, which
includes the holiday shopping season.  Severe weather also affects restaurant
and retail sales adversely from time to time.  Furthermore, we are not able to
predict the impact that the ongoing COVID-19 pandemic may continue to have on
the seasonality of our business.

Key Performance Indicators

Management uses a number of key performance measures to evaluate our operational and financial performance, including the following:

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• Comparable store restaurant sales increase/(decrease): To calculate comparable

store restaurant sales increase/(decrease), we determine total restaurant sales

of stores open at least six full quarters before the beginning of the

applicable period, measured on comparable calendar weeks. We then subtract

total comparable store restaurant sales for the current year period from total

comparable store restaurant sales for the applicable historical period to

calculate the absolute dollar change. To calculate comparable store restaurant

sales increase/(decrease), which we express as a percentage, we divide the

   absolute dollar change by the comparable store restaurant sales for the
   historical period.


• Comparable store average restaurant sales: To calculate comparable store

average restaurant sales, we determine total restaurant sales of stores open at

least six full quarters before the beginning of the applicable period, measured

on comparable calendar weeks, and divide by the number of comparable stores for

   the applicable period.



• Comparable store retail sales increase/(decrease): To calculate comparable

store retail sales increase/(decrease), we determine total retail sales of

stores open at least six full quarters before the beginning of the applicable

period, measured on comparable calendar weeks. We then subtract total

comparable store retail sales for the current year period from total comparable

store retail sales for the applicable historical period to calculate the

absolute dollar change. To calculate comparable store retail sales

increase/(decrease), which we express as a percentage, we divide the absolute

dollar change by the comparable store retail sales for the historical period.

• Comparable store retail average weekly sales: To calculate comparable store

average retail sales, we determine total retail sales of stores open at least

six full quarters before the beginning of the applicable period, measured on

comparable calendar weeks, and divide by the number of comparable stores for

   the applicable period.



• Comparable restaurant guest traffic increase/(decrease): To calculate

comparable restaurant guest traffic increase/(decrease), we determine the

number of entrees sold in our dine-in and off-premise business from stores open

at least six full quarters at the beginning of the applicable period, measured

on comparable calendar weeks. We then subtract total entrees sold for the

current year period from total entrees sold for the applicable historical

period to calculate the absolute numerical change. To calculate comparable

restaurant guest traffic increase/(decrease), which we express as a percentage,

we divide the absolute numerical change by the total entrees sold for the

   historical period.



• Average check increase per guest: To calculate average check per guest, we

determine comparable store restaurant sales, as described above, and divide by

comparable guest traffic (as described above). We then subtract average check

per guest for the current year period from average check per guest for the

applicable historical period to calculate the absolute dollar change. The

absolute dollar change is divided by the prior year average check number to

calculate average check increase per guest, which we express as a percentage.




These performance indicators exclude the impact of new store openings and sales
related to MSBC and Holler & Dash Biscuit HouseTM ("Holler & Dash"), since we
acquired MSBC in the first quarter of 2020, and we have converted our Holler &
Dash locations into MSBC locations.

We use comparable store sales metrics as indicators of sales growth to evaluate
how our established stores have performed over time. We use comparable
restaurant guest traffic increase/(decrease) to evaluate how established stores
have performed over time, excluding growth achieved through menu price and sales
mix change. Finally, we use average check per guest to identify trends in guest
preferences, as well as the effectiveness of menu changes. We believe these
performance indicators are useful for investors to provide a consistent
comparison of sales results and trends across comparable periods within our
core, established store base, unaffected by results of store openings, closings,
and other transitional changes.

Company Performance in 2021

Management believes that the Cracker Barrel brand remains one of the strongest and most differentiated brands in the restaurant industry, and we plan to continue to leverage and build on that strength as a core component of our business strategy.

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Our long-term strategy includes the following:

• Enhancing the Core business to drive sustainable sales growth and continued

business model improvements. During 2021, we focused on driving topline sales

despite the challenging environment brought on by the COVID-19 pandemic by

accelerating our off-premise business, introducing craveable, signature food,

and improving the employee and guest experience. Additionally, during 2021 we

continued to make progress on key strategic initiatives such as continuing the

   rollout of beer and wine to our stores, investments in our digital
   capabilities, and upgrades to our point of sale system.


• Expanding the Footprint by building profitable new stores in both core and

developing markets. In 2021, we opened two new Cracker Barrel locations and

   two new MSBC locations.



• Extending the Brand to further drive shareholder value creation by developing

new platforms to drive growth, such as our acquisition of MSBC in 2020 and

continued integration of that concept into the Company in 2021.




Additionally, during 2021, we continued our focus on generating shareholder
returns by reinstating our regular quarterly dividend. Like many companies in
the restaurant and retail industries, we had temporarily suspended our quarterly
cash dividend as a result of the exigencies of the COVID-19 pandemic. In the
fourth quarter of 2021, we declared (and subsequently paid in the first quarter
of 2022) a dividend at $1.00 per share.

RESULTS OF OPERATIONS

The following table highlights operating results over the past three years:

                                                               Relationship to Total Revenue
                                                             2021             2020         2019
Total revenue                                                  100.0 %          100.0 %     100.0 %
Cost of goods sold (exclusive of depreciation and rent)         30.7             30.9        30.3
Labor and other related expenses                                34.8             36.7        35.1
Other store operating expenses                                  24.0             24.4        20.4
General and administrative                                       5.2              5.8         5.0
Gain on sale and leaseback transactions                         (7.7 )           (2.8 )         -
Impairment                                                         -              0.9           -
Operating income                                                13.0              4.1         9.2
Interest expense                                                 2.0              0.9         0.5
Income before income taxes                                      11.0              3.2         8.7
Provision for income taxes (income tax benefit)                  2.0             (1.1 )       1.4
Net loss from unconsolidated subsidiary                            -             (5.6 )         -
Net income (loss)                                                9.0             (1.3 )       7.3



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  Index


Total Revenue

The following table highlights the key components of revenue for the past three
years:

                                                        2021            2020             2019
Revenue in dollars(1):
Restaurant                                           $ 2,227,246     $ 2,032,030      $ 2,482,377
Retail                                                   594,198         490,762          589,574
Total revenue                                        $ 2,821,444     $ 2,522,792      $ 3,071,951
Total revenue percentage increase (decrease)                11.8 %         (17.9 %)           1.4 %
Total revenue by percentage relationships:
Restaurant                                                  78.9 %          80.5 %           80.8 %
Retail                                                      21.1 %          19.5 %           19.2 %
Comparable number of stores                                  655             646              640
Comparable store sales averages per store: (1)
Restaurant                                           $     3,312     $     3,065      $     3,784
Retail                                                       890             737              891
Total                                                $     4,202     $     3,802      $     4,675
Restaurant average weekly sales (2)                  $      63.4     $      58.4      $      72.4
Retail average weekly sales (2)                             17.2            14.3             17.2
Average check increase                                       3.1 %           2.7 %            3.3 %
Comparable restaurant guest traffic
increase/(decrease) (3)                                      5.3 %         (21.6 %)          (0.7 %)



(1) Comparable store averages exclude MSBC and Holler & Dash.
(2) Average weekly sales are calculated by dividing net sales by operating weeks
and include all stores except for MSBC and Holler & Dash.
(3) Comparable store sales and traffic consist of sales of stores open at least
six full quarters at the beginning of the period and are measured on comparable
calendar weeks.  Comparable store sales and traffic exclude MSBC and Holler &
Dash.

Total revenue benefited from the opening of four new units in 2021, five new
units in 2020, and eight new units in 2019, partially offset by the closing of
one unit in 2021, two units in 2020 and one unit in 2019.

Despite experiencing improvements in conditions during 2021 from the initial
wave of infections and public health response during the second half of 2020,
the COVID-19 pandemic continued to negatively impact our sales and traffic as a
result of both changes in consumer behavior and federal, state and local
governmental authorities' continuation of various restrictions on travel, group
gatherings and dine-in services.  Dining room service was operational to varying
degrees in 2021, yet most locations were impacted at times during the year by
capacity restrictions, social distancing guidelines, and decreased consumer
demand for in-person dining. The total revenue decrease for 2020 as compared to
2019 was primarily the result of all of our restaurant operations being limited
to pick-up and delivery orders with no dine-in service for a portion of the
third quarter of 2020, the related significant decline in restaurant guest
traffic, restrictions mandated by federal, state and local governments in the
United States to mitigate the spread of COVID-19 and the related changes in
consumer behavior.  The total revenue decrease was partially offset by our
subsequent resumption of dine-in services at a number of our Cracker Barrel
stores and the acceleration of our off-premise business, which benefited from a
number of operational improvements implemented to support that business's
growth.

The following table highlights comparable store sales* results over the past two
years:

                               Period to Period
                             Increase (Decrease)
                      2021 vs 2020         2020 vs 2019
                      (655 Stores)         (646 Stores)
Restaurant                      8.4 %              (18.9 )%
Retail                         20.9                (17.1 )
Restaurant & Retail            10.8 %              (18.6 )%

*Comparable store sales consist of sales of stores open at least six full quarters at the beginning of the year, are measured on comparable calendar weeks and exclude MSBC and Holler & Dash.

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Index



Our comparable store restaurant sales increase in 2021 from 2020 resulted from
an average check increase of 3.1% (including a 2.1% average menu price increase)
and an increase in guest traffic of 5.3%.

In 2020, our comparable store restaurant sales, comparable retail sales and
comparable restaurant guest traffic were negatively affected by the COVID-19
pandemic as all dining rooms were closed beginning the week of March 27, 2020
and only certain restaurants resumed dine-in operations with limited capacity
beginning at the end of April 2020. Our comparable store restaurant sales
decrease in 2020 from 2019 resulted from a decrease in guest traffic of 21.6%
partially offset by an average check increase of 2.7% (including a 1.8% average
menu price increase).

Our retail sales are made substantially to our restaurant guests.  The increase
in our comparable store retail sales in 2021 from 2020 resulted primarily from
the guest traffic increase and strong performance in the toys, apparel and
accessories, food and convenience and décor merchandise categories. The decrease
in our comparable store retail sales in 2020 from 2019 resulted primarily from
the impact of the COVID-19 pandemic and resulting dining room closures and
restrictions which caused a marked decline in guest traffic.

Cost of Goods Sold (Exclusive of Depreciation and Rent)

The following table highlights the components of cost of goods sold in dollar amounts for the past three years:

                             2021          2020          2019
Cost of Goods Sold:
Restaurant                 $ 567,825     $ 515,663     $ 628,761
Retail                       297,436       264,274       302,316
Total Cost of Goods Sold   $ 865,261     $ 779,937     $ 931,077


The following table highlights restaurant cost of goods sold as a percentage of restaurant revenue for the past three years:

                                 2021       2020       2019
Restaurant Cost of Goods Sold     25.5 %     25.4 %     25.3 %



The increase in restaurant cost of goods sold as a percentage of restaurant
revenue in 2021 as compared to 2020 was primarily the result of commodity
inflation of 2.4% partially offset by lower food waste and a decrease in
employee discounts. Lower food waste and the decrease in employee discounts both
accounted for decreases of 0.1%.  Restaurant cost of goods sold as a percentage
of restaurant revenue increased slightly in 2020 from 2019.

We presently expect the rate of commodity inflation to be mid-to-high single digits in 2022 as compared to 2.4% in 2021.

The following table highlights retail cost of goods sold as a percentage of retail revenue for the past three years:

                             2021       2020       2019
Retail Cost of Goods Sold     50.1 %     53.8 %     51.3 %



The decrease in retail cost of goods sold as a percentage of retail revenue in
2021 as compared to 2020 resulted from lower markdowns, higher initial margin,
lower freight expense, the change in the provision for obsolete inventory and
lower inventory shrinkage partially offset by an increase in discounts and
allowances.

                                                                     2020 to 2021
                                                                      (Decrease)
                                                                     Increase as
                                                                     a Percentage
                                                                       of Total
                                                                       Revenue
Markdowns                                                                    (2.9 %)
Higher initial margin                                                        (0.3 %)
Freight expense                                                              (0.3 %)
Provision for obsolete inventory                                             (0.2 %)
Inventory shrinkage                                                          (0.2 %)
Discounts and allowances                                                      0.2 %



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Index

The increase in retail cost of goods sold as a percentage of retail revenue in 2020 as compared to 2019 resulted primarily from higher markdowns, higher employee discounts, higher freight expense and lower retail credits.

                                    2019 to 2020
                      Increase as a Percentage of Total Revenue
Markdowns                                                    1.2 %
Employee discounts                                           0.6 %
Freight expense                                              0.4 %
Retail credits                                               0.2 %


Labor and Other Related Expenses

Labor and other related expenses include all direct and indirect labor and related costs incurred in store operations. The following table highlights labor and other related expenses as a percentage of total revenue for the past three years:


                                    2021       2020       2019

Labor and other related expenses 34.8 % 36.7 % 35.1 %




The year-to-year percentage change from 2020 to 2021 resulted primarily from the
following:

                                                                     2020 to 2021
                                                                      (Decrease)
                                                                     Increase as
                                                                     a Percentage
                                                                       of Total
                                                                       Revenue
Store management compensation                                                (1.5 %)
Miscellaneous wages                                                          (0.8 %)
Employee health care expenses                                                (0.2 %)
Store bonus expense                                                          (0.1 %)
Store hourly labor                                                            0.8 %



In general, during 2021 as compared to 2020, certain expenses as a percentage of
total revenue materially decreased as a function of the significant increase in
total revenue and increased operations. In particular, the decreases in store
management compensation, miscellaneous wages, and store bonus expense as a
percentage of total revenue in 2021 as compared to 2020 were primarily driven by
the increases in total revenue in 2021.

Lower employee health care expenses as a percentage of total revenue in 2021 as compared to 2020 resulted primarily from both lower claims activity and the increase in total revenue in 2021.


The increase in store hourly labor in 2021 as compared to 2020 as a percentage
of total revenue resulted primarily from wage inflation exceeding menu price
increases.

The year-to-year percentage change from 2019 to 2020 resulted primarily from the
following:

                                                                     2019 to 2020
                                                                       Increase
                                                                      (Decrease)
                                                                         as a
                                                                      Percentage
                                                                       of Total
                                                                       Revenue
Store management compensation                                                 1.4 %
Miscellaneous wages                                                           0.4 %
Employee health care expenses                                                 0.3 %
Store hourly labor                                                           (0.3 %)
Store bonus expense                                                          (0.2 %)



In general, in 2020, labor and other related expenses as a percentage of total
revenue were materially increased by the impact of the COVID-19 pandemic.  In
particular, the increases in store management compensation and miscellaneous
wages as a percentage of total revenue in 2020 were all primarily driven by this
decrease in revenue.

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Index

Higher employee health care expenses as a percentage of total revenue in 2020 as compared to 2019 resulted primarily from higher claims activity.


The decrease in store hourly labor as a percentage of total revenue in 2020 as
compared to 2019 resulted primarily from lower usage of hourly employees due to
reduced operations caused by the COVID-19 pandemic.

The decrease in store bonus expense as a percentage of total revenue in 2020 as
compared to 2019 resulted from lower performance against financial objectives in
2020 as compared to 2019 due to the impact of the COVID-19 pandemic.

Other Store Operating Expenses


Other store operating expenses include all store-level operating costs, the
major components of which are depreciation and amortization, operating supplies,
utilities, repairs and maintenance, advertising, rent, credit card and gift card
fees, real and personal property taxes and general insurance.  The following
table highlights other store operating expenses as a percentage of total revenue
for the past three years:

                                  2021       2020       2019

Other store operating expenses 24.0 % 24.4 % 20.4 %




The year-to-year percentage change from 2020 to 2021 resulted from the
following:

                                                                     2020 to 2021
                                                                      (Decrease)
                                                                     Increase as
                                                                     a Percentage
                                                                       of Total
                                                                       Revenue
Depreciation                                                                 (0.8 %)
Real and personal property taxes                                             (0.2 %)
Utilities                                                                    (0.1 %)
Preopening                                                                   (0.1 %)
Loss on asset disposition                                                    (0.1 %)
Advertising                                                                  (0.1 %)
Rent                                                                          0.6 %
Other store expenses                                                          0.4 %



In general, during 2021 as compared to 2020, certain expenses as a percentage of
total revenue materially decreased by the significant increase in total revenue
and increased operations. In particular, the decreases in depreciation expense,
real and personal property taxes, and advertising expense as a percentage of
total revenue for 2021 as compared to 2020 were primarily driven by the increase
in total revenue in 2021.

The decrease in utilities expense as a percentage of total revenue for 2021 as
compared to 2020 was primarily driven by the increase in total revenue in 2021
partially offset by higher natural gas, electricity, and water rates.

The decrease in preopening expenses as a percentage of total revenue for 2021 as compared to 2020 resulted primarily from the timing of new store openings.

The decrease in loss on asset disposition as a percentage of total revenue for 2021 as compared to 2020 resulted primarily from increased repair and maintenance activity for equipment as opposed to asset disposal.


The increase in rent expense as a percentage of total revenue for 2021 as
compared to 2020 resulted primarily from the sale and leaseback transaction
involving 62 of our owned Cracker Barrel stores completed on August 4, 2020.
The aggregate initial annual rent payment for these properties is approximately
$10,393.  Additionally, the related rent expense includes $12,735 recorded in
2021 for the non-cash amortization of the asset recognized from the gain on the
Company's sale and leaseback transactions. See Note 11 to the Consolidated
Financial Statements for additional information regarding the Company's sale and
leaseback transactions.

The increase in other store expenses as a percentage of total revenue for 2021
as compared to 2020 resulted primarily from costs associated with the growth in
our off-premise business.

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Index



The year-to-year percentage change from 2019 to 2020 resulted primarily from the
following:

                                         2019 to 2020
                                   Increase as a Percentage
                                       of Total Revenue
Depreciation                                             1.0 %
Other store expenses                                     0.6 %
Rent                                                     0.6 %
Supplies                                                 0.5 %
Advertising                                              0.4 %
Utilities                                                0.3 %
Real and personal property taxes                         0.3 %
Maintenance                                              0.2 %



In general, for 2020, other store operating expenses as a percentage of total
revenue were materially increased by the significant reduction in total revenue
and reduced operations caused by the impact of the COVID-19 pandemic.  In
particular, the increases in rent expense, supplies expense, advertising
expense, utilities expense, real and personal property taxes and maintenance
expense as a percentage of total revenue for 2020 were all primarily driven by
this decrease in revenue.

The increase in depreciation expense as a percentage of total revenue for 2020
as compared to 2019 resulted primarily from higher capital expenditures with
accelerated depreciation methods.

The increase in other store expenses as a percentage of total revenue for 2020
as compared to 2019 resulted primarily from costs associated with the expansion
of our off-premise business.

General and Administrative Expenses

The following table highlights general and administrative expenses as a percentage of total revenue for the past three years:


                                      2021      2020      2019

General and administrative expenses 5.2 % 5.8 % 5.0 %




The year-to-year percentage change from 2020 to 2021 resulted from the
following:

                                         2020 to 2021
                                   (Decrease) Increase as a
                                  Percentage of Total Revenue
Payroll and related expenses                              (0.5 %)
Professional fees                                         (0.2 %)
Depreciation expense                                      (0.1 %)
Travel expense                                            (0.1 %)
Incentive compensation expense                             0.3 %



The decreases in payroll and related expense and travel expense as a percentage
of total revenue in 2021 as compared to 2020 were primarily driven by cost
savings initiatives implemented in response to the COVID-19 pandemic and the
increase in total revenue in 2021.

The decrease in professional fees as a percentage of total revenue in 2021 as
compared to 2020 was primarily driven by lower fees related to sale and
leaseback transactions partially offset by additional proxy expenses related to
the proxy contest initiated by affiliates of Sardar Biglari in connection with
the Company's 2020 annual shareholders meeting held on November 19, 2020.

The decrease in depreciation expense as a percentage of total revenue in 2021 as compared to 2020 was primarily driven by the increase in total revenue in 2021.


The increase in incentive compensation as a percentage of total revenue in 2021
as compared to 2020 was primarily driven by better performance against financial
objectives in 2021 as compared to 2020.

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The year-to-year percentage change from 2019 to 2020 resulted primarily from the
following:

                                         2019 to 2020
                                   Increase (Decrease) as a
                                  Percentage of Total Revenue
Payroll and related expenses                               0.7 %
Professional fees                                          0.4 %
Incentive compensation expense                            (0.2 %)



In general, for 2020, general and administrative expenses as a percentage of
total revenue were materially increased by the significant reduction in total
revenue and reduced operations caused by the impact of the COVID-19 pandemic.
In particular, the increases in payroll and related expense and professional
fees were all primarily driven by this decrease in revenue.  The increase in
payroll and related expenses also resulted from severance expenses recorded in
2020 as part of the elimination of positions in the corporate headquarters and
in the field. The decrease in incentive compensation in 2020 as compared to 2019
resulted from lower performance against financial objectives in 2020 as compared
to 2019 due to the impact of the COVID-19 pandemic.

Gain on Sale and Leaseback Transactions


On July 29, 2020, we entered into a sale and leaseback transaction involving 64
of our owned Cracker Barrel properties and recorded a gain of $69,954.  On
August 4, 2020, we entered into a second sale and leaseback transaction
involving 62 of our owned Cracker Barrel stores and recorded a gain of $217,722.
See Note 11 to the Consolidated Financial Statements for additional information
regarding these sale and leaseback transactions.

Impairment


During the third and fourth quarters of 2020, we determined that certain Cracker
Barrel and MSBC locations were impaired, resulting in impairment charges of
$22,496.  These locations were impaired because of declining operating
performance and resulting negative cash flow projections as a result of the
impact of the COVID-19 pandemic.  It is possible that we may recognize
additional impairment as a result of the unknown impacts of the COVID-19
pandemic and our response. The Company did not incur impairment charges in 2021
or 2019.

Interest Expense

The following table highlights interest expense for the past three years:

                     2021         2020         2019
Interest expense   $ 56,108     $ 22,327     $ 16,488



The year-to-year increase in 2021 from 2020 resulted primarily from the costs
associated with termination of interest rate swaps, higher weighted average debt
levels caused by our borrowing under our 2019 Revolving Credit Facility in
response to the COVID-19 pandemic, higher weighted average interest rates, and
the cessation of interest income on Punch Bowl Social ("PBS") promissory notes
written off in the third quarter of 2020. Additionally, as part of our amendment
to the 2019 Revolving Credit Facility in the third quarter of 2021, we incurred
additional interest expense of $452 related to the write-off of deferred
financing costs and we incurred interest expense of $768 related to the
amortization of the original issue discount on our Notes.

The year-to-year increase in 2020 from 2019 resulted primarily from materially
higher debt levels caused by our borrowing of the remaining available amount
under our 2019 Revolving Credit Facility in March 2020 and exercising the
accordion feature under the 2019 Revolving Credit Facility to borrow an
additional amount in response to the COVID-19 pandemic and higher weighted
average interest rates.

We presently expect our interest expense for 2022 to be approximately $9,000.

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Provision for Income Taxes (Income Tax Benefit)

The following table highlights the provision for income taxes (income tax benefit) as a percentage of income before income taxes ("effective tax rate") for the past three years:

                      2021       2020         2019
Effective tax rate     18.0 %     (35.3 %)     16.1 %



The increase in our effective tax rate from 2020 to 2021 is primarily the result
of the increase in income before income tax. The decrease in our effective tax
rate from 2019 to 2020 is primarily due to the tax benefits from the net loss
recorded for PBS and a large reduction in income before income taxes relative to
a modest reduction in the tax credits.

We presently expect our effective tax rate for 2022 to be approximately 18%.

LIQUIDITY AND CAPITAL RESOURCES

The following table presents a summary of our cash flows for the last three years:


                                                          2021           2020           2019
Net cash provided by operating activities              $  301,903     $  161,002     $  362,796
Net cash provided by (used in) investing activities        78,330       (157,226 )     (241,574 )
Net cash provided by (used in) financing activities      (672,636 )      396,336       (198,994 )
Net increase (decrease) in cash and cash equivalents   $ (292,403 )   $  400,112     $  (77,772 )



Our primary sources of liquidity are cash generated from our operations and our
borrowing capacity under our revolving credit facility.  Our internally
generated cash, along with cash on hand at July 30, 2021 and borrowings under
our 2019 Revolving Credit Facility, were sufficient to finance all of our
growth, share repurchases, dividend payments, working capital needs, interest
payments under our revolving credit facility and other cash payment obligations
in 2021. We believe that cash at July 30, 2021, along with cash expected to be
generated from our operating activities and the borrowing capacity under our
revolving credit facility, will be sufficient to finance our continuing
operations, our continuing expansion plans, debt service and working capital
needs for 2022.

Cash Generated from Operations


The increase in net cash flow provided by operating activities in 2021 from 2020
primarily reflected the timing of payments for accounts payable and certain
taxes and lower bonus payments made in 2021 as a result of the prior year impact
of the COVID-19 pandemic on our operations in 2020.

The decrease in net cash flow provided by operating activities in 2020 from 2019
primarily reflected the negative impact on our operations caused by the COVID-19
pandemic and the timing of payments for accounts payable.

Capital Expenditures and Proceeds from Sale of Property and Equipment

The following table presents our capital expenditures (purchase of property and equipment), net of proceeds from insurance recoveries, for the last three years:


                                                       2021          2020   

2019

Capital expenditures, net of proceeds from
insurance recoveries                                 $  70,130     $ 296,008     $ 137,540



Our capital expenditures consisted primarily of capital investments for existing
stores, new store locations and strategic initiatives.  On July 29, 2020, we
entered into an agreement with the original lessor and a third party financier
to obtain ownership of 64 Cracker Barrel properties and simultaneously entered
into a sale and leaseback transaction with the financier.  The decrease in
capital expenditures in 2021 from 2020 resulted primarily from a similar
transaction in 2021 as well as decreases in new store construction, store
remodels and other similar cost-saving measures in response to the COVID-19
pandemic and lower capital expenditures for existing stores partially offset by
higher capital expenditures for strategic initiatives.

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The increase in capital expenditures in 2020 from 2019 resulted primarily from
the July 29, 2020 transaction discussed above partially offset by lower capital
expenditures for strategic initiatives.

We estimate that our capital expenditures during 2022 will be approximately
$120,000. This estimate includes the acquisition of sites and construction costs
of new Cracker Barrel stores and MSBC locations that we plan to open during
2022, as well as acquisition and construction costs for store locations to be
opened in 2022.  We intend to fund our capital expenditures with cash generated
by operations and cash on hand as the result of borrowings under our revolving
credit facility, as necessary.

The following table presents our proceeds from sale of property and equipment
for the last three years:

                                                 2021          2020        2019

Proceeds from sale of property and equipment $ 149,960 $ 207,253 $ 151




On August 4, 2020, we completed a sale and leaseback transaction involving 62
Cracker Barrel stores.  The decrease in proceeds from sale of property and
equipment in 2021 from 2020 primarily relates to the proceeds from the August 4,
2020 sale and leaseback transactions being lower than the July 29, 2020 sale and
leaseback transaction. The increase in proceeds from sale of property and
equipment in 2020 from 2019 also relates to the sale and leaseback transaction
entered into on July 29, 2020.

Maple Street Biscuit Company


Effective October 10, 2019, we acquired 100% ownership of MSBC, a breakfast and
lunch fast casual concept, for a purchase price of $36,000, of which $32,000 was
paid to the sellers in cash with the remaining $4,000 being held as security for
the satisfaction of indemnification obligations, if any.  The first installment
of $1,500, to be held as security, was paid to the principal seller in the first
quarter of 2021, and the remaining amount, if any, will be paid in a final
installment to the sellers on the two-year anniversary of closing.  We also
incurred acquisition-related costs of $1,269.  During 2020, we converted our six
Holler & Dash locations into MSBC locations.  We believe that the investment in
MSBC supports our strategic initiative to extend the brand by becoming a market
leader in the breakfast and lunch-focused fast casual dining segment of the
restaurant industry and by providing a platform for growth.

Punch Bowl Social


Effective July 18, 2019, we entered into a strategic relationship with PBS, a
food, beverage and entertainment concept, by purchasing a non-controlling equity
interest in the concept.  The PBS concept was developed to focus on
made-from-scratch food, a craft beverage program and social gaming.  We believed
the investment in PBS provided a growth vehicle to deliver additional
shareholder value and extend our footprint into a complementary market segment.
During the onset of the COVID-19 pandemic, PBS Holdco's wholly-owned subsidiary
and principal operating company, PBS BrandCo, LLC ("Brandco") suffered
unsustainable disruption to its business across the chain and suspended all
operations.  On March 20, 2020, the primary lender under Brandco's secured
credit facility ("Lender") provided notice of the Lender's intention to
foreclose on its collateral interest in Brandco unless Cracker Barrel repaid or
unconditionally guaranteed the indebtedness.  For reasons previously disclosed
in our public filings, we determined not to invest further resources to prevent
foreclosure or otherwise provide additional capital to PBS and recorded a
non-cash impairment charge on our investment of $132,878.

During the course of the pandemic, the Lender unsuccessfully sought a buyer for
Brandco and its assets, culminating in Brandco filing a petition for
reorganization under Chapter 11 of the United States Bankruptcy Code in December
2020.  In April 2021, the United States Bankruptcy Court for the District of
Delaware approved a plan of liquidation of Brandco, pursuant to which the Lender
purchased Brandco and certain of its assets and liabilities for a purchase price
of approximately $32,000, none of which proceeds were attributable to the
Company's interest in PBS.  Following the completion of this sale transaction,
the Company's remaining interest in PBS was determined to have no remaining
value.

Borrowing Capacity, Debt Covenants and Notes


On September 5, 2018, we entered into a five-year $950,000 revolving credit
facility (the "2019 Revolving Credit Facility") with substantially the same
terms and financial covenants as our previous $750,000 revolving credit
facility, which it replaced.  The 2019 Revolving Credit Facility also contains
an option to increase the revolving credit facility by $300,000.  In the fourth
quarter of 2020, we drew an additional $39,395 under this option for a one-year
period. In the third quarter of 2021, we entered into an amendment to the 2019
Revolving Credit Facility which reduced the commitment amount from $950,000 to
$800,000.

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The following table highlights our borrowing capacity and outstanding borrowings
under the 2019 Revolving Credit Facility, our standby letters of credit and our
borrowing availability under the 2019 Revolving Credit Facility as of July 30,
2021:

                                                                          July 30, 2021
Borrowing capacity under the 2019 Revolving Credit Facility              $  

800,000

Less: Outstanding borrowings under the 2019 Revolving Credit Facility

85,000

Less: Standby letters of credit*                                            

31,896

Borrowing availability under the 2019 Revolving Credit Facility $

683,104



*Our standby letters of credit relate to securing reserved claims under workers'
compensation insurance and securing our sale and leaseback transactions entered
into on July 29, 2020 and August 4, 2020.  Our standby letters of credit reduce
our borrowing availability under the 2019 Revolving Credit Facility.

During 2021, we repaid $924,395 under the 2019 Revolving Credit Facility and
borrowed an additional $60,000 under the 2019 Revolving Credit Facility. During
2020, we borrowed $801,395 under the 2019 Revolving Credit Facility to fund our
dividend payments, acquisition of MSBC, other working capital needs and to
provide flexibility as a result of the uncertainty caused by the COVID-19
pandemic.  During 2020, we repaid $252,000 of the borrowings.

Our 2019 Revolving Credit Facility contains customary financial covenants, which
include maintenance of a maximum consolidated total leverage ratio and a minimum
consolidated interest coverage ratio.  We were in compliance with the 2019
Revolving Credit Facility's financial covenants at July 30, 2021, and we expect
to be in compliance with the 2019 Revolving Credit Facility's financial
covenants for the remaining term of the facility.

On June 18, 2021, the Company entered into an issuance and sale of $300,000
aggregate principal amount of 0.625% Convertible Senior Notes due 2026.  The
Notes are senior, unsecured obligations of the Company and bear cash interest at
a rate of 0.625% per annum, payable semi-annually in arrears on June 15 and
December 15 of each year, beginning on December 15, 2021. The Notes mature on
June 15, 2026, unless earlier converted, repurchased or redeemed.  Net proceeds
from the Notes were $291,125, after deducting the initial purchasers' discounts
and commissions and the Company's offering fees and expenses.

In connection with the issuance of the Notes, the Company entered into privately
negotiated convertible note hedge transactions (the "Convertible Note Hedge
Transactions") with certain of the initial purchasers of the Notes  and/or their
respective affiliates and other financial institutions (in this capacity, the
"Hedge Counterparties"), which cover, subject to customary anti-dilution
adjustments, the aggregate number of shares of the Company's common stock that
initially underlie the Notes. Concurrently with the Company's entry into the
Convertible Note Hedge Transactions, the Company also entered into separate,
privately negotiated warrant transactions with the Hedge Counterparties
collectively relating to the same number of shares of the Company's common stock
underlying the Notes, subject to customary anti-dilution adjustments, and for
which the Company received premiums that partially offset the cost of entering
into the Convertible Note Hedge Transactions (the "Warrant Transactions").  The
portion of the net proceeds to the Company from the offering of the Notes that
was used to pay the premium on the Convertible Note Hedge Transactions, net of
the proceeds to the Company from the Warrant Transactions, was approximately
$30,300.

See "Material Commitments" below and Note 7 to our Consolidated Financial Statements for further information on our long-term debt.

Dividends, Share Repurchases and Share-Based Compensation Awards


Our 2019 Revolving Credit Facility imposes restrictions on the amount of
dividends we are permitted to pay and the amount of shares we are permitted to
repurchase.  Under the 2019 Revolving Credit Facility, provided there is no
default existing and the total of our availability under the 2019 Revolving
Credit Facility plus our cash and cash equivalents on hand is at least $100,000
(the "Cash Availability"), we may declare and pay cash dividends on shares of
our common stock and repurchase shares of our common stock (1) in an unlimited
amount if at the time the dividend or the repurchase is made our consolidated
total leverage ratio is 3.00 to 1.00 or less and (2) in an aggregate amount not
to exceed $100,000 in any fiscal year if our consolidated total leverage ratio
is greater than 3.00 to 1.00 at the time the dividend or repurchase is made;
notwithstanding (1) and (2), so long as immediately after giving effect to the
payment of any such dividends, Cash Availability is at least $100,000, we may
declare and pay cash dividends on shares of our common stock in an aggregate
amount not to exceed in any fiscal year the product of the aggregate amount of
dividends declared in the fourth quarter of the immediately preceding fiscal
year multiplied by four.

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To preserve available cash during the COVID-19 pandemic and in light of the
uncertainties as to its duration and economic impact, we deferred the payment of
the dividend of $1.30 per share declared in the third quarter of 2020 until
September 2, 2020 to shareholders of record on August 14, 2020 and temporarily
suspended future dividend payments.  In the fourth quarter of 2021, in light of
the ongoing recovery from the COVID-19 pandemic, our Board of Directors resumed
our dividend program and declared a dividend payable on August 6, 2021 to
shareholders of record on July 16, 2021 of $1.00 per share. Additionally, on
September 15, 2021, the Board declared a dividend of $1.30 per share payable on
November 9, 2021 to shareholders on record on October 22, 2021. In 2019, we also
paid a special dividend of $3.00 per share.

The following table highlights the dividends per share we paid for the last
three years:

                            2021       2020       2019
Dividends per share paid   $ 1.30     $ 3.90     $ 8.00



Our criteria for share repurchases are that they be accretive to expected net
income per share and are within the limits imposed by our debt commitments.
Subject to the limits imposed by our revolving credit facility, in 2019, we were
authorized by our Board of Directors to repurchase shares at the discretion of
management up to $25,000.  Additionally, in the fourth quarter of 2019, our
Board of Directors increased the share repurchase authorization to $50,000. 

In

the third quarter of 2020, our Board of Directors approved the repurchase of up
to an additional $25,000.  This authorization was effective immediately and
replaced the $50,000 share repurchase authorization which had been expended.  In
response to the COVID-19 pandemic, however, we temporarily suspended all share
repurchases until the fourth quarter of 2021 when 232,543 shares of our common
stock were repurchased at an aggregate cost of $35,000 in conjunction with the
Company's offering and sale of the Notes. Additionally, on September 15, 2021,
our Board of Directors authorized share repurchases up to $100,000 of the
Company's outstanding common stock. In 2020, we repurchased 378,974 shares of
our common stock in the open market at an aggregate cost of $55,007.  In 2019,
we did not repurchase any shares of our common stock.

In 2021, 2020 and 2019, related tax withholding payments on the vesting of certain share-based compensation awards resulted in a net use of cash of $2,282, $2,160, and $2,497, respectively.

Working Capital


In the restaurant industry, substantially all sales are either for cash or
third-party credit card.  Like many other restaurant companies, we are able to,
and often do, operate with negative working capital.  Restaurant inventories
purchased through our principal food distributor are on terms of net zero days,
while other restaurant inventories purchased locally are generally financed
through trade credit at terms of 30 days or less.  Because of our gift shop,
which has a lower product turnover than the restaurant, we carry larger
inventories than many other companies in the restaurant industry.  Retail
inventories are generally financed through trade credit at terms of 60 days or
less.  These various trade terms are aided by rapid turnover of the restaurant
inventory.  Employees generally are paid on weekly or semi-monthly schedules in
arrears for hours worked except for bonuses that are paid either quarterly or
annually in arrears.  Many other operating expenses have normal trade terms and
certain expenses such as certain taxes and some benefits are deferred for longer
periods of time.

The following table highlights our working capital deficit:

                               2021          2020           2019
Working capital (deficit)   $ (111,666 )   $ 191,956     $ (150,094 )


The change in working capital at July 30, 2021 compared to July 31, 2020 primarily reflected the decrease in cash and timing of payments for certain taxes. The decrease in cash resulted primarily from higher debt repayments partially offset by lower capex spending, cash generated from operations and lower dividend payments.

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The change in working capital at July 31, 2020 compared to August 2, 2019
primarily reflected the increase in cash and timing of accounts payable
partially offset by the current portion of our long-term debt and the
recognition of lease liabilities due to the adoption at August 3, 2019 of
accounting guidance for leases.  The increase in cash resulted from the actions
taken by management to increase and preserve liquidity during the COVID-19
pandemic such as borrowing under our revolving credit facility and the deferral
of our dividend payment from the fourth quarter of 2020 until the first quarter
of 2021.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements.

Material Commitments

Our contractual cash obligations and commitments as of July 30, 2021, are summarized in the tables below:


                                                                       Payments due by Years
Contractual Obligations (a)             Total          2022          2023-2024       2025-2026      After 2026
2019 Revolving Credit Facility (b)   $    85,000     $       -     $    85,000     $         -     $          -
Convertible Debt (c)                     309,375         1,875           3,750         303,750                -
Leases (d)                             1,237,088        86,992         142,379         122,730          884,987
Purchase obligations (e)                  55,481        51,734           1,402             546            1,799
Other long-term obligations (f)           39,380            --           4,758              95           34,527

Total contractual cash obligations $ 1,726,324 $ 140,601 $ 237,289 $ 427,121 $ 921,313




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                                                     Amount of Commitment Expirations by Years
                                       Total          2022          2023-2024       2025-2026      After 2026
2019 Revolving Credit Facility(b)   $   800,000     $       -     $   800,000     $         -     $           -
Convertible Debt (c)                    300,000             -               -         300,000                 -
Standby letters of credit(g)             31,896         6,394          25,502               -                 -
Total commitments                   $ 1,131,896     $   6,394     $   825,502     $   300,000     $           -

(a) At July 30, 2021, the entire liability for uncertain tax positions (including

penalties and interest) is classified as a long-term liability. At this

time, we are unable to make a reasonably reliable estimate of the amounts and

timing of payments in individual years because of uncertainties in the timing

of the effective settlement of tax positions. As such, the liability for

uncertain tax positions of $22,232 is not included in the contractual cash

obligations and commitments table above.

(b) Our 2019 Revolving Credit Facility expires on September 5, 2023. Using a

projected interest rate and the outstanding borrowings at July 30, 2021, we

anticipate having interest payments of $3,221 and $3,194 in 2022 and

2023-2024, respectively. The projected interest rate for our outstanding

borrowings is the LIBOR rate at July 30, 2021 of 0.18% plus our current

credit spread of 3.00%. Based on our outstanding borrowings and our standby

letters of credit at July 30, 2021 and our current unused commitment fee as

defined in the 2019 Revolving Credit Facility, our unused commitment fees in

2022 and 2023-2024 would be $2,763 and $3,051, respectively; however, the

actual amount will differ based on actual usage of the 2019 Revolving Credit

Facility.

(c) Our $300,000 aggregate principal amount of 0.625% Convertible Senior Notes

mature on June 15, 2026. The Notes bear cash interest at an annual rate of

0.625%, payable semi-annually in arrears on June 15 and December 15 of each

year, beginning on December 15, 2021.

(d) Includes base lease terms and certain optional renewal periods for which, at

the inception of the lease, it is reasonably certain that we will exercise.

(e) Purchase obligations consist of purchase orders for food and retail

merchandise; purchase orders for capital expenditures, supplies, other

operating needs and other services; and commitments under contracts for

maintenance needs and other services. We have excluded contracts that do not

contain minimum purchase obligations. We excluded long-term agreements for

services and operating needs that can be cancelled within 60 days without

penalty. We included long-term agreements and certain retail purchase orders

for services and operating needs that can be cancelled with more than 60

days' notice without penalty only through the term of the notice. We

included long-term agreements for services and operating needs that only can

be cancelled in the event of an uncured material breach or with a penalty

through the entire term of the contract. Because of the uncertainties of

seasonal demands and promotional calendar changes, our best estimate of usage

for food, supplies and other operating needs and services is ratably over

either the notice period or the remaining life of the contract, as

applicable, unless we had better information available at the time related to

     each contract.



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(f) Other long-term obligations include our Non-Qualified Savings Plan ($32,527,

with a corresponding long-term asset to fund the liability; see Note 14 to

the Consolidated Financial Statements), Deferred Compensation Plan ($2,000)

and our long-term incentive plans ($4,853).

(g) Our standby letters of credit relate to securing reserved claims under

workers' compensation insurance and securing our sale and leaseback

transactions entered into on July 29, 2020 and August 4, 2020. Our standby

letters of credit reduce our borrowing availability under the 2019 Revolving

     Credit Facility.



Recent Accounting Pronouncements Adopted and Not Yet Adopted


See Note 2 to the accompanying Consolidated Financial Statements for a
discussion of recent accounting guidance adopted and not yet adopted.  The
adoption of accounting guidance discussed in Note 2 did not have a significant
impact on our consolidated financial position or results of operations.
Regarding the accounting guidance not yet adopted, with the exception of the
accounting guidance for convertible instruments, we do not expect the accounting
guidance will have a significant impact on the Company's financial position or
results of operations.  The adoption of the accounting guidance for convertible
instruments will increase long-term debt and decrease equity on the Consolidated
Balance Sheet by the amount of the equity component of convertible notes
recognized in equity.  Additionally, the if-converted method for calculating
diluted earnings per share instead of the treasury stock method will be applied.

CRITICAL ACCOUNTING ESTIMATES


We prepare our Consolidated Financial Statements in conformity with GAAP. The
preparation of these financial statements requires us to make estimates and
assumptions about future events and apply judgments that affect the reported
amounts of assets, liabilities, revenue, expenses and related disclosures.  We
base our estimates and judgments on historical experience, current trends,
outside advice from parties believed to be experts in such matters and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources.  However, because future events and their effects cannot be
determined with certainty, actual results could differ from those assumptions
and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 2 to the Consolidated
Financial Statements.  Judgments and uncertainties affecting the application of
those policies may result in materially different amounts being reported under
different conditions or using different assumptions.  Critical accounting
estimates are those that:

• management believes are most important to the accurate portrayal of both our

financial condition and operating results; and

• require management's most difficult, subjective or complex judgments, often as

a result of the need to make estimates about the effect of matters that are

   inherently uncertain.



We consider the following accounting estimates to be most critical in understanding the judgments that are involved in preparing our Consolidated Financial Statements:

• Impairment of Long-Lived Assets

• Insurance Reserves

• Retail Inventory Valuation


 • Lease Accounting


Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.

Impairment of Long-Lived Assets


We assess the impairment of long-lived assets whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable.  Recoverability of assets is measured by comparing the carrying
value of the asset to the undiscounted future cash flows expected to be
generated by the asset.  If the total expected future cash flows are less than
the carrying amount of the asset, the carrying value is written down, for an
asset to be held and used, to the estimated fair value or, for an asset to be
disposed of, to the fair value, net of estimated costs of disposal.  Any loss
resulting from impairment is recognized by a charge to income.  Judgments and
estimates that we make related to the expected useful lives of long-lived assets
and future cash flows are affected by factors such as changes in economic
conditions and changes in operating performance.  The accuracy of such
provisions can vary materially from original estimates and management regularly
monitors the adequacy of the provisions until final disposition occurs.

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We have not made any material changes in our methodology for assessing
impairments during the past three years and we do not believe that there is a
reasonable likelihood that there will be a material change in the estimates or
assumptions used by us to assess impairment of long-lived assets.  However, if
actual results are not consistent with our estimates and assumptions used in
estimating future cash flows and fair values of long-lived assets, we may be
exposed to losses that could be material.  During 2020, we recorded impairment
charges of approximately $23,000 due to the deterioration in operating
performance of certain Cracker Barrel and MSBC locations as a result of the
impact of the COVID-19 pandemic.  It is possible that we may recognize
additional impairment as a result of the impacts of the COVID-19 pandemic and
our response.

Insurance Reserves

We self-insure a significant portion of our expected workers' compensation and
general liability programs. We purchase insurance for individual workers'
compensation claims that exceed $250, $750 or $1,000 depending on the state in
which the claim originated.  We purchase insurance for individual general
liability claims that exceed $500.  We record a reserve for workers'
compensation and general liability for all unresolved claims and for an estimate
of incurred but not reported ("IBNR") claims.  These reserves and estimates of
IBNR claims are based upon a full scope actuarial study which is performed
annually at the end of our third quarter and is adjusted by the actuarially
determined losses and actual claims payments for the fourth quarter.
Additionally, we perform limited scope actuarial studies on a quarterly basis to
verify and/or modify our reserves.  The reserves and losses in the actuarial
study represent a range of possible outcomes within which no given estimate is
more likely than any other estimate.  As such, we record the losses in the lower
half of that range and discount them to present value using a risk-free interest
rate based on projected timing of payments. We also monitor actual claims
development, including incurrence or settlement of individual large claims
during the interim periods between actuarial studies as another means of
estimating the adequacy of our reserves.

Our group health plans combine the use of self-insured and fully-insured
programs.  Benefits for any individual (employee or dependents) in the
self-insured group health program are limited.  We record a liability for the
self-insured portion of our group health program for all unpaid claims based
upon a loss development analysis derived from actual group health claims payment
experience.  We also record a liability for unpaid prescription drug claims
based on historical experience.

Our accounting policies regarding insurance reserves include certain actuarial
assumptions and management judgments regarding economic conditions, the
frequency and severity of claims and claim development history and settlement
practices.  We have not made any material changes in the methodology used to
establish our insurance reserves during the past three years and do not believe
there is a reasonable likelihood that there will be a material change in the
estimates or assumptions used to calculate the insurance reserves.  However,
changes in these actuarial assumptions or management judgments in the future may
produce materially different amounts of expense that would be reported under
these insurance programs.

Retail Inventory Valuation

Cost of goods sold includes the cost of retail merchandise sold at our stores
utilizing the retail inventory method ("RIM").  Under RIM, the valuation of our
retail inventories is determined by applying a cost-to-retail ratio to the
retail value of our inventories.  Inherent in the RIM calculation are certain
inputs, including initial markons, markups, markdowns and shrinkage, which may
significantly impact the gross margin calculation as well as the ending
inventory valuation.

Inventory valuation provisions are included for retail inventory obsolescence
and retail inventory shrinkage.  Retail inventory is reviewed on a quarterly
basis for obsolescence and adjusted as appropriate based on assumptions made by
management and judgment regarding inventory aging and future promotional
activities.  Retail inventory also includes an estimate of shrinkage that is
adjusted upon physical inventory counts.  Annual physical inventory counts are
conducted based upon a cyclical inventory schedule.  An estimate of shrinkage is
recorded for the time period between physical inventory counts by using a
two-year average of the physical inventories' results on a store-by-store basis.

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We have not made any material changes in the methodologies, estimates or
assumptions related to our merchandise inventories during the past three years
and do not believe there is a reasonable likelihood that there will be a
material change in the estimates or assumptions in the future.  However, actual
obsolescence or shrinkage recorded may produce materially different amounts than
we have estimated.

Lease Accounting

We have ground leases for our leased stores and office space leases that are
recorded as operating leases under various non-cancellable operating leases.
Additionally, we lease our retail distribution center, advertising billboards,
vehicle fleets, and certain equipment under various non-cancellable operating
leases.  Effective August 3, 2019, we adopted lease accounting guidance which
requires the recognition of lease assets and lease liabilities on the balance
sheet.  Adoption of the accounting guidance for leases resulted in the
recognition of right-of-use operating lease assets of $464,394 and total
operating lease liabilities of $506,406 as of August 3, 2019.

We evaluate our leases at contract inception to determine whether we have the
right to control use of the identified asset for a period of time in exchange
for consideration.  If we determine that we have the right to obtain
substantially all of the economic benefit from use of the identified asset and
the right to direct the use of the identified asset, we recognize a right-of-use
asset and lease liability.  Also, at contract inception, we evaluate our leases
to estimate their expected term which includes renewal options that we are
reasonably assured that we will exercise, and the classification of the lease as
either an operating lease or a finance lease.  Additionally, as our leases do
not provide an implicit rate, we use our incremental borrowing rate based on the
information available at the time of commencement or modification date in
determining the present value of lease payments. Assumptions used in determining
our incremental borrowing rate include our implied credit rating and an estimate
of secured borrowing rates based on comparable market data. We assess the
impairment of the right-of-use asset at the asset group level whenever events or
changes in circumstances indicate that the carrying value of the asset may not
be recoverable.

Changes in these assumptions and management judgments may produce materially different amounts in the recognition of the right-of-use assets and lease liabilities. Additionally, any loss resulting from an impairment of the right-of-use assets is recognized by a charge to income, which could be material.

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09/22CRACKER BARREL OLD COUNTRY STORE : Wells Fargo Adjusts Price Target on Cracker Barrel Old ..
MT
09/22CRACKER BARREL OLD COUNTRY STORE : Deutsche Bank Adjusts Cracker Barrel Old Country Store ..
MT
09/21Lennar, Cracker Barrel fall; AutoZone, Nektar rise
AQ
09/21CRACKER BARREL OLD COUNTRY STORE : Holds Off on Guidance as Delta Impact Drives Fiscal Fou..
MT
09/21CRACKER BARREL OLD COUNTRY STORE : Fiscal Q4 Earnings, Revenue Miss Street Views; Raises Q..
MT
09/21CRACKER BARREL : Fiscal Q4 Earnings Snapshot
AQ
09/21CRACKER BARREL OLD COUNTRY STORE : REPORTS FOURTH QUARTER AND FULL YEAR FISCAL 2021 RESULT..
PU
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