Cracker Barrel beats on lower costs

Chain raises guidance for second straight quarter

Third-quarter profits at Cracker Barrel rose more than 20 percent from a year ago primarily because the company managed to cut its spending on food and salaries and benefits despite a 2 percent rise in sales.

The Lebanon-based restaurant and retail chain earned $14.4 million in the quarter versus $12.0 million in early 2009. Per diluted share, profits rose to 61 cents from 52 cents, three cents better than what analysts had been expecting. Operating margins rose 210 basis points, same-store restaurant sales 0.6 percent.

"We are encouraged by the improving profitability at the store level while, at the same time, delivering higher levels of customer satisfaction according to our latest surveys," said Chairman, President and CEO Michael Woodhouse, who also raised his company's guidance for the fourth quarter. "As we roll out our initiatives, the focus is on continuing to improve operations and the guest experience."

Another bright point for the company were its retail stores, which account for a fifth of total revenue: Average unit volume rose 2.7 percent while same-store sales were up more than 3 percent.

Shares of Cracker Barrel (Ticker: CBRL) closed Monday trading at $50.01 and are up 32 percent this year.