Cross Country Branding with Cracker Barrel

Cracker Barrel makes the most of its country-music connections to grab a wider--and local--audience.

By Margaret Littman, Contributing Editor -- Chain Leader, 3/1/2008

Cracker Barrel tested its first TV ads in almost a decade in Nashville, Tenn.; Indianapolis; Jacksonville, Fla.; Spartanburg, S.C.; and Louisville and Lexington, Ky.

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Until recently, if you were one of the 8 percent of Americans without a car, you probably never saw advertising for Cracker Barrel Old Country Store. The Lebanon, Tenn.-based chain of 562 restaurants across the country almost exclusively advertised on billboards, because the majority of its restaurants are along the interstate.

Those billboards lured in the customers who craved a home-style meal away from home. But as gas prices and other factors have curtailed family road trips, Cracker Barrel designed a number of initiatives designed to make the chain top of mind for new segments of the population without alienating its core customer. These efforts include a program to sell exclusive country music CDs in the Old Country Store portion of its units and a six-month test of television ads in select markets. The 30- and 60-second spots are the chain’s first TV ads since the end of the last decade.

Cracker Barrel, of course, isn’t abandoning its road warrior, the interstate-driving customer who likes the consistency of pulling off at the nearest exit for a roast beef dinner or a plate of chicken and dumplings. Those drivers account for 40 percent to 50 percent of the chain’s customers.

But Cracker Barrel, like all of its competitors in the family-dining segment, has been faced with high gas prices and a weak environment. December 2007 comparable-store sales dropped 1.1 percent from the same month in 2006. So the company has looked at ways to build its brand among a wider audience.

Josh Turner is one of the country music stars who has released high-profile music albums for distribution exclusively through Cracker Barrel stores.

Robert Derrington, a senior restaurant analyst with Morgan Keegan and Co. in Nashville, Tenn., says recent months have been among the worst he’s seen in the industry in two decades: “All the pressures are out there. These have been some of the worst traffic trends. But [Cracker Barrel] management is taking a far more proactive approach they have ever taken.”

“It is a very strong brand, but the real task for me was to build awareness for that brand because we want to appeal to multigenerational families,” says Simon Turner, Cracker Barrel’s chief marketing officer.

Music to Their Ears

Chief among Turner’s plans is an expansion of the chain’s sale of country music CDs in its retail stores, which account for approximately 20 percent to 25 percent of Cracker Barrel’s total sales. More than 36 percent of the chain’s guests are heavy listeners of country music, so it makes sense to use the genre to draw new customers in. After all, the word “country” is in the concept’s name.

In addition, Cracker Barrel has been the lead sponsor of the Grand Ole Opry radio shows for the past three years. The company has also helped raise funds for the Country Music Hall of Fame through CDs and concerts.

“People come to us because of the good country cooking,” Turner explains. “But the country music is an important theme. It provides a good emotional connection.

“We’ve been playing country music [in the units] since the brand began and it has been a major part of the brand image, so it was a natural thing for us to build upon,” he adds.

When diners wait for a table in a busy restaurant, they wait in the store, and about one-third of diners shop in the store. But the CD program may be helping to boost restaurant sales, rather than the restaurants feeding the stores.

Four years ago Cracker Barrel first worked with bluegrass singer-songwriter Alison Krauss to release one of her CDs. Since then the chain has contracted for nine different CDs that are exclusive to Cracker Barrel, including a Live at the Opry album with heartthrob Josh Turner and the farewell tour of megagroup Alabama, and also sells non-exclusive albums. In the last four years, Cracker Barrel has sold 3 million CDs, 1 million of which were exclusive.

Such deals can be profitable, says Ken Tucker, Nashville Correspondent for Billboard magazine. Working with a retailer like Cracker Barrel (or Hallmark or Starbucks, both of which have entered the music business as well) means artists forgo expenses for a music video for Country Music Television and other big-ticket promotional items. So they can start making money faster than if the album were produced by a major label.

“The landscape for music has changed. There is not a corner record store anymore. Country music is now sold more in Wal-Marts and Kmarts,” Tucker adds. “Companies are looking for different ways to sell their music, and this is one of those ways.”

Multifaceted Approach

Country music plays a role in Cracker Barrel’s first TV commercials since 1998, too. The test TV spots play a cover of Tracy Lawrence’s song “If The World Had a Front Porch.” The song illustrates the chain’s down-home feel and also helps associate it with its local community. The company began airing the spots in October 2007 on network TV in select markets and will run them for six months.

Derrington thinks Cracker Barrel may decide to add price-focused advertising in 2008 and 2009. With an average check of $8.13, less than the $12 to $14 range of many of its competitors, price is an advantage it can promote.

In January, Derrington lowered his earnings estimates of CBRL Group, along with the stocks of 11 other full-service family and casual-dining chains. But he is “stunned at how good” the “If The World Had a Front Porch” TV commercials are and feels the chain is doing the right things to bring in more customers, Derrington says. “I applaud the move.”