Good morning, and welcome to the Cracker Barrel fiscal year 2020 first quarter earnings conference call. Today, all participants will be in listen-only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that today's event is being recorded. At this time, I would like to turn the conference over to Adam Hanan, Manager of Investor Relations. Please go ahead.
Thanks, operator. Good morning, welcome to Cracker Barrel's first quarter fiscal 2020 conference call and webcast. This morning, we issued a press release announcing our first quarter results and our outlook for the 2020 fiscal year. On the call with me this morning are Cracker Barrel's President and CEO, Sandy Cochran, Senior Vice President and CFO, Jill Golder, and Vice President and Principal Accounting Officer, Jeff Wilson. Sandy will begin with a review of the business, and Jill will review the financials and outlook. We will open up the call for questions for Sandy, Jill, 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?
Good morning, and thank you, Adam. This morning, we announced positive comparable store restaurant sales, and we delivered GAAP earnings per share of $1.79. While we faced headwinds from the softening trend in industry traffic, comparable sales that continued throughout our first quarter, I was pleased that we again solidly outperformed the industry and that we grew operating income by 3%. Jill will review the financial results for the quarter as well as our updated full-year expectations, but before she does, I want to speak to some of the highlights from the quarter and provide an update on our plans for the remainder of the fiscal year. First quarter menu promotion featured our Homestyle Chicken. As a reminder, this popular offering was previously only available on Sundays, but we made it available every day as part of our Signature Fried Chicken platform.
The menu promotion also featured our new Homestyle Chicken BLT sandwich. It was supported by 6 weeks of national TV media, with the ad continuing our strategy of more explicitly highlighting our food and value. While traffic in the quarter was softer than expected, I was still pleased with the performance of the menu and marketing promotion. Moving to off-premise, we again saw solid growth in this business. It was a meaningful contributor to top-line results for the quarter. During the quarter, we expanded our third-party delivery coverage. This service is now available in nearly 600 stores. We also expanded our fleet of catering vans, bringing our total to 235. We hired several catering sales managers as we continue to grow our catering business. Turning to retail, our sales in the first quarter were below our expectations. Our apparel merchandise was particularly challenged.
We continue to rework our women's apparel category as the guest response remained weaker than last year. Additionally, we believe the unseasonably warm weather contributed to the underperformance of this category, particularly our outerwear offerings. As we look to the second quarter, Christmas seasonal merchandise sales, such as decor, appear to be strong. With the holiday gift purchasing season having just begun, we remain cautious regarding the shorter selling season, and our teams are working diligently to address our sales concerns and remain committed to offering holiday products with strong price-value relationships, which we believe may place some pressure on our second quarter margin rate. Looking ahead, we'll continue to execute our fiscal 2020 business priorities.
This includes accelerating our off-premise business, driving top-line growth through craveable signature food, enhancing the employee and guest experience, leveraging new long-term growth drivers such as Maple Street Biscuit Company and Punch Bowl Social. I'm excited about our current holiday menu promotion, which features the return of our Country Fried Turkey topped with pan gravy, served with green bean casserole and cranberry relish. This offering proved to be very popular last year, and we believe the new equipment platform that we installed as part of the Signature Fried Chicken initiative helps to provide improved consistency. The menu promotion is being supported by an integrated marketing campaign that includes national TV. Second quarter is a key period of our off-premise business.
We've been pleased with the demand for our Heat & Serve offerings in recent years, and we believe the growth we've seen in this business reflects the trust that guests have in Cracker Barrel to provide a delicious home-cooked meal during these special occasions. Continue to believe that these differentiated offerings, which serve up to 10 people, are a good value and provide the ultimate convenience for guests looking to host family and friends in their homes. This year, we also made several enhancements to support an improved guest experience, both for our in-store and our off-premise guests during this high-volume period. We continue to be pleased with the demand for third-party delivery and are evaluating how we can further expand our reach and frequency for this occasion. Lastly, we announced our acquisition of Maple Street Biscuit Company.
Several years ago, when we were assessing opportunities in the fast-casual space as part of our Extend the Brand Strategy, Maple Street was a concept that stood out, and I had the opportunity to meet with Scott Moore, the Founder and CEO. Since that time, we've been closely following and admiring Maple Street, which continued to grow. Several months ago, Scott reached out and asked whether Cracker Barrel would be interested in acquiring Maple Street. He'd grown Maple Street to 28 company-owned units and five franchise locations since opening in 2012. He recognized that Maple Street would benefit from additional resources and expertise. While he was prepared to go through a full search process for prospective buyers, he preferred a trusted strategic partner with a long-term perspective. Our brands share many values and similarities, such as made-from-scratch cooking and genuine hospitality.
Maple Street will be able to leverage Cracker Barrel's resources and expertise. We're committed to preserving the integrity of the Maple Street brand. Our experience with Holler & Dash has reinforced our belief that the breakfast and lunch-focused fast-casual segment is an attractive category. We believe Maple Street will serve as a growth vehicle that complements Cracker Barrel by accelerating our penetration in this segment by providing increased exposure to urban and suburban markets and to the Millennial and Gen Z cohorts. After closing the deal in October, we immediately moved into the integration phase, and our teams are working diligently to execute our plans, which includes the conversion of Holler & Dash into Maple Street. We expect the integration to last until the spring, and we look forward to accelerating growth in the months following the completion of the integration.
We believe that Maple Street and Punch Bowl Social are two emerging brands that are positioned to become leaders in their respective categories and will serve as complementary growth vehicles for delivering long-term value to Cracker Barrel shareholders. While our main focus remains the long-term success of the core Cracker Barrel brand, we're very excited about the future for both of these brands and the value creation we believe they'll drive. The Maple Street team will be relocating to Nashville, and Punch Bowl Social continues to operate from its Denver headquarters, led by Robert Thompson. Closing, slight softness in the industry and in our sales performance compared to Q4, I was pleased with the quarter. We continue to outperform the industry, and our team started the year off strongly in executing against our priorities for the fiscal year.
Additionally, we completed the acquisition of Maple Street Biscuit Company, which we believe complements our strategic investment in Punch Bowl Social and will drive long-term value creation. Going forward, we'll continue to execute our plans to enhance the core, expand the footprint, and extend the brand as we seek to deliver shareholder returns. Lastly, I'm excited to announce that we'll be providing additional detail regarding our long-term strategy at our Analyst Investor Day, which will take place in late June 2020. We'll be sharing more specifics in the coming months. With that, I'll turn it over to Jill.
Good morning, everyone, and thank you, Sandy. I would like to begin by discussing our financial performance for the first quarter of fiscal 2020 and then our outlook for the 2020 fiscal year. Before we begin, I would like to note that we adopted the new accounting standard for leases at the start of the fiscal year. While this did not have an impact on our income statement or cash flows, it did have a meaningful impact to our balance sheet, as our total assets increased approximately $578.3 million, with $473.5 million of the increase attributable to the addition of operating leases to the balance sheet. More information on these changes will be provided in the 10-Q that will be filed shortly.
In this morning's release, we reported first quarter net income of $43.2 million and GAAP earnings per diluted share of $1.79, compared to prior year earnings per diluted share of $1.96. Our reported earnings per diluted share included unfavorable impacts for the quarter of $0.11 related to transactional and integration expenses associated with the acquisition of Maple Street Biscuit Company and a $0.25 loss from the company's equity method investment in its unconsolidated subsidiary, Punch Bowl Social. For the quarter, we reported total revenue of $749 million, an increase of 2.1% when compared to prior year revenue of $733.5 million. Our restaurant revenue increased 2.7% to $607.1 million. Our retail revenue decreased 0.4% to $142 million. Our total revenue increase was primarily driven by positive comparable restaurant sales and the net opening of four new Cracker Barrel locations.
Cracker Barrel comparable store restaurant sales in the quarter increased 2.1% as average check increased 3.6% and traffic decreased 1.5%. The increase in average check reflected menu price increases of approximately 2.3% and a favorable menu mix of 1.3%. The first quarter mix favorability was driven primarily by our Signature Fried Chicken platform. First quarter comparable store retail sales decreased 0.9%, with decreases coming primarily within our women's apparel and toys categories. Moving on to expenses. Total cost of goods sold in the quarter was 29.3% of total revenue versus 30.3% in the prior year quarter. Our restaurant cost of goods sold was 24.6% of restaurant sales, a 60-basis point decrease versus the prior year. This decrease was primarily due to lower levels of commodity inflation and leverage from menu price increases.
On a constant mix basis, our food commodity costs were approximately 0.2% higher in the quarter than in the prior year quarter, driven primarily by increases in dairy. Our retail cost of goods sold was 49.6% of retail sales, compared to 51.3% in the prior year quarter. This 170-basis point decrease was primarily a result of higher initial margin and lower markdowns. Labor and related expenses were $263.3 million, or 35.2% of revenue, compared with $258.2 million, or 35.2% of revenue in the prior year quarter. Other store operating expenses were $162.9 million in the quarter, or 21.7% of revenue, compared with other store operating expenses of $152.5 million, or 20.8% of revenue in the prior year quarter.
This 90 basis points increase was primarily driven by planned depreciation increases related to our investments in strategic initiatives, a higher advertising expense to support our fall menu promotion, and transactional and integration expenses associated with the acquisition of Maple Street Biscuit Company. Store operating income was $103 million in the first quarter, or 13.8% of revenue, compared with store operating income of $100.6 million or 13.7% of revenue in the prior year quarter. General and administrative expenses were $39.6 million in the quarter, or 5.3% of revenue, and included transactional and integration expenses associated with the acquisition of Maple Street Biscuit Company. This compared to G&A expenses of $38.9 million, or 5.3% of revenue in the prior year quarter. GAAP operating income was $63.4 million, or 8.5% of revenue, compared with $61.7 million, or 8.4% of revenue in the prior year quarter.
Net interest expense for the quarter was $3.6 million, compared to $4.3 million in the prior year quarter. This decrease was primarily driven by the benefit of interest income resulting from our lending to Punch Bowl Social. Our effective tax rate for the first quarter was 17.7%, compared to an effective tax rate of 17.7% in the prior year quarter. In the first quarter, we paid $32.1 million in dividends and repurchased shares totaling $14.2 million, which resulted in us returning $46.3 million to shareholders in the quarter. Turning to our balance sheet. We ended the fiscal quarter with $43.2 million of cash and equivalents, compared to $101.6 million at the prior year quarter end. Our total debt was $485 million at quarter end. Before providing our fiscal 2020 outlook, I would like to speak to our acquisition of Maple Street Biscuit Company.
As we announced in October, we acquired Maple Street in an all-cash transaction for $36 million. Maple Street is a strong brand with attractive unit economics, which include targeted AUVs of over $1 million and targeted store-level EBITDA over 17%. Current unit economics are below these levels, but we anticipate achieving the run rate for these targets shortly after we implement a staggered rollout of planned initiatives upon the completion of the integration. We believe Maple Street has strong growth potential. We are working on the site selection strategy and refining our estimate for Maple Street's ultimate build-out, and we plan to share additional detail at our Analyst and Investor Day in late June. With respect to our fiscal 2020 outlook, everyone should be mindful of the risks and uncertainties associated with this outlook, as described in today's earnings release and in our reports filed with the SEC.
Our fiscal 2020 earnings estimate continues to assume total revenue of approximately $3.15 billion-$3.2 billion. We now expect Cracker Barrel comparable store restaurant sales growth of approximately 2%. We continue to anticipate Cracker Barrel comparable store retail sales growth of approximately 1%. We continue to anticipate our fiscal 2020 menu pricing will be approximately 2%. We continue to expect to open six new Cracker Barrel stores. We now expect to open one Maple Street location in fiscal 2020. Additionally, we plan to convert six of the seven Holler & Dash locations to Maple Streets in the coming months. We continue to expect increased food commodity costs on a constant mixed basis in the range of 2%-2.5% for the fiscal year. We have locked in our pricing on approximately 45% of our commodity requirements for fiscal 2020, compared to approximately 50% at this time last year.
We continue to project that our retail margins as a % of sales for the full year will be approximately flat compared to the prior year. We continue to anticipate wage inflation on a constant mixed basis of approximately 4%. We continue to project $11 million-$13 million in business model improvements resulting from sustainable cost savings. Taking these assumptions into account, we continue to expect full-year operating income margin of approximately 9% of total revenue. We now project net interest expense of approximately $12 million, which includes the benefit of interest income resulting from our lending to Punch Bowl Social and reflects our updated lending schedule to Punch Bowl Social. We now anticipate an effective tax rate for the fiscal year of approximately 16%-17%, which assumes the renewal of the Work Opportunity Tax Credit.
This guidance also includes an expected tax benefit from the estimated loss from our equity method investment in Punch Bowl Social. We continue to expect capital expenditures for the year of approximately $115 million to $125 million and depreciation of approximately $110 million to $115 million. Our guidance implies an increase in fiscal 2020 EBITDA of approximately 1% to 3% compared to the prior year. Taking these new assumptions into account, we now expect to report GAAP earnings per share between $8.50 and $8.65. I want to make a few points about this estimate. First, it includes an expected loss from our equity method investment in Punch Bowl Social of approximately $0.80, which includes the following components. First, pre-opening expenses and significant investments in corporate infrastructure to support growth. Second, expected unit closure expenses. Third, updated business performance expectations.
Our GAAP EPS estimate also includes transactional and integration expenses related to the acquisition of Maple Street, which we estimate will unfavorably impact GAAP EPS by approximately $0.15, $0.11 of which occurred during the first quarter. With that, I will turn the call over to the operator so that we can take your questions. Thank you very much.
We will now begin the question and answer session. As a reminder, to ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw a question, please press star then two. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Jake Bartlett of SunTrust. Please proceed.
Thanks for taking the question. Sandy, I wanted to ask about the lowered same-store sales outlook for 2020 on the restaurant side. I'm wondering what is driving that, whether it's the industry outlook that you talked about being less strongly expected, or whether it's some of your initiatives, like maybe the follow-through from the fried chicken launch, how the Homestyle Chicken ran, how it performed in the first quarter, anything you're seeing early on in the Thanksgiving selling season.
All right. Great. Thanks, Jake. I'm actually going to let Jill take that question.
Good morning, Jake. Yes, we did update our comp guidance to 2% from our prior guidance of 2%-3%. This was primarily driven by the year-to-date industry performance. We continue to be pleased with our off-premise performance and anticipate continued growth in that business. As we said in our prepared remarks, we believe we can still achieve our targeted off-premise performance of 10% of sales at the end of this year. The Signature Fried Chicken platform has been performing well to our expectations, and that includes the performance of our Southern Fried Chicken, the Homestyle Chicken, as well as the new Homestyle Chicken BLT. I do want to point out as we look at the guidance, it does assume that the industry improves from its current trend in the back half.
Got it. If we could maybe switch to the second quarter and the initiatives that you have and the promotions that you're running. Do you expect any difference year-over-year in terms of marketing weights, for instance, for the Country Fried Turkey promotion? I believe you're increasing your Heat & Serve prices pretty sharply this year again as you did last year. I'm just trying to gauge your confidence that that's not going to have some pushback in terms of demand.
We did anticipate the impact on demand as we made the decision about pricing, which was made last spring. The impact, if any, on the demand is built into our guidance. In terms of the media, I would say that we do have some additional media this year. One of the things that happened to us last year, we actually, I think, began to be concerned we were going to run out of turkey. This year we were able to change our turkey inventory, which gave us more confidence. I think there's some additional media being driven after Thanksgiving with the turkey message on it. We continue to be excited about the Heat & Serve as well as our celebration meals.
Of course, tomorrow our first annual Macy's Thanksgiving Day Parade debut is tomorrow with our float and our tiny store, which is in New York.
Thursday
excuse me, Thursday, our tiny store, which was in New York this morning.
Great. Just last question. On the margins, your restaurant level margins, you included the impact of the transaction on the integration costs. I’m wondering, I believe that you used to have a conference every other year, biennial conference. Was that in the first quarter here? Typically, it’s between 30 to 40 basis points, or has that been pushed into another quarter?
Jake, there's a couple things there. Yes, the transaction costs from Maple Street, of $0.11 was in the margins, for Cracker Barrel. About 48% of that or so was in G&A. The remaining was in other operating expenses. Yes, we did have our conference this fiscal year, and that is in the second quarter. It wasn't the biggest impact in there. I'm sorry, in the first quarter. It wasn't the biggest impact though in there. Yeah, we did have some other operating expenses around our investment in capital, as well as the increase of the two weeks in advertising that we had in the first quarter.
Great. Thank you very much.
The next question comes from Alton Stump of Longbow Research. Please proceed.
[inaudible] good morning. Certainly, team, I just want to ask you, as you look at the overall competitive environment, what you're seeing out there, is it getting more aggressive in the casual space? As I look forward, in your view, is that going to continue, or do you think we'll see things get a bit more rational over the course of fiscal year 2020?
We certainly believe that it has been more competitive. As the industry softened in recent months, and it would appear the consumer shifted some of their discretionary spending away from casual dining. That elevated the competitive pressure, and I think the reaction was a higher level of promotional activity, which we were certainly noticing in the first quarter. To what degree that'll continue, I don't think I can comment on that, Alton. As Jill mentioned, we are assuming an improvement in the underlying industry trend in the second half of the year.
Got it. Thanks, Sandy. Then, kind of a small question, which I guess is for Jill, just as you bought back shares, of course, in the quarter for the first time in a couple of years, but obviously have also done some acquisitions here recently. How do you view share buybacks as a tool going forward next 18, 24 months?
That's a great question, Alton. As you know, we now have more flexibility for repurchasing shares. That's another way that, as the board looks at capital allocation, we're able to provide value back to our shareholders. I think what I'd say is our overall philosophy about capital allocation hasn't really changed. We continue to focus on investing in the business to drive sales and earnings and long-term value creation. Secondly, we remain committed to our regular quarterly dividend. This year, we declared a $3 last fiscal year. We declared a $3 special in June. As you've pointed out in the first quarter of this fiscal year, we repurchased about $14.2 million in shares. We have other investments in future growth-driving initiatives like our investment in Maple Street and Punch Bowl Social.
I think the board will continue to look at all of our options in front of us in terms of how we drive long-term value creation. Share repurchase has now become part of that mix.
Got it. Thank you both.
Our next question comes from Gregory Francfort of Bank of America. Please proceed.
Maybe just the first one. In terms of Punch Bowl Social, Jill, I think you gave a breakdown of what's the main components of that. Can you maybe talk about what was the delta from the old $0.50 to the current $0.80? Is that greater pre-opening than you've had, or what was the driver of that $0.30? Thanks.
Great. Thanks, Greg. As a reminder to everyone, we have a non-controlling stake in Punch Bowl Social, and we continue to believe it's a highly differentiated brand with significant growth potential. Remember when we gave our original guidance of $0.50 loss, that included the fact that PBS, Punch Bowl Social, has positive store level EBITDA, but it's offset by the pre-opening expense that you mentioned and a G&A infrastructure that supports the future growth. The change was largely due to unit closure expenses. We closed the Fort Worth site, which we believed was a selection site issue, and the Cracker Barrel team is partnering with the Punch Bowl team to leverage our expertise to help us improve our site selection process. In addition, we did lower it a little bit for our current thinking on updated business performance. Again, as a reminder, it's a new brand.
Many of the stores haven't even been open three years, so we're getting a fair amount of learning, specifically around sales trends. There's a number of sales drivers in this brand. We're entering new markets, so we're learning about how sales grow in new markets, how we ramp up in group and event dining, as well as the seasonality of the business. These numbers may move around a little bit, but we'll provide as much information as we can.
Thank you very much. Maybe just two others, one for Jill and one for Sandy. Jill, just on the retail margins, I know you guys are talking about it being flat for the year, but you guys are seeing, I guess, a lot of costs you're able to take out. The margins have been very good. Can you maybe talk about what's been the biggest tailwinds or biggest drivers of that performance year-over-year and why that would be temporary versus ongoing? Then, I have one last one for Sandy.
Well, I think on the retail margins, I'll actually start on that. I think the team has done a really good job of trying to protect margin rate and dollars in an environment where we needed to address sort of a variety of issues, but probably the biggest one for us this particular quarter was the tariffs. We've done that through designing the assortments, through evaluating alternative suppliers, working with our vendors to share the cost, in some cases, changing our pricing. Our buyers work really hard to continue to deliver unique, fun, nostalgic, great value items to our guests and to provide the appropriate level of profitability for our shareholders.
Got it. Thank you. Maybe just my last one is, I know you talked about it a little bit in your prepared remarks, Sandy, but just, can you maybe address what are some of the big differences between Maple Street and Holler & Dash? What are things that they're doing right that maybe Holler & Dash wasn't doing right, and why this is kind of a better brand to bet on longer term? That's it. Thank you.
There's a lot of similarity. They are biscuit entrees, a menu that features comfort food. They're both fast casual, open breakfast and lunch, both sort of focused on an urban, suburban locations targeting Millennials and Gen Z. I think our experience with Holler & Dash reinforced our belief that the segment was attractive. Maple Street's been around longer. Their brand is, we believe, has a strong, proven business model, attractive unit economics, high growth potential. Given their number of units and success and where we currently were in the Holler & Dash path, we felt that the conversion of Holler & Dashes into Maple Street would accelerate our penetration in the category.
Great. Thank you very much.
Today's next question comes from Jeff Farmer of Gordon Haskett. Please proceed.
Thanks. Just a couple more on Punch Bowl. When do you expect to see the concepts become neutral to EPS?
This is Jill. I think what I would say about that is, as we said, we expect the investment in Punch Bowl Social this year, based on equity method of accounting, to be an approximate loss of $0.80. We're not providing guidance beyond fiscal 2020. We will certainly talk more about it on our Analyst Day in late June. As we said, right now, given how we're learning about the brand, the team continues to refine their forecast for next year. We look forward to sharing more in June.
Okay. Of the Punchbowl units that are in the comparable store base, is there a same-store sales number that you guys have shared or are willing to share?
Yeah, no. We're not providing that level of detail around our investment or the performance of the Punchbowl brand because it's a non-controlling interest, so we're just providing the below the line method based on the equity method of accounting.
Okay, just a couple of quick additional ones. Just following up the Heat & Serve questions.
You guys didn't provide a ton of detail, but it was pretty clear that was a big same-store sales driver last year in the fiscal second quarter. With the growing popularity of that offering, I have to assume it gets more popular every year as people get familiar with it, and the double-digit price increase that was already mentioned. How impactful could that be to your fiscal second quarter same-store sales number this year?
Well, it's certainly going to be an important component of the Thanksgiving week. It's an offer we're very excited about. Our guests are excited about it. We did have the price increase and some demand, an increase in demand expectations built into our guidance. It is only an offer that's available for one week before Thanksgiving. We do offer a Christmas Heat & Serve before Christmas. It is just one component of the overall mix for the second quarter. I will say off-premise, in general, though, is an important part of our second-quarter sales expectations. In addition to the Heat & Serve, we're looking forward to growth in our celebration meals as well as individual to-go growth through both third-party delivery and just people coming into the restaurant to pick up their meal.
All right. That's helpful. Just one last one. You delivered strong labor cost control, I think for the second consecutive quarter. Just curious, sort of looking under the hood a little bit, what's driving that labor cost favorability, and how sustainable is that as we move through the balance of the fiscal year?
This is Jill. What I would say is the teams have done a really nice job managing through labor. Our operations team is focused on kind of the back to the basics on how we forecast our sales and then appropriately schedule. We were pleased with our overall labor performance. I will say the wage inflation of 3.2% was a modest headwind for us. We expect for the year wage inflation to be 4%, so that'll become more of a headwind as we look forward. Also within the labor line, we did see some favorability across a couple of other lines that helped offset our wage inflation, primarily in pre-opening labor and a little bit in store bonuses.
Great. Thank you.
The next question comes from Stephen Anderson of Maxim Group. Please proceed.
Okay. That's Stephen Anderson. Just wanted to talk about the quarter. Specifically, I want to get into the impact from Hurricane Dorian. Although there was not really a direct hit to the United States, there was that weekend in September, where there were a lot of evacuations, may have been some store closures. I wanted to see if you were able to get any color on the impact on overall sales. Thank you.
Great. No, thanks, Stephen. Hurricane Dorian, even though the actual impact wasn't as much as it was forecasted to be, it was disruptive to our business and certainly had impact on our traffic, especially as people were concerned that it was going to hit Florida. What we don't know is how much it impacted people's travel plans. As you'll recall, it was near an important holiday weekend for us when it hit. We definitely think that it had an impact. As a reminder, in the first quarter of the prior year, we had two hurricanes. Our best estimate is they relatively offset each other, but it was a little more difficult to analyze.
All right. Thank you. I want to also take a look at the commodities. You said that looking at last quarter, declines up 0.2%, but you're still keeping the full year forecast. I want to see if you see any pressure points across your commodity complex.
Great. In the commodities basket, in the first quarter, we benefited from wrapping on higher egg prices than the prior year. That's the primary component that brought our commodities flat to the prior year. We have a little bit of that wrap in the second quarter, so we do expect to see commodities step up in the second quarter and then be slightly above 3% in the back half. The main drivers haven't changed from what we talked about in our previous calls. It's really beef, pork, and dairy that are the largest drivers of our commodity inflation. As we mentioned, we've got approximately 45% of our commodity pricing is locked.
All right. Thank you.
Our next question comes from Bob Derrington of Telsey Advisory. Please proceed.
Yeah, thank you. Sandy, as it relates to Punch Bowl Social, I think on the last conference call, you talked about the business, and you were fairly excited about ultimately the experiential contribution that it could bring along with Cracker Barrel. At the time, you were talking about the smaller prototype that opened in Fort Worth, which ultimately has been closed. I'm just curious, what was it that has changed within the perception of that store location from the initial enthusiasm about that smaller prototype?
We're disappointed that Fort Worth wasn't successful. In this particular case, we believe it was a site selection issue more than a small box issue, and we're partnering with the team at Punch Bowl Social to understand better all of the situation and to improve that process. As Jill said, it's a young brand. There's going to be learnings. We will continue to learn, continue to update the guidance, but we continue to believe that PBS has significant growth potential, and I think it's positioned to become a leader in the segment.
Are you, I guess, based on that experience, thinking that you may provide a little bit more participation in some of the key decision-making processes within Punchbowl?
Well, I don't know if it'll be more than we had originally planned. The team out in Denver. We'd always anticipated in areas like real estate, purchasing, some things like that we would be able to add expertise, and that's one of the reasons we made the investment. We certainly dug in quickly on the real estate issue just to ensure that we understood what the learnings were in all the sites, including Fort Worth.
Got you. Okay. To shift gears back to the Old Country Store. You also talked on the last conference call about the new menu that you've introduced there. I think this menu now offers essentially both breakfast and all-day dining. Is there something about the contribution from the impact of that menu that has affected the sales guidance? Or, just if you could help us with your initial impression of how that's being received at the store level.
Yeah, the dinner menu initiative is currently only in 70 stores. I'm not sure what you said all-day dining. Oh, what you might be referring to is that the dinner menu now has a small category where we call out on the dinner menu that breakfast is available all day, and we actually offer on the dinner menu our most popular breakfast items. We highlight that the full breakfast menu is available if you ask the server. That largely made it just easier for our guests that wanted to order breakfast as well as easier for our servers who now don't have to put two menus down for the lunch, dinner time and only one unless asked. We continue to be encouraged by the learnings we have in the dinner test, but we are continuing to test and learn.
The first changes from the initiative will probably launch or we're expecting to launch sometime next spring, chain-wide. As we learn, we've been making modifications. I think we've got one going in next week to the test stores. We'll have another round then after the holiday, and we'll modify the dinner menu. No, the learnings from the dinner menu didn't impact. I'll turn actually over to Jill on how that might have impacted the sales forecast.
Bob, this is Jill. On the sales forecast, the big change has been the industry expectations. You might remember from when we originally gave guidance, we expected the industry to perform overall as it had performed in the prior fiscal year, which was better than our recent current trends. On the new food introductions, specifically under the Signature Fried Chicken platform, we've been very pleased. That's certainly driving the mix favorability that you've seen, and they've been featured in our advertising, and we've been pleased with that performance as well, specifically around the Southern Fried Chicken, the Homestyle Chicken and the Homestyle Chicken BLT that was featured.
Okay, that's helpful. What I was curious about is whether adding the breakfast to the all day, that dinner menu Sandy had hurt the check average as consumers shopped maybe at more lower price, possibly the breakfast items as opposed to the regular dinner features?
We're not currently seeing that.
Okay. All right. That's good. Last question, if I could. On the depreciation, in the first quarter, it was up about 15% year-over-year, yet the midpoint of the guidance, Jill, I think only targets D&A up about 5%. Should we anticipate that the essentially $28.7 million in the first quarter is expected to be a reasonable run rate for the other quarters? That's kind of what your guidance implies.
Yeah. Just a second, Bob. We're taking a look. I think we feel comfortable with our guidance. Some of that is where the Maple Street integration cost kind of fell, but overall, we feel pretty comfortable with our guidance. We've stepped down a little bit on our capital spending, you're going to see some of that will start to roll off towards the back half.
Yes. We did, Bob, this is Jeff. We did have some accelerated depreciation associated with the acquisition of Maple Street that is affecting our depreciation number in the first quarter as well.
Okay. All right. That's helpful. Thank you. Appreciate it.
The next question comes from Brett Levy of MKM Partners. Please proceed.
Great. Thank you. Good morning.
Good morning.
A couple of clarifications and then just some bigger picture. You've talked about the continued growth on Punch Bowl Social, and now you had a closure. Should we still assume that the roughly 100 unit target you had in place still exists? How should we think about the makeup of a willingness to revisit the smaller prototypes?
I think for now, you should assume that the guidance or that 100 store expectation still exists, and we'll update you more at the Analyst Day in the summer.
Got you. You talked about continued growth of to-go and off-premise. Care to quantify what it was, the growth this quarter?
Yes. We are verifying. I think we said it was up over 150 basis points. We'll verify that. It was a significant contributor in the first quarter, 180 basis points. Excuse me.
It grew as a percentage of the mix?
Yes.
Okay.
It contributed that to same restaurant sales growth.
Oh, that's the contribution to comps. Okay.
There you go.
With respect to November, I know you haven't given a guidance of a cadence, but do you care to share any color in terms of how you exited F1Q and started off F2Q?
No, I guess I would not. I don't have any additional color to add to what we've already disclosed.
Got you. I guess a strategic question. You've talked about upgrading the POS systems. How many units do you have that in now? Theoretically, why did you decide to spend $14 million on buybacks as opposed to use that free cash that you have in play to maybe accelerate the integration now that you've already gotten past the equipment integration from last year? Thank you.
Yeah, that's a fair question. As we've looked at the POS rollout, so first of all, we're currently in 130 stores. We expect to add an additional 40 in fiscal 2020. We're still really pleased with the new POS. It's an easier system to use for the team members. The technology, we believe, enhances the employee experience. Then we think it'll be a foundation for some future cost savings. I guess what I would say is it's not that easy to flip the switch in terms of rollout. We will talk about at Analyst Day more about what our rollout plans look like, but it wasn't a capital constraint that kept us from increasing the rollout. It's more a logistics. Is that helpful?
That is. Thank you very much.
Our next question comes from Jon Tower of Wells Fargo. Please proceed.
Great. Thanks. Just a quick clarification first, if I may. The $0.80 EPS headwind that you had mentioned related to Punch Bowl Social, that does not include the interest income from the loan. Is that correct?
That is correct. The $0.80 represents our investment using the equity method accounting. The other two areas on the financial statement where you will see an impact from Punch Bowl Social, one is on the interest income, which benefits from our loan to Punch Bowl. The other is in the tax rate, which benefits from the loss.
Okay. This is just a straight up one-line $0.80 headwind tied to the loss. Okay.
Yeah.
Great. Perfect. Then could you quantify what the size of the loan is to Punchbowl right now?
You want to answer or I can answer it?
Go ahead.
What we had said is we were going to loan up to $50 million in the near term. To date, we've loaned $30 million. About $15 million of that was last fiscal year, $16 million to date so far, and our guidance contemplates that we'll loan the remaining $20 million in this fiscal year.
Great. Thank you on that. Just going back to the Signature Fried Chicken platform, can you give us a little bit more in terms of what you're seeing around customer usage of this, perhaps just as simply a % of mix of sales today, or more importantly, what you're seeing around frequency of use of this platform. Are you actually seeing customers come in more frequently to use this than what you've seen in other platforms in the past?
What I can say is that it's in line with our expectations that we're pleased with the mix. Let me back up, though. When we put our Signature Fried Chicken platform in, we started with the offer of Southern Fried Chicken, and that was the bone-in offer, four pieces of bone-in fried chicken. We rolled our Homestyle Chicken, which is a boneless offering that used to be available only on Sunday. We rolled that out as an everyday offer in the summer, and we added to that our Homestyle Chicken BLT, which we're pleased with that performance. In the holiday season.
We're offering the fried turkey offer as our holiday offer, and we're pleased with the performance of that. We'll next be adding hand-batter breaded tenders. That'll probably be next fall at the earliest. The investment in the platform was always intended to be a multi-year initiative, and we continue to be pleased with the results.
Okay. Thank you. Anything else outside of the Signature chicken platform for the balance of the year, either on the new product side that we should be thinking about, or importantly, also around advertising? Is there any significant changes in the advertising spend planned for the balance of 2020? I know, obviously, 2019, you had a significant amount of spend in that fourth quarter tied to this launch. How should we think about advertising for the balance of 2020?
Yeah, no, that's a good question, Jon. The advertising, as we talked about, we've added some advertising in the first half, more in the second quarter that kind of came out of the fourth quarter. It'll be close to parity within the third quarter, expected to be lower in the fourth quarter. We haven't talked about what our advertising will feature yet, kind of beyond what we're on air with right now.
Okay. Thank you.
Thank you.
This concludes the question and answer session. At this time, I would like to turn the conference back over to Sandy Cochran for any closing remarks.
Thank you for joining us today. I'm encouraged by the start to the year and remain confident in our plans to drive continued performance. We appreciate your interest and support and wish you all a safe and happy holiday season.