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During the late 1990's, as CBRL endeavored to maintain its strong, historical rate of growth, a number of issues lead, to a deterioration in the company's financial performance. Increased capital spending strained the CBRL system! More importantly, aggressive menu pricing and tight management of restaurant expenses threw the consumer value out of balance. The decline in operational performance, coupled with declining customer counts caused a significant decline in profitability.

As seen in the chart below the same management team is aggressively raising prices again! At a time when the typical CBRL customer can't afford to fill his tank with gas!

2Q08 EPS quality looked suspect.....
CBRL posted sluggish revenue growth of 3.6% in 2Q08. As expected higher operating costs caused restaurant operating income to decline 1.6%, but a 12.9% decline G&A versus last year enabled operating income to increase 7.5%. The balance of the EPS growth in the quarter was driven by a $0.05 per share gain on sale of real estate and a 34% decrease in outstanding shares outstanding.

Given the current traffic trends there is a high probability that 3Q08 EPS will look ugly too.....