SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549


                            FORM 10-Q


        Quarterly Report Pursuant to Section 13 or 15(d)
             of the Securities Exchange Act of 1934

For the Quarterly Period Ended October 31, 1997

Commission file number 0-7536


             CRACKER BARREL OLD COUNTRY STORE, INC.


Incorporated in Tennessee          I.R.S. Employer Identification
                                             No. 62-0812904

                  Hartmann Drive, P.O. Box 787
                    Lebanon, Tennessee 37087

                          615-444-5533



Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities  Exchange Act of 1934 during the preceding  12  months
(or for such shorter period that the registrant was required to file
such   reports),  and  (2)  has  been  subject  to  such   filing
requirements for the past 90 days.

     Yes X     No_






                61,497,866 Shares of Common Stock
         Issued and Outstanding as of November 28, 1997














                             PART I

Item 1. Financial Statements
                                
             CRACKER BARREL OLD COUNTRY STORE, INC.
              CONDENSED CONSOLIDATED BALANCE SHEET
                (In thousands, except share data)


                                        October 31,     August 1,
                                           1997           1997
                                           ____           ____
ASSETS                                  (Unaudited)     (Audited)
                                                   
Current assets:
  Cash and cash equivalents             $ 66,655       $ 64,933
  Short-term investments                   1,349          1,666
  Receivables                              4,301          4,836
  Inventories                             86,428         73,269
  Prepaid expenses                         4,835          4,707
                                        ________       ________
     Total current assets                163,568        149,411
                                        ________       ________

  Property and equipment,net             707,986        678,167
  Other assets                             1,919          1,127

                                        ________       ________
Total assets                            $873,473       $828,705
                                        ========       ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                      $ 27,467       $ 27,422
  Accrued expenses                        69,725         57,669
  Current portion of long-term debt        3,500          3,500
  Current portion of capital lease
     obligations                             166            166
                                        ________       ________
     Total current liabilities           100,858         88,757
                                        ________       ________

Long-term debt                            62,000         62,000
Capital lease obligations                  1,269          1,302
Deferred income taxes                     16,214         16,214

Stockholders' equity:
  Common stock - $.50 par value,          30,737         30,533
     authorized 150,000,000 shares,
     issued and outstanding 61,474,674
     at October 31, 1997 and 61,065,306
     at August 1, 1997
  Additional paid-in capital             220,919        211,850
  Retained earnings                      441,476        418,049
                                        ________       ________

     Total stockholders' equity          693,132        660,432
                                        ________       ________

Total liabilities and stockholders'
  equity                                $873,473       $828,705
                                        ========       ========
See notes to condensed consolidated financial statements. CRACKER BARREL OLD COUNTRY STORE, INC. CONDENSED CONSOLIDATED STATEMENT OF INCOME (In thousands, except per share data) (Unaudited) Quarter Ended _______________________________ October 31, November 1, 1997 1996 ____ ____ Net sales: Restaurant $242,230 $202,528 Retail 70,525 56,374 ________ ________ Total sales 312,755 258,902 Cost of goods sold 106,491 89,315 ________ ________ Gross profit on sales 206,264 169,587 Labor & related expenses 106,100 87,225 Other store operating expenses 46,489 37,969 ________ ________ Store operating income 53,675 44,393 General and administrative 15,882 14,354 ________ ________ Operating income 37,793 30,039 Interest expense 1,060 -- Interest income 820 364 ________ ________ Pretax income 37,553 30,403 Provision for income taxes 13,820 11,553 ________ ________ Net income $ 23,733 $ 18,850 ======== ======== Earnings per share $ .38 $ .31 ======== ======== Weighted average common shares and equivalents 62,288 61,107 ======== ======== Dividends per share $ .005 $ .005 ======== ========
See notes to condensed consolidated financial statements. CRACKER BARREL OLD COUNTRY STORE, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended __________________________ October 31, November 1, 1997 1996 ____ ____ Cash flows from operating activities: Net income $23,733 $18,850 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 10,464 8,983 Loss (gain)on disposition of property and equipment 437 (56) Changes in assets and liabilities: Inventories (13,159) (16,479) Other assets (792) 19 Accounts payable 45 (1,231) Other current assets and liabilities 12,463 1,872 _______ _______ Net cash provided by operating activities 33,191 11,958 _______ _______ Cash flows from investing activities: Proceeds from maturities of short-term investments 317 3,380 Purchase of property and equipment (41,381) (39,537) Proceeds from sale of property and equipment 661 815 _______ _______ Net cash used in investing activities (40,403) (35,342) _______ _______ Cash flows from financing activities: Proceeds from exercise of stock options 9,273 292 Principal payments under long-term debt and capital lease obligations (33) (33) Dividends on common stock (306) (303) _______ _______ Net cash provided by (used in) financing activities 8,934 (44) _______ _______ Net increase (decrease) in cash and cash equivalents 1,722 (23,428) Cash and cash equivalents, beginning of period 64,933 28,971 _______ _______ Cash and cash equivalents, end of period $66,655 $ 5,543 ======= ======= Supplemental disclosures of cash flow information: Cash paid during the three months for: Interest $ 832 $ 8 Income taxes 6,092 5,326
See notes to condensed consolidated financial statements. CRACKER BARREL OLD COUNTRY STORE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Condensed Consolidated Financial Statements ___________________________________________ The condensed consolidated balance sheet as of October 31, 1997 and the related condensed consolidated statements of income and cash flows for the quarters ended October 31, 1997 and November 1, 1996, have been prepared by the Company, without audit; in the opinion of management, all adjustments for a fair presentation of such condensed consolidated financial statements have been made. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended August 1, 1997. Deloitte & Touche LLP, the Company's independent auditors, have performed a limited review of the financial information included herein. Their report on such review accompanies this filing. 2. Income Taxes ____________ The provision for income taxes for the quarter ended October 31, 1997 has been computed based on management's estimate of the effective tax rate for the entire fiscal year of 36.8%. The variation between the statutory tax rate and the effective tax rate is due primarily to employer tax credits for FICA taxes paid on tip income. The Company's effective tax rates for the quarter ended November 1, 1996 and for the entire fiscal year of 1997 were 38.0% and 37.0%, respectively. 3. Seasonality ___________ The sales and profits of the Company are affected significantly by seasonal travel and vacation patterns because of its interstate highway locations. Historically, the Company's greatest sales and profits have occurred during the period of June through August. Early December through the last part of February, excluding the Christmas holidays, has historically been the period of lowest sales and profits. Therefore, the results of operations for the quarter ended October 31, 1997 cannot be considered indicative of the operating results for the full fiscal year. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations All dollar amounts reported in Item 2 are shown in thousands. Except for specific historical information, many of the matters discussed in this Form 10-Q are forward-looking statements that involve risks, uncertainties and other factors which may cause the actual performance of Cracker Barrel Old Country Store, Inc. to differ materially from those expressed or implied by such statements. Factors which will affect actual results include, but are not limited to: the availability and costs of acceptable sites for development; the ability of the Company to recruit and train restaurant personnel in its expansion locations; the acceptance of the Cracker Barrel concept as the Company continues to expand into new geographic regions; continued successful development of new and regional menu items; the continued success of the Company's recently rolled out frequency-based Cracker Barrel Old Country Store Neighborhood program; changes in or implementation of additional governmental rules and regulations; and other factors described from time to time in the Company's filings with the Securities and Exchange Commission, press releases and other communications. Results of Operations The following table highlights operating results for the quarter ended October 31, 1997 as compared to the same period a year ago: Quarter Ended _________________________________ October 31, November 1, 1997 1996 ____ ____ Net sales: Restaurant 77.5% 78.2% Retail 22.5 21.8 _____ _____ Total net sales 100.0 100.0 Cost of goods sold 34.0 34.5 _____ _____ Gross profit on sales 66.0 65.5 Labor & related expenses 33.9 33.7 Other store operating expenses 14.9 14.7 _____ _____ Store operating income 17.2 17.1 General and administrative 5.1 5.5 _____ _____ Operating income 12.1 11.6 Interest expense 0.3 0.0 Interest income 0.2 0.2 _____ _____ Pretax income 12.0 11.8 Provision for income taxes 4.4 4.5 _____ _____ Net income 7.6% 7.3% ===== =====
Same Store Sales Analysis 257 Store Average _________________ Quarter Ended ________________________________ October 31, November 1, 1997 1996 ____ ____ Restaurant $ 785.3 $770.9 Retail 225.6 214.3 ________ ______ Restaurant & retail $1,010.9 $985.2 ======== ======
Sales Net sales for the first quarter of fiscal 1998 increased 21% compared to last year's first quarter. Same store restaurant sales increased 1.9% and same store retail sales increased 5.2%, for a total same store sales (restaurant and retail) increase of 2.6%. Same store restaurant sales increased primarily due to an effective 2.9% menu increase throughout the quarter. Same store retail sales increased primarily due to an improved assortment of retail items in the stores. New stores accounted for the balance of the first quarter net sales increase. Cost of Goods Sold Cost of goods sold as a percentage of net sales for the first quarter of fiscal 1998 decreased to 34.0% from 34.5% in the first quarter of last year. The decrease was primarily due to decreases in dairy and hog complex prices from prior year levels. This decrease was partially offset by an increase in the mix of retail sales from 21.8% last year to 22.5% this year, since retail sales carry a higher cost of goods than restaurant sales. Labor and Related Expenses Labor and related expenses include all direct and indirect labor and related costs incurred in store operations. Labor and related expenses as a percentage of net sales increased to 33.9% in the first quarter this year from 33.7% in the first quarter last year. The increase was primarily due to higher bonus payouts under the store- level bonus program instituted in fiscal 1997. These higher bonus payouts resulted from the significant improvements in store-level operating income in the first quarter of fiscal 1997 versus the prior year. This increase was partially offset by the net improvement in store-level, hourly labor, resulting from enhanced operational productivity partially offset by store-level, hourly wage inflation of approximately 2.9%. Other Store Operating Expenses Other store operating expenses include all unit-level operating costs, the major components of which are operating supplies, repairs and maintenance, advertising expenses, utilities and depreciation and amortization. Other store operating expenses as a percentage of net sales were 14.9% this year versus 14.7% during the same quarter last year. Other store operating expenses as a percentage of net sales increased primarily due to the loss on the disposal of surplus property and the incremental depreciation associated with the new point-of-sale system in the stores. General and Administrative Expenses General and administrative expenses as a percentage of net sales decreased to 5.1% during the first quarter of this year from 5.5% during the first quarter of last year. The primary reason for the decrease was increased sales volume as compared to the first quarter of last year. Interest Expense Interest expense increased to $1,060 for the first quarter of this year from $0 for the first quarter a year ago. The increase was primarily due to the Company drawing on a $50,000 term loan on December 2, 1996. Interest Income Interest income increased to $820 for the first quarter of this year from $364 for the first quarter a year ago. The primary reason for the increase in interest income was higher average funds available for investment. Recent Accounting Pronouncements Not Yet Adopted In February 1997, SFAS No. 128, "Earnings per Share," was issued. SFAS No. 128 specifies the computation, presentation and disclosure requirements for earnings per share. This statement is effective for both interim and annual periods ending after December 15, 1997, with restatement of all prior periods shown. Earlier application is not permitted. The effective date of SFAS No. 128 for the Company is for the quarter and six-month period ending January 30, 1998. In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was issued. SFAS No. 130 specifies how to report and display comprehensive income and its components. This statement is effective for fiscal years beginning after December 15, 1997, with restatement of all prior periods shown. The Company will adopt SFAS No. 130 in the first quarter of fiscal 1999. In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," was issued. SFAS No. 131 requires the disclosure of certain information about operating segments in the financial statements. This statement is effective for fiscal years beginning after December 15, 1997, with restatement of all prior periods shown if not impracticable to do so. The Company will adopt SFAS No. 131 in the first quarter of fiscal 1999. The Company does not expect the adoption of SFAS Nos. 128, 130 or 131 to have a material effect on the Company's consolidated financial statements. Liquidity and Capital Resources The Company's operating activities provided net cash of $33,191 for the three months ended October 31, 1997. Most of the cash was provided by net income adjusted by depreciation and amortization. Increases in inventories were substantially offset by increases in other accrued expenses. Capital expenditures were $41,381 for the first three months of fiscal 1998. Land purchases and the construction of new stores accounted for substantially all of these expenditures. Capitalized interest decreased to $387 for the first quarter of fiscal 1998 from $639 for the same period a year ago. This decrease was primarily due to the timing of new store construction in fiscal 1998 as compared to the same period a year ago. The Company's internally generated cash and short-term investments were sufficient to finance all of its growth in the first three months of fiscal 1998. The Company estimates that its capital expenditures for fiscal 1998 will be approximately $190,000, substantially all of which will be land purchases and the construction of new stores. On December 2, 1996 the Company received the proceeds from a $50,000 5-year term loan bearing interest at a three-month LIBOR-based rate ("London Interbank Offered Rate"). Concurrently, the Company entered into a swap agreement with a bank to fix the interest rate at 6.36% for the life of the term loan. This $50,000 term loan is part of a $125,000 bank credit facility that also includes a $75,000 revolver. Management believes that cash and short-term investments at October 31, 1997, along with cash generated from the Company's operating activities, will be sufficient to finance its continued expansion plans through fiscal 1999. INDEPENDENT ACCOUNTANTS' REPORT To the Board of Directors and Stockholders of Cracker Barrel Old Country Store, Inc. Lebanon, Tennessee We have reviewed the accompanying condensed consolidated balance sheet of Cracker Barrel Old Country Store, Inc. as of October 31, 1997, and the related condensed consolidated statements of income and cash flows for the quarters ended October 31, 1997 and November 1, 1996. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Cracker Barrel Old Country Store, Inc. as of August 1, 1997 and the related consolidated statements of income, stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated September 10, 1997, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of August 1, 1997 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. DELOITTE & TOUCHE LLP Nashville, Tennessee December 10, 1997 PART II OTHER INFORMATION Item 1. Legal Proceedings _________________ None. Item 2. Changes in Securities _____________________ None. Item 3. Defaults Upon Senior Securities _______________________________ None. Item 4. Submission of Matters to a Vote of Security Holders ___________________________________________________ A. The annual meeting of shareholders was held November 25, 1997. B. Election of Directors: The following directors were re-elected for one-year terms of office: James C. Bradshaw, Robert V. Dale, Dan W. Evins, Edgar W. Evins, William D. Heydel, Robert C. Hilton, Charles E. Jones, Jr., Charles T. Lowe, Jr., B. F. Lowery, Ronald N. Magruder, Gordon L. Miller, Martha M. Mitchell and Jimmie D. White. C. Other Matters: Proposal 1 - Election of Directors. FOR ABSTAIN ___ _______ James C. Bradshaw 50,334,175 273,892 Robert V. Dale 50,348,089 259,978 Dan W. Evins 50,345,771 262,296 Edgar W. Evins 50,331,606 276,461 William D. Heydel 50,336,734 271,333 Robert C. Hilton 50,348,820 259,247 Charles E. Jones, Jr. 49,628,760 979,307 Charles T. Lowe, Jr. 50,331,487 276,580 B. F. Lowery 49,608,952 999,115 Ronald N. Magruder 50,346,652 261,415 Gordon L. Miller 50,340,309 267,758 Martha M. Mitchell 50,344,480 263,587 Jimmie D. White 50,350,307 257,760 Proposal 2 - To consider and vote upon the adoption of a proposed amendment to the Cracker Barrel Old Country Store, Inc. Amended and Restated Stock Option Plan, to increase the number of shares of Company Common Stock available under the Plan from 14,025,702 to 17,525,702. Affirmative votes cast 21,761,087 Negative votes cast 15,204,336 Votes cast to abstain 313,734 Broker non-votes 13,328,910 Proposal 3 - To approve the selection of Deloitte and Touche LLP as the Company's independent auditors for the 1998 fiscal year. Affirmative votes cast 50,376,521 Negative votes cast 107,828 Votes cast to abstain 123,718 Proposal 4 - To consider and take action on a shareholder proposal, requesting that the Compensation and Stock Option Committees link executive compensation to social policy goals. Affirmative votes cast 2,300,968 Negative votes cast 32,144,123 Votes cast to abstain 2,834,066 Broker non-votes 13,328,910 Item 5. Other Information _________________ None. Item 6. Exhibits and Reports on Form 8-K ________________________________ A. The following exhibits are filed pursuant to Item 601 of Regulation S-K: (15) Letter regarding unaudited financial information. B. No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CRACKER BARREL OLD COUNTRY STORE, INC. Date: 12/10/97 By /s/Michael A. Woodhouse ________ _____________________________________________ Michael A. Woodhouse, Chief Financial Officer Date: 12/10/97 By /s/Patrick A. Scruggs ________ _____________________________________________ Patrick A. Scruggs, Assistant Treasurer December 10, 1997 Cracker Barrel Old Country Store, Inc. Hartmann Drive Lebanon, Tennessee 37088-0787 We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Cracker Barrel Old Country Store, Inc. for the quarters ended October 31, 1997 and November 1, 1996, as indicated in our report dated December 10, 1997; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended October 31, 1997, is incorporated by reference in Registration Statement Nos. 2-86602, 33-15775, 33-37567, 33-45482 and 333-01465 on Forms S-8 and Registration Statement No. 33-59582 on Form S-3. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP Nashville, Tennessee
 

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENT OF CRACKER BARREL OLD COUNTRY STORE, INC. AND SUBSIDIARIES FOR THE QUARTER ENDED OCTOBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. 1,000 3-MOS JUL-31-1998 AUG-2-1997 OCT-31-1997 66,655 1,349 4,301 0 86,428 163,568 871,294 163,308 873,473 100,858 62,000 0 0 30,737 662,395 873,473 312,755 312,755 106,491 206,264 152,589 0 1,060 37,553 13,820 23,733 0 0 0 23,733 .38 .38