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LEBANON, TN-Hampered by hurricanes and increased gas prices that cut into consumer spending, restaurant chain operator CBRL Group Inc., reported a 14% drop in net income during the first quarter of 2006 and cautioned that weak consumer spending could have an impact on the remaining fiscal year.

The operator of Cracker Barrel Old Country Store restaurant and gift shop chain reported net income of $25.7 million, or 51 cents per share for the quarter ending Oct. 28 compared to a year earlier profit of $29.9 million, or 57 cents per share. Wall Street analysts had forecast earnings of 53 cents per share.

Sales rose slightly by 3% to $633.4 million, helped by menu price hikes, but sales at outlets open at least a year were off, slipping by 0.4% at Cracker Barrel restaurants and by 11.6% at the chain’s up-front retail operation. Same-store sales edged up 0.5% at the firm’s Logan Roadhouse chain but were still below expectations.

“Our retail sales have been disappointing, reflecting lower restaurant guest traffic and the fact that our customers have been spending less on average per retail purchase,” chief executive Michael Woodhouse said in an earnings statement.

Higher gas prices and increased consumer financial responsibilities drove down guest traffic at the chain by more than 4% during the quarter, executives said. While noting that the sales environment was “challenging,” Woodhouse said sharply higher energy costs had a solid impact on quarterly results, a factor that was expected to continue throughout the year.

The company, which operates 538 Cracker Barrel Old Country Stores along with 129 company-owned and 23 franchised Logan’s Roadhouse restaurants, said it expects improved earnings for the second quarter and the remainder of fiscal 2006. It projected earnings of between 57 cents and 63 cents per share for the second quarter, and from $2.30 and $2.45 per share for the remainder of the year.

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