Widespread backlash to Cracker Barrel’s new logo has put the family-dining chain in a deep traffic hole, and it will spend the next 12 months trying to dig itself out.
The chain reported Wednesday that its traffic plunged 8% after it unveiled a redesigned logo on Aug. 19. The new, more streamlined logo did away with the image of a man and a barrel, sparking social media fury both from conservatives, who accused the chain of going “woke,” and fans who disapproved of the modern new direction.
Lebanon, Tennessee-based Cracker Barrel is anticipating the fallout to be far-reaching. Even after scrapping the new logo and halting plans to remodel stores, Cracker Barrel is still expecting to finish the current quarter, the first of its fiscal year, with traffic in the negative 7% to 8% range. And it is forecasting a same-store traffic decline of 4% to 7% for the full fiscal year, with traffic expected to improve each quarter.
“This is a bit of an unusual situation, and we have factored all of that into our guidance,” CFO Craig Pommells told analysts.
The dim outlook sent Cracker Barrel’s stock tumbling by more than 9% in after hours trading Wednesday.
It was a major setback for a sweeping three-year turnaround plan at the 660-unit chain, which since last year has been working to return to relevance, particulary with younger consumers. The logo and remodel package were part of that, but after the criticism, Cracker Barrel has recommitted to its old-fashioned vibe. It is even restoring four remodeled restaurants to their former look.
As a result, the chain will end up spending far less than the initial $600 million to $700 million it had budgeted for the transformation effort, executives said Wednesday. But it will keep the bulk of the plan in place, and will intensify its focus on two other pillars—food and customer experience—to help combat its fresh traffic challenges.
“We feel like this is still the right plan,” CEO Julie Felss Masino told analysts. “Our focus right now, our renewed focus, is on food and experience.”
That will start with a flurry of menu updates, including the return of Uncle Herschel’s Breakfast and Country Mornings Breakfast by popular demand, along with new items such as pot roast, herb-roasted chicken and a sausage and egg hashbrown casserole.
It will also entail an ongoing effort to improve efficiency and consistency in the kitchen. Phase one showed positive results, and phase two is being tested in 15 locations, with plans to expand it to the regional level next year.
Cracker Barrel will also step up its marketing a bit to help drive in customers, with a campaign tied to college football on deck and some other “big news” coming next week, Masino said.
And, of course, it plans to lean more into nostalgia with its marketing now that customers have made it clear that that’s what they want.
“The teams are really actively engaged in making sure all of our guests know that we are honoring our legacy and our heritage and inviting everybody in for a great meal around our table,” Masino said.
Cracker Barrel received a lot of feedback over the past month, Masino said. In an effort to continue to keep tabs on customer sentiment, the chain is adding a new feature to its loyalty program called Front Porch Feedback that will allow members to share their thoughts about their experience directly with the chain.
Masino said it would allow Cracker Barrel to link reviews with transactions and analyze the feedback in new ways.
As far as the logo backlash, Pommells said the response was fairly broad-based, with a slightly heavier impact in the Southeast, besides Florida. The chain saw less of a decline among consumers over the age of 65, but the pattern was evenly spread across income cohorts, he said.
The debacle spoiled what would have otherwise been a strong earnings report for Cracker Barrel. Same-store sales rose 5.4% for the quarter ended Aug. 1, which included a 5.4% price increase and a 1% increase in menu mix. It was the chain’s fifth consecutive quarter of positive same-store sales.
Cracker Barrel on Wednesday also provided a rare update on the 68-unit Maple Street Biscuit Co., and it was not a good one. The company expects to close 14 underperforming Maple Street locations this fiscal year, and many of them have already been shuttered. Cracker Barrel acquired the fast-casual biscuit chain in 2019 with plans to grow the brand.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.