Cracker Barrel Old Country Store told shareholders Thursday that the turnaround strategy blasted as a waste of time and money by outraged shareholder Sardar Biglari is already generating results, with preliminary assessments showing a 2.9% rise in same-store restaurant sales for the first quarter ended Nov. 1.
“While we have more work to do, we are encouraged and energized by the early favorable results of our strategic initiatives,” Cracker Barrel CEO Julie Massino said in providing shareholders with a sneak peek of the results. Complete and audited figures are scheduled to be released Dec. 4.
Massino also indicated that Cracker Barrel outpaced its peer set in traffic growth during the period, but did not disclose any preliminary figure. The company has traditionally benchmarked itself against casual-dining chains rather than the family-dining sector, saying it has more in common with the likes of Chili’s and Applebee’s than Denny’s or IHOP.
Sales from the gift shops of units opened at least a year decreased by 1.6%, according to the preliminary report.
It was released a day after Biglari, who controls 9.3% of Cracker Barrel’s stock, again ripped into management via a letter to fellow shareholders. “Making no decision is bad enough,” he wrote, an apparent reference to his earlier complaints that leadership has been too complacent, “but the kind of decisions the Board and management are making is actually worse.”
He lamented that the Cracker Barrel stock held by the various companies he controls was worth $350 million five years ago but would fetch only $100 million today. “Your investment and ours are in the same boat,” he asserted.
Biglari acknowledged management’s ambitious plan for rejuvenating the Cracker Barrel brand, but characterized the effort as throwing money at a problem instead of repairing what needs to be fixed.
“The Company’s big strategy to turn itself around is to spend $700 million, or 70% of its market value, on store renovations and remodels,” he contended. The outcome will be a chain that’s been gussied up to still look old.
“The day Cracker Barrel opened, it was already old—its theme derived from the 1920s,” the investor wrote. “I am concerned that not only will the remodel not work but it could actually damage the brand further...Let me make my position clear: The company’s $700 million remodel plan will not work!"
Part of the problem, he continued, is that no one in management or on the board has ever turned around an ailing restaurant chain. If he is elected to the board as he’s requested, “I would be the only one to have done so,” Biglari wrote.
He was apparently referring to his leadership of Steak ‘n Shake, the family-dining chain he took over in mid-2008. At the time, the retro-themed chain was reportedly losing $100,000 a day. It posted a net income of $4.9 million for the third quarter ended Sept. 30, 2024, a year-over-year increase of 43%. Biglari has likened himself to Michelangelo for carving a profitable Steak ‘n Shake out of the mess he had acquired.
The investor is asking fellow Cracker Barrel shareholders to give him a role in turning around their holding. He has nominated himself and two associates for seats on the 10-person board.
The current board has agreed to support the election of one, Michael Godwin, but has vehemently opposed adding Biglari and his other ally, former Getty Images officer Milena Alberti-Perez.
But Biglari has continued to push hard for the directorships. “If we were on the Board, we would hold a minority position; so we ask, what is the downside?” he implored in Wednesday’s communication.
Cracker Barrel’s annual shareholder meeting is scheduled for Nov. 21. This year it will be conducted via a conference call rather than as an in-person event.
Management has said it will use the occasion to provide another update on the turnaround effort, which it estimates will take about three years.
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.