Cracker Barrel's Stand Against Sardar Biglari's Board Nominees
Explore Cracker Barrel's response to Sardar Biglari's repeated takeover attempts and their strategic transformation plan.
Background on the Situation
Cracker Barrel, a well-known casual-dining company, recently faced pressure from Sardar Biglari, the CEO of Steak 'n Shake, regarding his nominations for the board. This marked Biglari's seventh attempt in 13 years to takeover Cracker Barrel's board, leading the company to label it as an 'unnecessary proxy contest.' Biglari aimed to nominate himself along with Milena Alberti-Perez, a move challenged by Cracker Barrel, citing her lack of qualifications and even her admission of never visiting a Cracker Barrel restaurant.
Cracker Barrel's Critique
In response to Biglari's actions, Cracker Barrel criticized his dividend plan as 'self-serving' and highlighted his poor track record in business performance. The company emphasized the disparity in share ownership, noting that while Biglari owns less than 10% of the company's stock, Cracker Barrel's own nominees, Carl Berquist and Meg Crofton, possess significant business experience and collectively would hold 30% of the company's stock.
Engagement History
Despite the current conflict, Cracker Barrel revealed that they have previously engaged extensively with Biglari and even accommodated a Biglari-backed nominee on the board in 2022 to avoid a proxy contest. The company expressed disappointment with Biglari's rejection of settlement offers, indicating his strong desire for a board position, raising concerns about his motives being more self-serving than shareholder-focused.
Strategic Transformation Plan
Cracker Barrel reiterated the significance of their strategic transformation plan led by CEO Julie Massino. This plan, still in its early stages, includes initiatives such as brand modernization, menu enhancements, digital technology investments, and a focus on improving both customer and employee experiences. The company is positioning itself for future growth and sustainability through these strategic endeavors.
Financial Performance and Portfolio
The latest earnings report from Cracker Barrel showed a slight decline in same-store sales but a modest overall revenue growth. Mentioning their new barbell pricing strategy, CEO Julie Massino highlighted the positive impact on flowthrough and value perception scores. As of August 2024, Cracker Barrel boasts a portfolio of 724 restaurants, including both Cracker Barrel and Maple Street Biscuit Company locations.
