Biglari Capital Corp. Issues Letter to Shareholders of Cracker Barrel Old Country Store, Inc.

Rhea-AI Summary

Biglari Capital Corp. released a letter to Cracker Barrel Old Country Store shareholders, expressing concerns over the company's ongoing underperformance, with a 33.2% decline in total shareholder return over the past year compared to peers. The letter criticizes management's failure to address customer traffic issues and the expansion plans despite existing operational inefficiencies. It calls for leadership change, specifically replacing CEO Sandy Cochran, and suggests implementing a substantial share repurchase program or special dividend to enhance shareholder value.

Positive

• Ownership of 2,055,141 shares, equivalent to 8.8% of outstanding shares.
• Call for aggressive share repurchase or special dividend to enhance shareholder value.

Negative

• 33.2% decline in total shareholder return over the past year.
• Management's poor performance in customer retention and operational efficiency.
• Continued struggles to return to pre-Covid profit levels.
• Recommendation to replace CEO Sandy Cochran due to consistent failures.

San Antonio, TX, June 6, 2022 /PRNewswire/ -- Biglari Capital Corp. today issued the following letter to shareholders of Cracker Barrel Old Country Store, Inc. (NASDAQ: CBRL).  See below for the shareholder letter in its original form.

Dear Fellow Cracker Barrel Shareholders:

We are shareholders of Cracker Barrel Old Country Store, Inc. (the "Company"), with an ownership of 2,055,141 shares, representing 8.8% of the Company's outstanding shares.

On December 14, 2021, we issued a public letter to shareholders highlighting our concerns about Cracker Barrel's poor performance. Six months later, Cracker Barrel continues to lag behind its peer group, as the table below demonstrates.

Total Shareholder Return

			1-year		3-year		5-year		Since Covid (2/19/2020)
Peer Median			-24.8%		-22.4%		-15.6%		-20.3%
S&PMidCap 400			-5.8%		41.2%		55.6%		24.2%
Cracker Barrel			-33.2		-34.7%		-28.1%		-35.9%
Better/(Worse) than Peer Median			(8.4%)		(12.3%)		(12.5%)		(15.6%)
Better/(Worse) than S&PMidcap 400			(27.3%)		(75.9%)		(83.7%)		(60.1%)
	Peer group includes: BJ's Restaurants,Bloomin' Brands,Brinker International,Darden Restaurants, Dave & Buster's,Denny's, Dine        Brands, Texas Roadhouse, and The Cheesecake Factory
	Source: FactSet data as of 06/03/2022

We believe management has neglected to focus on core issues relating to the Company's customer traffic and store-level margins. In our view, there is no sound rationale for pursuing headlong expansion of new units when a significant productivity gap persists in existing units.

Clearly, management is unable to execute effectively. An example is its insistence on pursuing a younger demographic customer base, which has not gained traction. The effects of poor managerial decisions are manifest in the Company's revenue and profit figures. Unlike many of its peers, Cracker Barrel has struggled to return to pre-Covid profit levels. The Company's average restaurant sales are still below those of the pre-Covid era. Among its peer group, Cracker Barrel has one of the worst operating earnings post-Covid in comparison to its pre-Covid performance.

Over the last five years, the CEO has failed to retain customers; failed in a major acquisition, with a 100% loss within eight months; and failed to adapt to a modern post-pandemic environment. Cracker Barrel management has been consistent in losing customers and blaming external factors for its underperformance. It is time to replace CEO Sandy Cochran. Furthermore, the Company should return cash to shareholders through an aggressive share repurchase program or through a significant special dividend. We continue to see that a dollar in the hands of current management turns into less than a dollar of value for shareholders. 

Sincerely,
/s/ Sardar Biglari
Sardar Biglari

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/biglari-capital-corp-issues-letter-to-shareholders-of-cracker-barrel-old-country-store-inc-301561696.html

SOURCE Biglari Capital Corp.

FAQ

What percentage of Cracker Barrel does Biglari Capital own?

Biglari Capital owns 2,055,141 shares, representing 8.8% of Cracker Barrel's outstanding shares.

What is the total shareholder return for Cracker Barrel compared to its peers?

Cracker Barrel's total shareholder return declined by 33.2% over the past year, significantly worse than its peer median.

What actions does Biglari Capital recommend for Cracker Barrel?

Biglari Capital recommends replacing CEO Sandy Cochran and implementing a significant share repurchase program or special dividend.

How does Cracker Barrel's performance compare in the restaurant industry?

Cracker Barrel's performance continues to lag, with significant declines in customer retention and operating efficiency compared to peers.