Top Investor Tried to Warn Cracker Barrell That Their Abandoning of Tradition in Favor of "The Modern Audience" Was "Folly"

I don't know much about Cracker Barrel. From what I gather, we're watching another corporation with a defined customer base deciding to abandon and spurn that dedicated customer base in pursuit of a newer, different, more diverse customer base.

This has been tried, and tried, and tried, and tried some more, and it fails every time.

Once the "old" customer base figures out that the corporation considers them Undesirable and Deplorable, and would rather go bankrupt than take their dirty traditionalist money, that corporation goes into a death spiral. They can't admit they were wrong, and even if they did, they'd have to admit that their error consisted of disrespecting and disliking the "old" customer base.

Cracker Barrel, I think, had a brand based around comfort food served in a friendly, kitschy style, with the walls covered with tchotchkies suggesting a country/farm-life vibe.

The New and Improved Cracker Barrel looks like the cafeteria at a hospital:

The old logo was indeed a throwback, hearkening back to the days when a corporate logo was actually a logo and not just a word or two in a "modern" font.

Cracker Barrel's top investor warned the Woke AWFL DEI CEO that she was throwing the brand away to make it yet another charmless uniculture/Marxist anti-culture gray wasteland, but the Woke AWFL DIE CEO decided to be the GirlBoss and tell him to pound sand.

Cracker Barrel's CEO dismissed warnings from a top investor who called the rebranding 'obvious folly' Julie Felss Masino and board ignored Sardar Biglari's criticism of $700M transformation plan calling it 'obvious folly'

Cracker Barrel's rebrand sparks outrage as company's stock plunges

Cracker Barrel's slide into a rebranding debacle began with a phone call at 4:30 p.m. on May 16, 2024.

That day, Cracker Barrel's new CEO, Julie Felss Masino, got on the phone with investors and unveiled the details of a "strategic transformation plan" her board of directors had approved. The first of "five pillars" in the plan would be "refining" and "evolving the brand across all touchpoints."

Over the next months, Masino and her board of directors dismissed at least four warnings by a top investor, Sardar Biglari, that the rebranding was "obvious folly," filings with the Securities and Exchange Commission reveal.

"Cracker Barrel is not a broken brand but it has a broken board," he wrote, in a scathing seven-page letter to shareholders.

He laid out his criticisms in a 120-page slide-deck presentation with the title, "CRACKER BARREL IS IN CRISIS," next to the company's longtime logo of an old man in overalls leaning on a barrel -- a logo that Masino would wipe out, unbeknownst to Biglari at the time.

While the dynamics of company executives pursuing politically correct, woke rebranding are now well-documented, a timeline of the last year-and-a-half behind-the-scenes at Cracker Barrel reveals a classic case of corporate myopia, ignoring caution and barreling forward with rigidity.

On the call in May 2024, Masino announced she'd hired a new "leading" branding agency to "refine and strengthen positioning to delight existing and new guests." The other pillars included "enhancing the menu," "evolving the store and guest experience," "winning in digital and off-premise" and "elevating the employee experience."

Biglari, a San Antonio, Texas, venture capitalist sometimes nicknamed "Big," didn't buy the corporate gobbledygook.

...

Other investors also didn't react well to the news, the company's share price falling the next day to $48.98.

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A series of Cracker Barrel boards and senior executives dismissed him as a wayward "activist investor" with a suspect "ultimate agenda," and his criticism last year fell on deaf ears. Biglari has earned a reputation as a "bully" and "evil genius" with a "Type X" personality, driven by money. Early into his investment in Cracker Barrel, he created a website for his critiques: enhancecrackerbarrel.com. Cracker Barrel responded on a webpage devoted to investors.

The CEO and the board barreled ahead, hiring a new chief marketing officer, Sarah Moore, in July 2024 from MGM Resorts International, doubling down on expensive store remodelings and "refreshes."

Its 2024 annual report, released last September, included a "Diversity, Equity & Inclusion" section, featuring its seven "Business Resource Groups" for promoting "diverse members," Black leaders, "Hispanic and Latino culture," "LGBTQ+ Awareness," military veterans and women leaders.

Hauntingly, in the report, executives warned that "failure to achieve or sustain" its "strategic transformation plan" with the rebranding "could adversely affect our results." They also noted, "Unfavorable publicity could harm our business," as could "activist shareholders," like Biglari.

By Oct. 8, 2024, Biglari had had enough. In his blistering seven-page letter to shareholders, he warned them about the board's "obvious folly," greenlighting Masino and "her new transformation plan." He criticized the board's alleged dysfunction and mismanagement.

"Cracker Barrel is in perilous times," he wrote.

He laid out stark numbers. In 2011, Cracker Barrel reported $167 million in operating income on revenues of $2.4 billion. By 2023, after $1.4 billion in cumulative capital expenditures, operating income had fallen to $121 million, even as revenues climbed past $3.4 billion.

"...the problem lies not in the seating but in getting more people to sit in it," he warned, continuing, "We do not believe changing the furniture and altering the décor are going to change the Company's trajectory or solve the Company's underlying problem of declining traffic."

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After the CEO and board ignored his October 2024 warnings, Biglari responded with an even sharper two-page critique on Nov. 13, 2024. "If you had $100 in Cracker Barrel stock in January 2019, five years later it is worth about $30. Therefore, there is just $30 to go before the entire investment is lost," he wrote.

Instead of correcting the company's course, he alleged, board members circled the wagons around the management team. "They value collegiality over accountability," he wrote.

He described the "transformation" as a "mistake" of misguided executives falling into a "textbook trap of overspending on cosmetic remodeling."

He noted, a bit humorously, "The day Cracker Barrel opened," in 1969, "it was already old -- its theme derived from the 1920s. I am concerned that not only will the remodel not work but it could actually damage the brand further."

The Woke CEO, who wears Progressive Politics Signalling Mega-Glasses and looks like a Queefier Marie Harf, says the "overwhelming majority" of people "appreciate" their hard-gay rebranding, implying that it's only a tiny minority of angry noise-makers who don't like it.

They tried this with Marvel, Star Wars, and Bud Light, too.

"Tiny minorities" don't cause brands to lose $121 million.

posted by Ace at 02:12 PM

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