Why Cracker Barrel's Shareholders Are Furious With The Company

Things haven't gone so well for Cracker Barrel's stock price in the first half of 2022 and it appears that shareholders in the company might have the CEO over a barrel. In a recent letter from one of the company's biggest shareholders, the dissatisfaction is as thick as the restaurant's sawmill gravy. These Cracker Barrel shareholders say that the restaurant differs from the best restaurants chains but only in undesirable ways. They not only are unhappy with the company's poor performance but the response of the corporation's leadership to their concerns as well.

While the letter recognizes Cracker Barrel's efforts to improve its bottom line, the shareholders say the numbers prove it isn't enough. They also argue that the company's failures mean it's time for a change in leadership. To support their complaints, they present some data and criticize the strategy Cracker Barrel has taken to improve its bottom line.

A press release contains the letter in question. In the letter, the Biglari Capital Corp. says that it owns about 8% of Cracker Barrel stock and isn't happy about how its investment is performing. Biglari refers to the stock's performance over the past six months as a reason for its discontent. The letter shows the S&P peer median shareholder return since February of 2020 has been 15.6%. The market index considers restaurants like Denny's and The Cheesecake Factory peers for Cracker Barrel. Over the same amount of time, owning shares in Cracker Barrel has actually cost investors almost 36% of their investments. That isn't the only complaint, however.

American Recruiters reports that millennials comprise only 30% of Cracker Barrel's clientele. Biglari Capital Corp. argues that focusing on attracting more young people to the restaurant is the wrong way to go, though. Instead, Cracker Barrel should focus on investor relations and get the right leadership in place. The shareholder letter suggested that the company replace current CEO Sandy Cochran. It also demanded that Cracker Barrel use its existing capital to issue an immediate return to customers by either buying back stock or paying a special dividend. Whether Biglari Capital Corp. and other stockholders get a special dividend or not, Cracker Barrel may have some work to do in smoothing things over with this stockholder.