Cracker Barrel Faces Pressure from Activist Investors

Cracker Barrel is currently facing scrutiny from activist investors who have taken notice of the recent logo controversy that struck the restaurant chain.

Sardar Biglari, the owner of Steak’N Shake, is challenging the reelection of CEO Julie Fels Masino and director Gilbert Davila, as stated in a securities application submitted Thursday.

This marks Biglari’s eighth attempt to secure a board seat at Cracker Barrel. He first invested in the company back in 2011 and now holds nearly 3% of its shares.

According to a proxy filing from Biglari Capital Corp, there are concerns that “accountability and stewardship are of little importance” to the board at Cracker Barrel.

Biglari, who was born in Iran, attributes the recent turmoil to Felss Masino and Davila, who run a marketing firm called DMI Consulting focusing on diversity initiatives. Notably, Davila leads the company’s compensation committee.

Biglari has expressed his concerns, suggesting he warned the chain against the “false road” that has now led to current troubles. For instance, in August, he poked fun at the company by sharing an image of a red hat resembling a MAGA style, which read “Fire Cracker Barrel CEO.”

During a revenue call on Wednesday, Cracker Barrel reported that customer traffic fell by 8% across its 650 locations due to the backlash from its rebranding efforts. The company anticipates this decline could continue into the next year, estimating a further drop between 4% and 7%.

Though the Tennessee-based chain quickly reverted to its previous “Old Timer” logo—a design featuring a man leaning against a barrel—its efforts to recover from the public relations disaster that began on August 19 are ongoing.

Nevertheless, Cracker Barrel has pushed back against Biglari’s previous efforts, making it increasingly challenging for activist groups to successfully introduce new bylaws. Shareholders looking to nominate directors at multiple annual meetings within a five-year span must be prepared to refund Cracker Barrel up to $5 million for any proxy-related expenses if their candidates fail to gain support.

In a recent statement, Cracker Barrel described Biglari’s pursuit of the proxy contest as motivated “for what appears to be purely selfish reasons.” They added that shareholders have repeatedly rejected his proposals and candidates by significant margins.

A spokesperson for Cracker Barrel has not provided immediate commentary on the matter.