Cracker Barrel’s stock price tumbled after the company’s CEO admitted the biscuit and gravy chain is “not as important as it used to be” and failed to present investors with a convincing plan to revamp its restaurants. As a result, prices have fallen sharply over the past week.
The 54-year-old roadside eatery, housed in an old country store and serving comfort food like chicken fried steak, grits and hash brown casserole, has been steadily losing customers over the past decade.
Its most loyal older customers fled during the pandemic, and many have never returned.
In response, Cracker Barrel announced last Thursday that it plans to spend up to $700 million over the next three years.
Executives said the company could solve some of the problems by revamping its menu and marketing and “refreshing the interior and exterior” with a “different color palette.”
“We’re not as important as we used to be,” CEO Julie Fels Masino, who took over the company’s helm nine months ago, said on a conference call with investors. “Some of our recipes and processes haven’t evolved in decades.”
But management also said it doesn’t expect the big investments to start paying off until late 2026 or 2027.
The chain cut its annual dividend from $1.30 per share to 25 cents.
Shares of the Lebanon, Tennessee-based company have fallen nearly 20 percent since the call.
By Thursday morning, the stock had fallen to $45.83. This was a 52-week low and also the lowest in over 10 years.
Casual dining chains including Red Lobster, which filed for bankruptcy on Sunday, Applebee’s, IHOP and Olive Garden are struggling across the board to attract cash-strapped customers.
But Fels Masino said Cracker Barrel has fallen to “mid-tier” status, adding: “The reality is that we’ve lost some market share, especially in dinner.”
Over the past four years, Cracker Barrel has lost 16% of its customers, a trend that has continued this year, with same-store sales falling 4% in the most recent quarter.
““A big reason for the stock price decline is that they didn’t have much of a plan,” Jake Bartlett, an analyst at Trust Corp., told the Post. “They announced a plan, but didn’t provide investors with enough information to determine whether reinvesting in stores was a credible plan to address traffic losses.”
One of the biggest challenges is attracting younger customers.
Bartlett said some metrics show that about 10% of all seniors have not returned to their pre-pandemic eating out habits, adding to the urgency.
“They have a lot of older consumers, so they need to move away from that consumer in the long term,” Bartlett said.
But winning over both seniors and Gen Z can be complicated. Last year, Cracker Barrel was accused of being “woke” after lining the front porches of its stores with rainbow-colored rocking chairs during Pride Month.
Infuriated customers have vowed to boycott the 660-store chain.
“Just business and stay out of politics!” one commenter posted after Cracker Barrel posted one of their rainbow rocking chairs on Instagram.
Others accused the brand of “rainbow washing” and promoting pro-LGBTQ messaging in the lead-up to Pride Month purely as a marketing ploy.
The CEO said there have been some optimistic signs recently when it comes to attracting a younger customer base.
“Now, it’s Google Cracker Barrel vs. Anthropology,” Fels Masino told analysts on a conference call last week. “It’s important and if you know, you know.”
TikTok Influencer abby spinach A series of posts comparing Cracker Barrel’s Old Country Store products to those from the upscale and trendy Anthropologie chain received more than 100,000 heart emojis and thousands of comments. .
In a game she called “Cracker Barrel or Anthropology?”, the influencer challenged her followers to guess which dresses were from which retailer, concluding that Cracker Barrel clothes received high scores due to their relatively low prices.
“I found it harder than I thought it would be to tell the difference,” the influencer said.
The company is also considering hiring consultants and purchasing pre-cooked ingredients to cut kitchen labor costs.
Company executives said most of its stores are in rural areas, but price hikes may also be implemented at stores in urban areas.
Plans also include brightening the lighting and replacing uncomfortable wooden chairs with booths and banquettes.
Two of the restaurants have been renovated and another 10 are testing revamped menus, the company said.
Cracker Barrel plans to remove 20 items from its menu this fall and replace them with dishes like “upscale savory chicken and rice, slow-cooked pot roast and shepherd’s pie with hash brown casserole.”
The company did not specify which items would be discarded.
“Cracker Barrel last week announced a multi-year strategic plan that includes making additional investments in our stores and refreshing our approach over time,” the company said in a statement to the Post. “We’re excited to see what this means for the guest experience, including a refreshed restaurant and the food and experiences our guests love.
“We believe that executing our plan will create substantial value for all stakeholders and set the stage for Cracker Barrel to thrive for decades to come.”
