Classic American Restaurant's Shares Plummet 20% After CEO's Painful Admission - 'We're Just Not As Relevant'
The Cracker Barrel Old Country Store restaurant chain isn’t doing well.
The company’s stock prices are at their lowest in over a decade, and the chain’s 660 stores have lost 16 percent of their customers over the past four years.
Cracker Barrel’s stock price at Friday’s market closing was $45.62, some 20 percent lower than the $57.27 price on May 16.
The company, based in he Lebanon, Tennessee, has launched a three-year, $700 million upgrading of its restaurants, is altering its menu and is seeking a younger clientele.
But even its new CEO, who has been with the company for nine months, says Cracker Barrel is not as relevant as it once was.
Cracker Barrel, home of fried chicken, lots of gravy, plenty of carbs, and gifts new and nostalgic in trouble? How can that be?
What’s going on with the iconic 54-year-old company whose brown and yellow billboards are almost as familiar as the signs identifying interstate highways along which Cracker Barrels almost always park themselves?
Lots of reasons are creeping forth.
“We’re just not as relevant as we once were,” the eatery’s CEO, Julie Felss Masino, said on an investor call May 16, according to the New York Post. “Some of our recipes and processes haven’t evolved in decades.”
For a while, I’ve been reading comment sections in stories about Cracker Barrel, and there have been repeated complaints about declining quality.
In the Post’s comment section, someone calling themselves WhoDat said: “Years ago they had very good food for very reasonable prices.
“We’ve noticed it going downhill for the past decade. We don’t have any near us but we’d always stop whenever we were on a road trip. Haven’t been back in years.”
A comment by a reader identified as “Steve” at investment advice site Motley Fool — which was tepid about buying Cracker Barrel stock — said: “After our last visit with my wife to Cracker Barrel, we decided with the many changes to menu and quality, it would be our last.
“They should go back to their roots and reinvent themselves. It seems they have forgotten their core values to us.”
And analysis of Cracker Barrel’s decline has to include the meme “Go woke, go broke.”
With such a high amount of patronage by the elderly, the company made decisions to offend the traditional values of a key demographic by selling rocking chairs painted to reflect LGBT “pride.”
What were they thinking?
And Cracker Barrel is seeking younger customers, according to the Post. But the company could do that without a country-fied Bud Lite tactic.
Provide good food and good service, nice products in the gift shop, and continue a family-oriented nostalgia with an increased slant toward millennials. Do that and the appeal of the brand might remain.
Of course, other factors come into play. Witness the woes surrounding other sit-down casual restaurants, such as Applebee’s, TGI Friday’s and Red Lobster, which filed for bankruptcy last Sunday.
Is that a result of Bidenflation or lingering effects of the pandemic?
Cracker Barrel says many of its senior customers stopped coming during the pandemic and never returned.
Did the pandemic disrupt senior dining habits? Can many of them no longer afford to eat out?
Except for things such as health care and memorial services, marketing to an elderly demographic will entail the loss of that group and the need to replenish it.
Cracker Barrel has long had to deal with that reality but until recently seems to have overcome it. And the company can regain its market by aiming for competitive advantage that appeals to all but the youngest adults without children.
In fact, it’s already gotten some younger adult attention. TikTok influencer @Abby.Spinach has challenged viewers to note that dresses from Cracker Barrel’s merchandise section are comparable to those of upscale Anthropologie, but at lower prices, according to the Post.
Meanwhile, the company hopes to stop its losses by remodeling stores inside and out and by altering the menus.
They’re looking to increase comfort by getting rid of the wooden chairs and providing booths and banquettes.
While they won’t say which items they’re jettisoning, Cracker Barrel plans to take 20 items off the food menu. They say they’ll add new items, such as chicken and rice, a new pot roast, and Shepherd’s Pie in the fall.
All in the hope of turning things around.
“Cracker Barrel shared its multi-year strategic plan last week, which includes investing more in our stores to freshen up our approach over time,” Cracker Barrel told the Post. “We are excited about what this means for our guest experience, including refreshed restaurants, and delivering food and an experience guests love.
“As we execute our plans, we believe we’ll create substantial value for all our stakeholders and will set the stage for Cracker Barrel to thrive for decades to come.”
Perhaps. But the answer is right in front of them without the MBA language – provide good food, good service and good merchandise at the right price.
And don’t insult the politics of your primarily rural demographic.
Especially take care of that last one and maybe even I’ll be back.
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