After continuing criticism by shareholder Sardar Biglari, Cracker Barrel sent a letter to shareholders Thursday that his positions were not credible and that his company had “a long-term record of lagging performance and problematic governance.” Read about crackerbarrel employee.
In response to Biglari’s pull on the board of Cracker Barrel by nominee Raymond Barbrick, president and co-CEO of The Briad Company, the letter, written by CEO Sandy Cochran. Steak ‘n Shake and Western Sizzlin’ owner Biglari owns 2,1 million shares, or 8,7 percent of Cracker’s shares.
On a number of times, Biglari met up with Cracker Barrel in July 2019 for his acquisition of Punch Bowl Social and the subsequent $133 million struck the brand when the brand early came into touch with the food chain. He called it “one of the worst mistakes in the history of the restaurant.”
In the letter, Cochran said that after several months of study and discussions, Cracker Barrel invested in Punch Cup. According to the CEO, Cracker Barrel’s demographics is complemented by strong revenues, sustainability, growth opportunities, successful management as well as millennial and Gen-Z customers.
Then in March, the COVID pandemic struck the United States and cut down all Punch Bowl devices. Cracker Barrel decided that “significant management attention and millions of dollars of capital” would be needed by the brand, extending beyond any financing provided under the CARES Act. Cracker Barrel decided to concentrate on main activities because of the confusion surrounding the company.
“Punch Bowl continues to fight for the pandemic six months later, and we think it will likely stay challenged in the foreseeable future,” said Cochran in the letter. “Punch Bowl Social is one of the thousands of tragic pandemic corporate losses. While we are certainly quite disappointed by the results of our investments, we are more disappointed that we never had the chance to prove our investment thesis and to make Punch Bowl Social entirely feasible.”
Cochran said that Biglari’s latest candidate is his fifth 10-year effort to further his own interests with a proxy competition.
She noticed Biglari’s gestures at Steak ‘n Shake, in which he assumed ownership of the corporation in the first phase of a proxy battle. Cochran said that he did so without paying other shareholders the customary “control fee” and then renamed Biglari Holdings to Steak ‘n Shake his own name, and “proceeded to oversee the destruction of huge shareholder value.”
In 2019, Biglari Holdings saw a 6.9% decline in revenue in the same store and an 11.2% decrease in traffic.
“We consider that the deterioration of Steak’n Shake, a brand once a long history restaurant, is a caution of misallocation of capital, underinvestment, lack of strategic vision, subpar leadership, and lost brand identity,” said Cochran.
Though Cracker Barrel dealt with the track record of Biglari, Cochran said that the organization still found Barbrick to be a possible manager. To endorse these activities, the brand used a globally known third-party recruitment agency. After a review of both the company and three impartial board members of Cracker Barrel, it was determined that Barbrick was not adequately experienced.
The interviewers challenged his lack of familiarity in public enterprises and the importance of his corporate background as a boss of a corporation running restaurants that largely abandoned the casual-dining market.
Instead, the Board voted to recommend Gisel Ruiz, a former Walmart boss.
“Mr. “Mr. Biglari is right — Cracker Barrel is one of the best restaurant concepts ever made,” said Cochran. “Nevertheless, it’s not just ‘the idea’ that makes Crash Barrel so important, I think you’ve never known, but I think you do. It is the staff, the community, the implementation and our mutual effort to continually have an excellent employee experience and a visitor experience that allows us to return our shareholders. It’s never been simpler to me before than after the year we’ve just had.”