San
Antonio, TX, Nov. 13,
2024 /PRNewswire/ -- Biglari Capital Corp. today
issued the following letter to shareholders of Cracker Barrel Old
Country Store, Inc. (NASDAQ: CBRL). See below for the
shareholder letter in its original form.
Dear Shareholders of Cracker Barrel Old Country Store Inc.:
If you had $100 in Cracker Barrel
stock in January 2019, five years
later it is worth about $30.
Therefore, there is just $30 to go
before the entire investment is lost.
Our group had approximately $350
million in the stock five years ago; it is now worth
around $100 million. Your investment and ours are in the same
boat.
This election should be simple. It is about voting for
Milena Alberti-Perez and myself
instead of two directors, Carl
Berquist and Meg Crofton, who
have overseen a loss of about 70% during their tenures as board
members. There is no one on the Board or management team who has
successfully turned around a restaurant chain. (In fact, there are
scarce few executives in the country who have successfully turned
around a restaurant chain.) I would be the only one to have done so
if elected. And if we were on the Board, we would hold a minority
position; so we ask, what is the downside?
Despite all of the Company's failures, the board members are
spending shareholders' money to defend themselves. They could have
settled but they fear letting accountability into the boardroom.
They value collegiality over accountability. You and I should be
concerned that they could lose our remaining investment. Therefore,
the consequences of this election are enormous.
Making no decision is bad enough, but the kind of decisions the
Board and management are making is actually worse. Recent
managerial appointments are beyond comprehension. For instance,
there is a new chief strategy officer who has no restaurant
background; his last post was chief strategy officer of a cannabis
company whose stock declined by over 85%.
The Company's big strategy to turn itself around is to spend
$700 million, or 70% of its market
value, on store renovations and remodels. Before I knew of
management's plan, my advice to the CEO was that she should avoid
falling into the textbook trap of overspending on cosmetic
remodeling to stem guest traffic declines, a mistake I have seen at
many failing restaurant companies. The new CEO could use our help,
since neither she nor anyone else on the Board has ever turned
around a restaurant chain.
Cracker Barrel Old Country Store is a history-steeped place that
channels Americana; there are a few brands like it, and none
require wholesale changes to their aesthetic. The day Cracker
Barrel opened, it was already old — its theme derived from the
1920s. I am concerned that not only will the remodel not work but
it could actually damage the brand further. These decisions are
taking us down the same path, I believe, as Ruby Tuesday, Red
Lobster, TGI Fridays, and the like. Let me make my position clear:
The company's $700 million remodel
plan will not work!
Why do we need your vote? Most large active investors have
stayed away from Cracker Barrel stock and many index funds now own
it. Unfortunately, index funds do not have the time to evaluate
individual companies. Moreover, proxy advisory firms emphasize
governance over shareholder returns. This approach ignores the
reality that most companies with a trillion-dollar market value
have a poor governance record by their measure despite producing
excellent shareholder returns. To these advisory firms, I can only
quote Samuel Johnson: "I have found
you an argument; but I am not obliged to find you an
understanding." Any capitalist who uses his or her own money to own
this stock would be displeased by the current Board and would want
board members with both experience and a significant ownership
stake to help fix the Company.
We have had a 13-year investment in the Cracker Barrel stock,
and my prior predictions proved correct. I now believe there is a
significant risk of a 50% loss or more if we are not elected to the
Board.
The best we can do is to make sure we obtain the support of the
investors who know and care about Cracker Barrel and its long-term
performance, and want to make money in the stock over time.
If you side with us, please be sure to vote the GOLD card,
checking the boxes for Sardar
Biglari and Milena
Alberti-Perez.
Sincerely,
/s/ Sardar Biglari
Sardar Biglari
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SOURCE Biglari Capital Corp.
