Biglari Capital Corp. Issues Letter to Shareholders of Cracker Barrel Old Country Store, Inc.

Core Viewpoint - Biglari Capital Corp. expresses significant concerns regarding the performance and management of Cracker Barrel Old Country Store, Inc., highlighting a substantial loss in shareholder value and calling for a change in the Board of Directors to address ongoing issues [2][4][29]. Financial Performance - Since 2019, Cracker Barrel shareholders have lost over $2.9 billion in market value, with the stock price down 50.9% since the appointment of the current CEO, Julie Felss Masino [2][3]. - Total shareholder returns for Cracker Barrel over the past one, three, and five years are -49.6%, -65.3%, and -70.2%, respectively, significantly underperforming compared to proxy peer groups and the S&P 500 [5]. Management and Board Issues - The letter criticizes the Board for its role in the company's poor performance, citing a lack of accountability and poor capital allocation decisions during the tenure of former CEO Sandy Cochran [8][10]. - The Board's decision to promote the former CEO to Chairman is viewed as indicative of governance failures, with the current Board being described as lacking the necessary experience to address the company's challenges [9][17]. Strategic Missteps - Cracker Barrel's strategy of opening new stores during a period of declining customer traffic is deemed unnecessary and costly, with significant closures occurring in recent years, particularly on the West Coast [14][20]. - The company has made poor investments in new brands, such as Holler & Dash and Punch Bowl Social, which have resulted in substantial financial losses [14][15]. Proposed Changes - Biglari Capital advocates for a low-capex plan focusing on core business operations rather than high-capital expenditures, suggesting the divestment of non-core brands and halting new store openings [21][22]. - The company should prioritize improving store-level economics and customer service to regain lost traffic and enhance shareholder value [21][22]. Call for Accountability - The letter emphasizes the need for a change in the Board to prevent further decline, arguing that the current Board has failed to address internal issues that have led to significant shareholder losses [23][24][28]. - Biglari Capital seeks to bring its expertise and long-term investment perspective to the Board to help restore value for shareholders [27][30].