This Iconic Food Chain Is In Deep Doo-Doo! Can It Woo Both Boomers And Zoomers?

By Lisa Pelgin | Friday, 24 May 2024 04:10 PM
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Cracker Barrel, the 54-year-old roadside restaurant chain, has seen its stock plummet over the past week following an admission by its CEO, Julie Felss Masino, that the company is "just not as relevant" as it once was.

The statement, made during an investor call, was accompanied by a lack of a convincing plan to revitalize the chain, causing concern among investors.

The company, known for its Old Country Store and traditional American menu, has been experiencing a steady decline in customers over the past decade. The COVID-19 pandemic further exacerbated this trend, as many of its senior patrons, who were among its most loyal customers, have not returned.

In an attempt to address these issues, Cracker Barrel announced last Thursday that it plans to invest up to $700 million over the next three years. The company's top executives believe that updating the menu, revamping marketing strategies, and refreshing the interior and exterior of its restaurants with a "different color palette" could help solve some of its problems.

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However, the company's management also revealed that they do not expect these expensive investments to start yielding returns until the second half of 2026 and 2027. This revelation, coupled with the decision to cut its yearly dividend from $1.30 per share to 25 cents a share, has led to a nearly 20% drop in the company's shares since the call.

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Felss Masino acknowledged that Cracker Barrel has fallen to "the middle of the pack," admitting that the company has lost some market share, especially during dinner hours. Over the past four years, Cracker Barrel has lost 16% of its diners, a trend that has continued this year with a 4% drop in comparable sales during the most recent quarter.

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Truist analyst Jake Bartlett attributed the decline in the company's stock to the lack of a concrete plan. "They announced a plan for a plan but they didn't give investors enough information to judge whether reinvesting in the stores was a credible plan to address the traffic losses," Bartlett told The Post.

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One of the major challenges facing Cracker Barrel is attracting younger customers. Bartlett noted that about 10% of seniors overall have not returned to their pre-pandemic eating out habits, which increases the urgency for the company to shift its focus away from this demographic.

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However, efforts to appeal to both seniors and younger customers have proven to be complex. Last year, the company faced backlash for displaying rainbow-colored rocking chairs during Pride Month, with some customers pledging to boycott the 660-store chain.

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Despite these challenges, Felss Masino expressed optimism about attracting a younger clientele, citing a recent trend on TikTok where influencer @Abby.Spinach compared the merchandise at Cracker Barrel’s Old Country Store to that of the upscale, trendy Anthropologie chain.

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In addition to these efforts, the company has hired consultants and is exploring ways to reduce its labor costs in the kitchen by purchasing some prepared ingredients. The company is also considering price increases for stores in more urban locations, and plans to improve lighting and replace wooden chairs with booths and banquettes.

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Cracker Barrel is also testing a revamped menu in 10 of its stores, with plans to remove 20 items and replace them with dishes such as "premium savory chicken and rice, slow-braised pot roast and hashbrown casserole Shepherd’s Pie," this fall.

In a statement to The Post, the company said, "Cracker Barrel shared its multi-year strategic plan last week, which includes investing more in our stores to freshen up our approach over time. 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.”

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