When the head of your company says dark times are ahead, you bet the stock price will take a hit. That’s what happened to the Cracker Barrel last week. The establishment, a fixture of roadside eating, was declared irrelevant by CEO Julie Felss Masino during a brutal earnings call.
These reports led to the stock trading at a 52-week low last Thursday. Cracker Barrel is an aging chain that hasn’t undergone a renovation in what seems like forever. The COVID pandemic also took a hit, wresting its usual clientele away who have yet to venture out for chicken and dumplings. Still, the chain vows to spend at least $700 million to reboot the establishment (via NY Post):
Cracker Barrel’s stock has been in freefall over the past week after its CEO admitted the biscuits-and-gravy chain is “just not as relevant” as it used to be — and failed to show investors a convincing plan to revamp its restaurants.
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Its senior clientele, among its most loyal, fled during the pandemic and many have since failed to return.
In response, Cracker Barrel said last Thursday it plans to spend as much as $700 million over the next three years.
Top brass says the company can fix some of its problems by updating its menu and marketing and “refreshing the interior and exterior” with a “different color palette.”
Management, however, also revealed that it doesn’t expect the pricey investments will begin to pay off until the second half of 2026 and 2027.
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But Felss Masino said Cracker Barrel has fallen to “the middle of the pack,” adding “the reality is we’ve lost some market share, especially at dinner.”
Over the past four years, Cracker Barrel has lost 16% of its diners — a trend that has continued year to date with a 4% drop in comparable sales during the most recent quarter.
The piece added that people have a picture of how much the chain will spend, but the details were scarce. Still, the store inside the restaurant is being viewed as having merchandise akin to stores like Anthropologie. They’re also looking into cutting overhead concerning ingredients and produce. Price hikes at some locations should be expected, with “two of its stores got a makeover, and another 10 are testing a revamped menu.”
Some 20 traditional menu items will be removed, though we don’t know what those are right now. We’ll see how this goes. Other chains, like Red Lobster, weren’t as lucky. The seafood brand tried a bottomless shrimp pitch to lure customers but incurred such heavy losses that it declared bankruptcy before Memorial Day.
