Cracker Barrel vs. Sardar Biglari: Brand Redesign Fuels Long-Running Corporate Governance Battle

The venerable American restaurant chain Cracker Barrel Old Country Store finds itself at the epicenter of a protracted corporate governance battle, a conflict recently intensified by a contentious brand redesign. At the heart of this dispute is Sardar Biglari, a significant shareholder and CEO of Biglari Holdings, who has waged a years-long campaign against Cracker Barrel’s board and management. This ongoing saga illustrates the complex dynamics between activist investors seeking to reshape company strategy and incumbent leadership striving to protect their vision and brand identity, particularly when facing a public backlash.

• Sardar Biglari, CEO of Biglari Holdings and a major shareholder, has been engaged in a years-long activist campaign against Cracker Barrel.
• His activism, dating back to 2011, includes seven proxy solicitations, advocating for increased dividends and questioning strategic investments.
• Cracker Barrel vehemently defends its leadership and strategy, dismissing Biglari’s actions as “self-interested” and highlighting his track record at Steak ‘n Shake and Western Sizzlin’.
• The conflict escalated in October 2024 following the expiration of a standstill agreement and a widely criticized brand redesign by Cracker Barrel.
• Biglari capitalized on public disapproval of the new logo, using his company Steak ‘n Shake’s social media to mock Cracker Barrel’s changes.
• The broader implications of this dispute touch upon corporate governance, shareholder rights, and the balance of power between investors and management.

The Protracted Governance Battle

Biglari’s Activist History and Demands

Biglari’s tenure as an activist shareholder at Cracker Barrel dates back to 2011, marked by an unprecedented seven proxy solicitations over 14 years. Through his Lion Fund and other entities, Biglari has consistently challenged the company’s strategic direction, advocating for increased shareholder dividends, questioning investment in new stores, and criticizing decisions he deems detrimental to the brand. He has sought to install his own nominees on the board and called for the replacement of former CEO Sandra B. Cochran, articulating his grievances in open letters that claim the board is “flawed” and out of touch with the restaurant’s “core customers.”

Cracker Barrel’s Defense and Counter-Criticisms

Cracker Barrel, in turn, has vociferously defended its strategy and leadership, characterizing Biglari’s actions as “purely self-interested.” The company points to shareholders’ consistent rejection of Biglari’s proposals and nominees by “overwhelming margins.” Furthermore, Cracker Barrel has frequently referenced Biglari’s track record at his own ventures, Steak ‘n Shake and Western Sizzlin’, as “cautionary tales” of “poor performance.” The company specifically noted that during a June 2024 meeting with new Cracker Barrel CEO Julie Felss Masino, Biglari allegedly did not express concerns about the strategic transformation plan or the reduction in quarterly dividends, contrary to his later public criticisms.

Escalation and Brand Redesign Controversy

The long-standing tensions escalated significantly in October 2024, following the expiration of a two-year “standstill agreement” that had temporarily curbed Biglari’s public critiques. He swiftly released a scathing seven-page letter attacking the board’s “strategic transformation plan,” particularly its proposed remodels, which he believes will not address declining traffic. Simultaneously, the public’s negative reaction to Cracker Barrel’s simplified, text-only logo—which removed “The Old Timer” icon—provided fresh ammunition. Steak ‘n Shake, under Biglari’s leadership, capitalized on this furor, taking to x.com to publicly mock Cracker Barrel’s redesign, posting images critical of the new logo and even calls for CEO Masino’s dismissal.

Biglari’s Leadership Record and Broader Implications

A Mixed Track Record at His Own Ventures

Biglari’s own leadership history presents a mixed record that Cracker Barrel frequently highlights. He acquired Steak ‘n Shake in 2008 when it was on the brink of bankruptcy, initially turning it around to generate substantial daily profits within a year. However, by 2018, Steak ‘n Shake faced renewed losses, leading to the closure of 200 locations and a shift towards a “quick service” model reliant on self-service kiosks. Similarly, under his stewardship, Western Sizzlin’ contracted significantly from 140 to just 33 locations. Cracker Barrel’s stock, on the other hand, saw a 7% drop, wiping out $90 million in market value following its controversial rebrand, though it later recovered after the company pledged to retain its traditional logo elements.

Corporate Governance Integrity and Shareholder Rights

The broader implications of such prolonged activist campaigns often touch on corporate governance integrity and the balance of power between shareholders and management. Wall Street analyst Ken Squire, who tracks activist shareholders, has described Biglari’s frequent proxy fights as potentially amounting to “harassment” and an abuse of shareholder rights, even adding him to a “Hall of Shame” for alleged “self-dealing.” Squire contends that while proxy fights are a vital mechanism for shareholder accountability, their excessive use can become disruptive, compelling companies to seek measures to restrict such behavior while preserving the legitimate governance rights of all shareholders. Steak ‘n Shake COO Dan Edwards, however, maintains that Cracker Barrel’s management is “disconnected from its brand and its customers” and deflects from its own operational issues by attacking Biglari personally, asserting that over $2.5 billion in market value has been lost collectively under the current management.