--:-- [Sound of a car driving on the highway]
--:-- Host: It's the Friday before Labor Day weekend, the last gasp of summer. And across America, cars are on the move. Maybe you're on I-40, or I-95, or I-10. It's probably an I-something. And then you see it, a billboard rising above the asphalt haze. Cracker Barrel. They're very prominent near highways. They're a place, you know, families could go stop and rest and have a meal and buy some fun swag while they're doing it.
--:-- [Sound of a car slowing down]
--:-- Host: Cracker Barrel is a Tennessee-based chain of restaurants slash old country stores. A roadside icon with an unmistakable logo. A man in overalls leaning against a barrel. So the logo, which dates back to 1977, had what customers referred to as the old-timer Uncle Herschel, which is a man in overalls who is sitting on a chair.
--:-- [Sound of a car stopping]
--:-- Host: But this summer, that logo, it's become a cultural lightning rod, one that initially wiped out tens of millions of dollars from the restaurant's valuation. All because a new streamlined logo erased that old-timer and set off a digital pitchfork mob.
--:-- [Sound of a car door opening]
--:-- Host: Our colleague Heather Haddon has been covering the story. A lot of commentators were like, no, we do not like this. So Cracker Barrels made everybody crazy today.
--:-- [Sound of a car driving away]
--:-- Host: My first thought was, why? I mean, if it's not broke, don't fix it. It's this old country store and now it's changing and it's just, I don't like it. But this story is about more than just a botched logo rebrand, because this public outcry became an opportunity for a jilted investor who's been gunning for Cracker Barrel for years.
--:-- [Sound of a car driving on the highway]
--:-- Host: It's not just a branding story. It's about a grudge that has been simmering between this activist investor and Cracker Barrel for 14 years. And suddenly here is this moment where Cracker Barrel is facing all this scrutiny and attention, I mean, national attention, and he pounced on it.
--:-- [Sound of a car slowing down]
--:-- Host: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, August 29th.
--:-- [Sound of a car door opening]
--:-- Jessica Mendoza: coming up on the show the behind the scenes grudge fueling the cracker barrel outrage why shop at Burlington maybe it's the deals that are new each time you drop by maybe it's the brand names you'll be shocked Burlington has in store or maybe it's the quality of the items the amazing selection, and the newest trends.
--:-- [Sound of a car driving away]
--:-- Jessica Mendoza: If you like to save but also like to stay in style, Burlington is your answer, and the question you'll be asking yourself is, why go anywhere else? Burlington. Deals. Brands. Wow.
--:-- [Sound of a car driving on the highway]
--:-- Jessica Mendoza: Tuesday on NBC, Jimmy Fallon and Bozema St. John host a highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play-play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC.
--:-- [Sound of a car slowing down]
--:-- Jessica Mendoza: For someone who's never heard of or has never been to a Cracker Barrel, what is this restaurant? What is it known for?
--:-- [Sound of a car door opening]
--:-- Host: Yeah, so Cracker Barrel was founded in 1969, and the image of Cracker Barrel at that time, and still today, was an old country store. Step inside a Cracker Barrel and your feet creak on wooden floorboards. On the tables, you'll find the beloved Cracker Barrel peg game. Look up at the walls and you'll see old license plates, cast iron skillets, sepia-toned photos.
--:-- [Sound of a car driving away]
--:-- Host: It's known for the rocking chairs and rolling pins on the walls and ephemera. So kind of that warm, cozy vibe. And then there's the food. Fried chicken is definitely where it's at. So big plates of fried chicken, cornbread, skillets, casseroles, breakfast all day. You can get pancakes all day if you want it It known for big portions It also known for being affordable I think the average check size is something like 15 bucks which is pretty cheap for a sit meal
--:-- [Sound of a car slowing down]
--:-- Host: And yeah maybe you doing some shopping while you there pick up a t something like that And Cracker Barrel doesn't sell just food and tchotchkes, but a version of Americana. It's a heritage brand built on nostalgia and comfort.
--:-- [Sound of a car door opening]
--:-- Host: But after more than half a century of the classics, customers felt Cracker Barrel was getting stale. In surveys, the restaurant was getting mediocre marks for food, value, experience, and convenience. Last year, foot traffic was down 16% from 2019. The dinner business was looking soft, and in-store retail sales were down.
--:-- [Sound of a car driving away]
--:-- Host: And Cracker Barrel's guests really have skewed older, So 65 plus. And that was really hard for them during the pandemic because that's a lot of the folks who, you know, didn't go out to restaurants during the pandemic and then didn't really return. So they were struggling with loss of traffic. They just weren't doing great and were losing share to other casual dining chains who were proving themselves more.
--:-- [Sound of a car slowing down]
--:-- Host: So they had been at this moment where, you know, it seemed like it was time to do something. And so what did they do to try to right the ship? So the first thing they did is they brought in a new CEO.
--:-- [Sound of a car door opening]
--:-- Host: What we're doing is very intentional. It's all based in research. We've talked to all of our guests. We've talked to our team members. In 2023, Cracker Barrel hired Julie Fels-Massino, a food and beverage exec with a kind of corporate pedigree the brand craved.
--:-- [Sound of a car driving away]
--:-- Host: Julie Fells Massino had experience in what you may call maybe slightly younger, trendier brands like Starbucks and Taco Bell. She worked at Taco Bell International and she came in with a lot of energy and she looked at the business and said, we need to do something different. The idea was to modernize and attract a younger clientele.
--:-- [Sound of a car slowing down]
--:-- Host: Massino came up with a three-year transformation plan. The changes ranged from shaking up merchandise in retail stores, to remodeling some of the restaurants, to rolling out cocktails like mimosas on the menu.
--:-- [Sound of a car door opening]
--:-- Host: They're literally having a beer or a glass of wine with their meal, or frankly, you know, we sell a lot of mimosas for brunch. Some of the tweaks worked. The menus, in my opinion, were much easier to read. This and that viral video, this is the exact sweatshirt that I was looking for and could not find at any of the Cracker Barrels.
--:-- [Sound of a car driving away]
--:-- Host: Other changes, like the decluttering of walls, weren't such a hit. America wants to go in Cracker Barrel and have Cracker Barrel vibes. Here's the problem. It doesn't look modern. It looks corporate. HR level corporate.
--:-- [Sound of a car slowing down]
--:-- Host: Broadly, though, things were looking up. In June, the company posted four consecutive quarters of same-store sales growth in the restaurants. This was exciting. You know, it did seem like some of the things were working. I wouldn't say, you know, off the charts, but it was starting to show some progress.
--:-- [Sound of a car door opening]
--:-- Host: Then, earlier this month, Cracker Barrel threw a party in New York City to celebrate the new logo. that cleaner, simpler design without the old-timer affectionately known as Uncle Herschel. The company brought in country music singer Jordan Davis to hype up the crowd.
--:-- [Sound of a car driving away]
--:-- Host: Thank y'all, thank y'all, thank y'all. My name's Jordan Davis Cracker Barrel. Thank y'all so much for letting us be a part of this.
--:-- [Sound of a car slowing down]
--:-- Host: But soon after the relaunch, things went sideways. Online outrage picked up. A lot of people did take some offense to it. Like, they like the old-timer. They like him being there. it symbolizes maybe a simpler time or country living. They didn't like that he was gone. They wanted the old timer back.
--:-- [Sound of a car door opening]
--:-- Host: Cracker Barrel told Heather it did extensive customer surveys on the logo before revealing the change, and that customers liked the modernized branding. But online, the anger was growing. Some right-leaning commentators called for Massino to resign, accusing the brand of woke virtue signaling.
--:-- [Sound of a car driving away]
--:-- Host: They equated the loss of the old timer with the erasure of tradition. It's not at all about a logo. It is about a country, it is about our heritage, and it is about our culture.
--:-- [Sound of a car slowing down]
--:-- Host: The most prominent person who spoke out is the president. Eventually, Donald Trump himself waited. The president said in part today, quote, Cracker Barrel should go back to the old logo. It made a mistake based on customer response.
--:-- [Sound of a car door opening]
--:-- Host: So this whole thing has really had a cost for Cracker Barrel. So their stock dropped. It had been trading at about $60 a share before this. Then it went down to something like $54. I mean, this was real.
--:-- [Sound of a car driving away]
--:-- Host: But Heather says this outrage wasn't entirely organic. One of the loudest voices fanning the flames was a longtime cracker barrel antagonist a big shareholder in the company There a guy who been behind a lot of this outrage and his name is Sardar Biglory This activist investor who's had a 14-year axe to grind and has nothing to lose by airing his grievances.
--:-- [Sound of a car slowing down]
--:-- Host: In a word, can you describe his relationship with Cracker Barrel? Contentious, is what I would say.
--:-- [Sound of a car door opening]
--:-- [Sound of a car driving away]
--:-- Heather Haddon: This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, It's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there.
--:-- [Sound of a car slowing down]
--:-- Heather Haddon: It's pro savings days at Lowe's. Get up to 35% off select major appliances and save an additional $1,000 when you buy four select LG major appliances. Plus, get a free DeWalt 20-volt max 5-amp hour battery when you buy a select DeWalt 20-volt max tool. Get the job done for less at Lowe's. We help. You save. Valid through 926. Selection varies by location. While supplies last. See associate or lowes.com for more details and qualifying items.
--:-- [Sound of a car door opening]
--:-- Heather Haddon: Cracker Barrel was facing what our colleague Heather calls a perfect storm. You know, customers having feelings about the brand, this larger political moment and polarization in America, and this activist investor who just keeps going after Cracker Barrel over and over again. That activist investor is Sardar Biglari.
--:-- [Sound of a car driving away]
--:-- Heather Haddon: So Sardar Biglari came to the U.S. with his family from Iran, came as a young kid, and basically seems to have been just taken with Warren Buffett and the idea of making money from a very early age.
--:-- [Sound of a car slowing down]
--:-- Heather Haddon: Biglari made his millions after starting a hedge fund. He would buy mostly struggling restaurant chains and shake them up. In 2008, he zeroed in on Steak and Shake, a burger chain weighed down by debt.
--:-- [Sound of a car door opening]
--:-- Heather Haddon: Biglari forced what's called a proxy fight, a shareholder showdown where an investor challenges the leadership of the company. He won, and he made himself CEO.
--:-- [Sound of a car driving away]
--:-- Heather Haddon: Biglari eventually built his own conglomerate, Biglari Holdings. And then Cracker Barrel caught his attention. By 2011, Beglari's holding company had become the biggest shareholder in Cracker Barrel, with more than 9% of its shares.
--:-- [Sound of a car slowing down]
--:-- Heather Haddon: So Beglari, what he did successfully at Steak and Shake, he wants to do at Cracker Barrel. He wants to run a kind of quick, down-and-dirty proxy fight at Cracker Barrel and take it over.
--:-- [Sound of a car door opening]
--:-- Heather Haddon: As a shareholder, Beglari wanted more say over the company's future. His goal was to get a board seat to influence Cracker Barrel's direction. But doing that wasn't so simple.
--:-- [Sound of a car driving away]
--:-- Heather Haddon: Things don't go as easily as with Steak and Shake. Cracker Barrel, you know, is a bigger brand than Steak and Shake. It has institutional investors. It's a more sophisticated brand to try to take over. And it doesn't work.
--:-- [Sound of a car slowing down]
--:-- Heather Haddon: But he does not give up. He is determined. So over the course of 10 years, he runs five more proxy campaigns. Five more? Yes, which is extremely unusual. Ultimately, Biglari mounted seven proxy fights. Each time, he was blocked.
--:-- [Sound of a car door opening]
--:-- Heather Haddon: He did have a smaller victory in 2022, when one of his nominees got a seat on Cracker Barrel's board. Biglari agreed not to publicly disparage the company for about two years. But when Julie Messino started spending on remodels and brand updates that would cost hundreds of millions of dollars, that was exactly the kind of plan Biglari hated.
--:-- [Sound of a car driving away]
--:-- Heather Haddon: In June, he met with executives at Cracker Barrel, including Messino, to air his complaints. And then he plunks down this letter where he has all these demands, where again, he's saying, Cracker Barrel needs to move back to its core. He doesn't think it should spend a lot of capital on things like these brand remodels restaurant remodels And he basically saying I like your strategic plan more or less
--:-- [Sound of a car slowing down]
--:-- Heather Haddon: And he gives him that letter and the brand basically says no thank you In a statement, Cracker Barrel said Biglari's proxy efforts were made for, quote, purely self-interested reasons. Thankfully, the company added, our shareholders have consistently rejected his proposals and nominees by overwhelming margins each time.
--:-- [Sound of a car door opening]
--:-- Heather Haddon: So let's fast forward to this month, when this logo outrage starts. How does Biglari's company Steak and Shake get involved in this? So Steak and Shake started posting on X, you know, with glee almost about Cracker Barrel's issues, you know, retweeting some prominent conservatives who had taken on this issue and just saying, they're right, Cracker Barrel has not been well managed and stopped the brand refresh.
--:-- [Sound of a car driving away]
--:-- Heather Haddon: and, you know, again, really fomenting some of these personal attacks on the CEO, you know, fire the CEO, and also then hyping his own brand, Steak and Shake, saying, you know, we are authentic, they are not.
--:-- [Sound of a car slowing down]
--:-- Heather Haddon: So, yeah, really attacking Cracker Barrel, really hyping its own brand, and, you know, playing up all this online outrage. In one post, Biglari's burger chain shared an image of a red hat that reads, Biglari was right about Cracker Barrel. Another picture shows a red hat with the slogan, Fire Cracker Barrel CEO.
--:-- [Sound of a car door opening]
--:-- Heather Haddon: And then Cracker Barrel crumbled. Just a week after unveiling its new logo, the company did a 180. We have a major update to that Cracker Barrel logo saga. The company is returning to its old logo. Cracker Barrel cracking under pressure, abandoning their newly redesigned logo following backlash from loyal customers. Our new logo is going away and our old timer will remain.
--:-- [Sound of a car driving away]
--:-- Heather Haddon: After Cracker Barrel backed down, its stock started to rebound. But Steak and Shake, or Biglari, wasn't satisfied. Biglari is not stopping. So he's like, great, we have the old logo back, but, you know, stop the brand refresh. I still have this axe to grind against the brand, and he just can't let go of this because he's still going.
--:-- [Sound of a car slowing down]
--:-- Heather Haddon: It doesn't seem like he got the control that he wanted. He has not gotten the control he wanted. Biglari and his holding company didn't respond to requests for comment.
--:-- [Sound of a car door opening]
--:-- Heather Haddon: So Uncle Herschel lives on, for now. The grudge does, too. But here's the irony. This whole logo fiasco and rebranding debacle, it gave Cracker Barrel more attention than it's had in years. In fact, the chain's stock is now trading higher than before the controversy, and customer interest has spiked.
--:-- [Sound of a car driving away]
--:-- Heather Haddon: You know, some attention actually might be okay. I mean, the Google searches for Cracker Barrel are at an all-time record high. I mean, people are actually thinking about this brand and maybe going and looking them up and their menu in a way that they really never have in years.
--:-- [Sound of a car slowing down]
--:-- Heather Haddon: I mean, the timing is interesting too. You know, we're going into Labor Day weekend. And if you're thinking about where you might stop on your way to wherever you're going on your road trip, like this is a brand that might be top of mind at the moment.
--:-- [Sound of a car door opening]
--:-- Heather Haddon: I have actually mapped out where we could potentially go to a Cracker Barrel in Wisconsin this weekend. So yes, I am among those who are looking at, how can we stop at a Cracker Barrel and see how it's doing right now?
--:-- [Sound of a car driving away]
--:-- Jessica Mendoza: That's all for today, Friday, August 29th. The Journal is a co-production of Spotify and the Wall Street Journal. The show's made by Catherine Brewer, Pia Gudkari, Carlos Garcia, Rachel Humphries, Sophie Codner, Ryan Knudsen, Matt Kwong, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez-Espinoza, Heather Rogers, Pierce Singhi, Jivika Verma, Lisa Wang, Catherine Whalen, Tatiana Zamis, and me, Jessica Mendoza.
--:-- [Sound of a car slowing down]
--:-- Jessica Mendoza: Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. additional music this week by katherine anderson peter leonard billy libby bobby lord emma munger and blue dot sessions fact checking this week by kate gallagher thanks for listening we're off on monday but we'll be back with a new episode on tuesday see you then
