The Corporate Grudge Fueling Cracker Barrel's Logo Fiasco

0:07It'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 schwag while they're doing it. 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.

1:12But 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. 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. 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.

1:52Because this public outcry became an opportunity for a jilted investor who's been gunning for Cracker Barrel for years. 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.

2:22Welcome to The Journal, our show about money, business and power. I'm Jessica Mendoza. It's Friday, August 29th.

2:35Coming up on the show, the behind-the-scenes grudge fueling the Cracker Barrel outrage.

2:55For someone who's never heard of or has never been to a Cracker Barrel, what is this restaurant? What is it known for? 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. 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.

3:44Fried 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's known for big portions. It's also known for being affordable. I think the average check size is something like 15 bucks, which is pretty cheap for a sit-down meal. And yeah, maybe you're doing some shopping while you're there, pick up a T-shirt, 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. But after more than half a century of the classics, customers felt Cracker Barrel was getting stale.

4:30In 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. 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.

5:11So 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. 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. Julie Fels-Massino had experience in what you may call maybe slightly younger, trendier brands like Starbucks and Taco Bell. She worked at Taco Bell International.

5:52And 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. 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. 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.

6:36Other 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. 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. Then, earlier this month, Cracker Barrel threw a party in New York City to celebrate the new logo.

7:18That 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. 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. 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. And they didn't like that he was gone. They wanted the old-timer back.

7:54Cracker 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. 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. 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.

8:30Admit a mistake based on customer response. 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. 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's a guy who's 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.

9:15In a word, can you describe his relationship with Cracker Barrel? Contentious is what I would say. That's next.

9:40Cracker 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. — So Sardar Beglari 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. — Beglari made his millions after starting a hedge fund. He would buy mostly struggling restaurant chains and shake them up.

10:29In 2008, he zeroed in on Steak and Shake, a burger chain weighed down by debt. 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. 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. 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.

11:14As 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. 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. 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.

11:56Ultimately, Viglari mounted seven proxy fights. Each time, he was blocked. He did have a smaller victory in 2022, when one of his nominees got a seat on Cracker Barrel's board. Viglari agreed not to publicly disparage the company for about two years. But when Julie Massino started spending on remodels and brand updates that would cost hundreds of millions of dollars, That was exactly the kind of plan Biglari hated.

12:29In 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's basically saying, I don't like your strategic plan, more or less. 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.

13:12Thankfully, the company added, our shareholders have consistently rejected his proposals and nominees by overwhelming margins each time. 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. 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.

14:01So, 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. 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.

14:49Our new logo is going away and our old timer will remain.

14:56After 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 ax to grind against the brand. and he just can't let go of this because he's still going. It doesn't seem like he got the control that he wanted. He has not gotten the control he wanted. Biglaria and his holding company didn't respond to requests for comment. 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.

15:43In fact, the chain's stock is now trading higher than before the controversy, and customer interest has spiked. You know, some intention actually might be okay. I mean, the Google searches for Crackle 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. So near term, I mean, this could be helpful. maybe people are interested in checking out Cracker Barrel. Yeah, and it's funny because the timing is interesting too. You know, we're going into Labor Day weekend.

16:19And 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. 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? Amazing.

16:52That'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 Espinosa, Heather Rogers, Pierce Singhi, Jivika Verma, Lisa Wang, Catherine Whalen, Tatiana Zamis, and me, 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

17:42thanks for listening we're off on monday but we'll be back with a new episode on tuesday see you then