Cracker Barrel is under siege by an activist investor who smells blood after the country restaurant chain’s logo fiasco.
The owner of Steak ‘n Shake, Sardar Biglari, is contesting the re-election of Cracker Barrel chief executive Julie Felss Masino and director Gilbert Davila to the company’s board, according to a securities filing on Thursday.
It’s Biglari’s eighth attempt to win a seat on Cracker Barrel’s board. He first invested in the company in 2011 and now owns nearly 3% of the company’s stock.
“We believe accountability and stewardship have been deemed of little importance by the Cracker Barrel Board,” according to the proxy filing by Biglari Capital Corp. “Shareholders need to send a strong message to the board for failing to get rid of a manager who is worse than mediocre.”
Iranian born Biglari blames Felss Masino and Davila — who runs a marketing firm called DMI Consulting that focuses on DEI initiatives — for Cracker Barrel’s latest crisis. Davila heads up the company’s compensation committee.
Biglari claims to have warned Cracker Barrel about its “mistaken path” that has led it to become a “laughingstock” today.
In August, he mocked the company posting photos of red MAGA style hats that said “Fire Cracker Barrel CEO.”
On an earnings call on Wednesday, Cracker Barrel said the fallout from its rebranding disaster has resulted in an 8% decline in customer traffic at its 650 restaurants – and it expects the declines to continue into the following year, forecasting a 4% to 7% decline in traffic.
While the Tennessee-based chain quickly reversed its decision to scrap it’s “old timer” logo –an image of a man leaning on a barrel – it is still struggling to attract diners and get in front of the public relations disaster that started on Aug. 19.
But Cracker Barrel has repelled Biglari’s past overtures and has made it harder for activists to target it with new bylaws.
Shareholders that nominate directors at more than one annual meeting within five years – and fail to get support for their nominees – are required to reimburse Cracker Barrel for the proxy related expenses, up to $5 million.
Cracker Barrel on Thursday referred the Journal to a previous statement, saying that Biglari has pursued his proxy contests “for what we believe are purely self-interested reasons.” “Thankfully, our shareholders have consistently rejected his proposals and nominees by overwhelming margins each time,” the company said.
A Cracker Barrel spokesperson didn’t immediately respond to a request for comment.
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