Sydney Sweeney (2:49)

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Eagle Jeans Sydney Sweeney Hasbrook jeans.

Sydney Sweeney (3:17)

You see what I did there, right?

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Jessica Mendoza (3:56)

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

Heather Haddon (4:03)

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.

Jessica Mendoza (4:15)

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.

Heather Haddon (4:31)

It's known for the rocking chairs and rolling pins on the walls and ephemera. So kind of that warm, cozy vibe.

Jessica Mendoza (4:42)

And then there's the food.

Heather Haddon (4:44)

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'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.

Jessica Mendoza (5:13)

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. 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 and Cracker Barrel's.

Heather Haddon (5:48)

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. So they had been at this moment where, you know, it Seemed like it was time to do something.

Jessica Mendoza (6:18)

And so what did they do to try to right the ship?

Heather Haddon (6:21)

So the first thing they did is they brought in a new CEO.

Julie Fels Messino (6:25)

What we're doing is very intentional. It's all based in research. We've talked to all of our guests. We talked to our team members.

Jessica Mendoza (6:30)

In 2023, Cracker Barrel hired Julie Fels Messino, a food and beverage exec with a kind of corporate pedigree the brand craved.

Heather Haddon (6:39)

Julie Fels Messino had experience in what, you know, 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.

Jessica Mendoza (6:59)

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.

Julie Fels Messino (7:16)

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.

Jessica Mendoza (7:24)

Some of the tweaks worked.

Jordan Davis (7:26)

The menus, in my opinion, were much.

Ninja Kitchen Advertiser (7:28)

Easier to read this in that viral video.

Sydney Sweeney (7:31)

This is the exact sweatshirt that I was looking for and could not find.

Ninja Kitchen Advertiser (7:34)

At any of the Cracker Barrels.

Jessica Mendoza (7:36)

Other changes, like the decluttering of walls, weren't such a hit.

Heather Haddon (7:40)

America wants to go in Cracker Barrel.

Jessica Mendoza (7:42)

And have Cracker Barrel vibes. Here's the problem.

Heather Haddon (7:45)

It doesn't look modern.

Jessica Mendoza (7:46)

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.

Heather Haddon (8:02)

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.

Jessica Mendoza (8:13)

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.

Jordan Davis (8:28)

Thank y'. All. Thank y'. All. Thank y'. All. My name's Jordan Davis. Cracker Barrel than y'. All. So much for allowing us to be a part of this.

Jessica Mendoza (8:34)

But soon after the relaunch, things went sideways. Online outrage picked up.

Heather Haddon (8:39)

A lot of people did take some offense to it. Like they, they like the old timer. They, 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.

Jessica Mendoza (8:54)

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 they equated the loss of the old timer with the erasure of tradition.

Heather Haddon (9:14)

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 weighed in. The president said in part today, quote, cracker Barrels should go back to the old logo, admit 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, this was real.

Jessica Mendoza (9:48)

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.

Heather Haddon (10:01)

There's a guy who's been behind a lot of this outrage and his name is Sardar Biglari. This activist investor who's had a 14 year axe to grind and has nothing to lose by airing his grievances.

Jessica Mendoza (10:15)

In a word, can you describe his relationship with Cracker Barrel?

Heather Haddon (10:20)

Contentious is what I would say.

Jessica Mendoza (10:25)

That's next.

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Jessica Mendoza (11:25)

@Mintmobile.Com Switch upfront payment of $45 for three month plan. $15 per month equivalent required. New customer offer first three months only, then full price plan, options available, taxes and fees extra. Cmno.com cracker barrel was facing what our colleague Heather calls a perfect storm.

Heather Haddon (11:45)

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.

Jessica Mendoza (11:57)

Again, that activist investor is Sardar Baglari.

Heather Haddon (12:05)

So Sardar Baglari came to the US 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.

Jessica Mendoza (12:21)

Baglari 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 n Shake, a burger chain weighed down by debt. Baglari 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. Baglari eventually built his own conglomerate, the Glary Holdings. And then Cracker Barrel caught his attention. By 2011, Baglari's holding company had become the biggest shareholder in Cracker Barrel with more than 9% of its shares.

Heather Haddon (13:04)

So Baglary, what he did successfully at Steak N Shake, he wants to do a Cracker Barrel, he wants to run kind of quick down and dirty proxy fight at Cracker Barrel and take it.

Jessica Mendoza (13:14)

Over as a shareholder. Baglari 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.

Heather Haddon (13:26)

Things don't go as easily as with Steak N Shake. Cracker Barrel, you know, is a bigger brand than Steak N 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.

Jessica Mendoza (13:49)

Five more, yes.

Heather Haddon (13:51)

Which is extremely unusual.

Jessica Mendoza (13:56)

Ultimately, Baglari 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. Baglari 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 dol, that was exactly the kind of plan Baglari hated. In June, he met with executives at Cracker Barrel, including Massino, to air his complaints.

Heather Haddon (14:35)

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.

Jessica Mendoza (15:05)

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. So let's fast forward to this month when this logo outrage starts. How does Baglari's company, Steak N Shake, get involved in this?

Heather Haddon (15:30)

So Steak N Shake started posting on X, you know, with, 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 stop 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 N Shake, saying, you know, we are authentic, they are not. So, yeah, really attacking Cracker Barrel, really hyping its own brand and, you know, playing up all this online outrage.

Jessica Mendoza (16:14)

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.

Heather Haddon (16:35)

We have a major update to that Cracker Barrel logo saga. The company is returning to its old logo.

Jessica Mendoza (16:41)

Cracker Barrel cracking under pressure, abandoning their.

Ninja Kitchen Advertiser (16:44)

Newly redesigned logo following backlash from loyal customers.

Jessica Mendoza (16:49)

Our new logo is going away and.

Julie Fels Messino (16:50)

Our old timer will remain.

Jessica Mendoza (16:56)

After Cracker Barrel backed down, its stock started to rebound. But Steak N Shake or Big Larry wasn't satisfied.

Heather Haddon (17:05)

Baglari 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.

Jessica Mendoza (17:19)

It doesn't seem like he got the control that he wanted.

Heather Haddon (17:21)

He has not gotten the control he wanted.

Jessica Mendoza (17:24)

Baglari and his holding company didn't respond to requests for comment. So Uncle Hershel 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.

Heather Haddon (17:51)

You know, some attention actually might be okay. I mean, the Google searches for Cracker Barrel are at an all time record high when 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.

Jessica Mendoza (18:15)

And it's funny because 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.

Heather Haddon (18:29)

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 where can we stop at a Cracker Barrel and see, see how it's doing right now.

Jessica Mendoza (18:42)

Amazing. That's all for today. Friday, August 29 the Journal is a co production of Spotify and the Wall Street Journal. The show is made by Kathryn Brewer, Pia Gadkari, Carlos Garcia, Rachel Humphries, Sophie Kodner, Ryan Knudsen, Matt Kwong, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez De la Rosa, Sarah Platt, Alan Rodriguez Espinosa, Heather Rogers, Pierce Singhy, Jeevika Verma, Lisa Wang, Catherine Whalen, Tatiana Zemis and me, Jessica Mendoza. Our engineers are Griffin Tanner, Nathan Singapok and Peter Leonard. Our theme music is by so Wiley. Additional music this week by Katherine Anderson, Peter Leonard, Billy Libby, Bobby Lourd, 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.