DEFA14A: Cracker Barrel Defends Board, Strategy Amidst Proxy Fight

Cracker Barrel Old Country Store, Inc. urges shareholders to support its 10 director nominees and multi-year plan against an activist campaign by Sardar Biglari.

Summary

• Cracker Barrel is soliciting votes for its 10 director nominees for the Annual Meeting of Shareholders on November 20, 2025.
• The company is facing its fourth proxy contest in five years, and eighth in 15 years, from activist investor Sardar Biglari.
• The Board and leadership team are executing a multi-year plan, introduced in May 2024, to improve financial performance.
• Fiscal year 2025 saw GAAP net income grow by 13.3% and adjusted EBITDA grow by 6.0% compared to fiscal year 2024.
• The company achieved five consecutive quarters of comparable restaurant sales increases through the fourth quarter of fiscal 2025.
• Dinner traffic was positive in the fourth quarter of fiscal 2025 for the first time in three years, driven by the reintroduction of Campfire meals.
• Hourly turnover has improved by 19 percentage points in the past two years.
• Digital and off-premise sales continue to improve, and the loyalty program has grown to over nine million members.
• Cracker Barrel authorized a new $100 million share repurchase program and maintains a quarterly dividend.
• The company acknowledges a misstep with a new logo launch and modern store design test, which triggered significant negative public reaction and social media amplification.
• Sardar Biglari is accused of amplifying false claims, using a direct competitor's (Steak n Shake) social media to attack Cracker Barrel, and taking out billboards against CEO Julie Masino and the company.
• Biglari is urging shareholders to vote against the re-election of CEO Julie Masino and independent director Gilbert Dvila.
• The Board believes Ms. Masino and Mr. Dvila are critical to the company's success and continued growth.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive, reflecting the company's defense of its strategy and management, coupled with reported financial improvements. However, the ongoing, costly proxy contest and the acknowledged misstep with brand refresh initiatives introduce significant negative pressure and uncertainty, preventing a higher score.

Positives

• Achieved five consecutive quarters of comparable restaurant sales increases through Q4 fiscal 2025.
• Grew GAAP net income by 13.3% for full year fiscal 2025 compared to fiscal 2024.
• Grew adjusted EBITDA by 6.0% for full year fiscal 2025 compared to fiscal 2024.
• Dinner traffic was positive in Q4 fiscal 2025 for the first time in three years, driven by Campfire meals.
• Improved hourly turnover by 19 percentage points in the past two years.
• Improved digital and off-premise sales.
• Loyalty program grew to over nine million members.
• Maintained a strong balance sheet and reduced net debt.
• Authorized a new $100 million share repurchase program.
• Maintained a quarterly dividend, underscoring commitment to shareholder returns.

Negatives

• Misstep with the launch of a new logo and introduction of a more modern store design test, which triggered significant negative public reaction.
• Dealing with challenges from public attacks and negative social media amplification related to the brand refresh initiatives.
• Ongoing, costly, and distracting proxy contest initiated by Sardar Biglari, his fourth in five years and eighth in 15 years.
• Progress has been stalled by the response to the logo change and remodel tests.

Risks

• Inflationary conditions affecting commodity, ingredient, transportation, distribution, and labor costs.
• Disruptions to the restaurant or retail supply chain.
• Effects of changes in international, national, regional, and local economic and market conditions.
• Ability to manage retail inventory and merchandise mix.
• Ability to sustain or improve operational or marketing execution and performance, including the multi-year strategic plan.
• Increased competition affecting sales, labor recruiting, cost, and retention.
• Consumer behavior changes due to negative publicity, health/dietary trends, or safety concerns.
• Effects of indebtedness and associated restrictions on financial and operating flexibility.
• Changes in interest rates, increases in borrowed capital, or capital market conditions affecting financing costs.
• Reliance on a single distribution facility and certain significant vendors, especially for foreign-sourced retail products.
• Information technology disruptions and data privacy/information security breaches.
• Compliance with privacy and data protection laws.
• Changes in or implementation of additional governmental or regulatory rules and interpretations.
• Actual results of pending, future, or threatened litigation or governmental investigations.
• Ability to manage the impact of negative social media attention and associated costs.
• Impact of activist shareholders, specifically Sardar Biglari's disruptive campaign.
• Ability to achieve aspirations, goals, and projections related to environmental, social, and governance initiatives.
• Ability to successfully enter new geographic markets.
• Changes in land, building materials, and construction costs.
• Availability and cost of suitable sites for restaurant development.
• Ability to retain key personnel.
• Ability and cost to recruit, train, and retain qualified hourly and management employees.
• Uncertain performance of acquired businesses, strategic investments, and other initiatives.
• Effects of business trends on the outlook for individual restaurant locations and their carrying value.
• General or regional economic weakness, business and societal conditions, and weather impact on sales and customer travel.
• Discretionary income or personal expenditure activity of customers.
• Implementation of new or changes in interpretation of existing GAAP.

Future Outlook

The company is confident in its path ahead, leveraging the successful elements of its multi-year plan, honoring its heritage, and deepening connections with guests to return to the progress and results achieved in fiscal 2025 and put the business back on a positive trajectory. It aims to continue delivering growth and value creation for shareholders.

Management Comments

• Cracker Barrel is not just an Old Country Store or a restaurant; it is the front porch of America, and we take seriously the responsibility of stewarding the Cracker Barrel brand and business.
• We believe Sardar Biglari is launching another unnecessary, costly and distracting proxy contest to advance his own interests rather than yours.
• The Board, Ms. Masino and the senior leadership team are working diligently in the best interests of all shareholders to position the Company to return to the momentum and positive trajectory of fiscal 2025.
• We acknowledge that we misstepped with our launch of a new logo and the introduction of a more modern store design that we were testing in a small number of stores, which triggered a public reaction that went well beyond what we could have anticipated.
• We listened carefully to our guests and pivoted quickly to switch back to our Old Timer logo and pause our remodels.
• We are moving ahead with a strong strategy and set of initiatives to return the Company to the progress and results we achieved in fiscal 2025 and put the business back on a positive trajectory.
• We believe the loss of Ms. Masino and Mr. Dvila would deprive the Company of critical leadership and valuable skills and expertise on the Board, as well as risk derailing our ability to return the Company to growth and improved profitability.
• We believe Mr. Biglari's present campaign is designed to hurt the business, as he calls for the removal of critical leadership and forces the Company to devote focus and resources to yet another of his contests at an important time.

Industry Context

The restaurant industry is experiencing rapid change, requiring companies like Cracker Barrel to adapt while balancing tradition and innovation. The filing highlights increased competition and the importance of operational execution, marketing, and digital engagement. The challenges faced with brand refresh initiatives underscore the strong emotional connection consumers have with established brands in the casual dining segment, making changes particularly sensitive. Activist investor campaigns are a recurring theme in mature industries, often pushing for strategic shifts or management changes.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• The company mentions the actual results of pending, future or threatened litigation or governmental investigations as a risk factor, but no specific proceedings are detailed in the filing.

Related Party Transactions

• NA

Stakeholder Impact

• **Shareholders:** Urged to vote for current nominees to protect investment and support the multi-year plan. Potential for value creation through share repurchase and dividends. Risk of value destruction due to activist campaign and associated costs.
• **Employees:** Investment in teams and training has led to a 19 percentage point improvement in hourly turnover, suggesting a positive impact on employee experience and retention.
• **Customers:** Company listened to feedback and reverted to the Old Timer logo and paused remodels after negative public reaction, indicating responsiveness to customer sentiment. Strategic pricing and reintroduction of popular meals aim to maintain value and drive traffic.
• **Management/Board:** Facing a challenging proxy contest, requiring significant focus and resources to defend their strategy and leadership. The Board is united in supporting CEO Julie Masino and director Gilbert Dvila.

Next Steps

• Shareholders to vote on Cracker Barrel's 10 director nominees at the Annual Meeting on November 20, 2025.
• Company to continue execution of its multi-year plan to return to growth and improved profitability.
• Company to continue honoring Cracker Barrel's heritage and deepening connection with guests.
• Company to address challenges from negative publicity and activist attacks.

Key Dates

Keywords

Cracker Barrel, CBRL, Proxy Contest, Sardar Biglari, Shareholder Meeting, Corporate Governance, Restaurant Industry, Retail, Financial Performance, Strategic Plan, Share Repurchase, Dividend, Activist Investor, Julie Masino, Gilbert Dvila