The directors of Cracker Barrel Old Country Store have rebuffed the latest attempt by activist investor Sardar Biglari to gain a foothold on the restaurant and retail company’s board.
The decision to deny Biglari isn’t a surprise: The investor, who also runs the holding company for Steak ’n Shake and other holdings, has been turned away a number of times in the past decade. What is noteworthy about Cracker Barrel’s latest pushback is that the company also has recruited a former COO of Walmart’s Sam Club division to take a new spot on its board ahead of the planned retirement of a 15-year veteran.
Coming aboard is Gisel Ruiz, who last year retired from Walmart after nearly three decades in progressively more senior human resources and operations roles. Her COO stint at Sam’s Club from early 2017 until mid-2019 had her managing the operations of more than 600 stores with some $65 billion in annual sales.
Ruiz’s election to the Cracker Barrel board — which comes two months after the body added a former Walt Disney executive — lifts its member count to 11 but only for a few months. Richard Dobkin, a former Ernst & Young managing partner in Tampa who has been a director since 2005, has told the board he will not stand for re-election this fall. Dobkin, 75, is chair of the board’s audit committee.
“We have been working for more than three months to recruit Gisel,” said William McCarten, Cracker Barrel’s chairman. “The caliber of the four directors we have added to our board over the last three years demonstrates that we are able to attract the best people from the best companies to help us drive our business forward.”
Not surprisingly, Biglari — who controls 8.7 percent of Cracker Barrel’s shares — doesn’t see it that way. In an open letter to other Cracker Barrel shareholders Tuesday, he said his poking and prodding has led Cracker Barrel to make a number of investor-friendly changes and again criticized the board and CEO Sandy Cochran for their decisions to first invest in the Punch Bowl Social eatertainment concept and then to pull the plug on that investment as COVID-19 spread early this year — a move that cost the Lebanon-based company $133 million.
“Cracker Barrel is one of the best concepts ever created in the restaurant industry. We believe Ms. Cochran and the current board do not fully appreciate its potential,” wrote Biglari, who last month nominated a New Jersey industry veteran to the board. “We have attempted on multiple occasions to reach an amicable resolution with Cracker Barrel leadership. The time has come for the years-long stonewalling to end. We are resolved to obtain representation on the board in order to improve capital allocation, and in so doing to augment the value of the company for the benefit of all shareholders.”
Also on Tuesday, Cochran and her team released the company’s results for the fourth fiscal quarter, which showed a profit of $25.1 million on sales of $495 million. A year ago, those numbers were $65.0 million and $787 million, respectively. Same-store sales fell 39 percent during the quarter but progressed from a 59 percent plunge in May to a 28 percent drop in July as nearly all of the company’s restaurants reopened for limited in-person dining. Cochran said same-store sales were down about 20 percent in the first six weeks of the company’s new fiscal year.
Shares of Cracker Barrel (Ticker: CBRL) were changing hands at $133 at 2 p.m. Tuesday, down about 3.5 percent on the day. They started 2020 around $155 and bottomed out in March near $54.