IBJNews

Biglari set to make big move on Cracker Barrel

Back to TopCommentsE-mailPrintBookmark and Share

Prominent corporate advisory firm Institutional Shareholder Services Inc. is backing Cracker Barrel's board of directors in a proxy fight with investment firm Biglari Holdings Inc., but it also said shareholders should not support an anti-takeover measure the restaurant operator wants ratified.

Biglari Holdings began buying Cracker Barrel shares in June and has regulatory approval to buy a nearly 50 percent stake in the company. It currently owns slightly more than 10 percent, according to a report issued Wednesday by ISS.

Biglari is based in San Antonio and controlled by Sardar Biglari. It also owns Indianapolis-based Steak `n Shake and Western Sizzlin restaurant chains. IBJ reported in October that Cracker Barrel was trying to keep Biglari at bay.

Biglari has complained that Cracker Barrel isn't living up to its potential. The investor also has said that the restaurant should provide more detailed disclosures about its different business units and that the directors should invest more of their own money in the company.

Cracker Barrel Old Country Store Inc., based in Lebanon, Tenn., will hold its annual shareholder meeting Dec. 20, and Biglari is seeking a seat on the company's board of directors. Of the 13 directors, 11 are up for reelection and two are stepping down.

ISS said in its report that Biglari raises a number of points about operating performance and transparency that the board should consider. But it also said the company appears to have regained its step after stumbling during the recession, and it sees no "compelling need" for a board change.

The company reported last month its fiscal first-quarter earnings inched up slightly, helped by new store growth that balanced declines in revenue from stores and restaurants open at least a year.

In September, Cracker Barrel adopted a so-called "poison pill" meant to discourage Biglari from buying a bigger stake in the company after antitrust regulators approved Biglari's request to be allowed to buy up to 49.99 percent of its shares. Under the plan, stockholders would get the right to purchase more shares at a discount if any group acquired more than 10 percent of the common stock.

ISS said that threshold is too low and shareholders should not support the plan, which "may deter legitimate investment by shareholders that do not intend to undertake an opportunistic, hostile takeover attempt."

Cracker Barrel said it was pleased with the ISS recommendation regarding its directors, but it urged shareholders to vote for the poison pill provision. It said in a statement that plan is important to ensure "that neither Sardar Biglari nor anyone else can take over Cracker Barrel without paying a change-of-control premium to all shareholders."

Biglari Holdings spokesman Larry Miller said in an email they were disappointed in the board recommendation. He said they found the conclusion "inexplicable in view of much of the commentary that precedes it and especially in view of ISS's conclusion" that the poison pill was not in the best interest of shareholders.

Later, Miller sought to clarify his earlier remarks by noting that customer traffic has been down for seven consecutive years and that Cracker Barrel has spent $600 million in that time but operating income has declined. "The largest stockholder of the company is seeking one board seat of 11. These simple facts are all one needs to know to make the right decision."

Cracker Barrel has 608 locations in 42 states.

ADVERTISEMENT

  • To Diner
    You make choices with your wallet so if you don't like it, just don't go back. Please don't ruin it for the rest of us that LIKE the Cracker Barrel as it is. I have eaten at 400+ of their locations on business travel because their food is extremely consistent from location to location and they offer a pretty wide ranging menu of down home cooking. They don't try to hide their menu or their offerings and certainly shouldn't apoligize for it because it tastes good. Any body can have a bad day but you don't grow to over 600 locations serving bad food. Nor do you condem an entire francise based on one bad experience, especially for an off-the-menu item no doubt to appease your special dietary needs.
  • To Diner
    To Diner: I think people who eat at Cracker Barrel generally go there for the down-home cooking reputation, which includes high carb, high calorie comfort food. Just because you are on a no wheat low carb diet does not mean that all restaruants should have a "menu change for their outdated menu". You could always eat someplace else that caters to your special diet needs.
  • Need a Change
    After the earlier news of Biglari's interest, I went to the new Cracker Barrel in Zionsville. what a major disappointment. While the crowd was huge on Sunday (around Noon), and the aisles were as crowded with knick-knack shoppers as you would expect, the food was not good. I am on a no-wheat, low-carb diet and settled for a ham and cheese omelet (not even on the menu), that was tasteless and cold. I am not going back. Their menu is terribly out-dated. Given their great reputation and special niche, with all those locations they should be doing great. Menu changes and merchandise changes are definitely needed. If Biglari can bring those basic changes, then I am all for him.

    Post a comment to this story

    COMMENTS POLICY
    We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
     
    You are legally responsible for what you post and your anonymity is not guaranteed.
     
    Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
     
    No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
     
    We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
     

    Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

    Sponsored by
    ADVERTISEMENT

    facebook - twitter on Facebook & Twitter

    Follow on TwitterFollow IBJ on Facebook:
    Follow on TwitterFollow IBJ's Tweets on these topics:
     
    Subscribe to IBJ
    1. Good Day I am Mr (Victoria Wright) from United state of America, i stayed in NEW YORK, and i have a broke up business, until i found this company email who help me to gain a loan for business,, and now i want to used this short medium to congratulate the below company for the fast and safe money they loan to me without any form of collateral, i loan 500,000USD from the company to save my business and lots more, i saw their mail on the internet, everyone always give testimony for what they did, so i quickly contacted them and they all did everything for me without stress and my money was sent to my account just 3 days later, i was surprise and i feel so glad, now i have a standard business control agent who help me, now i will advice those who need urgent loan to contact him at the bellow email:zenithfirm12@gmail.com

    2. NOTICE:This is to inform the general public that Vampires are real. My name is James Franklyn.,am an agent of vampire,am here to introduce our new world trend to you,a world of vampire where life get easier,we have made so many persons vampires and have turned them rich,you will be assured long life and prosperity,you shall be made to be very sensitive to mental alertness,stronger and also very fast,you will not be restricted to walking at night only even at the very middle of broad day light you will be made to walk.In case you are wildly oppressed by some unscrupulous persons we can still help you fight them.Your protection is assured immediately you join.Just contact the bellow email if you are interested we are here to attend to you anytime you want us. Contact the bellow email for more details. Email:vampirescreed@hotmail.com Sincerely: James Franklyn.

    3. Bravo! Someone else that is willing to speak the truth! Bravo!_____NBCSN is available in almost 2 MILLION more homes than just a few years ago, but Indycar STILL gets less total viewers than it did just a few years ago when NBC took over Versus. Attendance and ratings cratered with the end of season races (just when the title battle got "interesting" HAH!__________And now...new race in Basilia, where Miles celebrated the "rich history" of Indycar racing there. Rich history? What, 7 events in the 100 years of AOW? Yep, some history. Well, at least its an oval. It's not??? Are you kidding me??? Gosh darn road racin furriners.

    4. PURITY RAY LOAN OFFER........ Have you been denied by your banks,or are you in need of of an urgent loan to pay of your bills we are capable of giving loans @ cheaper rate to interested individuals, student, companies and members of the public in need of finance to settle bills, we do offer considerable loans which you can count on. For more information on our various types of loan,then you will have to contact PURITY RAY LOAN FIRM, to help you achieve your desire LOAN APPLICATION FORM TO BE FILLED BORROWERS INFORMATION * Full name:………………………. * SEX * ……………………………. * Country………………………….. * State:……………………………. * Land:…………………………….. * Occupation:…………………….. * phone number:…………………. * Telephone: ………………………….. * Age:………………………………. * Amount needed as loan:……… * Loan Duration:………………….. * Propose of Loan:……………….. * Annual revenue:………………… * Monthly Income:……………….. * Guarantee:………………………. * Payment: monthly or annually Email.....purityrayloanfirm@gmail.com Thank you and God bless Mr Purity Ray PURITY RAY LOAN FIRM we tend to serve you better

    5. Problem: most of the people responding to this article don't know about this service AT ALL! Why? Lack of awareness. This isn't IndyGo. This is CIRTA: might as well be the mattress company because they are asleep at the wheel - something like 3 directors over the last year? Playing with federal grant money is great! This "region" wants commuter rail service, has spent MILLIONS on Transportation studies yet can't even support a commuter bus line? This is largely for suburban riders to get to downtown - not for "service people to work in our hotels and restaurants" ! Get your head out of your backside!! These are professionals, students etc. that don't want to fight traffic, save some money on parking, gas, stress.... if CIRTA would put their federal money into widely promoting the sevive to Greenwood, Fishers & Carmel instead of finding directors and studies - this would be a successful service. Our family uses(d) it daily for the last several years - but the recent uncertainty & now unreliability due to cuts from Carmel has been a problem. Now, costs us an additional $350/month for gas & parking ( $4200/year) plus vehicle wear, service, environmental impact ... YES - this REGION needs this this type of service in order to keep growing and getting the people it needs to fill skilled positions in downtown Indianapolis. Think outside of your own car !!!

    ADVERTISEMENT