Cracker Barrel’s restaurant and “country store” can surely be considered two separate businesses. There is a far cry between a gift/clothing shop and a restaurant. . The concept of this being only one business is being questioned by investor activist, Sardar Biglari, 34 years old, who is the CEO of Biglari Holdings, one of the largest shareholders in Cracker Barrel (CBRL).
Having over 600 locations in 42 states and a market value of $960 million, customers are used to seeing Cracker Barrels right off major highways. Guests enjoy eating a meal and then doing some gift shopping, especially if they are traveling and want to bring souvenirs home for themselves, family, and friends.
Biglari wants the corporation to admit that they are running two distinct businesses and that accounting should be separate for each one so that shareholders can be informed of the breakdown on what items are doing well and which are not and how each business is performing. Prior to this, Cracker Barrel has been able to combine all the income and expenses and move money back and forth when necessary.
Even though SEC filings show that the company calls the gift shops and restaurants two different “segments” and states that they are managed separately, cash is moved around between them depending on needs and are not reported as two segments. Cracker Barrel calls them “integrated”, and the management teams are not evaluated on how the profits and losses for their own segment are managed.
Biglari finds companies that are not doing as well as they should be, invests in them, and then works for improvements to benefit the company as well as the investors. Sometimes he has to boot the management or even take control himself.
What do you think will happen with Cracker Barrel? Stay posted!