Biglari brands Cracker Barrel’s biscuit-house chain as a loser
Investor says it’s time to pull the plug on Holler & Dash
Even though San Antonio activist investor Sardar Biglari has been unloading shares of Cracker Barrel Old Country Store Inc., he isn’t letting up on his criticism of the company.
In a fiery letter to Cracker Barrel CEO Sandra Cochran, Biglari — the company’s largest shareholder — said Cochran should sell the fledgling Holler & Dash Biscuit House, a fast-casual restaurant chain that serves Southern food. It has seven locations.
Holler & Dash, launched in 2016, is an “ill-conceived project destined to fail,” Biglari said in his letter Wednesday.
Divesting Holler & Dash, he added, will reduce corporate expenses and return management’s focus to Cracker Barrel, the restaurant and gift shop chain with more than 600 locations.
“Does anyone believe that Holler & Dash will move the financial needle?” Biglari said. “It is time you sign the death certificate on the Holler & Dash venture.”
A call to Lebanon, Tenn.-based Cracker Barrel was not returned. Biglari also didn’t respond to a request for comment.
Biglari’s missive comes at a time when he has been selling Cracker Barrel shares. He now owns about 3.5 million shares, or 14.7 percent of the stock, down from about 4.7 million shares, or 19.7 percent, late last year.
Biglari is chairman and CEO of Biglari Holdings Inc., a San Antonio-based publicly traded com-
pany that owns the Steak n Shake restaurant chain, Maxim men’s magazine and an insurance company.
The Cracker Barrel shares are held in Biglari Holdings’ investment partnerships, called the Lion Fund.
In a report to Biglari Holdings shareholders last month, Biglari said the fund purchased the 4.7 million Cracker Barrel shares for $241.1 million from May 2011 through the end of 2012.
That investment had turned into $950.8 million in value, counting stock sales and dividends, he said.
He previously has taken credit for much of the gains, at one point noting how Cracker Barrel adopted various recommendations he made — including halting store expansions, upgrading leadership and licensing the brand.
Asit Sharma, a contributor at a financial website called the Motley Fool, credited Biglari with helping improve Cracker Barrel’s cash flow, operating margin and stock price.
Biglari Holdings has “been good for Cracker Barrel,” Sharma said in a podcast last month. “They’ve kept management honest. They’ve been responsible for a lot of good change. So our druthers would be for Biglari to stay invested and stay active with this company.”
Biglari’s remaining stake in Cracker Barrel currently is valued at about $545.5 million, or about $115 million more than the market capitalization of Biglari Holdings.
Biglari’s letter provided no insight into why he is cutting his stake in Cracker Barrel shares. Nor did it indicate how much more stock he intends to sell.
Since acquiring the shares, Biglari has lost four proxy contests at Cracker Barrel. He failed three times to win seats on its board from 2011 through 2013. In 2014, shareholders defeated a proposal that could have allowed him to engage in an acquisition of the company.
Cracker Barrel had adopted a poison pill in 2012 to ward off Biglari, or anyone else, from acquiring control of the chain without offering a premium to all shareholders.
In 2015, Cochran called Biglari Holdings “a threat” to Cracker Barrel.
In his letter this week, Biglari also asked Cochran to disclose financial data on Cracker Barrel’s new stores “so we can judge the returns for the period under your leadership as CEO.”
Biglari has been critical of previous store expansions, disputing the company’s take that expanding has been a good use of its capital.
Biglari also urged Cracker Barrel to continue paying a special dividend of $3.75 a share or more.
“Special dividends should be paid irrespective of our level of our ownership,” he said. “Simply because we are a near 15 percent owner instead of 20 percent should not change the company’s allocation policy.
Cracker Barrel’s shares rose 36 cents to $155.01 Wednesday.