FIRST ON FOX – Cracker Barrel fired back at the “self-interested” head of Steak ‘n Shake, Sardar Biglari, after his fast food chain criticized the restaurant’s rebrand on social media, calling his “poor performance” as CEO a “cautionary tale.”
“Mr. Biglari has pursued an unprecedented seven proxy solicitations against the Company in just 14 years, each time for what we believe are purely self-interested reasons. Thankfully, our shareholders have consistently rejected his proposals and nominees by overwhelming margins each time. We believe his actions and poor performance at Steak ‘n Shake and Western Sizzlin’ remain cautionary tales,” Cracker Barrel told Fox News Digital in a statement.
Biglari took over Steak ‘n Shake after a year-long proxy battle in 2008 and is also one of Cracker Barrel’s largest shareholders, according to SEC filings. He owns Cracker Barrel stock through his Lion Fund and other entities, according to his latest SEC filing, and has waged numerous proxy fights against the board since he first bought shares in 2011. He became chairman of the board and CEO of Western Sizzlin’ in 2006, also following a proxy fight. He merged Steak ‘n Shake and Western Sizzlin’ under his Biglari Holdings corporation in 2010.
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As one of Cracker Barrel’s largest shareholders, Biglari has long raged against the board for pursuing what he believes to be poor business decisions that hurt the company’s brand. He’s waged six proxy battles and seven contested solicitations against Cracker Barrel’s board since 2011, seeking to install himself or his own nominees onto the Board, according to the company’s SEC filings.
He has also called for the replacement of former Cracker Barrel CEO Sandra B. Cochran, blasted the company’s rebrand, and called for increased dividends to shareholders in his many actions against the Board. He criticized the Board publicly in open letters issued in 2021 and 2022, according to the SEC filing.
Most of Biglari’s motions were rejected unanimously by the Board, but in 2022 he succeeded in getting one of his nominees onto the board, in exchange for a two-year “standstill agreement” that obliged him to stop pursuing proxy battles and disparaging the company publicly.
However, in Oct. 2024, after the standstill provisions ended, Biglari again attacked the Board’s “strategic transformation plan” in a scathing 7-page open letter. In the letter, the Iranian-born investor trashed the Board as “flawed” and slammed its previous decisions to open new stores and invest in new businesses. He criticized the Board for being out of touch with the restaurant’s “core customers.”
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“The plan the Board has adopted involves remodeling the units with new booths and banquettes, which have not been part of store interiors to date. Yet the problem lies not in the seating but in getting more people to sit in it. We do not believe changing the furniture and altering the decor are going to change the Company’s trajectory or solve the Company’s underlying problem of declining traffic,” Biglari wrote at the time.
“We believe the questionable transformation plan is indicative of a poorly constituted board that cannot relate to the Cracker Barrel brand or its customers. It lacks turnaround experience, and is critically missing the skill set needed to address the underlying business challenges,” he added.
However, Cracker Barrel said Biglari didn’t present any issues with the company’s planned rebrand during a June 2024 meeting he requested with new CEO Julie Felss Masino, allegedly attended by Biglari, Masino and other execs from Cracker Barrel and Biglari holdings.
“At the June 11 Meeting, Mr. Biglari did not express concerns about the strategic transformation or disagreement with the reduction in the Company’s quarterly dividend, and offered no material suggestions for improving the business,” Cracker Barrel said in its SEC filing.
Wall Street analyst Ken Squire, who monitors activist shareholders, told Fox News Digital that Biglari’s frequent proxy fights can amount to harassment, and he even added Biglari to his website’s “Hall of Shame” due to alleged “self-dealing.”
“One of the biggest advantages to U.S. markets is the ability for frustrated shareholders to launch a proxy fight to replace directors. But rarely, that right can be abused to the detriment of shareholders. That is what we see at Cracker Barrel… At some point it becomes too disruptive and harassing, and the Company should be entitled to take reasonable measures to allow it to restrict such behavior without sacrificing the governance rights of all shareholders,” Squire told Fox News Digital.
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After Cracker Barrel fans revolted following the restaurant redesigns that scrapped the chain’s kitschy-Americana feel in favor of a sleek, modernist approach and a new simplified logo that nixed the presence of “The Old Timer,” an iconic image of an old man leaning on a barrel, Steak ‘n Shake attacked Cracker Barrel on social media.
“Sometimes, people want to change things just to put their own personality on things,” Steak ‘n Shake posted, along with an image of part of the old Cracker Barrel logo.
“At [Cracker Barrel], their goal is to just delete the personality altogether. Hence, the elimination of the ‘old-timer’ from the signage,” Steak ‘n Shake posted on X on Aug. 21, shortly after the furor against the new logo began.
Steak ‘n Shake also posted images of red MAGA-style hats calling for Cracker Barrel CEO Masino to be fired.
Steak ‘n Shake has seen mixed results with Biglari at the helm. When he first acquired the company in 2008, it was, as he put it, a “vessel taking on water,” and on the brink of bankruptcy. Through a series of cost-reducing moves and other improvements, Biglari turned the company around to the point that it was generating $100,000 per day in profit just a year later in 2009.
However, by 2018, the franchise was again seeing losses and by 2024 the company had closed 200 locations and was revamped into a “quick service” fast food restaurant relying mostly on self-service kiosks, QSR reported.
Steak ‘n Shake recently won praise from Health and Human Services Secretary Robert F. Kennedy, Jr. after they began frying their French fries in beef tallow. Under Biglari’s stewardship of Western Sizzlin’, the company shrunk from 140 locations to just 33, which Cracker Barrel previously slammed as an erosion in the company’s value, FSR reported.
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Steak ‘n Shake COO Dan Edwards accused Cracker Barrel of attempting to distract from its recent PR disaster by attacking Biglari personally. Cracker’s Barrel stock dropped 7% after the botched rebranding attempt, wiping out $90 million in market value. However, the stock recovered somewhat after the company vowed to keep its current logo.
“CB’s misdirection techniques have remained the same for over a decade. The latest debacle proves that management is disconnected from its brand and its customers. Sardar Biglari is an investor. As chairman of the publicly traded company Biglari Holdings, Sardar seeks to build value for all BH stockholders. Instead of addressing his well-reasoned arguments, CB deflects by attacking him personally. Meanwhile, CBRL shares have continued to lose value. Collectively, over $2.5 billion in market value has been lost. It’s time for them to face reality rather than distort it,” Edwards told Fox News Digital.
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