Cracker Barrel's CEO faces an uphill battle to revive the restaurant chain after a blunt admission sent stock prices plummeting 20 per cent.
Cracker Barrel's CEO, Julie Felss Masino, recently delivered a blunt assessment to investors, acknowledging the company's need for improvement. During a recent investor call, her statement caused the American dining institution's shares to plunge. However, Masino is taking steps to revitalise the brand and recapture its former glory.
As part of its plan to save itself, Cracker Barrel is investing $700 million in a six-point refurbishment plan. This includes a makeover for stores with brighter colours, a new logo, and updated menus featuring new dinner options. However, Masino's plan also involves price increases at some locations.
The simplified menu now features exciting additions like green chilli cornbread and a hashbrown casserole shepherd's pie. Two stores have already been refurbished, and ten others are testing the refreshed menu with these new items.
Southern country-themed restaurant chain Cracker Barrel, with over 660 locations nationwide, has seen a significant decline in customers, losing more than 16 per cent in just four years. This trend has led to store closures and prompted company leadership to develop a turnaround plan.
Cracker Barrel faces a critical challenge: Attracting younger diners. Currently, their core customer base are those over 65. Masino, who joined Taco Bell nine months ago, outlined a five-point turnaround plan during a recent earnings call to address this. Here's a breakdown of the key areas they'll be focusing on.
Evolving an Icon: Cracker Barrel's Turnaround Plan
"The brand has lost some of its shine, particularly post-pandemic,' she said. 'But to ignite growth, we must revitalise the brand."
New Logos
"Cracker Barrel is an iconic brand, but even iconic brands must evolve," Masino admitted. While consumer recognition remains robust, recent research indicates the brand needs to keep pace with changing preferences.
The brand refresh includes a new logo and colour scheme developed with a branding agency. While embracing a modern aesthetic, Cracker Barrel assures its loyal patrons that the brand's core country heritage and legacy will remain firmly in place.
Menu Makeover and Value Focus
Masino identified the menu as a critical area for improvement. "Our second strategic pillar is all about what makes up about 80 per cent of our sales, our menu," she said.
In February, they launched a test program featuring a significant menu overhaul in select locations. This included approximately 20 new dishes, several existing items with modifications, and over 20 menu items removed.
The top executive said they are pleased with the guest's response to the menu revamp test. Encouragingly, eight of the new lunch and dinner entrees have already cracked the top 20 most popular entrees in the test locations, she added.
Masino noted that Cracker Barrel sees similar success beyond entrees, with new items like our green chilli cornbread and banana pudding experiencing strong sales in other categories. This includes comfort food classics with a twist, like our premium chicken and rice dish and a slow-braised pot roast shepherd's pie topped with a hash brown casserole crust.
Cracker Barrel will also implement some efficiency measures to streamline operations and reduce costs. One such change involves transitioning away from hand-cut lettuce. Masino also hinted at the possibility of strategic price adjustments to reflect the evolving menu and operational changes.
Cracker Barrel utilises a five-tier pricing system to adapt to varying costs across locations. However, Masino revealed that 60 per cent of their outlets currently fall under the lowest tier, suggesting potential adjustments for some stores.
She provided an example of stores with similar pricing tiers despite a significant difference in average annual household income (e.g., $55,000 vs. $90,000). This indicates a possibility of price reductions in certain areas to reflect local market conditions better.
Refreshed Look for Cracker Barrel
Interiors and exteriors will receive a refresher with new colours and lighting, and more comfortable seating will be introduced. Moreover, the decor and fixtures will be simplified for a cleaner look. Cracker Barrel expects to complete 25-30 store remodels in the next fiscal year.
"We began conducting a pilot remodel in two test stores. This included refreshing the interior and exterior of these stores by using a different colour pallet, updating lighting, offering more comfortable seating and simplifying decor and fixtures," Masino said.
Rewards and Delivery
Launched in September, the loyalty program surpassed expectations with 5 million members, a 25 per cent increase over initial projections. Recognising changing customer preferences, Cracker Barrel plans to offer delivery through partnerships with services like Uber Eats.
Improved Work Environment
Cracker Barrel invests in employee experience with better training, simplified roles, and more technology to enhance job satisfaction.
"Our people are at the heart of everything we do,' she said. And ultimately, you're happier when you feel good about where you work and what you do. And that translates to the guests," Masino said. Cracker Barrel has a tiered pricing system, but many stores are in the lowest tier despite varying costs in different locations.
"We have stores in metro areas with an average annual household income of $55,000 in the same pricing tier as one with $90,000," she said. The restaurant's stock price has fallen nearly 20 per cent since the turnaround plan announcement, reflecting some investor scepticism.
Management expects the turnaround plan to take several years to show financial results, anticipating a payoff in late 2026 or 2027. "A big reason the stock is down is that there wasn't much of a plan," Truist analyst Jake Bartlett told the New York Post.
Cracker Barrel has a history of facing criticism for its stance on social issues. Past anti-LGBT policies have been countered by recent Pride Month initiatives, which in turn sparked boycotts from some customers.
While Cracker Barrel grapples with declining customers, another restaurant chain recently adopted a unique strategy. A New York City eatery replaced in-person greeters and cashiers with virtual staff, highlighting the restaurant industry's competitive landscape and ongoing challenges.
