Cracker Barrel Invests $700M to Entice Customers After Traffic Plunges 16%, Stock Craters as Chain Struggles with ‘Woke’ Backlash

Cracker Barrel Old Country Store, the iconic restaurant chain known for its Southern-style cuisine and nostalgic decor, has unveiled a sweeping $700 million strategic transformation plan aimed at revitalizing its brand amidst dwindling sales and customer traffic.

This announcement comes as the company struggles with a 16% decline in traffic over the past year, a trend that some attribute to Cracker Barrel’s recent embrace of ‘woke’ ideology.

In June 2023, Cracker Barrel sparked controversy by posting an Instagram image of a rainbow-painted rocking chair to celebrate Pride Month, proclaiming, “Everyone is always welcome at our table.”

This move drew sharp criticism from conservative patrons, with Texas Rep. Ronny Jackson tweeting, “BYE BYE CRACKER BARREL! I will NEVER eat there again!!” The Texas Family Project, a conservative advocacy group, accused the restaurant of having “fallen” and “caved to the mob.”

Fast forward to 2024, and Cracker Barrel finds itself in a precarious position.

The company’s latest quarterly report reveals a 4% drop in traffic, contributing to the overall 16% plunge.

Newly appointed CEO Julie Felss Masino has spearheaded the strategic transformation, which focuses on five key areas: brand evolution, menu enhancement, store remodels, digital and off-premises investment, and employee experience improvement.

Masino acknowledged the need for change, stating, “We know from our research that despite high levels of consumer affinity, we’re just not as relevant as we once were.” The plan includes modernizing marketing strategies, refining the menu, and implementing strategic pricing initiatives tailored to local demographics.

In a test earlier this year, Cracker Barrel introduced 20 new menu items while removing others. Green chile cornbread and hashbrown casserole are among the additions now available at all locations.

Store remodels are also underway, with a pilot test featuring a new color palette, comfortable seating, and simplified decor. A smaller store prototype, maintaining the same seating capacity, is set to debut in fall 2025 at 25-30 locations.

Despite these efforts, the market reacted negatively to the transformation announcement.

Cracker Barrel’s stock plunged 13% to a 12-year low, partly due to the company’s decision to slash its dividend by 80% to fund the initiative.

While trailing-12-month revenue stands at $3.4 billion, near an all-time high, earnings per share are lower than a decade ago, and the company has been paying out more in dividends than it earns.

Management remains optimistic, projecting adjusted EBITDA of approximately $400 million in fiscal 2027, up from less than $300 million in fiscal 2023.

However, some question whether the strategic transformation can succeed without addressing the perceived alienation of Cracker Barrel’s core customer base.

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The success of Cracker Barrel’s $700 million gamble will depend on its ability to regain relevance and win back the loyalty of its once-dedicated patrons, many of whom feel the restaurant has strayed too far from its roots in pursuit of a ‘woke’ agenda.