This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

[video] Cracker Barrel Investor Calls for Sale

The video this transcript is based on appeared on December 19.

NEW YORK ( The Deal) -- Sardar Biglari has been fighting for change at Cracker Barrel for years while Darden Restaurants puts Red Lobster up for sale.

VIDEO TRANSCRIPT

He may not be winning, but he sure is persistent.  Hello and welcome to The Deal Report, I'm Jeff Kanige.

Sardar Biglari is not happy with Cracker Barrel's (CBRL) management. For three straight years, Biglari has waged proxy fights against the restaurant chain and for three straight years shareholders have rejected his demands that they put his nominees on the company's board. Now, as The Deal's Demitri Diankantois reports, Biglari wants Cracker Barrel to put itself for sale.

Biglari is the company's largest shareholder. But it's not clear why he thinks his fellow investors will be any more receptive to his ideas this time around. Maybe he was inspired by Barington Capital's success in its campaign against Darden Restaurants (DRI) . Barington this week explained in detail why Darden should separate its older chains - Red Lobster and Olive Garden - from its growth businesses - which include Capital Grille, Eddie V's and Bahama Breeze, among others. Darden hired advisers to study the proposal and this morning agreed to spin off or sell Red Lobster and to stop expanding Olive Garden.

The Darden example, though, doesn't help Biglari's case. For one thing, Demitri's sources point out that restaurant chains tend to do better when they focus on one or two brands. Take McDonald's (MCD) . Over the last few years the company has spun off its Chipotle Mexican Grill (CMG) chain and sold Boston Market. Or Yum Brands (YUM) . It got rid of A&W and Long John Silver's to focus on KFC and Pizza Hut. So it's obvious why Barington has a point when it suggest that Darden should slim down.

But Cracker Barrel just runs Cracker Barrels and has actually been doing a pretty good job. The stock is up almost 70% this year and the company now has a market cap of about $2.5 billion. So any acquisition would be an expensive proposition. In face, industry experts tell Demitri that they don't think anyone would pay the price for Cracker Barrel even if the company agreed to put itself on the block.

Biglari says he'll take his case directly to Cracker Barrel's shareholders if the board won't act. But with the stock price rising so strongly and with sales and profits growing, investors don't really have a compelling reason to listen.

In New York, this is Jeff Kanige for The Deal.

Written by Jeff Kanige in New York.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $121.30 0.00%
FB $94.01 0.00%
GOOG $625.61 0.00%
TSLA $266.15 0.00%
YHOO $36.67 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs