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[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.


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.

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