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NEW YORK (TheStreet) -- The plot continues to thicken at Cracker Barrel (CBRL) , which happens to be my favorite chain restaurant.

By way of background, I really like the food and the atmosphere (sometimes to my family's chagrin), and believe that the company has created one of casual dining's greatest, most unique brands. It's about as close as you can get to country-style food in a chain setting and the retail stores attached to each location, which essentially serve as a glorified waiting room, set it apart from the very crowded and competitive casual dining space. Those retail stores have also caused some controversy, but more on that later.

As an investor, you have to be careful about falling in love with a particular company or product (as you might believe that I have with CBRL), and jumping to the conclusion that it's also a great stock. I've written countless times about the disconnect between a seemingly great company and its' valuation; we've seen that recently with



. In Cracker Barrel's case, I believe there is value there. Perhaps a great deal.

It is a name that I've owned outright in the past and one that I sold after a very nice run-up a couple of years back. I still have exposure to the stock, although not directly, and that's where this story is getting interesting.

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Cracker Barrel has been the target of an activist investor,

Biglari Holdings


, a publicly traded company that is the capital allocation vehicle of hedge fund manager Sardar Biglari. Biglari Holdings has amassed a 17.5% stake in Cracker Barrel, and has been seeking changes at the company and representation on the company's board of directors.

Specifically, Biglari points to declining operating income per store, and believes that it could be much higher. He's also been displeased about the lack of transparency regarding performance of the retail business, which leads me to believe there's skepticism about devoting so much space to retail. (There's also a Web site,, devoted to the cause

, which contains letters sent to Cracker Barrel shareholders, and management.)

In terms of the current board, Biglari has railed at them for not having enough skin in the game in terms of owning CBRL shares. So far, he has been unsuccessful in his pursuit to gain board seats, but continues to build his CBRL stake.

In response, Cracker Barrel adopted a poison pill this past April, which would be triggered if anyone buys 20% or more of the company. An earlier attempt to adopt a poison pill triggered at 10% ownership failed.

What attracted me to Cracker Barrel as an investor was that it's valuations were extremely low, as were expectations. Sweetening the deal was the real estate owned by the company; namely more than 400 of its locations. That's a potentially compelling portfolio of real estate and gives the company some options.

Three years ago, a sale and leaseback transaction on one distribution center and 14 stores netted $57.6 million: $12.4 million for the distribution center and about $3.23 million per store. While you can't jump to the conclusion that every owned location is worth in excess of $3 million, it does give you an idea of potential value.

With Biglari Holdings' stake in Cracker Barrel at 4.065 million shares, each share of Biglari Holdings theoretically represents 3.3 shares of Cracker Barrel, worth about $210. Biglari Holdings is currently trading around $350. Biglari also owns

Steak 'n Shake

, a fast food chain that has experienced a nice turnaround in recent years,

Western Sizzlin

, a small casual dining chain, as well as other assets.

Biglari has become a compelling sum-of-the parts story. It's also the cheapest way I know to participate in Cracker Barrel.

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The fight is not over yet either; like many activist situations, it is escalating. Biglari originally wanted one seat on the board. Now he wants four. He's also the largest shareholder and just 2.5% away from triggering the poison pill. Stay tuned.

At the time of publication, the author was long BH.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the

Cheap Stocks Web site

, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.