Cracker Barrel Old Country Store, Inc. · NASDAQ:CBRL
Cracker Barrel Old Country Store — Proxy Contest (November 2011)
56 slides from Cracker Barrel Old Country Store's proxy contest presentation, Nov 29, 2011
Slide 1: Schedule 14A Definitive Additional Materials
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant x Filed by a party other than the Registrant ¨ Check the appropriate box: ¨ Preliminary Proxy
Slide 2: Filing Party and Date Filed
(3) Filing Party: (4) Date Filed:
Slide 3: Cracker Barrel Files Updated Presentation on Biglari Holdings Proxy Contest
Investor Contact: Cracker Barrel Old Country Store, Inc. Lawrence E. Hyatt, Senior Vice President and Chief Financial Officer, 615-235-4432 or MacKenzie Partners, Inc. Mark Harnett, 212-929-5877 or Media Contact: Cracker Barrel Old Country Store, Inc. Julie K. Davis, Senior Director, Corporate Commu
Slide 4: Press release continued: Biglari concerns and About Cracker Barrel
• Has previously used a proxy fight to gain control without paying a premium to shareholders; • Has a history of extraordinary turnover on boards after he joins; • Raises business and legal conflicts of interest issues as the CEO of a restaurant company that the Company believes competes with Cracke
Slide 5: Presentation used in meetings with ISS
Cracker Barrel Old Country Store, Inc. (the “Company”) used the following presentation in meetings with Institutional Shareholder Services Inc. beginning on November 29, 2011. This presentation was also posted to the “Biglari Proxy Contest” section of the Company’s Investor Relations website, invest
Slide 6: Old Country Store - November 2011
® Old Country Store November 2011
Slide 7: Important Information and forward-looking statements
Additional this More The Important Cracker —SEC AND IMPORTANT including 2website presentation discussion. legal ACCOMPANYING detailed )at Barrel Barrel, Barrel’s inAnnex issue additional www.sec.gov. Information connection information INFORMATION.* Old of All its 2011 are Awhether directors thereto.
Slide 8: Agenda
I. Overview Agenda II. III. IV. 3V. Why Cracker Other Ongoing WeProxy Barrel’s Believe Transformation Matters Track Biglari isofWrong the Company for Cracker Barrel
Slide 9: Executive Summary
Executive Summary ‘Old Country Store
Slide 10: Key Facts to Consider in Your Recommendation
Key apreviously Cracker Stock Continues Sardar Has 5viewsignificantly Facts as strategy history has Biglari poor Barrel outperformed to Consider strive corporate ofinused turnover place renewed for proxy in operational for governance the Your inthe next fight market boards board Recommendation phase
Slide 11: Gaining Momentum Since Announcing Initiatives
Gaining We Since 1st Full-year “Much Research to Stephen “We communicate Brad “…comps improvement Jeff 61Source: Jeff bear Quarter believe Omohundro, expect believe Ludington, becoming Omohundro, fruit.” better-than-expected”1 Company Anderson, Momentum reactions guidance have first EPS CBRL the ini
Slide 12: Biglari's Suggestions Are Not Appropriate at This Time
$65 operate Biglari Ultimately, The 7We Believe have believe couple return million costhas argues of devoted cash sensible also our we capital with Biglari’s share that will and investment suggested attractive arepurchase we in significant invest operate store Suggestions the should growth public in
Slide 13: We Have a Focused Plan and Remain Open to New Ideas
…And We prioritize 8While areinternational continue we We focused key remain Have tofocus evaluate on aopen Focused the expansion areas six toadditional new strategic Plan ideas, and Butlicensing avenues priorities the Remain ideas toof that Open Mr. drive retail CEO Biglari to long and New Sandy fo
Slide 14: We've Added New Directors and Listen to Shareholders
We’re New Added We 9However, listen CEO Open 4 new to based appointed our todirectors New shareholders on his Ideas intrack toSeptember the From record, board Anyinpotential Source the pastconflict 6 monthsof interest and his interactions with our board to date, we believe Mr. Biglari would not be a
Slide 15: I. Overview
I. Overview ‘Old Country Store
Slide 16: History, Management and Success
History, 30 Management Pleasing Nov Cracker IPO. Magazine as growth America’s Ranked 1990 Family chain Restaurant Magazine, topInstitutions title successive the given Aug Mike named Dec acquisition June Recapitalization achieve capital March divestiture Announces Logan’s 608 Today in 1981 Note: 11 4
Slide 17: Timeline of Biglari's Cracker Barrel Involvement
CrackerJune Biglari 23-Jun-2011 26-Aug-2011 13-Jun-2011 21-Jul-2011 1-Sep-2011 March 23-March-2011 17-June-2011 Peterson 27-July-2011 Bradford 1-Aug-2011 9-Aug-2011 McCarten 12 demands Barrel Joins Joins Joins Biglari July Nominating William Company Sandra BH James Biglari Coleman Board Proceeds Boa
Slide 18: Experienced Board
Experienced Board Michael Executive 1999 of Sandra Became 2011 as Robert 1986 James Dean Management. Industries Richard Managing Charles Founded B.F. William Chairman Marriott Martha Senior Coleman President/CEO Andrea President Note: 13 the CEO (Jack) and Two Company W. of Partner V. B. M. E. of J.
Slide 19: Cracker Barrel Made Good Faith Settlement Offer Biglari Refused
Cracker Letter “…in “Under approved “When —Michael 14 an towe that Barrel Sardar effort byspoke Woodhouse offer, theto Made Biglari, Cracker on be weAugust constructive, awould Good 22-Aug-2011: 10, immediately Faith 2011, the Settlement Board youadd indicated authorized to Offer our that Board meyo
Slide 20: II. Cracker Barrel's History of Success
II. Cracker Barrel ‘s history of Success 15
Slide 21: The Cracker Barrel Concept
The Cracker •Owns Country •Pleasing •Honest •Good •Old-fashioned •Welcome 16 country and value Stores People®—genuine break operates Barrel cookin’ across country forConcept 608 travelers 42store Old states hospitality
Slide 22: Traditional Home-Style Menu Has Evolved
Menu Traditional “Home-Style” New Sunrise Wholesome Fancy Six Granola Country Chicken Vegetable 17 Grain Menu Has Fixin’s Sampler Pancake Dinner n’n’ Salad Evolved Dumplins Menu Offerings Mornin’ Meatloaf Country Plate Breakfast Offers toSampler Appeal Maintain Cookin’ Dinnerto Relevance Lighter Use
Slide 23: Retail Is Integral to Guest Experience
Retailfor Guest Rockers Gifts Regional Cracker Exclusive 18 waiting is Barrel on Integral under products music thearea Experience branded $20 front to the porch foods
Slide 24: Winning Awards and Recognition
Winning #1 -Nation’s “Best Top Ranked —Restaurants -Most Best —Packaged Gold —NTA 19 The Zagat’s Consumer Family of National Award RV-Friendly Good Breakfast” the Tour asConcept 2010 Restaurant Dining Full-Service the Sam Brand Travel –Operators Restaurant Courier Top & & Club Institutions among 201
Slide 25: Cracker Barrel Has Outperformed Peers Over the Long Term
Powerful Peers Last 160% (15.3)% (1.0)% Sep-2006 Indexed 280% Sep-2011 Daily Cracker Source: Note: 20 5and 10 from Peer 140% 250% Years Years Bloomberg Barrel Price (18.7)% Concept May-2003 Jul-2007 Market group 29-Sep-2006 28-Sep-2001 120% 220% Restaurant includes Over Has 100% 190% May-2008 asJan-
Slide 26: Five-Year Total Shareholder Return Exceeds Peers
…And 2.0 2.6 1.8 Peer (2.4)% (2.6)% (1.9)% Cracker (23.7)% (4.1)% Source: compounding 21 %Median: Five-Year S&P Barrel Research (2.4)% effect Biglari Total of Holdings Insight, dividends Shareholder 30-Sep-2011. Brinker paid Return onCheesecake reinvested Exceeds Total Return dividends.” Peers Darde
Slide 27: Traffic: Cracker Barrel vs Steak n' Shake
Traffic Cracker 103.1 102.0 102.7 103.2 101.4 102.3 Steak 100.0 102.9 100.7 96.9 90.0 93.7 100.8 Source: FY2010 FY2009 FY2008 FY2007 FY2006 FY2005 FY2004 22 %n’ %IsPublic Barrel Shake Only Filings Same One Component Store Salesof Indexed Same Store to 2004 Sales Growth
Slide 28: Our Same Store Sales Outperform Casual Dining Index
Our Same Cumulative Base Cracker FY11 FY10 FY09 FY08 FY07 FY06 91.1 100.5 100.3 99.5 101.2 100.7 100.0 Knapp-Track™ Note: 23 Year Knapp-Track™ Barrel Store Comparable Casual Sales Casual Growth Dining SameDining Outperforms Index* Store Sales IndexIndex, same Knapp-Track™ store FY2006 sales= Casual
Slide 29: We Have Achieved More Attractive Return on Invested Capital
We % Estimated 15.5 8.6 15.2 14.8 12.5 11.8 5.8 Cracker Biglari Darden Brinker Cheesecake P.F. Texas Ruby Source: Note: Equity. 24 Have Chang’s %Tuesday ROIC Roadhouse Holdings Debt Restaurants Capital International Barrel Achieved Latest Factory calculated figures IQ Twelve and aexclude More as lat
Slide 30: III. Ongoing Transformation of the Company
III. Ongoing Transformation of the Company 25
Slide 31: New CEO Brings Experience, Energy and a Plan to Grow
CEO 12 New Refined Enhanced 26 3 4marketing Sandy 5 menu 6 restaurant Cochran and messaging pricing operating Brings Experience, platform Innovative Energy andtactics a Plandriving to Growretail Traffic, salesSales, growthProfits Focusedandcost Shareholder reductionValue Balanced approach to capital
Slide 32: Refined Marketing, Menu and Operating Platform Initiatives
CBRL 1N Reinforce Marketing New 2R Increase Promotional 3E Sustainably Refinement 27nhanced efined ew advertising Marketing Strategic Menu Variety guest Authentic Restaurant spend of Improve strategy visits restaurant and Messaging Initiatives &firm toPricing Everyday increase Value the of Operating
Slide 33: Innovative Tactics, Focused Cost Reduction, Balanced Capital Allocation
4ICBRL Deliver •Emphasize 5F offerings Offset Reduction •New 6B Enhance •Investments •Steady 28 nnovative ocused alanced system Commodity Strategic Value return Cost Shareholder Approach Tactics unique in expected & ofnew Initiatives Connection capital Driving Pressure and to store Value Capital top
Slide 34: What Analysts Are Saying
What Analyst “Management over -Jeff initiatives” New 7-Nov-2011 “We —Bryan “In ability Source: 29 times believe are do the Omohundro, CEO Analysts tonot Publicly Commentary particularly past Elliot, make past Sandra expect management, decade… [Biglari up-to-the-challenge” Are dramatic Raymond availa
Slide 35: IV. Other Proxy Matters
IV. Other Proxy Matters ‘Old Country Store
Slide 36: Shareholder-Friendly Rights Plan Adopted
Shareholder-Friendly Adopted -Shareholder (“qualifying —Rights —If Biglari’s Biglari “In “We 31Rights fulfilling shareholders areHoldings’ plan control Argument in plan expire response friendly offers”) that would is investors…” iffocused objective, 2010 approve, shareholders that not to provisions:
Slide 37: Cracker Barrel Rights Plan Compares Favorably to ISS Attributes
Cracker Mandatory *As ISS Shareholder Limitations Term: Threshold: Rationale: 32 Recommended setNo 3 forth years Barrel more Deter Should 10% Generally redemption: on ratification: Ratification: redemption: inifFuture Rights than ISS approved (same creeping beAttributes* 2011 3thoroughly 20%, Redemp
Slide 38: Why a 10% Threshold for Biglari?
Whystaggered Biglari No 20% Mergers Under plan, The All that Bottom Cracker next 33 cash, would 10% qualifying year. of adue the 10% has shareholders line: Barrel /fully-financed threshold to business Tennessee further afive-year Rights A history board 10% has and offer delay combinations aPlan its
Slide 39: Compensation Aligns Pay with Performance
Cracker Reward Align Attract CBRL Base Bonuses Strong Operating The Year-over-year Improvement In Management 34 2011, FY2011, Compensation salaries executives’ base pay-for-performance and performance Barrel’s 79% generally Income retain the salaries generally Paid Incentives of inimprovement Compan
Slide 40: Holding Company Plan Will Save Money
Planbelieve Cracker Although Why Holding Realize Simplify Facilitate We 35 to now? Collapse tax Barrel Company company the more the The merging and corporate Holding Old efficient previous other Holding format was Country the savings Company structure originally two cash credit Company no Store comp
Slide 41: V. Why We Believe Biglari Is Wrong for Cracker Barrel
V. Why We Believe Biglari is Wrong for Cracker Barrel 36
Slide 42: Why We Believe Biglari Is Wrong for Cracker Barrel
Whyapproach Gained Slashed Proposed Returns Presence His 37 Weinitial operational little Believe on excessive dualour cash with board class Board Biglari to our compensation investment of representation shareholders board stock would Is Wrong at tocreate Biglari date at Steak plan for athas aSteak p
Slide 43: Biglari's Old Target Playbook
Biglari’s Old Target Original 13-Jun-2011 Shares 23-Sep-2011: 7-Aug-2006 10-Nov-2005 17-Aug-2007 Actual 23-Jun-2011: 26-Aug-2011: 1-Sep-2011: 8-Sept-2011: 11-Dec-2006: 17-Jun-2007: Sun 1-Dec-2005: 22-Oct-2009: Agreement 12-Aug-2007: 7-Mar-2008: 8-Aug-2008: 8-Apr-2010: Source: 38 Country Capital Acti
Slide 44: How Biglari Purchased Control of Biglari Holdings
How Purchased -Call BIGLARI 5.8% 7-Mar-2008 Proxy 8-Aug-2008 Renamed 8-Apr-2010 Today: 6.8%2 17-Aug-2007 Nominates 19-Jun-2008 Two Jul-2008 Announces 22-Oct-2009 Share Biglari “for Instead Took Became 321Source: 39 Western Lion P. Cooley’s 20,000 561,000 As Stock Cooley investment Options: executive
Slide 45: Biglari's Boards: Turnover at Companies
Paul Jones Alan Thomas Titus After Fred Geoffrey John Name Sardar Biglari since Vice Phillip 2008 Cooley Director Distinguished Business Western Kenneth Cooper •on Management, Independent Ruth of Development 21Source: 40 Director Served Chancellor Titus John Directors real C. Chairman Risk W. Cowart
Slide 46: We Are Not the Only Ones Who Think Biglari's Governance Record Is Poor
We Are Biglari’s “…there …although but -Wayne “The Shake -Indianapolis Note: 6-Feb-2010 41 rather unanimous Permission despite Not L. does Governance has Kelley, our the Business been not his current Only vote to relatively appear Former informed use Ones Record [to Journal; chairman quotes to trans
Slide 47: Steak n' Shake Stopped Investing in Growth
($ inQ2 Steak FY Q1 9.1 8.1 6.6 5.1 3.3 1.7 1.0 Latest 7.5 Median 5.3 3.2 2.8 1.8 Biglari Holdings Source: Note: 42 2008 %Millions) ‘2.5 Red 1.4 0.9 3.2 Twelve Q3 Stopped Cracker nCapital =FY Shake Restaurants % 3.0 Line Q42.2 1.7 1.1 2009 %Months Q1 denotes Barrel IQ Latest Investing %Q2 FY as 1.8o
Slide 48: Biglari's Compensation Package and Shareholder Reaction
…And Compensation Biglari’s If This Following Biglari Public “…one Richard “The -unwilling Source: Note: 43 Ken NFI theisdecision pay current $300mm Shareholder Permission Skarbeck, Reaction in Focused Holdings received of BH Gibbons, proposed is addition to the adverse too Annual take system, sweet
Slide 49: Biglari Is Attempting to Maintain Control with Dual Class Stock Proposal
…And Biglari’s Biglari Under Could Class But 44 given Benhance the Maintaining isstock Dual attempting shareholder proposal would Class his voting Class Control Stock be tochallenges create hisB control Proposal currency shares Despite a dual and to=these His class for 1/5 reduce future Economic Min
Slide 50: Biglari's Business Conflict
Cracker We 45 Believe compete seek believe Barrel’s to attract what Biglari’s Sardar withboard Biglari many restaurant Biglari proposed product restaurant learns Has traffic board from aregularly Business concepts away our service board considers from Conflict also these could raises pricing, other
Slide 51: We Believe Steak n' Shake and Cracker Barrel Are Competitors
We Believe Steak’n Full Similar Dinner Lunch Breakfast Geographical Americana Alcoholic Average Mid 46 Service, – High Menu Shake Check Beverages Brand Cracker Single Family Overlap Items are Competitors Digits Barrel Diningand Format
Slide 52: Illustrative Menu Similarities
Illustrative Old Skillet Momma’s Vegetable Chicken’n NEW CAKES GRILLED Source: Not 47 Country currently COUNTRY Breakfast1 Cracker ‘NSalad Pancakes CHICKEN Menu EGGS Store offered. Barrel Item skillet Breakfast Salad Similarities archive and Steak’s Shake wbsite
Slide 53: Which Biglari Do You Believe?
Which In Source: Statement Hyatt Before Biglari What “Steak “I “We Woodhouse After “In “Naturally, (emphasis 48 have April meetings, are believe Cracker launching Biglari onBiglari nlaunching Cracker promises Holdings made Schedule and control Shake July on added) Ias May the would Said Says Schedul
Slide 54: Biglari's Curious Choice of Benchmarks
Biglari’s In But This Biglari The Why 1Cumulative Cracker S&P CBRL 600 Source: 49 Year his there Restaurant S&P peer 500 600 did November 3Outperformance curiously S&P Barrel(19.7)% Year Curious Biglari Restaurant 500 600 is setno Total is Research 5Restaurant single Index clearly Year use 14 chose
Slide 55: Biglari Slashed Capital Expenditures, But Paid to Put His Picture in Every Restaurant
Biglari Slashed Capital Expenditures, But Paid to Put His Picture in Every Restaurant 50
Slide 56: Key Message: Vote the WHITE Proxy Card
Key From •We Vote 51 We Our believe Message the are have believe current Cracker WHITE a delivered strong Sardar Biglari board Barrel’s Proxy company Biglari isstrong sisactively playbook dedicated Board Card isand results wrong involved aofto leader over creeping for Biglari our time, in at Cracker
Cracker Barrel OLD Country Store — Proxy Contest (November 2011) on 6ix