Cracker Barrel Old Country Store, Inc. · NASDAQ:CBRL
Cracker Barrel Old Country Store — Proxy Contest (November 2020)
62 slides from Cracker Barrel Old Country Store's proxy contest presentation, Nov 4, 2020
Slide 1: Investor Update November 2020
INVESTORUPDATE November 2020
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements in this communication may constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are subject to a number of risks, trends and uncertainties that could ca
Slide 3: Introduction
Introduction • Cracker Barrel has 660+ locations across 45 states and provides scratch-cooked breakfast, lunch and dinner, coupled with a unique “old country store” retail experience • The Company has a long track record of consistently delivering value for our shareholders, and we believe we have t
Slide 4: Executive Summary
Executive Summary Strong Track Record of Financial & Operational Outperformance & Consistent Capital Returns Well-Positioned to Continue Delivering Shareholder Value •Meaningful TSR1 outperformance versus the Casual Dining Peer2 median over the long-term and in-line over the near-term •Consistent an
Slide 5: Cracker Barrel's Unique Value Proposition
Cracker Barrel's Unique Value Proposition • Cracker Barrel was founded in 1969 Sales by Daypart Sales by Segment Retail Our Brand Promise • 663 locations across 45 states1 • Daypart diversification: Our stores serve Dinner 36% Breakfast 25% 19% Cracker Barrel provides a friendly home-away-from-break
Slide 6: Strong Track Record of Financial and Operational Outperformance & Consistent Capital Returns
Strong Track Record of Financial and Operational Outperformance & Consistent Capital Returns
Slide 7: Meaningful TSR Outperformance Over the Long-Term and In-Line Near-Term
Cracker Barrel Has Delivered Meaningful TSR Outperformance Over the Long-Term and is In-Line with Peers Over the Near-Term… Well-Recognized Casual Dining Peer Set established by Wall Street analysts includes Brinker, BJ's Restaurants, Bloomin' Brands, Cheesecake Factory, Darden, Dave & Buster's, Den
Slide 8: Cracker Barrel Performed Even Better in Periods Ending Pre-COVID
…and Cracker Barrel Performed Even Better During Periods Ending Pre-COVID Meaningful TSR outperformance versus the Casual Dining Peer Set2, S&P MidCap 4003 and Biglari Holdings over the long-term and in-line with peers over the near term on a pre-COVID basis (i.e. period ending 2/21/20)* 600% Pre-CO
Slide 9: Decisive Actions to Protect Employees, Guests and Shareholders During COVID-19
Our Board and Management Took Decisive Actions to Protect Our Employees, Guests and Shareholders During COVID-19 Employees •Offered short-term pay support, benefit continuation and free daily meals •Allowed employees to purchase household supplies and food items from our stores at cost • Worked with
Slide 10: Strong Results through COVID
Cracker Barrel Has Delivered Strong Results through COVID Delivered TSR performance in-line with the Casual Dining Peer median1 YTD •Through the execution of our off-premise offerings, prudent investments in the business and optimization of our dining room floor plans under varying capacity restrict
Slide 11: Comparable Store Sales Have Outperformed the Casual Dining Industry
Our Comparable Store Sales Have Outperformed the Casual Dining Industry Over the Last 10 Years CBRL's differentiated brand, strong value proposition, unique restaurant and retail offerings and superior execution have led to consistent outperformance of the casual dining index 120% Historical Comp Re
Slide 12: Continued Growth in Earnings per Share
Continued Growth in Earnings per Share $12.00 $10.29 Earnings per Share (USD) $8.00 $6.00 $4.00 $3.61 $4.40 $4.34 $4.97 $4.90 $5.63 $5.51 $6.82 $6.82 $7.86 $7.55 $8.37 $8.37 $8.87 $9.27 $9.27 $3.61 $2.00 FY 2011FY 2012FY 2013FY 2014FY 2015FY 2016FY 2017FY 2018FY 2019 GAAP EPSAdjusted EPS
Slide 13: Deliberate & Prudent Capital Allocation
Deliberate & Prudent Capital Allocation by Our Board and Management Over 80% of our capital allocation is used to enhance the core and return capital to shareholders These Capital Allocation Decisions Have Led to Improved ROIC We have returned over $1.3 billion to shareholders through dividends and
Slide 14: Well-Positioned to Continue Delivering Shareholder Value
Well-Positioned to Continue Delivering Shareholder Value
Slide 15: Executing the Core Pillars of Our Value Creation Strategy
We Are Continuing to Drive Performance By Executing the Core Pillars of Our Value Creation Strategy 11 IIDOUIIIYSTOI[
Slide 16: Innovating and Evolving Our Menu to Drive Traffic
Innovating and Evolving Our Menu to Drive Traffic Focused on introducing new, craveable foods to satisfy guest preferences for variety and novelty New Lunch and Dinner menu •Positive response from both guests and operators since its launch in Q4 2020 − Craveable offerings available daily − Simplifie
Slide 17: Off-Premise Offerings Will Continue to Drive Growth
Off-Premise Offerings Will Continue to Drive Value-Creating Growth Our off-premise business delivered double-digit growth across all channels since FY 2017, and accelerated further during COVID •Prior to COVID, off-premise was already a large and growing business with a strong foundation across mult
Slide 18: Strengthening the Employee and Guest Experience
Strengthening the Employee and Guest Experience Focused on innovative ways to enhance the employee experience and improve guest satisfaction New Easy-to-Use POS Creates a More Seamless Guest Experience and Cost Saving Opportunities •A foundational platform for in-store technology •Supports server ta
Slide 19: Unique and Complementary Retail Offering
Continuing to Drive Traffic with Unique and Complementary Retail Offering Retail is integral to the Cracker Barrel experience, and it differentiates our brand •Generating nearly 20% of our total revenues, our Retail business is highly complementary and synergistic with our Restaurant operations − Pr
Slide 20: Value-Creating New Unit Growth in Core and New Markets
Value-Creating New Unit Growth in Core and New Markets •While our primary focus is on enhancing our existing store base, we also invest in value-creating new unit growth − We leverage a rigorous, analytical approach using IRR analysis, and our Board of Directors approves risk-adjusted hurdle rates i
Slide 21: Investing in Complementary Growth Outside Cracker Barrel Concept
Investing in Complementary Growth Outside Cracker Barrel Concept We follow a highly disciplined and methodical approach in our evaluation of external investment opportunities What We Look For How We Approach • “W hite space,” where we believe there is long-term growth opportunity − E.g., fast casual
Slide 22: Our Investment in Maple Street Biscuit Company
Our Investment in Maple Street Biscuit Company Significant growth potential poised to meaningfully expand our guest base for years to come Maple Street Biscuit Company (“MSBC”) •Holler & Dash (“H&D”) increased our conviction that the breakfast and lunch-focused fast casual segment is attractive •The
Slide 23: Our Investment in Punch Bowl Social
Our Investment in Punch Bowl Social Our Board and management determined that the resources needed to ensure Punch Bowl Social's survival following the onset of COVID-19 would be better spent on positioning our core brands for long-term success •Our Investment in Punch Bowl Social was strategic and c
Slide 24: Punch Bowl Social Investment and COVID-19 Timeline
Following Our Punch Bowl Social Investment, COVID-19 Events Transpired Quickly There was third-party support around our decision at the time of investment November 2019 Mr. Biglari publishes a letter criticizing the investment in PBS and submitted a books and record request April 15, 2020 Mr. Biglar
Slide 25: Strategic Priorities Will Continue Driving Performance in 21 and Beyond
Strategic Priorities Will Continue Driving Performance in 2021 and Beyond COVID-19 has not changed Cracker Barrel's fundamental long-term goals – we will continue our focus on providing a superior employee environment and an enjoyable guest experience through disciplined investments Accelerating Off
Slide 26: Support of Cracker Barrel's Strategy Has Continued
Support of Cracker Barrel's Strategy Has Continued ““CBRL's F4Q20 results and current trends, give us increased confidence that it can recoup the majority of lost sales and profits post-COVID… In FY21, CBRL has numerous sales drivers (alcohol rollout, new menu and new digital platform) that should d
Slide 27: Highly Qualified, Engaged and Diverse Board & Strong Corporate Governance
Highly Qualified, Engaged and Diverse Board & Strong Corporate Governance
Slide 28: Four Independent Directors Added in the Past Three Years
We Have Added Four Independent Directors in the Past Three Years… With Substantial Experience in Sectors Relevant to Our Strategy and Brand / Experiential Focus Carl T. Berquist Former EVP & CFO, Marriott | Director Since: 2019 •Significant experience in hospitality and deep knowledge of real estate
Slide 29: Highly Qualified and Diverse Board
…To Our Already Highly Qualified and Diverse Board With Substantial Experience in Sectors Relevant to Our Strategy and Brand / Experiential Focus Coleman H. Peterson Former Chief People Officer, Walmart | Director Since: 2011 •Significant retail, human resources and employee relations experience •Ex
Slide 30: Norm Johnson Is the Better Director than Biglari's Nominee
We Believe Norm Johnson Is the Better Director for Our Board than Biglari's Nominee •Norm has a track record of success and significant operational, financial and capital allocation experience at public companies − During his tenure as CEO of CLARCOR, Norm successfully executed and allocated more th
Slide 31: Board and Management Team Work Closely to Manage Risk
The Board and Management Team Work Closely to Manage Risk • Our independent chairman ensures the effective independent functioning of the Board, which we believe provides appropriate balance in the Company's leadership • Robust risk management process, led by the Audit Committee, annually identifies
Slide 32: Corporate Governance Best Practices
We Have Implemented a Number of Corporate Governance Best Practices Shareholder-friendly governance… • Independent Chairman • Annually elected directors • 9 out of 10 directors are independent • Shareholders can call special meetings • Compensation aligned with performance • Committed to diversity a
Slide 33: Committed to Corporate Social Responsibility
Committed to Corporate Social Responsibility (CSR) Public Responsibility Committee oversees CSR and promotes an inclusive, respectful corporate culture Committed to Diversity and an Inclusive Workplace Culture •We strive to recruit, develop and retain a high performance workforce that reflects the c
Slide 34: Biglari's Nominee Would Not Enhance Our Board and His Ideas Are Not Credible
We Believe Mr. Biglari's Nominee, Raymond Barbrick, Would Not Enhance Our Board and Mr. Biglari's Ideas are Not Credible
Slide 35: Raymond Barbrick Would Not Enhance Our Board
We Believe Raymond Barbrick Would Not Enhance Our Board Rigorous Director Evaluation • Full evaluation process, including interview and evaluation by a nationally recognized search firm • As part of this process, we paused our ongoing evaluation of another candidate, Gisel Ruiz, to fairly evaluate M
Slide 36: Biglari's Previous Campaigns Rejected by Increasingly Wide Margins
Mr. Biglari's Previous Campaigns Were Rejected by Our Shareholders by Increasingly Wide Margins Year CBRL TSR Since Biglari Investment1 Prior Biglari CBRL Proposals Supported By ISS? Outside Support For Biglari2 2011 - Elect Sardar Biglari No 25.7% 2012 25.9% Elect Sardar Biglari & Phillip Cooley No
Slide 37: Biglari's Track Record of Value Destruction
We Believe Biglari has a Track Record of Value Destruction •Under Mr. Biglari's leadership, Steak ‘n Shake has struggled financially and operationally − Comparable store sales decrease of 6.9% and guest traffic declined 11.2% in 20191 − 21% YoY decrease in 2019 revenue2 with Q2 2020 results showing
Slide 38: History of Problematic Corporate Governance Practices at Biglari Holdings
History of Problematic Corporate Governance Practices at Biglari Holdings We believe Biglari Holdings' corporate governance track record brings his credibility into question 'Mr. Biglari used the equivalent of own company's treasury shares and debt in order to take voting control of the company from
Slide 39: Adverse Press Coverage of Mr. Biglari
Adverse Press Coverage Underscores Mr. Biglari's Problematic Executive Profile ““Steak ‘n Shake was on the ropes even before the COVID-19 pandemic hit, with customer traffic counts sliding 22% since 2015… the company also has a $165 million term loan scheduled to be paid off in March 2021 – a debt i
Slide 40: Conclusion
Conclusion
Slide 41: Vote the White Proxy Card Because...
We Believe You Should Vote the White Proxy Card Because… 'Cracker Barrel has a track record of consistently delivering value for our shareholders ' ' highest standards of corporate governance and to the long-term success of your investment 'After a thorough and independent evaluation, we believe Ray
Slide 42: Appendix
Appendix
Slide 43: Biglari's False Statements – Board
Mr. Biglari's False Statements and Mischaracterizations – Board Strong Board With Significant Restaurant Experience Mr. Biglari claims Cracker Barrel's Board does not have restaurant experience •Almost half of our independent directors have significant restaurant and foodservice experience: − Meg Cr
Slide 44: Biglari's False Statements – TSR Performance: Peer Set
Mr. Biglari's False Statements and Mischaracterizations – TSR Performance Our Peer Set is Appropriate and is Well-established by Recognized Third Parties Mr. Biglari claims that Cracker Barrel has selected an unrepresentative peer set •Cracker Barrel uses a well-recognized Casual Dining Peer Set (“C
Slide 45: Biglari's False Statements – TSR Performance (Cont'd)
Mr. Biglari's False Statements and Mischaracterizations – TSR Performance (Cont'd) Cracker Barrel has Delivered Consistent TSR Outperformance Mr. Biglari claims that we have underperformed on a TSR basis relative to strategic peers and changed our measurement dates to inflate our TSR (with Mr. Bigla
Slide 46: Biglari's False Statements – Operational Performance
Mr. Biglari's False Statements and Mischaracterizations – Operational Performance Guest Traffic and Comparable Sales Outperformance Relative to Peers Mr. Biglari claims we have a history of underperformance in comparable sales and guest traffic •While the U.S. casual dining sector has been challenge
Slide 47: Biglari's False Statements – New Store Openings and Disclosure
Mr. Biglari's False Statements and Mischaracterizations – New Store Openings and Disclosure Value-Creating New Unit Growth Mr. Biglari questions our decision-making process for new store openings •Our new unit opening strategy has consisted of modest, disciplined growth in both core and frontier mar
Slide 48: Biglari's False Statements – Capital Allocation
Mr. Biglari's False Statements and Mischaracterizations – Capital Allocation Balanced Approach to Capital Allocation Focused on Enhancing our Core Business and Returning Capital to Shareholders Mr. Biglari claims we have failed to benefit from over $700 million in cumulative capital expenditures and
Slide 49: Biglari's False Statements – Biglari Proposals
Mr. Biglari's False Statements and Mischaracterizations – Biglari Proposals Mr. Biglari Has Not Influenced Cracker Barrel's Strategy Mr. Biglari claims many of his suggestions were ultimately adopted and created value for shareholders •We have always taken Mr. Biglari's input seriously as we do with
Slide 50: Reconciliation of GAAP to Adjusted Non-GAAP Operating Results
Reconciliation of GAAP Basis to Adjusted Non-GAAP Basis Operating Results ($ in thousands except per share data) Note: No adjustments were made to GAAP EPS in FY 2011, FY 2017 and FY 2019 1. Charges and tax effects of proxy contest(s) or special meeting of shareholders 2. Severance, other charges an
Slide 51: Old Country Store supplemental information
OLD COUNTRY STORE Cracker Barrel Old Country Store, Inc. provided the following information to investors to supplement the previously filed investor presentation.
Slide 52: Appropriate Peers/Comparators; Texas Roadhouse
Approprpate Peers/Comparators; Texas Roadhouse There is no single company that is a true analog to Cracker Barrel, as we discussed, due to the following factors: •highly experiential nature; emphasis on hospitality •company-owned rather than franchised restaurants •20% retail •three-daypart coverage
Slide 53: Relevant Brands
f Relevant Brands Bi's Restaurants B's Restaurant and Company-owned (Bu) Brewhouse © Guest or usage profile © Scratch cooking © Complex menu Bloomin’ Brands | Outback Steakhouse Guest or usage profile (uN) Carrabba's © Mostly company-owned Bonefish Grill, Fleming’s Prime Steakhouse er International
Slide 54: Survivor Bias and Texas Roadhouse
Finally, as we discussed on our call, indices such as the Evercore ISI index omit companies which have gone out of business or gone private, which can create a “survivor bias” effect. We have several close competitors who have gone private and are now in bankruptcy or we believe to be significantly
Slide 55: Post-COVID TSR
Post-COVID TSR Both Mr. Biglari and we seem to agree that assessing Cracker Barrel’s performance pre-COVID is appropriate in light of the outsized impact that the pandemic has had on the entire casual dining industry, which by definition is full service. As we discussed, the pandemic impacted Cracke
Slide 56: New Unit ROIC Disclosure
New Unpt ROIC Dpsclosure We provide the same degree or higher level of disclosure around new units than most of the companies in the Evercore ISI index, including the four companies that Mr. Biglari cites - Darden, Texas Roadhouse, Bloomin’ Brands and Brinker. None of these companies makes the detai
Slide 57: Traffic Trends
Traffpc Trends As we discussed on our call, for a variety of industry, demographic, and behavioral reasons the casual dining industry has been experiencing negative traffic trends for years. Indeed, the sector has not experienced positive comparable-store year-over-year traffic since 2005. Combattin
Slide 58: Board of Directors – Recent Recruitment
Board of Dprectors – Recent Recruptment We began the recruitment of Gilbert Dávila and Gisel Ruiz to our Board many months before Mr. Biglari ever suggested that he might seek Board representation. Neither appointment was influenced by or in response to him in any way. To the contrary, our Board pau
Slide 59: Investment Timing
Investment Tpmpng The timing of our investments in Punch Bowl Social and Maple Street Biscuit Company (both of which were closed in the back half of calendar 2019) was coincidental and not part of a sudden shift in strategy or because we wanted to move away from growing core Cracker Barrel. We first
Slide 60: Board of Directors – Restaurant Experience
Board of Dprectors – Restaurant Experpence Nearly half of our independent directors have highly relevant experience in restaurant and food service, over and above their experience with Cracker Barrel: •Meg Crofton had direct P&L responsibility for nearly 500 restaurants in Walt Disney World alone. W
Slide 61: Process
PROCESS One key point we hope came through during our meeting is that our Board is highly engaged and follows well-defined processes in a variety of areas to protect the interest of shareholders. Our capital allocation decisions, our decisions regarding external investments, our determination of whe
Slide 62: Important Additional Information
Important Addptponal Informatpon The Company has filed a definitive proxy statement (the “Proxy Statement”) and accompanying WHITE proxy card in connection with the solicitation of proxies for the 2020 Annual Meeting of Cracker Barrel shareholders (the “Annual Meeting”). The Company, its directors a
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