Cracker Barrel Old Country Store, Inc. · NASDAQ:CBRL
Cracker Barrel Old Country Store — Proxy Contest (October 2013)
51 slides from Cracker Barrel Old Country Store's proxy contest presentation, Oct 16, 2013
Slide 1: Schedule 14A Proxy Statement – Cracker Barrel Old Country Store, Inc.
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: Slide 2
Slide 3: Investor presentation used in meetings beginning October 16, 2013
Cracker Barrel Old Country Store, Inc. (the “Company”) used the following investor presentation in meetings with investors beginning on October 16, 2013. This investor presentation was also posted to the “Proxy Contest” section of the Company’s Investor Relations website, investor.crakerbarrel.com.
Slide 4: Focused On The Road Ahead – Driving Performance, Fall 2013
Driving Performance Focused On The Road Ahead Fall 2013 – Investor Presentation
Slide 5: Important Additional Information
Important Additional Information Cracker Barrel Old Country Store, Inc. (the “Company”) urges caution in considering current trends and earnings guidance disclosed in this presentation. Except for specific historical information, matters discussed in this presentation are forward looking statements
Slide 6: Table of Contents
Table of Contents I. Cracker Barrel’s Track Record of Success II. An Unparalleled Guest Experience III. The Results IV. Special Dividend Proposal V. Biglari’s Corporate Governance Record Continues to Concern Us Appendix
Slide 7: I. Cracker Barrel’s Track Record of Success
I. Cracker Barrel’s Track Record of Success
Slide 8: Cracker Barrel’s Heritage – Pleasing People Since 1969
Cracker Barrel’s Heritage – Pleasing People Since 1969 Diversified 1 Menu and Meal Offerings Breakfast Lunch The Cracker Barrel Concept Cracker Barrel is Perceived to be 2 More Unique Than Competitors Highly differentiated concept providing wholesome connections to guests Dinner Technomic Brand Metr
Slide 9: Since 2011 Initial Announcement of Strategic Priorities, CBRL’s Share Price Is Up 159%
Since 2011 Initial Announcement of Strategic Priorities, CBRL’s Share Price Is Up 159%... 13-Sep-2011 19-Sep-2012 15-Nov-2012 26-Feb-2013 03-Jun-2013 20-Dec-2011 A majority of votes cast by New CEO CBRL reports Q4 and FY 2012 Results: CBRL reports Q2 2013 Results: CBRL reports Q3 2013 Results: A maj
Slide 10: …Dramatically Outperforming Benchmarks
…Dramatically Outperforming Benchmarks 1 Since Announcement of Strategic Priorities Trailing Twelve Months 280% 160% 150% 250% 140% 220% 130% 190% 120% 160% 110% 130% 100% 100% 90% 70% 80% Sep-2011 Jan-2012 May-2012 Sep-2012 Jan-2013 May-2013 Sep-2013 Oct-2012 Nov-2012 Jan-2013 Mar-2013 May-2013 Jul
Slide 11: Since Announcing Strategic Priorities, CBRL Has Generated Tremendous Shareholder Value
Since Announcing Strategic Priorities, CBRL Has Generated Tremendous Shareholder Value ($ in millions) $ 18.5 $ 2,487.5 $ 67.8 $ 1,485.4 Shares Repurchased Dividends Paid 2013 Increase in CBRL Equity Total Market Cap. Shareholder Value 2012 Increase in CBRL Equity Market Cap. $ 915.8 CBRL Equity Mar
Slide 12: Consistently Improving Adjusted Earnings Per Share
Consistently Improving Adjusted Earnings Per Share $ 6.00 $ 5.80 $ 5.60 $ 4.97 $ 5.00 $ 4.34 $ 4.00 $ 3.81 $ 3.62 $ 3.00 $ 2.00 $ 1.00 $ 0.00 2010 2011 2012 2013 2014 Guidance Range Source: Public filings rd Note: EPS numbers adjusted for 53 week in 2012, and all years adjusted for proxy contest exp
Slide 13: Despite Two Shareholder Votes In Favor of CBRL Nominees… We Are Here Again
Despite Two Shareholder Votes In Favor of CBRL Nominees and Strong Business Performance… We Are Here Again Despite Being Rejected by a Significant Margin of Votes Cast by CBRL Shareholders in Each of the Last Two Years, Sardar Biglari RemainsInsistent in His Campaign AgainstCracker Barrel… 1 1 2011
Slide 14: II. An Unparalleled Guest Experience
II. An Unparalleled Guest Experience
Slide 15: Review of 2013 Business Priorities and Accomplishments
Review of 2013 Business Priorities and Accomplishments 1 Refresh Select Menu Categories 2 Grow Retail Sales with Unique Merchandise 3 Build on Successful Handcrafted Marketing Campaign 4 Invest In and Leverage Technology 5 Expand the Brand Through eCommerce and Licensing 6 Continued Focus on Shareho
Slide 16: Refresh Select Menu Categories
1 Refresh Select Menu Categories Key Menu Initiatives Focused on Satisfying Guests’ Needs for Affordable Options, Healthier Items and Customizable Choices Value Better-For-You Reinforced the affordability of Country Dinner Plates, Wholesome Fixin’s satisfying guests’ needs for more affordable option
Slide 17: Grow Retail Sales with Unique Merchandise
2 Grow Retail Sales with Unique Merchandise Key Focus Areas Unique Retail Merchandise Under leadership of Senior Vice President of Retail, Laura Daily, who joined the Company in May 2012, there is an increased focus on merchandising assortment and an increased number of themes Developed collections
Slide 18: Build on Successful Handcrafted Marketing Campaign
3 Build on Successful Handcrafted Marketing Campaign Handcrafted by Cracker Barrel National Television Commercial Key Focus Areas Driving Strong Quarterly Comparable Store Traffic Refreshed ~1,600 billboards to focus on Handcrafted by Cracker 1.4 % Barrel advertising campaign — ~300 billboards displ
Slide 19: Invest In and Leverage Technology
4 Invest In and Leverage Technology Focused on Initiatives to Reduce Costs and Improve the Guest Experience Increased Productivity Adopted improvements to labor system and processes to increase hourly labor productivity and reduce administrative work for the management team, allowing them more time
Slide 20: Expand the Brand Through eCommerce and Licensing
5 Expand the Brand Through eCommerce and Licensing During week of October 7, 2013, the first shipment of seven licensed products under the CB Old Country Store brand were sent to grocery stores and mass merchandisers – Products, under the CB Old Country Store brand, include maple and smoked bacon, s
Slide 21: Continued Focus on Shareholder Return
Continued Focus on Shareholder Return Shareholder-Focused Dividend Policy 1,2 3 Quarterly Dividend per Share Since September 2011 Additional Focus on Shareholder Return in Fiscal Year 2013 Paid ~$45 million in total cash dividends – driven by the tripling of the quarterly dividend since September 20
Slide 22: III. The Results
III. The Results
Slide 23: CBRL Has Delivered Best in Class Total Shareholder Return Over Past Year
CBRL Has Delivered Best in Class Total Shareholder Return Over Past Year 1 Source: Bloomberg Note: Total Shareholder Return calculated by share price appreciation and dividends paid (assumes dividends paid are re-invested into the stock (purchasing more shares) on the ex-date of the dividend). (1) D
Slide 24: Continued Strong Operating Performance
Continued Strong Operating Performance ($ in millions) Total Revenue Adjusted EBITDAR¹ $ 316 $ 2,645 $ 2,580 $ 294 $ 2,434 $ 271 2011 2012 2013 2011 2012 2013 YOY Growth % 6.0% 2.5% YOY Growth % 8.5% 7.4% Source: Public filings Margin % 11.1% 11.4% 11.9% Note: Years relate to CBRL fiscal years. rd (
Slide 25: Acceleration of Comparable Store Restaurant Sales
Acceleration of Comparable Store Restaurant Sales TM Outperformed Knapp-Track Casual Dining Index For The Last Seven Quarters Cracker Barrel Comparable Restaurant Sales Knapp-Track TM Casual Dining Index Comparable Sales 3.8 % 3.5 % 3.3 % 3.3 % 3.1 % 3.1 % 2.6 % 2.2 % 0.9 % 1.0 % 0.3 % (0.0)% (0.3)%
Slide 26: Delivering an Outstanding Guest Experience
Delivering an Outstanding Guest Experience Leader in Eight of Ten Categories Source: Technomic Consumer Brand Metrics Study Q1 2011 – Q1 2013 Note: Brands include: Applebee’s, Bob Evans, Chili’s, Denny’s, IHOP, Olive Garden, Outback, Red Lobster, and Steak ‘n Shake. (1) Denotes rating significantly
Slide 27: Updated Business Priorities to Continue Driving Performance Through 2014
Updated Business Priorities to Continue Driving Performance Through 2014 Introduce Better-For-You menu items with our Focus on Better-For-You menu Wholesome Fixin's program launch 1 additions and reinforce everyday Increase value proposition with menu and process value adjustments designed to increa
Slide 28: IV. Special Dividend Proposal
IV. Special Dividend Proposal
Slide 29: Why You Should Vote Against the $20 Per Share Special Dividend Proposal
Why You Should Vote Against the $20 Per Share Special Dividend Proposal The Board Recommends That You Vote AGAINST This Proposal Background In response to Biglari's proposed call of special meeting for shareholder advisory vote on a $20 per share Special Dividend, the Board determined to include the
Slide 30: V. Biglari’s Corporate Governance Record Continues to Concern Us
V. Biglari’s Corporate Governance Record Continues to Concern Us
Slide 31: We Believe Biglari’s Corporate Governance Track Record Would Not Be Right for This Board
We Believe Biglari’s Corporate Governance Track Record Would Not Be Right for This Board Sardar Biglari used Biglari Holdings' funds to obtain personal voting control of ~15% of Biglari Holdings shares Biglari Holdings transferred ~3.8 million shares of CBRL stock to The Lion Fund (which is controll
Slide 32: Biglari Governance Track Record (Cont.) – Voting Control of Biglari Holdings Shares
We Believe Biglari’s Corporate Governance Track Record Would Not Be Right for This Board (Cont.) Sardar Biglari Used Biglari Holdings' Funds to Obtain Personal Voting Control of ~15% of Biglari Holdings Shares In 2010, Biglari Holdings invested ~$36mm in The Sardar 2 1 Biglari Lion Fund and The Lion
Slide 33: Biglari Governance Track Record (Cont.) – Self-Interested Transactions
We Believe Biglari’s Corporate Governance Track Record Would Not Be Right for This Board (Cont.) We Believe Biglari Has Engaged in Several Other Self-Interested Transactions – Increasing His Control In July and September 2013, Biglari Holdings undertook a series of complicated restructurings which i
Slide 34: Biglari Governance Track Record (Cont.) – Compensation
We Believe Biglari’s Corporate Governance Track Record Would Not Be Right for This Board (Cont.) We Believe Biglari Has Engaged in Several Other Self-Interested Transactions – Compensation Prior to the July 2013 restructuring Sardar Biglari’s compensation was subject to a shareholder-approved cap 1
Slide 35: Biglari Governance Track Record (Cont.) – Other Governance Matters
We Believe Biglari’s Corporate Governance Track Record Would Not Be Right for This Board (Cont.) Other Corporate Governance Matters at Biglari Holdings In September 2012, Biglari Holdings agreed to pay an $850,000 civil penalty to resolve a Federal Trade Commission complaint for failing to comply wi
Slide 36: Cracker Barrel’s Operating Performance Has Outshined Biglari’s Steak ‘n Shake Business
Cracker Barrel’s Operating Performance Has Outshined Biglari’s Steak ‘n Shake Business… ($ in thousands) “We believe operating income per store … is the metric that more accurately reflects the Company’s underlying performance and long-term financial health.” 1 Biglari Capital Corp. (8-Oct-2013) 2 S
Slide 37: …As Has Cracker Barrel’s Stock Price Performance Vis-à-Vis Biglari Holdings
…As Has Cracker Barrel’s Stock Price Performance Vis-à-Vis Biglari Holdings 1 Cracker Barrel Shares Currently Account for ~69% of BH’s Market Capitalization 280% 159% 250% 220% 190% 160% 49% 130% 100% 70% Sep-2011 Jan-2012 May-2012 Sep-2012 Jan-2013 May-2013 Sep-2013 12-Sep- 2011 to 30-Sep - 2013 Cr
Slide 38: Cracker Barrel’s Outstanding Board
Cracker Barrel’s Outstanding Board The Cracker Barrel Board is Composed of Highly Experienced Individuals First Elected Board Member Summary Biography to Board Independent President and CEO, Cracker Barrel Old Country Store, Inc. Sandy Cochran 2011 Former CEO, Books-A-Million, Inc. President and COO
Slide 39: Analysts Continue to Comment Favorably on the Strategy Put Forth by the Incumbent Board
Analysts Continue to Comment Favorably on the Strategy Put Forth by the Incumbent Board and Management Team “Under the leadership of CEO Sandy Cochran, management has taken increasingly proactive steps to enhance its core “Based on the sales success of CBRL’s new salads, we anticipate and iconic Cra
Slide 40: It Appears, Sardar Keeps the Focus on Himself
It Appears, Sardar Keeps the Focus on Himself
Slide 41: We Believe You Should Vote the White Proxy Card Because…
We Believe You Should Vote the White Proxy Card Because… We have accomplished a great deal over the last two years and have the right Board and management team in place to continue executing against our stated priorities We have a strong, capable and experienced Board that is committed to the highes
Slide 42: Appendix
Appendix
Slide 43: Reconciliation of GAAP Basis Operating Results to Adjusted Non-GAAP Operating Results
Reconciliation of GAAP Basis Operating Results to Adjusted Non-GAAP Operating Results (Unaudited and $ in thousands, except per share data) Twelve Months Ended August 2, 2013 As Reported Adjustments1,2,3 As Adjusted Total Revenue $ 2,644,630 – $ 2,644,630 Store Operating Income 344,786 – 344,786 Gen
Slide 44: Reconciliation of GAAP Basis Operating Results to Adjusted Non-GAAP (Cont.)
Reconciliation of GAAP Basis Operating Results to Adjusted Non-GAAP Operating Results (Cont.) (Unaudited and $ in thousands) Twelve Months Ended Twelve Months Ended Twelve Months Ended August 2, 2013 August 3, 2012 July 29, 2011 Adjusted Operating Income 1 $ 207,158 $ 188,115 $ 168,523 Depreciation
Slide 45: A Note on Peer Set Used for Benchmarking
A Note on Peer Set Used for Benchmarking Peer Set Rationale for Inclusion Ticker Company Name Logo For purposes of consistency, we are using the same peer set as last year BH Biglari Holdings We believe this subset of casual BOBE Bob Evans Farms and family dining restaurants represents the most comp
Slide 46: S&P Restaurant Index Composition
S&P Restaurant Index Composition Respective S&P Restaurant Index Constituents S&P S&P S&P S&P S&P S&P Ticker Company Name Logo 500 600 1,500 Ticker Company Name Logo 500 600 1,500 BJRI BJ’s Restaurants JACK Jack in the Box BH Biglari Holdings MCD McDonald’s BOBE Bob Evans Farms PNRA Panera Bread Com
Slide 47: Overview of 2013 Biglari Holdings Restructuring
Overview of 2013 Biglari Holdings Restructuring Pre-Transaction Today Sardar Sardar Biglari Biglari <1% 100% ~1% Biglari Biglari Biglari Holdings Capital Corp. Holdings Wholly Owned Wholly Owned Subsidiaries Subsidiary L.P. The Lion Biglari Capital BH / SNS The Lion The Lion SNS Fund, L.P. Corp. Ope
Slide 48: E-mail from Sandra B. Cochran to home office employees
Set forth below is an e-mail delivered by Sandra B. Cochran, President and CEO of Cracker Barrel Old Country Store, Inc. (the “Company”), to home office employees of the Company. The e-mail was sent after 7 a.m. Central Time on October 16, 2013.
Slide 49: Proxy Update email from Sandy Cochran to home office
From: Home Office News Sent: Wednesday, October 16, 2013 8:56 AM To: Home Office News Subject: Proxy Update From Sandy Cochran On October 3, Cracker Barrel began mailing its proxy statement for our Annual Meeting of Shareholders that will be held on November 13, 2013. Included in that mailing was a
Slide 50: E-mail from Sandra B. Cochran to field management employees
Set forth below is an e-mail delivered by Sandra B. Cochran, President and CEO of Cracker Barrel Old Country Store, Inc. (the “Company”), to field management employees of the Company. The e-mail was sent after 7 a.m. Central Time on October 16, 2013.
Slide 51: Proxy Update email from Sandy Cochran to store managers
From: Store Operations Sent: Wednesday, October 16, 2013 9:02 AM To: Stores — Restaurant Managers; Stores — Retail Managers Cc: Retail Regional Vice Presidents; Restaurant Regional Vice Presidents; Retail District Managers; Restaurant District Managers Subject: From Sandy Cochran: Proxy Update Impor
Cracker Barrel OLD Country Store — Proxy Contest (October 2013) on 6ix