Cracker Barrel Old Country Store, Inc. · NASDAQ:CBRL
Cracker Barrel Old Country Store — Proxy Contest (October 2024)
56 slides from Cracker Barrel Old Country Store's proxy contest presentation, Oct 29, 2024
Slide 1: Reinvigorating a Cherished Brand to Carve New Paths of Growth
OCTOBER 2024 REINVIGORATING A CHERISHED BRAND TO CARVE NEW PATHS OF GROWTH & USHER IN THE NEXT ERA OF VALUE CREATION
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Forward-Looking Statements Except for specific historical information, certain of the matters discussed in this presentation may express or imply projections of items such as revenues or expenditures, statements of plans and objectives or future operations or statements of
Slide 3: Board recommends its 10 nominees
After fairly evaluating all of his nominees, we decided to recommend that one of Biglari’s own nominees, Michael Goodwin, join the Board – after appointing Jody Bilney to the Board in 2022 as part of a settlement agreement with Biglari. The Board recommends the election of its 10 recommended nominee
Slide 4: Executive Summary
EXECUTIVE SUMMARY • We recognized our post-pandemic challenges and underperformance and appointed Julie Masino as CEO in FY 2024 to lead a new chapter of growth and innovation. • Julie and the Board, with the assistance of top-tier external advisors, worked for months to conduct a thorough review of
Slide 5: Executive Summary: Biglari settlement attempts
EXECUTIVE SUMMARY • We agreed to put Jody Bilney on our Board in 2022 as part of a settlement with Biglari. • The Board interviewed all four of Biglari’s original independent nominees, and made multiple settlement offers that included offering to appoint two of his original nominees to the Board. Bi
Slide 6: Executing a long-term strategic transformation plan
We are executing a long-term strategic transformation plan that will return Cracker Barrel to growth and profitability
Slide 7: Cracker Barrel at a glance
7 CRACKER BARREL 44 STATES 658 CRACKER BARREL STORES $676M RETAIL BUSINESS 20% OFF-PREMISE CHANNEL SALES FY 2024 $5.2M AVERAGE STORE VOLUME $3.4B REVENUE $41M NET INCOME $212M ADJUSTED EBITDA1 Source: Public filings and company website. 1. 1. Adjusted EBITDA is a non-GAAP financial measure. For a de
Slide 8: A special and differentiated brand
CRACKER BARREL IS A SPECIAL AND DIFFERENTIATED BRAND WITH UNIQUE ATTRIBUTES THAT DRIVE OUR DIRECTORS’ SKILL NEEDS 8 1. Source: Black Box Intelligence, as of the week ending October 6, 2024 EVERYDAY VALUE leveraged to drive traffic, not discounting LOW AVERAGE CHECK SIZE WITH HIGH VOLUMES Cracker Bar
Slide 9: The Board recognized the need for change
THE BOARD RECOGNIZED THE NEED FOR CHANGE AND Casual dining trends, cost structures, and consumer behaviors have changed, particularly post-pandemic Cracker Barrel needs to refresh our brand and experience to delight existing guests and attract new ones Brand and business model investments are needed
Slide 10: Board recruited CEO Julie Masino
THE BOARD RECRUITED CEO JULIE MASINO TO CHART A 10 25+ years of experience driving innovation and growth for globally loved and recognized restaurant and retail brands As President of International of Taco Bell, she led the expansion of the division to over 1,000 restaurants in 32 countries Previous
Slide 11: Comprehensive, data-driven review of our business
11 THE BOARD, JULIE AND THE LEADERSHIP TEAM UNDERTOOK A COMPREHENSIVE, DATA-DRIVEN REVIEW OF OUR BUSINESS The primary reasons why guests are dining less frequently at Cracker Barrel are addressable – speed, value, food quality, menu, and atmosphere are driving factors RESEARCH APPROACH AND METHODOLO
Slide 12: Strategic transformation plan: three imperatives, five pillars
OUR STRATEGIC TRANSFORMATION PLAN IS DESIGNED TO DRIVE GROWTH AND PROFITABILITY ANCHORED ON THREE OVERARCHING BUSINESS IMPERATIVES… Driving relevancy Delivering food and experiences guests love Growing profitability 12 …AND BUILT ON FIVE PILLARS THAT ARE SUPPORTED BY 20 SPECIFIC INITIATIVES AND ENAB
Slide 13: Five pillars and initiatives
Enhancing 2 the Menu 13 FIVE PILLARS SUPPORTED BY MULTIPLE INITIATIVES AND ENABLERS Evolving the Store & Guest Experience Winning in Digital & Off-Premise 3 4 Refining 1 the Brand Brand Refresh Ignite Cracker Barrel Fandom Elevated Guest Journey Elevating the Employee Experience 5 Menu of the Future
Slide 14: Refining the brand
OUR STRATEGIC TRANSFORMATION PLAN TOUCHES EVERY PART OF OUR BUSINESS 14 Source: Public filings as of October 2024. We are modernizing and refreshing the Cracker Barrel brand REFINING THE BRAND Updating brand platform and positioning • Research revealed strong foundation of customer love and brand af
Slide 15: Enhancing the menu
Enhanced culinary innovation and new menu item introduction process • Largest proprietary guest research in brand history resulted in 60+ items added to innovation pipeline • New menu items for lunch and dinner, leading to 4% increase in year-over-year day part traffic Introduced new menu architectu
Slide 16: Evolving the store and guest experience
OUR STRATEGIC TRANSFORMATION PLAN TOUCHES EVERY PART OF OUR BUSINESS 16 Source: Public filings as of October 2024. We are focusing on operations, returning our stores to brand standards, and undertaking a targeted, efficient approach to store refreshes and remodeling Focusing on metrics that matter
Slide 17: Winning in digital and off-premise
OUR STRATEGIC TRANSFORMATION PLAN TOUCHES EVERY PART OF OUR BUSINESS 17 Source: Public filings as of October 2024. WINNING IN DIGITAL AND OFF-PREMISE We have launched a rewards program to delight guests while providing robust data and insights to drive the business as we continue to invest in other
Slide 18: Elevating the employee experience
OUR STRATEGIC TRANSFORMATION PLAN TOUCHES EVERY PART OF OUR BUSINESS 18 Source: Public filings as of October 2024. ELEVATING THE EMPLOYEE EXPERIENCE We are making efforts to ensure our people feel valued and giving them the tools they need to succeed and take even better care of our guests Introduci
Slide 19: Path to achieve FY 2027 financial targets
TRANSFORMATION PLAN PUTS CRACKER BARREL ON A CLEAR PATH TO ACHIEVE OUR FY 2027 FINANCIAL TARGETS 19 FY 2024 FY 2025 FY 2027 $3.47B $3.80B – $3.90B $3.40B – $3.50B FY 2024 FY 2024 FY 2025 FY 2027 $211.62M $375M - $425M2 $200M - $215M2 $40.90M FY 2027 TARGETS REVENUE ($B) NET INCOME / ADJUSTED EBITDA1
Slide 20: Disciplined approach to capital expenditures
DISCIPLINED APPROACH TO STORE AND FACILITY CAPITAL EXPENDITURES WE ARE TAKING A PRUDENT, DATA-DRIVEN APPROACH TO OUR CAPITAL EXPENDITURES, 20 TESTING INVESTMENT AND MEASURING INCREASED TRAFFIC AND SALES TO BE THOUGHTFUL IN HOW WE SPEND STORE REMODELS • Through four-tiered remodel program, we are det
Slide 21: Strategic capital allocation and new dividend
2.1% 2.5% 0.0% 1.4% 0.0% 3.4% 0.0% 5.8% STRATEGIC CAPITAL ALLOCATION IS CORE TO OUR ABILITY TO DRIVE GROWTH OUR NEW DIVIDEND ENABLES US TO INVEST IN GROWTH AND RETURN CAPITAL Peer Median: 1.4% ____________________ Source: Public filings and FactSet as of October 2024. Current Dividend Yield As antic
Slide 22: History of engaging with Biglari
HISTORY OF ENGAGING WITH BIGLARI We have made multiple attempts to settle with Biglari and avoid another unnecessary proxy contest 22
Slide 23: Cracker Barrel has engaged extensively with Biglari
23 CRACKER BARREL HAS ENGAGED EXTENSIVELY WITH BIGLARI OVER THE YEARS Numerous Engagements with Biglari Since 2019, Including In-Person 2.5% Of Unaffiliated Shareholders Voted With Biglari in the Last Proxy Contest that Went to a Vote 4 Biglari Attempts to Put Himself on the Board 7 Distracting and
Slide 24: Biglari forcing his seventh proxy fight in 13 years
CRACKER BARREL HAS LOOKED FOR SOLUTIONS BUT BIGLARI IS NOW FORCING HIS SEVENTH PROXY FIGHT IN 13 YEARS 2011 DECEMBER 2011 Biglari’s proxy fight for one Board seat was unsuccessful Unaffiliated Support for Biglari: 26.2% BIGLARI LOSS NOVEMBER 2012 ISS and Glass Lewis recommended rejecting Biglari’s n
Slide 25: Multiple attempts to reach a settlement
CRACKER BARREL MADE MULTIPLE ATTEMPTS TO REACH A SETTLEMENT Biglari’s Primary Goal is to Secure a Board Seat For Himself. We believe that Biglari is trying to build his brand at Cracker Barrel's expense – and to shareholders' detriment. • Julie Masino reached out to Biglari shortly into her tenure a
Slide 26: Biglari would have two directors on the Board
26 BIGLARI WOULD HAVE TWO DIRECTORS ON THE BOARD WITH OUR SLATE OF RECOMMENDED NOMINEES 1. Source: Biglari Capital Corp. Definitive Proxy Statement filed October 10, 2024 Jody Bilney has provided outstanding contributions since joining the Board in 2022. Her deep understanding of marketing and consu
Slide 27: Alberti-Perez does not bring the right skillset
27 WE BELIEVE ALBERTI-PEREZ DOES NOT BRING THE RIGHT SKILLSET TO CRACKER BARREL WHY ALBERTI-PEREZ SHOULD NOT BE ELECTED No management or board experience in the restaurant, hospitality, retail, or multi-unit consumer brands sectors Career has been substantially in the publishing sector, and she lack
Slide 28: Biglari would be value destructive
28 WE BELIEVE BIGLARI WOULD BE VALUE DESTRUCTIVE AT CRACKER BARREL We believe Mr. Biglari is looking for a target to deploy his playbook of underinvesting and extracting capital – which has destroyed value elsewhere WHY BIGLARI SHOULD NOT BE ELECTED We believe his interests are not aligned with othe
Slide 29: Biglari's poor track record
BIGLARI’S POOR TRACK RECORD 29 Sardar Biglari’s history of shareholder value destruction and bad governance
Slide 30: Biglari's selective and misleading disclosure
30 BIGLARI’S SELECTIVE AND MISLEADING DISCLOSURE IN HIS OCTOBER 25TH PRESENTATION • Biglari highlights his Steak ‘n Shake “success”, but he ignores his lost decade • Biglari showed same-store sales performance from 2006 to 2010, but doesn’t highlight anything again until 2019 • What happened in betw
Slide 31: Biglari and Steak 'n Shake history
31 BIGLARI AND STEAK ‘N SHAKE HISTORY Over the past decade, we believe Biglari has consistently put self-promotion and self-interest over the health of the Steak ‘n Shake brand • Biglari first took over Steak ‘n Shake in 2008 through a proxy fight with a stated goal of opening 1,000 franchised units
Slide 32: Steak 'n Shake recent performance under Biglari
$804 $793 $761 $595 $344 $263 $232 $240 2016 2017 2018 2019 2020 2021 2022 2023 32 STEAK ‘N SHAKE RECENT PERFORMANCE UNDER BIGLARI Biglari’s Steak ‘n Shake Revenue % System SSS (0.6%) (3.0%) (6.5%) (5.7%) (11.7%) 12.5% 7.5% (2.6%) Traditional Franchise Franchise Partner Company-Operated 2 RAPIDLY DE
Slide 33: Biglari's strategy compromised Steak 'n Shake's standards
33 BIGLARI’S STRATEGY COMPROMISED STEAK ‘N SHAKE’S STANDARDS IN CUSTOMERS’ EYES “Weakening sales at the burger chain has ushered in an era of massive changes at the company, along with closed restaurants. The brand operated 612 restaurants five years ago but has closed 129 of them since then... Stea
Slide 34: Biglari and Western Sizzlin history
BIGLARI AND WESTERN SIZZLIN HISTORY 34 After having invested in the company, in 2006, Biglari was appointed as Chairman of the Board, setting the stage for his eventual acquisition and full control of the 140-restaurant company In 2010, Western Sizzlin and Steak ‘n Shake merged, with the combined en
Slide 35: Western Sizzlin recent performance under Biglari
35 WESTERN SIZZLIN RECENT PERFORMANCE UNDER BIGLARI Company-Operated Traditional Franchise Source: Biglari Holdings Annual Reports from 2016 to 2023 and 10-K Filings. REVENUES ARE FAR SHORT OF 2019 LEVELS ($M) EBIT HAS STEADILY DECLINED OVER TIME (EBIT in $M) $13 $14 $15 $15 $6 $8 $10 $11 2016 2017
Slide 36: Biglari stripped capital from Western Sizzlin
$3 $6 $9 $12 $15 $19 $21 $23 $26 $26 $27 $28 $29 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 94 92 86 75 70 67 62 59 52 42 41 39 38 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 36 AS BIGLARI HAS STRIPPED CAPITAL FROM WESTERN SIZZLIN, UNITS HAVE DECLINED AND C
Slide 37: Public record shows Biglari to be self-interested
“Holding majority control, he runs Biglari Holdings as he sees fit, without heeding outside advice. He likens his management style to ruthless industrialists who built massive fortunes in the 19th century (but utilized aggressive tactics to drive competitors out of business). ‘We are old-fashioned.
Slide 38: Don't let Biglari run his playbook at Cracker Barrel
38 DON’T LET BIGLARI RUN HIS VALUE DESTRUCTIVE PLAYBOOK AT CRACKER BARREL Paying an unsustainable dividend — which we believe is short-term thinking Taking Cracker Barrel back to “1980’s” menus — which is not what today's consumer wants Stopping investment in our stores — a sure path to further traf
Slide 39: The right directors for our future
THE RIGHT DIRECTORS FOR OUR FUTURE Highly skilled recommended nominees will ensure Cracker Barrel thrives today, tomorrow and well into the future 39
Slide 40: Our directors have highly relevant skills and experience
OUR DIRECTORS HAVE HIGHLY RELEVANT SKILLS AND EXPERIENCE Julie Masino President and CEO Carl Berquist Independent Director, Board Chair President and CEO since 2023 Former President of Taco Bell International Committees: E Restaurant & Strategy Expert Independent Director since 2019 Former EVP and C
Slide 41: Biglari targeting directors critical to stability
41 BIGLARI IS TARGETING DIRECTORS WHO ARE CRITICAL TO OUR STABILITY AND TRANSFORMATION Both Mr. Berquist and Ms. Crofton actively contributed to the development of our strategic transformation plan and provide key oversight and stability for our new CEO Former EVP and CFO of Marriott International C
Slide 42: Consistently refreshed our Board
42 WE HAVE CONSISTENTLY REFRESHED OUR BOARD TO MEET THE DEMANDS OF THE EVOLVING RESTAURANT INDUSTRY Jody Bilney Appointed in settlement with Biglari, given strong qualifications and skillset Marketing & Strategy Digital & Consumer Restaurant & Hospitality Brand Transformation Appointed as part of pr
Slide 43: Michael Goodwin brings additive skills
Mr. Goodwin’s technology skillsets would further support the technology initiative laid out in our strategic transformation plan WE BELIEVE MICHAEL GOODWIN BRINGS ADDITIVE SKILLS AND EXPERIENCE TO BE AN OUTSTANDING CRACKER BARREL DIRECTOR Michael Goodwin1 Independent Director Nominee Biglari nominee
Slide 44: Protect our strategic transformation plan
PROTECT OUR STRATEGIC TRANSFORMATION PLAN We are taking urgent action focused on enhancing shareholder value 44
Slide 45: Vote the WHITE proxy card
45 THE CRACKER BARREL BOARD IS OVERSEEING SUCCESSFUL EXECUTION OF OUR STRATEGIC TRANSFORMATION PLAN TO ENHANCE SHAREHOLDER VALUE Vote the “WHITE” Proxy Card Cracker Barrel’s Board of Directors unanimously recommends a vote "FOR ONLY" each of Cracker Barrel's 10 recommended nominees on the WHITE prox
Slide 46: Appendix
APPENDIX 46
Slide 47: Outstanding leadership team
Laura Daily Senior Vice President, Chief Merchant and Retail Supply Chain OUTSTANDING LEADERSHIP TEAM WITH DEEPLY RELEVANT EXPERIENCE TO CRAFT AND EXECUTE ON OUR STRATEGIC TRANSFORMATION PLAN 47 = Prior Strategy / Operations Experience = Prior Finance / Transactional Experience = Prior Restaurant /
Slide 48: Our exciting new remodels
OUR EXCITING NEW REMODELS – A FRESH LOOK WITH THE SAME CRACKER BARREL FEEL 48
Slide 49: Corporate governance practices
49 WE MAINTAIN CORPORATE GOVERNANCE PRACTICES THAT PRIORITIZE SHAREHOLDER ALIGNMENT AND ACCOUNTABILITY Policy against hedging and pledging of securities Annually elected directors Compensation aligned with performance Shareholders can call special meetings All directors except CEO are independent Fu
Slide 50: History of responsiveness to shareholder feedback
50 WE HAVE DEMONSTRATED A HISTORY OF RESPONSIVENESS TO SHAREHOLDER FEEDBACK In 2024, we reached out to our largest shareholders and shareholders representing ~76.2% of our outstanding shares Ms. Masino met in-person with Biglari twice in 2024, with the first meeting being at Ms. Masino's initiative
Slide 51: Executive compensation program
51 OUR EXECUTIVE COMPENSATION PROGRAM IS ALIGNED WITH OPERATIONAL AND FINANCIAL GOALS, AND SHAREHOLDER FEEDBACK CEO 2024 PAY OTHER NEO 2024 PAY Over the last two years, our Say on Pay has received a 95%+ vote support. This high level of support demonstrates substantial shareholder satisfaction with
Slide 52: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 52
Slide 53: EBITDA / Adjusted EBITDA
EBITDA / ADJUSTED EBITDA 53 In the accompanying presentation and the below reconciliation tables, the Company makes reference to EBITDA and adjusted EBITDA, as well as the 53rd week impact of these items. The Company defines EBITDA as net income, calculated in accordance with GAAP, excluding depreci
Slide 54: Historical financials with EBITDA bridge
HISTORICAL FINANCIALS WITH EBITDA BRIDGE ____________________ Source: Public filings as of October 6, 2024. ( CEO transition expenses Relates to Company’s CEO transition expenditure Strategic transformation expenses Relates to charges used on Company’s strategic transformation plan, which includes c
Slide 55: Reconciliation of GAAP to non-GAAP operating results
55 RECONCILIATION OF GAAP-BASIS OPERATING RESULTS TO NON-GAAP OPERATING RESULTS (UNAUDITED AND IN THOUSANDS) Fourth Quarter Ended 8/2/24 Margin 53rd Week Impact Twelve Months Ended 8/2/24 Margin 53rd Week Impact Revenue $ 894,387 100% $ 62,800 $ 3,470,762 100% $ 62,800 GAAP Net Income 18,139 2.0% $
Slide 56: Participants in the solicitation
Cracker Barrel, its directors and its executive officers will be participants in the solicitation of proxies from Cracker Barrel shareholders in connection with the matters to be considered at the Annual Meeting. Information regarding the names of Cracker Barrel’s directors and executive officers an
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