Cracker Barrel (CBRL) shares jumped 5% Tuesday, on a day that we saw what can best be described as a rally in small "lower quality" stocks - names such as Carrols Restaurant Group (TAST) (up 9%) and Noodles (NDLS) (up 8%) had good days. Since that description, at least the "lower-quality" part does not accurately describe CBRL, and there may be another reason for the boost.
As it turns out, CBRL did make an announcement Tuesday, although it flew under the radar, The company announced that CEO and President Sandy Cochran will be stepping down on November 1st. Cochran came to CBRL in 2009 as CFO, after leaving as CEO of Book-A-Million (talk about a wise move...). She became CEO of CBRL in 2011, and presided over an interesting time in the company's history, battling with Biglari Holdings (BH) , (BH) . CEO Sardar Biglari, whose firm at one time owned 20% of the company, as he waged several losing proxy contests.
Cracker Barrel's 2019 investment in Punch Bowl Social was a disaster that resulted in the closing of all locations just eight months later - to be fair, this was during the pandemic - and a $133 million loss, which drew the ire of Biglari, and rightfully so. Biglari Holdings, which now owns just over 9% of CBRL, finally got a seat on the board in September 2022 via director nominee Jody Bilney, in what seemed to be the beginning of a new era of peace between BH and CBRL. But you have wonder what part, if any, that played in Sandy Cochran's departure.
Cochran, who will become Executive Chair of the Board through September, 2024, will be replaced by Julie Felss Masino, who has served as President of Taco Bell International, owned by Yum Brands (YUM) , for the past five years.
In October, 2019, the company acquired Maple Street Biscuit Company (MSBC) for $36 million. MSBC has 56 locations primarily in the south, with the largest presence (17) in Florida.
Over the years, CBRL had become a mini-dividend champion of sorts, and currently yields 5.3%. While the company's current $1.30 quarterly dividend has not changed since late 2019, special dividends, as much as $3.75/share were paid between 2015 and 2019. During the pandemic, the company suspended payments, but resumed the dividend in late 2021.
CBRL currently trades at just under 15x 2024 and 2025 consensus earnings estimates. It has historically been a potential real estate play and owned 360 locations as of September, as well as its headquarter, which sits on 90 acres of land in Lebanon, Tennessee.
We'll see if this is the beginning of a new era for CBRL, whose shares have languished over the past five (down 4.5%/year on average on a total return basis) and 10-year periods (up 4.3% on average). Shares, which traded in the $180 range in April, 2021, closed Tuesday at $97.48
