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Cracker Barrel faces backlash after a disastrous rebrand effort.
CBRL's turnaround efforts have made little impact on EPS expectations.
Cracker Barrel faces cutthroat competition.
Cracker Barrel Company Overview
Based in Lebanon, TN, and founded in 1969, Zacks Rank #5 (Strong Sell) stock Cracker Barrel Old Country Store ((CBRL - Free Report) ) owns and operates full-service restaurants with attached retail stores across the United States. The company operates 660 company-owned locations across 43 states. Cracker Barrel is best known for its home-style country food, including meatloaf, homemade chicken n’ dumplings, as well as its signature biscuits, which use an old family recipe. Meanwhile, its attached retail stores sell unique gifts and trinkets that have an Americana twist.
Cracker Barrel’s Disastrous Rebranding Effort
Over its long history, Cracker Barrel has built a brand that allows its consumers to escape American highways for a piece of coziness and a trademark southern comfort vibe. However, in August, Cracker Barrel management took a considerable risk. The company removed its iconic “Uncle Herschel” man from its logo in an effort to reach a broader customer base. Additionally, the company began removing many of the American trinkets that fill its restaurants, making them far less distinctive.
Following the rebrand, CBRL shares dumped 7% in a single session, erasing $140 million in market cap as customer backlash began to set in. Worse, President Donald Trump weighed in on social media, suggesting the company return to its iconic and well-known branding. Though Cracker Barrel rescinded its rebranding plans amid the backlash, the damage was already done as many right-leaning customers saw the move as an appeal to the “woke” movement. Despite the retraction, CBRL shares have underperformed and been weak ever since.
Image Source: Zacks Investment Research
Cracker Barrel’s Growth is Stagnant
Cracker Barrel is in the midst of a multi-year turnaround effort, with initiatives spanning food quality kitchen optimization, loyalty expansion, and capital allocation. Thus far, there has been little evidence that Cracker Barrel’s turnaround efforts will bear fruit. As a result, Wall Street analysts expect earnings growth to remain stagnant for the foreseeable future.
Image Source: Zacks Investment Research
Cracker Barrel Competition
Cracker Barrel faces cutthroat competition in the fast casual space from competitors like Darden Restaurants ((DRI - Free Report) ),Bloomin’ Brands ((BLMN - Free Report) ),Denny’s ((DENN - Free Report) ), and Texas Roadhouse ((TXRH - Free Report) ).
Bottom Line
Cracker Barrel’s attempt to modernize its brand backfired severely, resulting in a significant stock drop and erosion of trust with its customer base. Despite quickly reversing the changes, the damage has been done.
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Bear of the Day: Cracker Barrel (CBRL)
Key Takeaways
Cracker Barrel Company Overview
Based in Lebanon, TN, and founded in 1969, Zacks Rank #5 (Strong Sell) stock Cracker Barrel Old Country Store ((CBRL - Free Report) ) owns and operates full-service restaurants with attached retail stores across the United States. The company operates 660 company-owned locations across 43 states. Cracker Barrel is best known for its home-style country food, including meatloaf, homemade chicken n’ dumplings, as well as its signature biscuits, which use an old family recipe. Meanwhile, its attached retail stores sell unique gifts and trinkets that have an Americana twist.
Cracker Barrel’s Disastrous Rebranding Effort
Over its long history, Cracker Barrel has built a brand that allows its consumers to escape American highways for a piece of coziness and a trademark southern comfort vibe. However, in August, Cracker Barrel management took a considerable risk. The company removed its iconic “Uncle Herschel” man from its logo in an effort to reach a broader customer base. Additionally, the company began removing many of the American trinkets that fill its restaurants, making them far less distinctive.
Following the rebrand, CBRL shares dumped 7% in a single session, erasing $140 million in market cap as customer backlash began to set in. Worse, President Donald Trump weighed in on social media, suggesting the company return to its iconic and well-known branding. Though Cracker Barrel rescinded its rebranding plans amid the backlash, the damage was already done as many right-leaning customers saw the move as an appeal to the “woke” movement. Despite the retraction, CBRL shares have underperformed and been weak ever since.
Image Source: Zacks Investment Research
Cracker Barrel’s Growth is Stagnant
Cracker Barrel is in the midst of a multi-year turnaround effort, with initiatives spanning food quality kitchen optimization, loyalty expansion, and capital allocation. Thus far, there has been little evidence that Cracker Barrel’s turnaround efforts will bear fruit. As a result, Wall Street analysts expect earnings growth to remain stagnant for the foreseeable future.
Image Source: Zacks Investment Research
Cracker Barrel Competition
Cracker Barrel faces cutthroat competition in the fast casual space from competitors like Darden Restaurants ((DRI - Free Report) ), Bloomin’ Brands ((BLMN - Free Report) ), Denny’s ((DENN - Free Report) ), and Texas Roadhouse ((TXRH - Free Report) ).
Bottom Line
Cracker Barrel’s attempt to modernize its brand backfired severely, resulting in a significant stock drop and erosion of trust with its customer base. Despite quickly reversing the changes, the damage has been done.