Cracker Barrel

Cracker Barrel Old Country Store, Inc.
Public
Traded as NASDAQ: CBRL
Industry Restaurants
Founded September 19, 1969 (1969-09-19)
Founder Dan Evins
Headquarters Lebanon, Tennessee, United States
Number of locations
 630
Area served
 United States
Key people
 Michael A. Woodhouse (Director & Executive Chairman)
Sandra B. Cochran (President & CEO)[1]
Revenue Increase US$ $2.580 billion (2012)[2]
Increase US $190.98 million (2012)[2]
Increase US $103.08 million (2012)[2]
Total assets Increase US $340.96 million (2012)[3]
Total equity Increase US $305.88 million (2012)[3]
Number of employees
 70,000
Website www.crackerbarrel.com

Cracker Barrel Old Country Store, Inc. is an American chain of combined restaurant and gift stores with a Southern country theme. The company was founded by Dan Evins in 1969; its first store was in Lebanon, Tennessee, which remains the company headquarters. The chain's stores were at first positioned near Interstate highway exits in the Southeastern and Midwestern US, but it has expanded across the country during the 1990s and 2000s. As of September 18, 2012,[4] the chain operates 630 stores in 42 states.

Cracker Barrel's menu is based on traditional Southern cuisine, with appearance and decor designed to resemble an old-fashioned general store. Each restaurant features a front porch lined with wooden rocking chairs, a stone fireplace, and decorative artifacts from the local area. Cracker Barrel is known for its partnerships with country music performers. It has received attention for its charitable activities, such as its assistance of victims of Hurricane Katrina and injured war veterans.

During the 1990s, the company was the subject of controversy for its official stance against gay and lesbian employees and for discriminatory practices against African American and female employees. A U.S. Department of Justice (USDOJ) investigation found that Cracker Barrel discriminated against minority customers; patrons complained of racially segregated seating and service quality. In an agreement with the USDOJ, Cracker Barrel has implemented non-discrimination policies and pledged to focus on improving minority representation and civic involvement, particularly in the black community. Company shareholders added sexual orientation to the company's non-discrimination policy in 2002.

History

First location and early company history

Cracker Barrel was founded in 1969 by Dan Evins, a sales representative for Shell Oil, who developed the restaurant and gift store concept initially as a plan to improve gasoline sales.[5] Designed to resemble the traditional country store that he remembered from his childhood, with a name chosen to give it a Southern country theme,[6] Cracker Barrel was intended to attract the interest of highway travelers.[5] The first restaurant was built close to Interstate 40, in Lebanon, Tennessee.[7] It opened in September 1969,[8] serving Southern cuisine including biscuits, grits, country ham, and turnip greens.[7]

Evins incorporated Cracker Barrel in February 1970,[5] and soon opened more locations. In the early 1970s, the firm leased land on gasoline station sites near interstate highways to build restaurants.[6] These early locations all featured gas pumps on-site; during gasoline shortages in the mid to late 1970s, the firm began to build restaurants without pumps.[5] Into the early 1980s, the company reduced the number of gas stations on-site, eventually phasing them out altogether as the company focused on its restaurant and gift sales revenues.[8] Cracker Barrel became a publicly traded company in 1981 to raise funds for further expansion.[5][7] It floated more than half a million shares, raising $4.6 million.[6] Following the initial public offering, Cracker Barrel grew at a rate of around 20 percent per year;[9] by 1987, the company had become a chain of more than 50 units in eight states, with annual net sales of almost $81 million.[5]

New markets and refocus

A Cracker Barrel in Morrisville, North Carolina

The company grew consistently through the 1980s and 1990s, attaining a $1 billion market value by 1992.[7][10][11] In 1993, the chain's revenue was nearly twice that of any other family restaurant.[6]

In 1994, the chain tested a carry-out-only store, Cracker Barrel Old Country Store Corner Market, in suburban residential neighborhoods.[11] In addition, it expanded into new markets through the establishment of more traditional Cracker Barrel locations, the majority of them outside the South, and tested alterations to its menus to adapt to new regions.[12] The chain added regional dishes to its menus, including eggs and salsa in Texas and Reuben sandwiches in New York, but continued to offer its original menu items in all restaurants.[10]

By September 1997, Cracker Barrel had 314 restaurants, and aimed to increase the number of stores by approximately 50 per year over the following five years.[12] The firm closed its Corner Market operations in 1997, and refocused on its restaurant and gift-store locations. Its then president, Ron Magruder, stated that the chain was concentrating on strengthening its core theme, offering traditional foods and retail in a country-store setting, with good service and country music.[9] The chain opened its first restaurant and gift store not located near a highway in 1998, in Dothan, Alabama.[13] In the 2000s, in the wake of incidents including charges of racial discrimination and controversy over its policy of firing gay employees, the firm launched a series of promotional activities including a nationwide book drive and a sweepstakes with trips to the Country Music Association Awards and rocking chairs among the prizes.[14]

Recent operations

The number of combined restaurants and stores owned by Cracker Barrel increased between 1997 and 2000, to more than 420 locations. In 2000 and 2001, the company addressed staffing and infrastructure issues related to this rapid growth by implementing a more rigorous recruitment strategy and introducing new technology, including an order-placement system.[15] From the late 1990s to the mid-2000s, the company focused on opening new locations in residential areas to attract local residents and workers as customers.[13] It updated its marketing in 2006 to encourage new customers, changing the design of its highway billboard advertisements to include images of menu items. Previously the signs had featured only the company's logo.[16] By 2011, Cracker Barrel had opened more than 600 restaurants in 42 states.[17][18][19] It was announced on January 17, 2012, that company founder Dan Evins had died of bladder cancer.[20]

Restaurants

A Cracker Barrel gift shop

Food and gift shop

As a Southern-themed chain, Cracker Barrel serves traditional Southern comfort food often described as "down-home" country cooking, and sells gift items including simple toys representative of the 1950s and 1960s, toy vehicles, puzzles and woodcrafts. Also sold are country music CDs, DVDs of early classic television, cookbooks, baking mixes, kitchen novelty decor, and early classic brands of candy and snack foods.[21][22] Breakfast is served all day, and there are two menus: one for breakfast, the other for lunch and dinner. Since the first restaurant opened, the menu has featured Southern specialties, including biscuits, fried chicken, and catfish;[5] seasonal and regional menu items were added during the 1980s and 1990s.[5][12] In 2007, Cracker Barrel announced plans to remove artificial trans fats from its menu items.[23][24]

Locations, service, and decor

A Cracker Barrel guest playing peg solitaire

For much of its early history, Cracker Barrel decided to locate its restaurants along the Interstate Highway System,[5] and the majority of its restaurants remain close to interstate and other highways.[25][26][27] Cracker Barrel is known for the loyalty of its customers,[10] particularly travelers who are likely to spend more at restaurants than locals.[12]

The locations are themed around the idea of a traditional Southern U.S. general store. Items used to decorate each store are authentic artifacts,[7] including everyday objects from the early 1900s and after.[28] Each restaurant features a front porch lined with wooden rocking chairs, a wooden peg solitaire game on every table,[29] and a stone fireplace with a deer head displayed above the mantel.[30] In fact, each location has five common items: a shotgun, a cookstove, a deer head, a telephone and a traffic light.[31] The peg games have been present in Cracker Barrel since the opening of the first store, and continue to be produced by the same family in Lebanon, Tennessee.[32] The decor at each location typically includes artifacts related to the local history of the area, including antique household tools, old wall calendars and advertising posters, and antique photographs;[26] these are centrally stored in a warehouse in Tennessee, where they are cataloged and stockpiled for future use by individual store locations.[33]

Awards

Destinations magazine has presented the chain with awards for best chain restaurant,[34] and in 2010 and 2011 the Zagat survey named it the "Best Breakfast".[35][36] The chain was selected by the Outdoor Advertising Association of America as the 2011 OBIE Hall of Fame Award recipient for its long-standing use of outdoor advertising.[37] It was also named the "Best Family Dining" restaurant by a nationwide "Choice in Chains" consumer poll in Restaurants & Institutions magazine for 19 consecutive years.[30]

Corporate overview

Investment and business model

Cracker Barrel restaurants are aimed at the family and casual dining market as well as retail sales.[9] The chain also advertises to people traveling on the interstate highways, as the majority of its locations are close to highway exits.[11] The company has promoted its cost controls to investors.[38][39] The company has stated its goal to keep employee turnover low, to provide better trained staff.[39] Since the 1980s, the firm has offered a formal training program with benefits for progressing through it to all of its employees.[5][40]

The board of directors of Cracker Barrel has repeatedly been at odds with the largest shareholder, Biglari Holdings Inc..[41] The owner of Biglari Holdings, Sardar Biglari, controls a 19.9% share of the company,[42] just short of the 20% needed to trigger a shareholder rights plan, more commonly termed a "poison pill".[43] The poison pill was adopted after Biglari Holdings sought approval to purchase a 49.99% share of the company and join the board of directors.[43]

Biglari Holdings purchased shares of Cracker Barrel in 2011, and has been often critical of the transparency to shareholders, overspending on advertising, lack of customer value,[44] capital funds mismanagement,[45] and not maximizing shareholder value.[46] Biglari has requested to be on the board of directors three times, and has been denied each time by a vote of shareholders.[41] Biglari Holdings has also put forward a request for a one time $20/share dividend to address perceived overly conservative capitalization,[46] which was also rejected by shareholders.[45] Cracker Barrel has responded by claiming Biglari has a "hidden agenda" and a conflict of interest by holding shares in other restaurant chains such as Steak 'n Shake.[47][48]

Community involvement

Cracker Barrel has supported a wide range of charities through one-off donations, promotional events, and partnerships with charitable organizations.[49] The chain has supported charities and causes in communities where its restaurants are located, including the Gulf Coast after Hurricane Katrina in 2005[50] and Nashville after severe flooding in 2010. In the same year Cracker Barrel established Cracker Barrel Cares Inc., an employee-funded non-profit organization that provides support to Cracker Barrel employees.[51] Cracker Barrel has also formed a partnership with the Wounded Warrior Project, a charity for injured veterans.[52] In attempts to rebuild its image after several race-related controversies,[53] the firm has provided a scholarship through the National Black MBA Association,[54] and job skills programs and sponsorships with 100 Black Men of America[53][55] and the Restaurant and Lodging Association.[56]

Cracker Barrel sponsored the NASCAR Atlanta 500 race at Atlanta Motor Speedway from 1999 to 2001[57] and the Grand Ole Opry from 2004 to 2009. The company was the first presenting sponsor of the Grand Ole Opry.[58] This sponsorship allowed the company to make connections within the Nashville music industry, following which it entered into partnership with a number of country music performers.[59] The chain has established partnerships with artists including Alison Krauss, Charlie Daniels, Josh Turner, Kenny Rogers, Dolly Parton, Alan Jackson, and Alabama, to offer CD releases and merchandise.[59][60][61]

Controversies

LGBT policies

In early 1991, an intra-company memo called for employees to be dismissed if they did not display "normal heterosexual values". According to news reports, at least 11 employees were fired under the policy on a store-by-store basis from locations in Georgia and other states.[6][12] After demonstrations by gay rights groups, the company ended its policy in March 1991 and stated it would not discriminate based on sexual orientation.[62][63] The company's founder, Dan Evins, subsequently described the policy as a mistake.[6] From 1992 onward,[64] the New York City Employees Retirement System, then a major shareholder, put forward proposals to add sexual orientation to the company's non-discrimination policy. An early proposal in 1993 was defeated, with 77 percent against and only 14 percent in support, along with 9 percent abstaining.[65] It was not until 2002 that the proposals were successful; 58 percent of company shareholders voted in favor of the addition.[62]

Cracker Barrel achieved the lowest score (15 out of 100) of all rated food and beverage companies in the Human Rights Campaign's 2008 Corporate Equality Index, a measure of LGBT workplace equality.[66] Their score for 2011 had increased to a 55. The 2011 survey noted that the firm had established a non-discrimination policy and had introduced diversity training that included training related to sexual orientation.[67] However, the company's score for 2013 dropped to a 35 out of 100, not having obtained the points related to non-discrimination toward gender identity and health benefits for partners of LGBT employees and transgender-inclusive benefits.[68]

On December 20, 2013, Cracker Barrel announced it would no longer sell certain Duck Dynasty products which it was "concerned might offend some of [its] guests"[69] after Phil Robertson, a star of the reality TV show, remarked in a GQ interview[70]

Don't be deceived. Neither the adulterers, the idolaters, the male prostitutes, the homosexual offenders, the greedy, the drunkards, the slanderers, the swindlers—they won't inherit the kingdom of God. Don't deceive yourself. It's not right.
--Duck Dynasty's Phil Robertson

Robertson also made "comments likening homosexuality to terrorism and bestiality" in the interview, and expressed views about race which attracted criticism. On December 22, less than two days after pulling the products from its shelves, Cracker Barrel reversed its position after protests from customers.[71][72][73]

Race- and gender-based discrimination lawsuits

In July 1999, a discrimination lawsuit was filed against Cracker Barrel by a group of former employees, who claimed that the company had discriminated against them on the grounds of race.[74][75] In December 2001, twenty-one of the restaurant's customers, represented by the same attorneys, filed a separate lawsuit, alleging racial discrimination in its treatment of guests.[76][77][78] Regarding both accusations, Cracker Barrel officials disputed the claims and stated that the company was committed to fair treatment of its employees and customers.[75][77][79]

In 2004, an investigation by the U.S. Justice Department found evidence that Cracker Barrel had been segregating customer seating by race; seating or serving white customers before seating or serving black customers; providing inferior service to black customers, and allowing white servers to refuse to serve black customers.[80] The Justice Department determined that the firm had violated Title II of the Civil Rights Act of 1964. The company was required to sign a five-year agreement to introduce "effective nondiscrimination policies and procedures." The terms included new equal opportunity training; the creation of a new system to log, investigate, and resolve complaints of discrimination; and the publicizing of its non-discrimination policies. They were required to hire an outside auditor to ensure compliance with the terms of the settlement.[81]

In 2006, Cracker Barrel paid a $2 million settlement to end a lawsuit alleging race and sexual harassment at three Illinois restaurants.[82][83] Cracker Barrel stores subsequently began displaying a sign in the front foyer explaining the company's non-discrimination policy,[80] and added to its website and menu the policy and details on how to make a complaint.[84]

Since the early 2000s, Cracker Barrel has provided training and resources to minority employees, to improve its image on diversity. These efforts involved outreach to minority employees, along with testing a training plan to help employees whose first language is Spanish to learn English.[53] As of 2002, minorities made up 23 percent of the company's employees, including over 11 percent of its management and executives.[54]

Cracker Barrel is on the Corporate Advisory Board for the Texas Conference of the National Association for the Advancement of Colored People (NAACP),[85] and is a corporate sponsor of the NAACP Leadership 500 Summit.[86] The company has been praised for its gender diversity, particularly on its board of directors, which includes three women out of eleven total board members.[87] Its chief executive officer (CEO), Sandra Cochran, is the second woman in Tennessee to hold that office in a publicly traded company.[87]

Licensed products

In November 2012, Cracker Barrel licensed its name to Smithfield Foods' John Morrell Division in a deal to create a line of meat products to be sold in super markets and through other retail channels.

In response to this turn of events, Kraft Foods filed a trademark-infringement lawsuit in February 2013. Kraft has sold cheese in retail stores under their Cracker Barrel brand since 1954. The corporation said that Cracker Barrel stores have not made significant sales of retail food products beyond their restaurant menu, and asked that the Smithfield Foods deal be nullified by the U.S. District Court in the Northern District of Illinois.[88][89]

References

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  70. ↑ Magary, Drew (January 2014), "What the Duck?", GQ, retrieved 2013-12-23
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  73. ↑ Kyles, Kyra (December 19, 2013), Duck Dynasty Dad on Blacks, Welfare, Jet, retrieved December 23, 2013, A&E announced Wednesday that Duck Dynasty star Phil Robertson was suspended indefinitely after making disparaging comments about gays and Blacks. [...] We think he may want to leave the topic of race relations out of his duck-summoning mouth.
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  85. ↑ "Corporate Advisory". texasnaacp.org. Texas Conference of the NAACP. Retrieved February 6, 2016.
  86. ↑ "Sponsors". NAACP Leadership 500 Summit. NAACP. May 2015. Retrieved February 6, 2016.
  87. 1 2 Allyn, Bobby (August 2, 2011). "Cracker Barrel says 'goodbye, glass ceiling'". The Tennessean. Retrieved February 2, 2012.
  88. ↑ "Kraft sues Cracker Barrel restaurants over trademark". Chicago Tribune. February 1, 2013. Retrieved February 14, 2013.
  89. ↑ Candice Choi (February 1, 2013). "Cracker Barrel Lawsuit: Kraft Suing Restaurants For Control Of Name". Huffington Post. Retrieved February 14, 2013.

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