Biglari: Time to sell Cracker Barrel is now

Credit market conditions favorable, activist says, but management 'ignoring prevailing winds of change'

Sardar Biglari has fired his latest volley at the management and board of Cracker Barrel Old Country Store as both sides prepare for a special shareholders’ meeting in two months.

In a letter accompanying his preliminary proxy statement, Biglari — who owns 20 percent of Lebanon-based Cracker Barrel — says CEO Sandy Cochran and her team “are ignoring the prevailing winds of change in the restaurant industry” and that an investor vote to put the company on the auction block would attract a lot of attention at good prices.

“We believe there can be a significant upside to Cracker Barrel’s business under the right management, but continued downside, as demonstrated by the recent poor operating performance in the hands of current management,” Biglari wrote, adding later that “any limited progress the Company has made has evidently stalled.”

Biglari runs Steak ‘n Shake and has said he’s willing to make an offer for Cracker Barrel if state anti-takeover laws are changed — the other point on which investors will vote. He has been pushing for big changes at the company since 2011 but has had three bids for board representation soundly rebuffed by shareholders.

Investors will have their latest say on his proposals on April 23, although their vote will be non-binding. Sending the message that Cracker Barrel is for sale, Biglari says, will draw a number of suitors — even though the clock is ticking.

“Were the Company to embark on a comprehensive strategic alternatives review (a process that we would fully support) it may find other potential acquirors ready, willing and able to pay a premium price,” he wrote. “The current credit market conditions make this an ideal time to secure the required financing. In spite of the opportune moment, time is of the essence. We believe the Company must act now to take advantage of the favorable financing environment before the window closes.”

Shares of Cracker Barrel (Ticker: CBRL) were up 0.6 percent Friday afternoon to $98.47. Over the past three months, they’ve fallen about 15 percent from their record highs.