Cracker Barrel is in a battle for relevance. One of the solutions is surprising

Cracker Barrel is in a battle for relevance. One of the solutions is surprising

Cracker Barrel CEO Julie Felss Masino recently gave an honest assessment of the brand: “We’re not as relevant as we used to be.”

Masino, who became CEO in July, laid out the diagnosis — and the remedy — in a May presentation to analysts. And it raises questions for those accustomed to brand name biscuits and gravy, wooden tables and chairs, brain teasers and front porch rocking chairs.

“The way we communicate, the things on the menu, the way the store looks and feels… all of these things came up time and time again in our research as opportunities for us to really regain relevance,” he said.

Cracker Barrel’s renovated Old Country Store (the brand’s full name) could include a remodeled restaurant with bookcases instead of lattice dividers and brand new banquette seating. The New Cracker Barrel may be a smaller restaurant altogether, with a menu that includes new items like green chili cornbread and banana pudding. Customers may notice a brighter interior with simpler decor, moving away from the usual cozy clutter.

The change is still being tested. A new thing happening now? Discounted dinner from 4 to 6 p.m.

Why is Cracker Barrel, so desperate for relevance, leaning on tactics typically used to attract seniors? Partly because many people eat early today. And partly because it’s looking for a quick fix.

We are all early people now
Cracker Barrel, which first opened in 1969, has long considered itself a roadside spot where weary travelers can stop for a bite to eat in the cozy dining room, and also choose from a wide selection of knick-knacks in its country store. That tone, which once appealed to Baby Boomers a lot, hasn’t resonated well since the pandemic.

Last year, as other diners returned to the restaurant after the early years of the outbreak, Cracker Barrel’s longtime customers remained cautious, visiting the chain less often. Now, its retail stores are taking a hit as consumers pull back on spending. The same dynamic occurs at his restaurant.

In the three months ended April 26, Cracker Barrel’s total revenue fell 1.9% from a year earlier, the company reported Thursday. Retail sales at stores open at least 18 months fell 3.8%, while restaurant sales fell 1.5%.

Wall Street is unimpressed: The company’s stock has declined nearly 37% this year, and has plunged about 70% over the past five years. The Tennessee-based chain has about 660 locations, which can be found across the country.

This new introductory offer, launched in February, is available Monday through Friday from 4 to 6 p.m. They start at $8.99 and include a reduced portion of Cracker Barrel’s country specialties, such as meatloaf and chicken.

Masino did not specifically mention the specials during the discussion about the long-term strategy for Cracker Barrel. But he pointed to the offer during the company’s earnings call on Thursday. It “is a big part of our overall pricing strategy,” Masino said.

In some ways, early specials are the perfect solution — they might appeal to Covid-wary seniors on a budget and younger consumers who eat early.

“Six o’clock is the new eight o’clock,” says Lisa W. Miller, a consumer strategist who has consulted for large restaurant chains through her company, Lisa W. Miller & Associates. “That four-to-six time period … can attract younger families as well.” The Wall Street Journal declared in the summer that “America is becoming an early bird nation.” And in recent years, late-night dining options have dwindled.

Fewer people visited Cracker Barrel before 9 a.m. and after 6 p.m. in the first quarter of this year than during that period in 2019, according to data from Placer.ai, which uses location data from mobile devices to estimate visits to specific restaurants and retail locations. Instead, the chain has “seen an increase in late-morning and lunch visits,” said RJ Hottovy, head of analytics research at Placer.ai. It is also seen to increase in the late afternoon, but to a lesser extent. The discrepancy “may explain the emphasis on early special offers,” he said.

Luring younger consumers in that early period will depend on how the company advertises the deal, Miller said. “It will all depend … on creative execution – how do they pursue it?”

Masino said Thursday that Cracker Barrel was so eager to rush the promotion that it recently began advertising the special.

But severing the link between early dinners and seniors will be difficult, said John A. Gordon, founder and CEO of Pacific Management Consulting Group, a restaurant consultancy.

“It’s very famous in this country that the elderly go out to eat earlier,” he said. “Even if that changes … it’s burned into people’s souls, that it’s set for the elderly.”

Offer, offer, offer
The company expects it will take years to revamp its brand, operations and restaurant model. But it needs to start increasing sales sooner. And now, consumers want deals.

Fast food companies are once again struggling with dollars and cents, with many launching $5 bundles. Casual restaurants like Chili’s and Applebee’s compete for customers with their own special dishes.

To compete in this environment, Cracker Barrel realized it needed to offer some kind of deal. It seems to have decided that an early dinner is the way to go.

There is a risk, Gordon said, that the offer could prove too popular. If too many people choose to dine at the lower price, margins and profits will suffer.

“They’re running a Red Lobster risk here,” he said. “That they put out something that’s too popular and then they’re overwhelmed by it.”

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