CBRL - Cracker Barrel Is Pursing A Necessary But Challenging Transformation

2024-06-07 04:34:31 ET

Summary

• Cracker Barrel, which has been underperforming Restaurant Industry peers, needs to rejuvenate its brand.
• It must preserve what works while regaining some lost relevance.
• This is an extremely challenging task.
• If a marketing powerhouse like Coca-Cola can mess this sort of thing up, as it once did, so too can anybody – including Cracker Barrel.
• There’s much to like in the way Cracker Barrel is coming out of the gate… But investors need more time to watch.

Cracker Barrel Old Country Store (CBRL) has no choice. It has to change.

The stock had long been cherished as an equity-income play. (Many old headlines visible in the Seeking Alpha CBRL Analysis archive confirm this.) And its yield recently topped 9%.

But that angle is now gone.

CBRL stock, anticipating a dividend cut, fell 36% from the start of this year until May 15 ^th . That’s just before management announced that the company would, indeed, slash the quarterly payout from $1.30 to $0.25 starting with the July 2024 payment.

This doesn’t necessarily mean CBRL is a dumpster fire. But it has had to experience a significant and quick turnover in its shareholder base.

Its huge population of equity-income shareholders had to sell given the stock’s now mundane yield near 2%. Meanwhile a new shareholder population has been slower to emerge....

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