The $700M Gamble

Management wants to spend ~70% of the entire market cap on store remodels. Here's why that's concerning, based on their own track record.

Remodel Cost

~$700M

≈70% of market cap

[1]

Per Store Cost

$1.1M

For 660 stores

[1]

Historical ROI

Negative

Prior remodels failed

[1]

The Death Spiral

How management destroyed a 50-year institution in 5 years

🎯

Peak Performance

2019

$282.8M Operating Income

⚠️

Poor Decisions Begin

2020

Unnecessary remodels start

📉

Traffic Exodus

2021

-10% customer traffic

💸

Margins Collapse

2022

Operating margin < 2%

✂️

Dividend Slashed

2023

Cut 80% to preserve cash

💥

Stock Crashes

2024

-70% from highs

🪦

Logo Disaster

2025

Brand identity crisis

The Result?

$2.5 BILLION IN VALUE DESTROYED

While the board kept their seats and compensation packages intact.

The Remodel Debate

📉 The Bear Case

Previous remodels have failed to drive traffic or improve margins. The company is throwing good money after bad, with capex at historic highs while returns plummet. Traffic declined 19% despite years of 'investments'.

Sources: Cracker Barrel Deck 10-24-2024, Biglari Capital Rebuttal Deck 2024

📈 Management's View

Remodels are necessary to modernize aging stores and attract younger demographics. The company believes updated aesthetics and improved ambiance will eventually reverse traffic declines.

Sources: Cracker Barrel public statements, Investor presentations

📊 The Track Record

2019-2024 Capex Spent$1.2B+
Traffic Change-19%
Operating Income Change-84%
Stock Performance-70%

Sources: Cracker Barrel Deck 10-24-2024, SEC filings

Critical Questions

Board plans to spend ~$700M (≈70% of market cap) on remodels

The Board-approved transformation plan includes spending approximately $700 million on store remodels, representing roughly 70% of the company's current market capitalization. This massive capital expenditure comes while operating income has fallen 84% since FY19.

Sources:Biglari Capital Rebuttal Deck 2024Cracker Barrel Deck 10-24-2024

$854M capex spent since FY19 while EBITDA collapsed

Despite investing $854 million in capital expenditures since FY19, operating income fell by 84% and adjusted EBITDA declined significantly. The Board approved this spending while operating metrics deteriorated to worst-in-class levels.

Sources:Cracker Barrel Deck 10-24-2024Biglari Capital Rebuttal Deck 2024

🎯 What Analysts Say

“We remain skeptical that remodels alone can offset structural headwinds...”

- Multiple sell-side analysts, 2024