Cracker Barrel

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.[10] Designed to resemble the traditional country store that he remembered from his childhood, with a name chosen to give it a Southern country theme,[11] Cracker Barrel was intended to attract the interest of highway travelers.[10] The first restaurant was built close to Interstate 40, in Lebanon, Tennessee.[12] It opened in September 1969,[13] serving Southern cuisine including biscuits, grits, country ham, and turnip greens.[12]

Evins incorporated Cracker Barrel in February 1970,[10] and soon opened more locations. In the early 1970s, the firm leased land on gasoline station sites near interstate highways to build restaurants.[11] 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.[10] 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.[13] Cracker Barrel became a publicly traded company in 1981 to raise funds for further expansion.[10][12] It floated more than half a million shares, raising $4.6 million.[11] Following the initial public offering, Cracker Barrel grew at a rate of around 20 percent per year;[14] by 1987, the company had become a chain of more than 50 units in eight states, with annual net sales of almost $81 million.[10]

A Cracker Barrel in Minnesota

The company grew consistently through the 1980s and 1990s, attaining a $1 billion market value by 1992.[12][15][16] In 1993, the chain's revenue was nearly twice that of any other family restaurant.[11]

In 1994, the chain tested a carry-out-only store, Cracker Barrel Old Country Store Corner Market, in suburban residential neighborhoods.[16] 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.[17] 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.[15]

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.[17] The firm closed its Corner Market operations in 1997 and refocused on its restaurant and gift store locations.The company's 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.[14] The chain opened its first restaurant and gift store not located near a highway in 1998, in Dothan, Alabama.[18] 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.[19]

In 2019 Cracker Barrel purchased Maple Street Biscuit Company for $36 million cash.[20]

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.[21] 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.[18] 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.[22] By 2011, Cracker Barrel had opened more than 600 restaurants in 42 states.[23][24][25] On January 17, 2012, company founder Dan Evins died of bladder cancer.[26]

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.[27][28] 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;[10] seasonal and regional menu items were added during the 1980s and 1990s.[10][17] In 2007, Cracker Barrel announced plans to remove artificial trans fats from its menu items.[29][30]

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,[10] and the majority of its restaurants remain close to interstate and other highways.[31][32][33] Cracker Barrel is known for the loyalty of its customers,[15] particularly travelers who are likely to spend more at restaurants than locals.[17]

The locations are themed around the idea of a traditional Southern U.S. general store. Items used to decorate each store are authentic artifacts,[12] including everyday objects from the early 1900s and after.[34] Each restaurant features a front porch lined with wooden rocking chairs, a wooden peg solitaire game on every table,[35] and a stone fireplace with a deer head displayed above the mantel.[36] In fact, each location has five common items: a shotgun, a cookstove, a deer head, a telephone, and a traffic light.[37] 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.[38] 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;[32] these are centrally stored in a warehouse in Tennessee, where they are cataloged and stockpiled for future use by individual store locations.[39]

Destinations magazine has presented the chain with awards for best chain restaurant,[40] and in 2010 and 2011, the Zagat survey named it the "Best Breakfast".[41][42] 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.[43] 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.[36]

The company is run by a board of directors made up of mostly company outsiders, as is customary for publicly traded companies. Board members are elected every year at the annual shareholders' meeting using a majority vote system. There are five committees within the board which oversee specific matters. These committees include the Audit Committee, which handles accounting issues with the company including auditing and reporting; the Compensation Committee, which approves compensation for the CEO and other employees of the company; the Governance and Nominating Committee, which handles various corporate matters including nomination of the board; the Executive Committee, whose Chairperson is ex officio the Chairman of the Board; and the Public Responsibility Committee, which works to ensure the company remains compliant with all local, state, and federal laws, in addition to ensuring the company remains neutral in American politics.[47]

Cracker Barrel restaurants are aimed at the family and casual dining market as well as retail sales.[14] The chain also advertises to people traveling on the interstate highways, as the majority of its locations are close to highway exits.[16] The company has promoted its cost controls to investors.[48][49] The company has stated its goals are to keep employee turnover low and to provide better trained staff.[49] Since the 1980s, the firm has offered a formal training program with benefits for progressing through it to all of its employees.[10][50]

Cracker Barrel has supported a wide range of charities through one-off donations, promotional events, and partnerships with charitable organizations.[51] The chain has supported charities and causes in communities where its restaurants are located, including the Gulf Coast after Hurricane Katrina in 2005[52] 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.[53] Cracker Barrel has also formed a partnership with the Wounded Warrior Project, a charity for injured veterans.[54] In attempts to rebuild its image after several race-related controversies,[55] the firm has provided a scholarship through the National Black MBA Association,[56] and job skills programs and sponsorships with 100 Black Men of America[55][57] and the Restaurant and Lodging Association.[58]

Cracker Barrel sponsored the NASCAR Atlanta 500 race at Atlanta Motor Speedway from 1999 to 2001[59] and the Grand Ole Opry from 2004 to 2009. The company was the first presenting sponsor of the Grand Ole Opry.[60] 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.[61] 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.[61][62][63]

In 1997, the company purchased the Mitchell House in Lebanon, Tennessee. The house had been the elementary dormitory and school for Castle Heights Military Academy which both Dan Evins and his son attended. The school had closed in 1986 and the building had sat empty since then. Cracker Barrel spent two million dollars to restore the home and used it as its corporate headquarters from 1999 to 2013.[64][65]

The board of directors of Cracker Barrel has repeatedly been at odds with the largest shareholder, Biglari Holdings Inc.[66] The owner of Biglari Holdings, Sardar Biglari, controls a 19.9% share of the company,[67] just short of the 20% needed to trigger a shareholder rights plan, more commonly termed a "poison pill".[68] 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.[68]

Biglari Holdings purchased shares of Cracker Barrel in 2011, and has often been critical of the transparency to shareholders, overspending on advertising, lack of customer value,[69] capital funds mismanagement,[70] and not maximizing shareholder value.[71] Biglari has requested to be on the board of directors three times, and has been denied each time by a vote of shareholders.[66] Biglari Holdings has also put forward a request for a one-time $20/share dividend to address perceived overly conservative capitalization,[71] which was also rejected by shareholders.[70] 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.[72][73]

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.[11][17] After demonstrations by gay rights groups, the company ended its policy in March 1991 and stated it would not discriminate based on sexual orientation.[74][75] The company's founder, Dan Evins, subsequently described the policy as a mistake.[11] From 1992 onward,[76] 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.[77] It was not until 2002 that the proposals were successful; 58 percent of company shareholders voted in favor of the addition.[74]

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.[78] 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.[79] 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.[80]

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"[81] after Phil Robertson, a star of the reality TV show, remarked in a GQ interview[82]

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 beastiality" 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.[83][84][85]

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.[86][87] 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.[88][89][90] Regarding both accusations, Cracker Barrel officials disputed the claims and stated that the company was committed to fair treatment of its employees and customers.[87][89][91]

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.[92] 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.[93]

In 2006, Cracker Barrel paid a $2 million settlement to end a lawsuit alleging race and sexual harassment at three Illinois restaurants.[94][95] Cracker Barrel stores subsequently began displaying a sign in the front foyer explaining the company's non-discrimination policy,[92] and added to its website and menu the policy and details on how to make a complaint.[96]

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.[55] As of 2002, minorities made up 23 percent of the company's employees, including over 11 percent of its management and executives.[56]

Cracker Barrel is on the Corporate Advisory Board for the Texas Conference of the National Association for the Advancement of Colored People (NAACP),[97] and is a corporate sponsor of the NAACP Leadership 500 Summit.[98] 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.[99] Its chief executive officer (CEO), Sandra Cochran, is the second woman in Tennessee to hold that office in a publicly traded company.[99]

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 supermarkets and through other retail channels. In response, 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.[100]

On November 14, 2013, in a unanimous ruling authored by Judge Richard Posner, the Seventh Circuit Court of Appeals upheld a ruling by a lower District Court judge granting an injunction against the sale of Cracker Barrel's meat products to be sold in stores. The Seventh Circuit upheld the injunction based on the combined similarity of the parties’ marks, goods, and channels of trade: "It's not the fact that the parties' trade are so similar that is decisive, nor even the fact that the products are similar (low-cost packaged food items). It is those similarities coupled with the fact that, if [Cracker Barrel] prevails in this suit, similar products with confusingly similar trade names will be sold through the same distribution channel – grocery stores, and often the same grocery stores – and advertised together." In Judge Posner's estimation, these similarities – despite the differences in the parties’ respective logos and regardless of where the products are located in relation to each other in grocery stores – might lead consumers to "think all the Kraft products bearing the 'Cracker Barrel' name were produced in association with the Defendant." In economics this behavior is referred to as 'traditional forward confusion.' The court further concluded the likelihood of confusion was exacerbated by the fact that both products at issue were inexpensive; thus, consumers were unlikely to scrutinize their respective labels.[101] In response to the ruling, Kraft Foods and Cracker Barrel made an agreement regarding the use of the Cracker Barrel name. In exchange for Kraft dropping the trademark-infringement lawsuit, Cracker Barrel agreed to sell its products under the brand name "CB Old Country Store." [102]