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Cracker Barrel, a US old-fashioned restaurant chain, cut its sales outlook for its fiscal year as it continues to recover from a social media controversy over an attempt to modernise its logo.
The company, whose restaurants are known for serving Southern-style comfort food, reported sales fell more than expected in its most recent quarter, sending its shares down about 10 per cent in after-hours trading on Tuesday.
“First-quarter results were below our expectations amid unique and ongoing headwinds,” chief executive Julie Masino said. “We have adjusted our operational initiatives, menu and marketing to ensure we are consistently delivering delicious food and exceptional experiences.”
Cracker Barrel in August changed its “Old Timer” logo that featured an elderly man leaning against a wooden barrel as a way to modernise the brand and attract new customers. But the shift ignited a social media backlash that prompted accusations that the company was engaging in “woke” rebranding.
US President Donald Trump weighed in, saying in a Truth Social post that the restaurant chain should go back to the old logo and “admit a mistake”.
Management quickly reverted to the old logo but the controversy has stuck: sales continue to fall and the company’s share price is down by about half this year.
Activist investor Sardar Biglari launched a proxy campaign this year urging shareholders to vote against the re-election of Masino, alleging that her tenure had been marked with “highly publicised mis-steps”. The chief executive retained her role following a November vote.
Cracker Barrel’s fortunes have diverged from those of American Eagle Outfitters. The apparel retailer’s ads over summer featuring actor Sydney Sweeney dragged it into the “culture wars” but it was defended by Trump. Last week, the company boosted its outlook, helped in part by the success of its marketing campaign featuring the starlet.
The absence of a “Trump bump” in sales has left Cracker Barrel exposed to the sort of challenges facing other American restaurant chains, as cash-strapped consumers skip dining out amid high prices and concerns about job security. Chipotle lowered its sales forecasts for the third time this year as it noted that the chain lost diners to grocery stores.
Cracker Barrel cut its full-year outlook and now expects annual revenue to be between $3.2bn and $3.3bn, compared to previous guidance of $3.35bn to $3.45bn: management told analysts they expect weaker customer traffic and a higher level of discounting. It also downgraded its forecast for adjusted earnings before interest, taxes, depreciation and amortisation to between $70mn and $110mn, lopping $80mn off each end of its earlier projection.
The outlook downgrade accompanied the group reporting a 5.7 per cent drop in revenue to $797.2mn in the three months that ended October 31, owing to a fall in traffic. That missed Wall Street’s expectations for revenue of $801mn.
It swung to a first-quarter net loss of $24.6mn, weighed down by items including impairments related to store closures and company restructuring costs.