In a letter sent to Cracker Barrel leadership, Biglari Capital proposed the family dining chain divest fat-casual concept Holler & Dash. The letter said that Holler & Dash was “ill conceived” and would never be successful. A spokesperson for Cracker Barrel said the company will not have any response to the letter.
Bigalri Capital recently sold off part of the more than +20 percent of Cracker Barrel stock it owned and reduced its ownership to 14.8 percent of the company. In the past, Biglari Capital tried to gain a more active management role in Cracker Barrel but was unsuccessful when it couldn’t get support from enough other stock holders.
Biglari Capital is controlled by Sardar Biglari, who some observers find controversial. On one hand he was given credit for a quick and successful turnaround for Steak N Shake. However, Biglari caused some head scratching when he bought Maxim magazine and installed himself as editor in chief.
There have been some comments that perhaps Cracker Barrel should run Steak N Shake rather than the other way around. In its last fiscal quarter Cracker Barrel comparable store sales were up 3.8 percent. Steak N Shakes comp store sales last year were down 5.1 percent.
Economic News This Week
- Initial-jobless claims totaled 221,000, a dip of 9,000 for the week ending March 16. The 4-week moving average hit 225,000, an increase of 1,000. Jobless claims remain a very low level on a historical basis.
- Sales of existing homes shot up 11.8 percent in February compared to January to a seasonally adjusted annual rate of 5.51 million homes. Sales were down 1.8 percent from February 2018, though. A spokesperson for the National Association of Realtors attributed the strong showing to a “…combination of lower mortgage rates, more inventory, rising income and higher consumer confidence…”
- Home builder confidence held steady in March. The National Association of Home Builders/Wells Fargo Housing Market Index was 62, unchanged from February. (Any reading greater than 50 indicates more builders view conditions good as opposed to poor.) Builders find the market for single-family homes is stabilizing after a slowdown at the end of last year.
- The Small Business Optimism Index showed modest improvement in February, according to The National Federation of Independent Businesses. The index totaled 101.7, an increase of 0.5. Small businesses were glad to put the government shut down behind them but were still uncertain about the future, according to the NFIB president.
- The Conference Board’s Index of Leading Economic Indicators rose 0.2 percent in February for a reading of 111.5. This is the first increase in the index in 5 months. The Conference Board believes the U.S. economy will continue to expand near term, but the pace of growth could decelerate by the end of this year.
- New factory orders for manufactured durable goods increased 0.3 percent in January. Transportation equipment led the increase by rising 1.2 percent. Shipments for manufactured durable goods decreased 0.5 percent. Transportation equipment shipments fell 1.3 percent. Unfilled orders for manufactured durable goods increased 0.1/ percent.
- The Philadelphia Federal Reserve’s Manufacturing Business Outlook Survey improved in March, rising to +13.7 from - 4.1 in February. (Any reading that exceeds zero indicates expansion.) The New Orders Index increased to +1.9 from minus 2.4 February. The Unfilled Orders Index dropped from +6.9 in February to +3.1 in March. The Shipments Index shot up from -5.3 to +20 this month. The Number of Employees Index fell to +9.6 from 14.5 in February while the Average Employee Work Week Index rose from +4.7 last month to +10.6 in March.
Foodservice News This Week
- C-store chain Kwik Trip will open a test kitchen in Onalaska, Wis. Kwik Trip continues to test fried chicken in a few of its stores and plans to offer take-home meals if the chicken program takes off. The success of these initiatives will require the chain to expand its commissary.
- The Performance Food Group purchased Eby-Brown. The Performance Food Group is the third largest foodservice distributor in the U.S. and Eby-Brown is a major distributor of candy, snacks, specialty beverages and tobacco products to convenience stores. Eby-Brown serves stores in 20 states and had revenue of $5.3 billion in 2018.
- Who takes the blame when food delivery orders aren’t right? Both the restaurant and the delivery operation get blamed, according to a study by Zion & Zion. Take, for example, an order showing up at the wrong temperature. In that instance, 71 percent of customers blame both the restaurant and the delivery company.
- Sodexo and Saldworks form a partnership. The contract feeder will offer Saladworks operations on college and university campuses, providing a healthy food option to students.
- A March Madness pick could land some lucky fan in the restaurant business. Buffalo Wild Wings’ contest “Bracket Pick ‘Em Daily Tourney Game” offers more than 500 prizes, including a fully customized Buffalo Wild Wings restaurant. We couldn’t find what the odds are on winning, but a safe bet is BWW probably won’t be handing over a restaurant.
- Corporate Stirrings: Continental Services purchased Sterling Services. Sterling’s customer base includes corporate dining, micro markets, vending and office coffee. The price of the purchase was not disclosed.
- Pizza Fusion has been acquired by Unique Foods. Cost of the deal was not given.
- Growth Chains: IHOP signed a franchise agreement to open 19 restaurants in Pakistan in the next 9 years. Kwik trip plans to open 40 to 50 stores a year for the next few years. I Heart Mac & Cheese chain signed a 23-store franchise development agreement for Long Island, N.Y., with 9 locations to open in the first 3 years.
- Comparable Store Sales Reports: Darden (Blended up 2.8 percent, Bahama Breeze down 3.7, Capital Grille up 4.3 percent, Cheddar’s Scratch Kitchen down 2.7 percent, Edie V’s up 3.7 percent, Longhorn up 3.8 percent, Olive Garden up 4.3 percent, Seasons 52 down 1.3 percent & Yardhouse down 2.1 percent), and Del Taco (System up 1.9 percent, Company Operated up 1.0 percent & Franchised up 3.2 percent)
For details and same store sales of other chains,
please click here for the latest Green Sheet.