Cracker Barrel shareholder loses proxy fight

The investor who controls 9.3% of the chain’s stock recommended the company divest the Maple Street business.


  • By Mark Basch
  • | 12:00 a.m. November 29, 2024
  • | 4 Free Articles Remaining!
Sardar Biglari, whose San Antonio, Texas-based firm controls 9.3% of Cracker Barrel, wanted the company to divest its Maple Street Biscuit Co. subsidary. “We believe Maple Street is an unnecessary extracurricular distraction for the Board and management,” he said.
Sardar Biglari, whose San Antonio, Texas-based firm controls 9.3% of Cracker Barrel, wanted the company to divest its Maple Street Biscuit Co. subsidary. “We believe Maple Street is an unnecessary extracurricular distraction for the Board and management,” he said.
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A large shareholder who wants Cracker Barrel Old Country Store Inc. to divest its Maple Street Biscuit Co. subsidiary lost a proxy fight for two seats on the company’s board.

Sardar Biglari, whose San Antonio, Texas-based firm controls 9.3% of Cracker Barrel, has sought election to the board seven times in the last 13 years, Cracker Barrel said.

He has questioned Cracker Barrel’s acquisition strategy in the past but this year was the first time his platform included divestiture of Maple Street, the former  Orange Park-based restaurant chain that Cracker Barrel acquired in 2019.

“Divest Maple Street Biscuit. Management can’t effectively execute a turnaround while spending time on a rounding error,” Biglari said in an October letter to shareholders.

“We believe Maple Street is an unnecessary extracurricular distraction for the Board and management,” he said.

Biglari was seeking election for himself and one associate to the company’s 10-member board of directors at Cracker Barrel’s annual meeting Nov. 21, but all 10 of the company’s nominees won approval from shareholders.

Biglari is Cracker Barrel’s third-largest stockholder behind BlackRock Inc., with 15.9% of shares, and The Vanguard Group with 11.8%, according to the company’s proxy statement.

Cracker Barrel is implementing new initiatives to revive the company’s brand under CEO Julie Felss Masino, who joined Cracker Barrel 13 months ago.

The initiatives include new menu items and remodels to make its stores more visually appealing.

The company operated 658 Cracker Barrel stores and restaurants at the end of its fiscal year Aug. 2, and had 66 Maple Street restaurants.

Maple Street, founded in 2012 with a Jacksonville restaurant in the San Marco neighborhood, was acquired for $36 million in October 2019.

The chain has doubled in size from the 33 restaurants it had five years ago, but Cracker Barrel does not break out financial data for Maple Street in its quarterly reports.

Cracker Barrel reported flat sales in the fiscal year but said it expects to report revenue rose 2.6% to $845.1 million in its first quarter ended Nov. 1, with sales at its restaurants open for more than one year rising 2.9%.

However, retail sales in the stores that accompany the restaurants fell 1.6%.

Biglari and his associate, Milena Alberti-Perez, each won more than 3 million votes at the annual meeting but the 10 company nominees all received more than 11 million votes.

“We thank our shareholders for their constructive engagement over the past several months, and their overwhelming support today,” Cracker Barrel’s board said in a statement issued after the meeting.

“During the course of our engagement, we were heartened by how many shareholders understood and expressed support for the strategic imperatives that we are pursuing,” it said.

“We are encouraged by the early favorable results across our operations as the plan takes hold and remain confident that we are on the right path to return Cracker Barrel to growth and meaningful value creation for all shareholders.”

Duos Technologies expects profitability with new energy deal

Duos Technologies Group Inc. reported a third-quarter loss but also announced a large new contract that CEO Chuck Ferry predicts will lead to a profitable 2025.

Jacksonville-based Duos said the two-year agreement to deploy and operate a fleet of mobile gas turbines and balance-of-plant inventory will produce an estimated $42 million in revenue.

New Duos Technologies Group CEO Chuck Ferry.

Duos reported third-quarter revenue of $3.24 million as it recorded a net loss of $1.4 million, so the contract could be a game changer.

“These revenues, along with the backlog we already have and expected growth with our Edge Data Center business and Railcar Inspection Portal business in the coming year allow me to confidently say we will become profitable in 2025,” Ferry said in a Nov. 20 conference call, according to a company transcript.

The company’s main business has been providing technology for the railroad industry but in June, it announced the formation of Duos Edge AI to provide artificial intelligence data centers in rural markets.

In August it announced the third business line of Duos Energy Corp. to provide energy services.

The energy business was a natural fit for Ferry, who had been CEO of Jacksonville-based fast-track power plant company APR Energy before it was acquired in 2020 by Atlas Corp.

The relationship with APR led to the $42 million contract with Fortress Investment Group.

“About three months ago, we became aware that APR Energy’s parent company, Atlas Corporation, wanted to exit the power business,” Ferry said.

“With this opportunity in mind, we formed a partnership with Fortress Investment Group, who will acquire the assets that will then be managed by Duos,” he said.

Ferry cautioned, in response to an analyst’s question, that the revenue is not guaranteed but estimated based on the business plan developed with Fortress.

Duos reported total revenue fell 2% to $5.82 million in the first nine months of this year.

More Shoe Carnival stores converting to Shoe Station

Shoe Carnival Inc. is converting more of its stores into another brand it owns called Shoe Station, with Florida one of its target markets.

The footwear chain controlled by former Jacksonville Jaguars owner Wayne Weaver announced the banner switch initiative in September. As it announced third-quarter earnings Nov. 21, CEO Mark Worden said the conversions are going so well it is expanding the program.

“During the third quarter, we expanded the testing of this strategy by re-bannering seven more stores, bringing the total number of re-bannered stores to 10,” Worden said in a conference call with analysts. 

“It’s still early days on these seven stores, but the results are promising,” he said.

“As such, we plan to further expand the testing by re-bannering an additional 25 stores in the first half of fiscal 2025.”

The conversion of stores from Shoe Carnival to Shoe Station is focused on Southeastern markets. Worden said Florida is one of the markets targeted but he didn’t specify cities.

Shoe Station’s website shows it has two locations in the Tampa-St. Petersburg market.

Shoe Carnival has two stores in the Jacksonville market, in the Regency area and in Orange Park, according to its website.

The Evansville, Indiana-based company operated 361 Shoe Carnival stores, 42 Shoe Station stores and 28 Rogan’s stores as of Nov. 21.

The company acquired Rogan’s in February, its second acquisition after buying Shoe Station in 2021.

Shoe Carnival and Shoe Station stores target different customers, Worden said in September when he first discussed the banner switches.

Shoe Carnival reported earnings of 70 cents a share in the third quarter ended Nov. 2, 10 cents lower than last year.

Sales at stores in all of its brands open for more than one year fell 4.1%, with Hurricanes Helene and Milton impacting about half of its stores, Worden said.

“While we did not experience major damage to our stores resulting from the hurricanes, our business was significantly disrupted, ranging from some stores being closed for a day or two all the way to one of our stores in Western North Carolina being closed for nearly a month without electricity or water,” he said.

Unseasonably warm weather also affected sales, delaying the start of winter boot season, Worden said.

Weaver is chairman of Shoe Carnival and its largest shareholder, controlling 32.7% of the stock with his wife, Delores.

Dream Finders jumps on addition to stock index

Dream Finders Homes Inc.’s stock jumped higher Nov. 21 after S&P Dow Jones Indices announced the Jacksonville-based homebuilder would be added to the S&P SmallCap 600 index.

Stocks commonly rise when they are added to indexes because funds that track the indexes have to buy the shares to keep their funds consistent.

Dream Finders rose as much as $4.47 to $32.38 Nov. 21 after the announcement.

Dream Finders replaced Haynes International Inc., which was removed from the index after being acquired.

Restaurant Brands’ Tim Hortons chain expanding to Florida

A chain owned by Restaurant Brands International Inc., which operates mainly in Canada, is expanding into Florida.

Tim Hortons, a chain known for its coffee and doughnuts, filed paperwork with Manatee County to open a restaurant in Ellenton, according to a Nov. 18 story in the Bradenton Herald.

Tim Hortons is a Toronto-based coffeehouse and restaurant chain.

Toronto-based RBI owns four chains, including Jacksonville-based Firehouse Subs, which it acquired in December 2021.

It also owns the Burger King and Popeyes brands.

Tim Hortons was founded by a hockey player in 1964 and operates restaurants in 19 countries but mainly in Canada, which had 3,894 of its 5,833 locations at the end of 2023.

It had 631 U.S. restaurants in 15 states, with two in the Atlanta market being the closest to Florida.

Tim Hortons has expanded beyond breakfast food to offer sandwiches and other menu items.

According to the Miami Herald, Tim Hortons had restaurants in Broward County in the 1980s and 1990s but the story did not say what happened to those locations.

RBI has been looking to expand its chains, including Firehouse, into new international markets.

But it has not said anything about plans to grow Tim Hortons in Florida.

Medtronic ENT business increases revenue

Medtronic plc said its Jacksonville-based division, which makes surgical instruments for ear, nose and throat physicians, grew revenue by a low-single-digit percentage in its second quarter ended Oct. 25.

The medical device products giant does not give more data on its ENT business in its quarterly reports.

The Dublin, Ireland-based company said Nov. 19 that total revenue rose 5.3% in the quarter to $8.4 billion, with adjusted earnings rising by a penny to $1.26 a share.

 

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