For years, Cracker Barrel has been a beloved spot for many. However, the chain is facing challenges and plans to overhaul its entire restaurant design, whether regulars are on board with the changes or not.
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00:00For years, Cracker Barrel has been a beloved spot for many. However, the chain is facing
00:04challenges and plans to overhaul its entire restaurant design, whether regulars are on
00:09board with the changes or not.
00:11Since the pandemic, people have been cutting back on food spending, while restaurants have
00:15raised prices to cope with rising inflation. This tough economic climate is affecting everyone,
00:20even well-established chains like Cracker Barrel, which aren't immune to the financial
00:24strain.
00:25The cost of food has had one of the largest increases from inflation.
00:29In the final quarter of 2023, Cracker Barrel raised its prices by 8.7 percent, followed
00:34by another 4.9 percent increase in 2024. They're part of a larger trend, as the National Restaurant
00:40Association reports that restaurant prices overall climbed by about 3.6 percent during
00:462024.
00:47This rise in food prices has contributed to a shift in consumer behavior, with many opting
00:51to cook at home to save money. According to an August 2024 Ipsos Consumer Tracker report,
00:57one-third of Americans now prefer preparing meals at home rather than dining out. Despite
01:01a 6.9 percent earnings boost in Q4 2024 compared to the same period in 2023, Cracker Barrel
01:08still missed analysts' expectations of $899 million and saw a 5.5 percent drop in store
01:14sales.
01:15Cracker Barrel isn't alone in facing these challenges. Chains like IHOP, The Cheesecake
01:19Factory, and Applebee's have also struggled with downturns in their business over the
01:23past year. Cracker Barrel, established in 1969, has long relied on its legacy, but that
01:29alone isn't enough to drive growth anymore. In 2023, new CEO Julie Messino pointed to
01:35cuts in the company's advertising budget as a key factor behind its struggles. Failing
01:39to modernize its brand has hurt several iconic American chains, like Friendly's, which, like
01:44Cracker Barrel, operates in the casual dining sector.
01:47Shortly after taking charge, Messino appointed a new chief marketing officer. During the
01:52fiscal 2024 fourth-quarter conference call, she expressed optimism about the marketing
01:57changes being implemented, highlighting potential improvements for the brand's future.
02:01We've partnered with a top-tier agency and have conducted extensive qualitative and quantitative
02:06research that is informing our upcoming brand refinements. Messino highlighted that Cracker
02:10Barrel's new CMO, Sarah Moore, is a digital marketing expert, emphasizing the importance
02:15of maintaining a strong online presence. With 90 percent of diners researching restaurants
02:20online and 72 percent relying on social media for reviews, Cracker Barrel can't afford to
02:25ignore its digital reputation.
02:28Older restaurants often show their age through a declining guest experience. Cracker Barrel,
02:32unfortunately, has struggled with issues like outdated decor, worn-out furniture, sticky
02:37floors, and inconsistent service. These problems have been growing for some time. The need
02:41for modernization goes beyond just the atmosphere. It's also evident in Cracker Barrel's menu.
02:46While known for homestyle meals at reasonable prices, many customers feel the quality has
02:51declined. Complaints about greasy, overly salty, poorly prepared, and undercooked dishes
02:56are common online. One Yelp reviewer summed it up simply, saying the food no longer meets
03:01the standard they once loved.
03:03Service sucks. Food sucks. Vibes suck. Cracker Barrel's leadership acknowledges the need
03:07for immediate improvements to the guest experience. To address this, they've launched a remodel
03:12initiative at select locations, updating interiors and exteriors through 2025, alongside menu
03:18adjustments. The big question remains, will these changes be enough to turn things around?
03:23Once a restaurant is labeled a senior spot, it's tough to shed that image. In 2023, the
03:27Wall Street Journal reported that 43 percent of Cracker Barrel's customers were over 55,
03:33with just 23 percent under 34. By 2024, CEO Julie Messino acknowledged this trend in an
03:39interview with the New York Post.
03:41We're just not as relevant as we once were. However, overdoing trendy changes could risk
03:46alienating loyal customers and losing the brand's identity. We're looking at you, Nutter
03:50Butter. Are you sure you're still on the right track?
03:52Anybody visit Tim.
03:55Sticking too rigidly to outdated methods won't work, either. For Cracker Barrel to thrive,
03:59it needs a strategic approach that attracts younger customers while still keeping its
04:03appeal for the loyal, older crowd intact.
04:06How do we make sure that we appeal to people who love us, because we want them to keep
04:09loving us, but how do we welcome even more people into the brand?
04:12To attract both younger and older customers, Cracker Barrel has introduced alcohol to its
04:17menu, offering beer, wine, and malt beverages. Weekend brunch has always been a draw, and
04:22adding affordable mimosas to the mix is a smart way to capture the interest of a new,
04:26younger crowd.
04:28Cracker Barrel has been grappling with declining sales for over a decade, and the challenges
04:32of the pandemic have only intensified the issue. Senior diners, a core part of their
04:36customer base, have become more hesitant to dine out post-lockdown. While attracting a
04:41younger crowd is crucial, CEO Julie Messino is also focused on winning back older patrons
04:46by keeping certain menu prices affordable.
04:49In the first quarter of 2024, Cracker Barrel raised prices at 150 locations while lowering
04:54them at 70 others across the country. The chain is now introducing new items across
04:59both higher and lower price points and rolling out early dinner specials, hoping to entice
05:03seniors who typically dine earlier to visit more often.
05:07Cracker Barrel is facing tough competition from restaurants with stronger advertising,
05:11better deals, and more appealing menus. As a spot that serves both breakfast and dinner,
05:16it competes on two fronts — Denny's and IHOP for breakfast, and Olive Garden and Cheesecake
05:21Factory for dinner.
05:22In the summer of 2023, former CEO Sandra Cochran acknowledged that their marketing efforts
05:27weren't as effective as needed, especially in drawing in new customers. Against the backdrop
05:32of a highly competitive and promotional marketplace, many of the competitors are not only getting
05:36sharp in the price point, but they also increase their level of advertising.
05:40Cracker Barrel must adapt to this fierce competition, leveraging its new strategies to attract a
05:45fresh customer base or risk falling behind.