Cracker Barrel closes Portland Jantzen Beach location

[ClownLoach]

If you look back in the 80's, 90's Cracker Barrel tried to sell itself to investors like a blue chip stock of sorts. This is why it has a high dividend.

In the past 5-8 years I don't know who the management is and I don't follow the company that closely but they seem to be trying to mess around and do different/strange things. They bought some kind of limited service biscuit format and I'm not clear how that actually performs. This expansion to CA/OR is clearly a very miserable and nasty failure for them. Adding liquor in 2020 was another somewhat curious move, while it makes sense to me, as a Nevadan, I can see how it may not be as acceptable to core customers of the chain from other regions where liquor is more regulated.

They had another earnings report at the end of February.

I was very satisfied with their pricing in Las Vegas. Not bad at all.

CA/OR- complete joke pricing. They should be ashamed for even trying to charge what they are charging.

I think their model is too labor intensive for the current labor market. They operate in a lot of states where servers are just paid the sub minimum wage+tips but with their large units, high volume, and high labor concept they still have a lot of people on staff who are non-tipped and paid quite a bit more.

What I see happening to their financials is similar to a lot of other restaurant operators in the US. And the period we are sitting in right now is tougher for restaurants than any period since the reopening. Things are cracking in the restaurant business, literally, as we speak. It is very very tough.

The thing I like about Cracker Barrel is at least the units are all corporate operated. Then again that didn't stop them from being stupid in OR/CA regarding price, menu, hours, etc. I hate to say a franchisee may have been able to do better...

So I think in recent years this chain has management in place that wants to do somewhat drastic things to grow and the results have been mixed (at best). This isn't the old 80's and 90's company that just built new units year after year across low cost regions of the US to show ongoing growth but was otherwise to be a boring sleepy investment you didn't need to think about much.

I'm going to take a guess. Someone came up with the West Coast expansion idea and ran with it. They're already gone. The remaining management knows nothing about the area, probably has a deep seated bias against "those goddurn Californians" and has decided to punish their customers for the higher cost of operations in their area. So instead of raising the price chain wide on each item 25 cents to support their brand in the few California and Oregon stores they decided to pass all of the costs along to those few locations, resulting in their demise due to breakfast platters being $7 higher than the chain and $9 higher than the comparable $8 IHOP platter, making their brand look wildly overpriced for such simplistic food.

[buckguy]

It may be even simpler given their overall performance. There are plenty of places that trade on selling a big artery clogging breakfast everyehere. I was in Oregon (not Portland) shortly before COVID and that was the case there. In that scenario, regional expansion isn't likely to be successful, esp. if you're bringing something that seems straight out of somewhere else and has no verneer of trendiness or interesting novelty---unless you count their past political missteps, there's no "buzz" of any sort about Cracker Barrel. Often, regardless of region, the faves in this segment are locally owned which may explain why nationals and semi-nationals like Perkins (which keeps going bankrupt), IHOP and Denny's keep trying to reinvent themselves. Cracker Barrel seems like the kind of place that is inheriting the cafeteria trade (which is nearly dead) in its home region, but can't even hold on to them anymore.

[veteran+]

I agree wholeheartedly with storewanderer about this industry "cracking".

IMO, it is a reckoning that was exacerbated by Covid. The trajectory of this was present before Covid. The signs were everywhere.

From the uber volatile egotistic celebrity chefs all the way down to the lousy fast food franchisees. Inflation, incompetent leadership, employees fed up with this work, et al.

[storewanderer]

I agree wholeheartedly with storewanderer about this industry "cracking".

IMO, it is a reckoning that was exacerbated by Covid. The trajectory of this was present before Covid. The signs were everywhere.

From the uber volatile egotistic celebrity chefs all the way down to the lousy fast food franchisees. Inflation, incompetent leadership, employees fed up with this work, et al.

I do not agree with charging a higher price in TN to subsidize CA's higher operating costs. That is not fair to the people in TN who get much lower wages. I am in NV and I see this often where a CA business comes here and tries to charge CA prices. It does not go well, our wages here are not high enough to pay those prices either (also our utilities are cheaper, wages are lower, etc.). However the issue I have is when a chain somehow thinks there is a reason to price 30%+ higher in CA than some cheaper state- that is too much of a price variance. Usually in sit down restaurants $1-$2 per entree item higher in CA is justified based on things like wages/rent/etc.

I never understood why tipped employees were allowed to be paid basically nothing, then have tips "make it up" so they made at least minimum wage. This struck me as an odd model, why not just pay the employees the wage needed to run the operation? And now in the US we have this odd split where some states no longer do the low wage for tipped employees but many states do still do that low wage for tipped employees so for restaurants this has created a very uneven playing field.

I think the problem with fast food franchisees are too many have debts and basically their debt service is so high that it causes them to price much too high to try and pay their expenses. Also too many buy the business as an investment, and do not seem to care much about the business. Add to it ridiculous franchisors who change logos back and forth and push mandatory sign changes onto franchisees that cost many thousands of dollars for what- nothing. Burger King is now back to their 80's logo and signs are being changed back to cheap looking thin versions of the signs that got removed before (which were nice thick signs). Ongoing menu changes, etc. are also difficult.

The leadership problem is since the industry thrives on paying people almost nothing (tipped employees), of course they don't want to pay the (non-tipped) leadership what they need to in order to retain good leadership so they jump and go into a management position in retail, etc. with similar working conditions but higher pay.

This industry could solve a lot of its problems by doing something about portion size too. It takes labor and materials to make food. Throwing food out therefore has two costs. The amount of food waste that occurs in full service restaurants is unreal and needs to get under control. In fast food, food waste is less but there is still too much and a lot of that would be solved by better quality control.

[veteran+]

That "pay model" came as a result of very powerful restaurant industry lobbyists.

[storewanderer]

That "pay model" came as a result of very powerful restaurant industry lobbyists.

That pay model pre-dates me.

When I was very young and heard about that pay model I asked someone why anyone would go work in a restaurant waiting tables. I never did get an answer.

Nevada thrives on tips yet even here that wage model got canceled a number of years ago.

[BillyGr]

When I was very young and heard about that pay model I asked someone why anyone would go work in a restaurant waiting tables. I never did get an answer.

Nevada thrives on tips yet even here that wage model got canceled a number of years ago.

Pretty simple reason - many people working those jobs can make more money than they would at most jobs they would otherwise have.
If not waiting tables, they would likely be working somewhere that pays closer to the minimum wage (a store or similar), and even a halfway decent waitperson in a moderate priced place will make more than that.

For instance, our local diner (where you might spend $20/person now for a dinner). Two people at the table, totals $40, so an $8 tip at 20%.
Server is handling several tables at a time, so over an hour they could be getting $32 in tips (that $8 x 4 tables of 2, possibly a bit less from some if they get just sandwiches or similar, but this is dinner time, possibly more if they get more than just a meal and a soda/similar drink or have more than 2 at one of the tables).

That is over 2x the minimum wage for NY (which is still just under $15 outside the NYC area), and also not counting the actual pay they get, even if it is fairly low (not sure exactly what that is these days, I think that was raised somewhat as well from the old $2.xx per hour level).

Stores may not pay exactly minimum either, but likely still under $20/hour (these aren't CA unionized grocery chains or similar).

If that server worked for another restaurant (even, say, a chain like Red Lobster, in an area 15ish miles away nearer to the bigger populations surrounding Albany), where meals under $20 barely exist any longer, they would get even more in tips for the same number of customers, thus even better for them.

[veteran+]

That "pay model" came as a result of very powerful restaurant industry lobbyists.

That pay model pre-dates me.

When I was very young and heard about that pay model I asked someone why anyone would go work in a restaurant waiting tables. I never did get an answer.

Nevada thrives on tips yet even here that wage model got canceled a number of years ago.

Yeah.......................it predates me as well.

[mjhale]

The US had (still has?) too many restaurants with too many "concepts" that were propped up with investment money along with a celebrity chef to bring in the unsuspecting drones who chase after whatever the "in" place to be seen eating is for this week. I'm not jaded at all! Lol Then you have the chains like Cracker Barrel who think their concept will work anywhere just because some exec thinks it will (everyone loves home cookin'....). And said chains do no or the wrong kind of market research and not realize there are local options with a far better product and a dedicated following. Even then the product just isn't that good. On a recent trip I stopped at a Cracker Barrel in an area that I would say is in their "core" demographic. They closed at 8 PM on a Saturday even in a busy shopping area. At 6 PM when I was there they were deserted. The chicken I ordered was burned, dry and with no taste. The green beans were straight out of a can and the cornbread might as well have been a cup of sugar. Imagine taking this same lack of execution up the line to some "concept" restaurant where you are paying multiples in price for mediocre food. I don't deny the struggles that restaurants have had over the few years. However we seemed to be very focused on the show and the image instead of the actual food quality. And expansion just because. The restaurants that I see prospering now are the ones who focused and are focusing on food quality and honest, sincere good service from their staff. I'm willing to pay a bit more because the product is worth it. Restaurants that stick around for many years focus on those things. Not whatever trend and whatever chef's smiling face is trying to get you to eat there.

[veteran+]

Well said!