Biglari Holdings Inc (NYSE:BH): Wants Cracker Barrel To Pursue Change In Its Board – CBRL


Dallas, Texas 11/08/2013 (Financialstrend) – Texas based Biglari Holdings Inc (NYSE:BH) provides investment management and the franchising of restaurants in the U.S. The company is involved in the ownership and franchising of restaurants mainly under two restaurant concepts including Steak n Shake and Western Sizzlin besides operating other concepts of Wood Grill Buffet and Great American Steak & Buffet comprising hot and cold buffet dining style. On Thursday, the stock of the company gained over 0.6% to end the trade at $456.95. Its 52 week price ranges between $326.55 and $467.89. The stock has gained over 10.6% in past one month’s trade.

Biglari holds 20% of Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), that operates 620 stores in 42 states and its restaurant accounts for most of its revenues. However the Biglari CEO, Sardar Biglari is at odds with Cracker Barrel management and trying to influence the change. Continuing his efforts, he sent another letter, couple to weeks ago to Cracker Barrel shareholders, explaining his vision for the company.

The Biglari CEO mentioned in his letter, “Without any question, Cracker Barrel is an A+ brand, but in our view, it has not achieved A+ performance because the board lacks entrepreneurial talent.” Moreover he argues to expand the debt level and advocates paying company shareholders a special cash dividend of $20. The CEO supports his argument stating that the debt would improve the company’s capital structure and this is the perfect environment given the low interest rates condition. Moreover Biglari believes that Cracker Barrel’s returns on capital for new stores are subpar and hence it is better to use cash for paying special dividend than opening new stores.

Cracker Barrel’s Stock Update

The stock fell 2.19% or $2.47 from its previous close during Thursday’s trade to end the trade at $110.21. Its 52 week price ranges between $60.07 and $115. The stock has surged over 70% year to date as compared to 17% gains witnessed by the stock of Biglari Holdings Inc (NYSE:BH).