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Cracker Barrel Cracks Apart
A reminder why the social responsibility of business is to focus on growing profits
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I have been a regular and public opponent of DEI, ESG, and anything else that leads to a misdirection or hijacking of corporate purpose. All these efforts, I believed, were part of the “Woke” movement that prioritized equality of outcomes over equality of opportunity, and demanded that capitalists be deprioritized, if not punished.
After the Bud Light fiasco and resulting backlash a couple of years ago, it was clear that the Woke fever (something I had likened to a mania and popular delusions I had studied during my research in to financial bubbles) had broken. The mania, which reminded me of the Salem Witch Trials and the Tulip Bubble, seemed to have reached its limits.
Since then, there has been a steady drumbeat of other such cases and one company after another has changed direction, dumping DEI initiatives:
Google eliminated its diversity hiring goals.
Last month, Cracker Barrel announced a new logo. Gone were “Uncle Herschel” and the barrel and the classic font, all ditched in favor of a sleek, imageless, modern design. The move pointed to a company embarrassed by itself and its customer base, one trying to remake its image to attract a more upscale clientele.
The backlash was swift – and massive. The new logo was unveiled on August 19. Customer traffic slowed to a trickle, with sales “dead for a week”. By August 21, the company’s stock tanked, losing 12 percent of its market value. On August 25, a poll showed that the share of the U.S. adult population with a negative view of the company jumped from 10 percent to 25 percent in just two days.
President Donald Trump even weighed in. On August 26, a mere five days after the new logo was revealed, he posted an animated video in which he greets the old timer…
Online commentary exploded (including an AI generated video of baby Trump addressing the matter), and shortly thereafter, the company announced it was bringing back the old logo. Cracker Barrel reversed course so quickly that surely Uncle Herschel got whiplash.
I find it noteworthy that a company could make such an obvious social blunder at this stage of the social cycle. After all, we’ve had a few years and lots of examples that made it clear a cultural course correction was underway. The company’s leaders seemed oblivious to this reality, suggesting they may be surrounding themselves people who think and feel the way they do. It leads to an obvious question: did the leaders even know anyone who eats at Cracker Barrel?
The logo redesign wasn’t a standalone idea. It was part of an attempt to help fix an ailing business. Declaring that the company was “just not as relevant”, a new CEO launched an initiative to completely remake the company’s image. $700 million was spent on remodeling restaurants, disposing of the tchotchkes, kitsch, and “old-timey” feel in favor of a sleeker, more modern design; the wooden tables and chairs were replaced by booths. Long-time menu items were ditched in favor of dishes like “premium savory chicken and rice” and TikTok influencers were invited to taste the new menu. A year ago, its annual report featured a Diversity and Inclusion section trumpeting seven “Business Resource Groups” dedicated to promoting diversity; the company had previously put out rainbow-colored rockers to celebrate Pride Month.
Throughout it all, they can’t say they weren’t warned. Sardar Biglari, a large investor in Cracker Barrel, repeatedly sounded the alarm over the company’s direction. He called the rebrand an “obvious folly”, called for refocusing on the company’s core business, and said it wasn’t the brand but the board that was broken; he issued one warning after another (after another). One commentator even remarked that the company’s diversity efforts were the result of feeling “compelled to atone for past sins” and they let their “eye off the ball”.
This story particularly resonated with me because of my own experience. When I served on corporate boards, I always advocated for the company to keep its eye on its core mission and not get distracted or waste resources on anything superfluous to that goal, including DEI and ESG initiatives. I’ve argued that management’s only concern should be to maximize long-term shareholder value, and that initiatives such as Cracker Barrel’s diversity-focused Business Resource Groups lead to inefficiencies, distractions, and lost profits, amounting to a “DEI Tax” that takes money out of everyone’s pockets.
Repeal The DEI Tax | ||||||
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Last week, The Washington Examiner ran an opinion piece I wrote about the “DEI” tax that millions of American shareholders are currently paying. My hope is that the piece spurs a conversation about t… | ||||||
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I also sympathize with Bilgier, in large part because I too raised concerns about DEI and ESG efforts at a public company. My efforts generated some news, which you can read about here and here, and listen to on an episode of “What’s Bugging Me” entitled “D.E.I. and E.S.G. Must D-I-E”.
Doing Good by Doing Well | ||||||
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Those who have followed my work know that I unapologetically believe business leaders should focus on generating and increasing profits. Pursuing other objectives, like prioritizing social goals, ine… | ||||||
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Now that I am running my own company, I have a chance to put into practice a lot of ideas that I advocated for in boardrooms. And that is why Goodwell Foods has a relentless focus on producing high quality pizzas at the lowest possible cost and getting them out the door and onto shelves as quickly as possible. Every decision, every goal, every discussion, must always be brought back to that simple yardstick.
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VIKRAM MANSHARAMANI is an entrepreneur, consultant, scholar, neighbor, husband, father, volunteer, and professional generalist who thinks in multiple-dimensions and looks beyond the short-term. Self-taught to think around corners and connect original dots, he spends his time speaking with global leaders in business, government, academia, and journalism. He’s currently the Chairman and CEO of Goodwell Foods, a manufacturer of private label frozen pizza. LinkedIn has twice listed him as its #1 Top Voice in Money & Finance, and Worth profiled him as one of the 100 Most Powerful People in Global Finance. Vikram earned a PhD From MIT, has taught at Yale and Harvard, and is the author of three books, The Making of a Generalist: An Independent Thinker Finds Unconventional Success in an Uncertain World, Think for Yourself: Restoring Common Sense in an Age of Experts and Artificial Intelligence and Boombustology: Spotting Financial Bubbles Before They Burst. Vikram lives in Lincoln, New Hampshire with his wife and two children, where they can usually be found hiking or skiing.
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