By all accounts, Cracker Barrel Old Country Store (CBRL +5.09%) is doing extremely well.
In June, the restaurant chain announced surprising results for its fiscal third quarter. Analysts expected the company to lose $0.42 per share on sales of about $778 million. Instead, the company reported a profit of $0.29 a share on sales that were $20 million higher than expectations.
That sent the stock soaring in mid-June, and it has more than doubled in price this year, up about 104% as of July 28.
NASDAQ: CBRL
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Yet the company just announced that CEO Julie Masino will step down next month and be succeeded by David Deno, the former CEO of Bloomin' Brands, which owns chains including Outback Steakhouse, Carrabba's Italian Grill, and Bonefish Grill.
Such a sudden CEO replacement is extremely rare when a company and its share price are excelling.
What gives?
Well, Masino was brought in as CEO in mid-2023 to shake up the company's somewhat stale brand and modernize its 660 restaurants, and, by doing so, perhaps attract a younger customer cohort.
She introduced new menu items and remodeled the restaurants, making them lighter, less old-fashioned, and less folksy.
A step too far in the modernization strategy
But Masino went too far for Cracker Barrel customers when she altered the chain's iconic logo, which featured beloved (at least among fans of the chain) figure Uncle Herschel, an overalls-clad "old-timer" sitting in a rocking chair beside a barrel. Masino unveiled a new, more modern logo in line with efforts to update the brand's image.
It didn't work. In fact, it was a disaster. Fans of the chain found it soulless and generic. They voted with their feet, sending same-store sales down immediately. Cracker Barrel shares plunged, too.
Even President Donald Trump weighed in, writing on Truth Social that the company should admit its mistake and revert to the old logo. The company did just that within days.
And it seemed Masino would survive the episode when shareholders voted in November 2025 to keep her on. But ultimately, the damage was done, and now she's on her way out.
Image source: Getty Images.
What should investors think of all this?
Well, it seems customers who love the chain may be returning, or still loyal, based on the better-than-expected fiscal third-quarter results. And guidance issued for fiscal year 2026 said sales could reach $3.3 billion, down from last year but better than previous forecasts.
The new CEO will need to forge a path that balances retaining the current customer base, which loves the old-timey feel of the restaurants, with attracting younger consumers. It can be done, but it won't be easy.
