Cracker Barrel plans to begin selling some of its merchandise, including pancake and muffin mixes, in grocery stores. Cracker already sells several of its products in its restaurants and online, but investors want the company to branch out and expand its brand.
Cracker Barrel Old Country Store, Inc./PRNewsFoto/File
Cracker Barrel plans to begin selling its some of its products in grocery stores.
The Lebanon-based restaurant chain already sells items like pancake and corn muffin mixes, cobbler filling and syrup in the stores attached to its restaurants and online.
But The Tennessean reports (http://tnne.ws/XJUP35) that the chain has signed a multiyear licensing agreement with John Morrell Food Group, a Smithfield Foods subsidiary, that will make those products available at grocery stores, mass merchandisers and other retail outlets.
Stephen Anderson, an analyst with Miller Tabak, said that using a licensing agreement is smart because it puts most of the risk on John Morrell if the venture fails. John Morrell also has a large presence in Western states where Cracker Barrel currently has little or no footprint.
Cracker Barrel has not yet said when its products will hit store shelves or how much revenue the company expects the strategy to generate.
The company said in a statement that it hopes the move will greatly increase awareness of the Cracker Barrel brand, which is part of a strategic plan the company adopted in 2012 under pressure from its largest shareholder.
Sardar Biglari, who now holds a 19.99 percent stake in Cracker Barrel, has called the brand "an underutilized asset" and has pushed the company to branch into licensing and franchising.
"The Cracker Barrel brand can reach more consumers through supermarkets, which most American households must frequent, whereas not all of them will enter a Cracker Barrel store in the coming year," he wrote in a 2011 letter to the company.
Retail currently accounts for just 20 percent of the company's annual revenues.
Anderson said the retail push could be good for the company, but it is important that they avoid offering so many products that they cannibalize restaurant sales. It's a mistake some other chains have made, especially with the introduction of frozen versions of their menu items.
"If they steer clear of that, I don't think the restaurant operations will be affected that much," he said.