Cracker Barrel may be crying uncle, but TheStreet Pro’s Ed Ponsi ain’t giving in.
The Uncle Herschel donnybrook began after Cracker Barrel (CBRL) decided to modernized its logo, scrubbing the barrel and booting the beloved “Old Timer” figure into oblivion.
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The overalls-wearing character resembles Herschel McCartney, the real-life uncle of the company’s founder Dan Evins, a Shell oil representative, who in 1969 developed the restaurant and gift store concept initially as a plan to improve gasoline sales.
Uncle Herschel has been sitting at that barrel since 1977.
In addition to the logo change, the Lebanon, Tenn.-based restaurant chain’s renovations involve a shift from the traditional rustic aesthetic to a brighter, more modern design with lighter walls, streamlined booths, and new seating, although iconic elements like stone fireplaces, rocking chairs, and the country store remain
Advertising characters, or mascots, have a long history, becoming popular in the early 19th century to build brand recognition and emotional connections with consumers.
Some early examples including the Quaker Oats Man in 1877, the Morton Salt Girl in 1914 and Mr. Peanut in 1916. All of these characters are still around today.
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Trump pounds Cracker Barrel
Cracker Barrel CEO Julie Masino initially defended the redesign efforts. In an interview with “Good Morning America” she said that public feedback to the company’s remodeled locations had so far been “overwhelmingly positive.”
“People like what we’re doing,” Masino said at the time. “Cracker Barrel needs to feel like the Cracker Barrel for today and for tomorrow — the things that you love are still there. We need people to choose us, and we want people to choose us. The buzz is so good, not only from our customers, but from our team.”
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Well, the buzz quickly turned into a buzzsaw of controversy that reached right into the White House and gave Cracker Barrel’s stock a brutal haircut.
Critics accused the rebrand of being too “woke” and leaning into progressive trends, as calls for a boycott grew and the company’s shares tumbled as much as 13%..
President Donald Trump took to social media to declare that “Cracker Barrel should go back to the old logo, admit a mistake based on customer response (the ultimate poll), and manage the company better than ever before.”
“They got a Billion Dollars worth of free publicity if they play their cards right,” Trump said. “Very tricky to do, but a great opportunity. Have a major News Conference today. Make Cracker Barrel a WINNER again.”
The backlash was strong enough to keep Uncle Herschel right where he was and the new logo never saw the light of day.
“”We thank our guests for sharing your voices and love for Cracker Barrel,” the company said in a statement. “We said we would listen, and we have. Our new logo is going away and our ‘Old Timer’ will remain.”
Trump returned to social media and proclaimed “Congratulations ‘Cracker Barrel’ on changing your logo back to what it was.”
“All of your fans very much appreciate it,” the leader of the free world said. “Good luck into the future. Make lots of money and, most importantly, make your customers happy again!”
Veteran trader cites Cracker Barrel’s returns
Cracker Barrel’s stock surged with the news and shares were up nearly 8% at last check.
However, Ponsi, managing director of Barchetta Capital Management, was not impressed.
Related: Cracker Barrel CEO pushes back on logo controversy
“This type of emotional reaction can cause a stock to hit an air pocket, but the effects are usually temporary,” he said in his Aug. 27 column.
Ponsi pointed to the case of United Airlines (UAL) , which saw its shares fall sharply in 2017 after a video of a passenger being dragged down the aisle went viral.
“Some consumers swore they’d never fly United again,” he said. “I’m sure they forgot that oath as soon as they became inconvenienced.”
Then there was Anheuser-Busch Inbev (BUD) , which took a beating in April 2023 over a social media promotion that Bud Light conducted with transgender influencer Dylan Mulvaney, which prompted musician Kid Rock to machine gun a case of the stuff.
Anheuser-Busch Inbev dropped from the mid-$60s to the low $50s, Ponsi said, but the stock was trading at around $62 recently.
“That return may not seem impressive, but since the Bud Light fiasco began, BUD is outperforming competitors Molson Coors (TAP) , Sam Adams (SAM) and Constellation Brands (STZ) ,” he said, adding that “all three competitors have suffered outsized losses, perhaps due to a drop in overall alcohol consumption.”
Ponsi said he does not believe the Cracker Barrel controversy will weigh down the stock for long, nor does he think the company’s turnaround will create a buying opportunity.
“Why?” he asked. “This is just not a good stock.”
Ponsi pointed Cracker Barrel’s returns, where shareholders have lost money for the past six years.
“Cracker Barrel may be an OK place to eat, but there’s no way I’d own shares of this stock,” he said. “The restaurant business is tough enough as it is, and consumers are still dealing with the worst bout of inflation in over 40 years. Add in the current controversy, it’s hard to see any upside for Cracker Barrel.”
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