Cracker Barrel shares nosedive following storm over logo change

By Suzanne McGee

Aug 21 (Reuters) - An ongoing attempt by Cracker Barrel Old Country Store CBRL.O to revamp its brand triggered a backlash and unleashed a selloff that wiped out most of the dining chain's year-to-date stock price gains.

The restaurant company on Tuesday unveiled a new logo that dispenses with the image of a seated, overall-clad man leaning against a barrel in favor of one that simply displays the chain's name against a barrel-shaped yellow silhouette. That prompted conservatives including Donald Trump Jr. as well as posters on Reddit and other social media sites to criticize the move.

The stock has taken a hit, falling as much as 13% by midday on Thursday.

Cracker Barrel's stock regained some ground later in the trading session, rising from an intraday low of $50.27 to close at $54.80, 7% lower on the day. Nearly four million Cracker Barrel shares changed hands on Thursday, compared to a daily average of about a million shares.

"It's understandable that they would want to do something to refresh their image," said Steven Sosnick, market strategist at IBKR, who noted that, like many other casual dining chains, Cracker Barrel has struggled to regain customers and revenues since the pandemic. "But in today's social media-dominated world, when nothing can occur without being commented on, it obviously bothered some people who feel a sense of nostalgia."

In June, Cracker Barrel reported a 0.5% increase in revenues for the third quarter of its fiscal year, along with a 1% increase in comparable store sales.

Those irked by Cracker Barrel's logo change included Donald Trump Jr., who posted "WTF is wrong with @CrackerBarrel??!" on X on Wednesday. Representatives for Trump did not immediately respond to a request for comment.

"This matters because tradition matters," opined Nate Morris, a Republican candidate for the U.S. Senate in Kentucky, also on X.

"Our values haven't changed, and the heart and soul of Cracker Barrel haven't changed," the company said in a statement provided to Reuters.

Market analysts said they think the selloff says more about the role that social media plays in today's financial markets than it does about Cracker Barrel itself.

"Momentum rules, and social media can create a heck of a lot of both positive and negative momentum," said Sosnick.

Others, though, wonder just why a storm of outrage is causing such a big decline in the share price.

"To claim that Cracker Barrel is going down in price because it changed its logo leads me to believe maybe people don't really know why the stock is going down," said Sam Stovall, chief investment strategist at CFRA Research.

"People go there for the food. They don't go there for the logo."