Consumers are moving toward quick service food places, says Jim Cramer

Like I said in the old days, Cracker Barrel was really one great stock me for nearly four decades after it came public in 81, it steadily marched higher. I used to constantly talk about it just and I went used to go all the time. But then, you know come to the financial crisis. It did become a mega horse galloping from 10 and change in late 2008 to an all time high of 185 in late 2018, 10 years. When the pandemic hit though the stock, it just got eviscerated. But by April 2021 was back to pre COVID levels. This thing was like Teflon. Since then though Cracker Barrel has been rolling downhill. It’s now $56 and change only a few bucks above where bottom during lockdown in 2020. So what the heck happened here? When you dig into the numbers, it’s clear Cracker Barrel came out of the pandemic is a much weaker operator. That’s highly unusual. Sure they’ve had some revenue growth versus 2019, but much that’s because they acquired Maple Street Biscuit Company in 2019 and that brand became the only real source of new store growth here. More important, Cracker Barrels earnings are still nowhere near where they were in 2019 because their profitability never really recovered. See, these guys earn more than $9 per share in 2019, but this year they’re only expected to make $4.59 per share, and that’s down substantially from 2023 to the cash flow trajectory is similarly subpar. So what’s the problem here? First, consumers have been moving more towards quick service or limited service food places rather than full service restaurants like Cracker Barrel. Second, their clientele skews older, and because many older people are on a fixed income, they tend to be more resistant to price hikes. While every other restaurant raised prices aggressively over the past few years, Cracker Barrel hasn’t had much room to maneuver, even though they’re dealing with the same cost inflation as everybody else. Third, the company’s been slow to adapt to the modern Europe. They only introduce a loyalty program late last year, they haven’t had much success appeal to younger people, and while Map Maple Street Biscuit can give them some growth. It’s still too small to really move the needle at this point. Don’t miss a second of Mad Money Follow at Jim Cramer on X. Have a question? Tweet Kramer Hashtag Mad Mentions. Send him an e-mail to [email protected] or give us a call at one 807 Four Three. CNBC. Miss something? Head to madmoney.cnbc.com.