Cracker Barrel Old Country Store Inc.’s largest single shareholder urged the family-dining operator Wednesday to consider strategic options, including a possible sale.

Activist investor Sardar Biglari, chairman of San Antonio, Texas-based Biglari Holdings Inc., said in regulatory filings that the management and board of Lebanon, Tenn.-based Cracker Barrel were not maximizing returns for shareholders.

In the filing, Biglari said Cracker Barrel's board “should undertake a value maximization process by reviewing all potential extraordinary transactions, including the sale. …” Biglari added that if the board does not take action on a possible sale, he would call for a special meeting to vote on a nonbinding resolution recommending the board pursue a sale.

Biglari, whose entities hold 19.9 percent of Cracker Barrel’s outstanding shares, has unsuccessfully tried three times to gain representation on the company's board. In November, shareholders voted against Biglari’s nonbinding proposal for a $20 special dividend.

In a chairman’s letter to Biglari Holdings shareholders dated Dec. 6, Biglari outlined the company’s increase in Cracker Barrel stock.

“We purchased the 20-percent stake in Cracker Barrel for $241 million,” Biglari told shareholders. “The market value at the end of our fiscal year 2013 was $485 million. Along the way, we have collected a total of $18.4 million in dividends.”

Messages left with Cracker Barrel and Biglari representatives were not returned by press time.

Analyst Bryan Elliott of Raymond James said Biglari’s demand for a sale would have little effect in light of shareholders’ November rejection of Biglari’s proxy fight for board seats and his dividend proposal. “He has no support among the shareholder base, clearly, so it doesn’t have much effect, other than it’s a distraction,” Elliott said.

He added, “He's already struck out three times. Now he's going to strike out four times. He’s going for the Golden Sombrero," he said, referring to a baseball phrase for a batter striking out four times in a single game.

Finding a potential buyer for Cracker Barrel, whose stock is trading at slightly more than 10 times earning before interest, taxes, depreciation and amortization, would be a challenge, Elliott noted. “That’s full value,” he said. “For someone to buy the company at this moment, they’d have to pay a premium to do that. I don’t see anybody justifying paying more than 10 times for a very mature Cracker Barrel business. So it’s a pipe dream.”

Elliott said Biglari “needs to get out of his position, and this is his last gasp to do it.”

In the first quarter ended Nov. 1, Cracker Barrel reported a 17.1-percent increase in profit compared with the previous year. The company said traffic fell 0.1 percent, but average check rose 2.9 percent compared with the previous year’s quarter. 

Biglari Holdings also owns, operates and franchises the Steak ’n Shake and Western Sizzlin’ chains.

Cracker Barrel operates 625 restaurant-retails units in 42 states.

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