Time To Examine Cracker Barrel.
Often, it is better to let a topic recede from the public's focus before addressing it. That is why I have not discussed the Cracker Barrel strategic marketing change. Several people have asked me why I thought Cracker Barrel made a bad decision. (They assumed the decision was bad.) The answer is simple. They were too successful. Cracker Barrel, I believe, was a victim of what many companies have suffered. They worked up the pyramid as shown in the graphic above.
Planning.
Many years ago, I had a supervisor who advised me about how to approach planning. He suggested that I develop a plan, implement it, tweak it where needed, and enjoy it once it was successful. You cheer your success as shown in the first level of the pyramid above. You might say this is a statement of the simplistic; I agree. Of course, few can actually develop a good plan.
The advice that came next was also simple, but not as easy to execute. He also said that I should never relax if a plan were successful; instead, I should reevaluate a plan periodically to ensure that my plan and my assumptions had not changed. He believed that a person who does not reevaluate a plan will reach the end of the planning process with nowhere to go—and probably facing failure. Often, college and university presidents make this mistake. They make a five-year plan, it goes well, and then they don't evaluate it until the end of the five years. Too late.
Re-evaluation is not simple or easy; sometimes it is harder than the original plan. Leaders and individuals, when evaluating a plan, have a propensity, actually, it is a severe bias, to believe that if a plan is going well, neither the plan nor its assumptions need to be examined. Rather than challenge their plan, they look for ways to affirm it. This is the second step on the pyramid, complacency. It is the most deadly.
Cracker Barrel's Success.
Now to Cracker Barrel. It developed a solid business model, targeted a suitable market, and offered a high-quality product. It was successful. I can remember for years that it was difficult to get into a Cracker Barrel restaurant around dinner time. The company was on the first tier of the graphic. It probably cheered its success; I know I did.
What is not as obvious is whether the company moved into the second phase of the chart and accepted complacency, believing that its underlying assumptions were valid. As an example, it may have assumed that baby boomers would always like the menu offerings, overlooking the fact that the tastes of this group were changing. This change in tastes was driven more by the medical profession's emphasis on cholesterol, I should add, than by the desire of baby boomers to eat something different. I still like chicken-fried steak and roasted or boiled peanuts.
Examining The Model.
Cracker Barrel's leadership team was eventually forced to realize that the preferences of the public had shifted. People had grown tired of purchasing items in the country store. Yes, sales continued to grow, but the market was getting saturated; the candy was not as appealing, and you can only buy so many triangular pegboard games. Economic headwinds reduced customer spending in the restaurant, and competitors offered newer facilities. The leadership recognized that it had a problem because revenues were not increasing at a satisfactory rate. This recognition is the third step in the pyramid.
All is not lost when a management team acknowledges its problems unless it starts to make assumptions that are even flimsier than the ones underpinning its existing complacency. While I cannot state what happened at Cracker Barrel, it seems, based on the actions taken, that management decided it was critical to revamp the menu, change its logo, and modernize its facilities. None of these decisions is necessarily wrong. So, why did Cracker Barrel run into problems?
Questioning Assumptions.
Cracker Barrel failed to appreciate that its strategy to change its logo, menu, and facilities would not win over a significant number of new customers, and it would cost it a portion of existing customers. The solution? It should have changed more gradually. For example, instead of totally redoing the logo, it could have eliminated the older adult, but left the cracker barrel. Alternatively, the renovations could have built upon the existing decorating style, rather than trying to make facilities look "modern."
Seeking Affirmation.
The weakness in the strategy may have been Cracker Barrel's reliance on consultants. It has been stated that Cracker Barrel used three marketing firms. Having served on the boards of publicly traded companies, I have found that consultants, whether in marketing or other roles, often tend to agree with what they think management wants to do. After all, if management and the board have come up with a new idea, they need someone to affirm the new strategy. I rarely encountered a consultant who forcefully challenged management.
There are two reasons that consultants are very slow to challenge management. The first is that they usually lack the foresight to understand business changes, and they are afraid that if they take an incorrect position, they will appear inept. The second is that they are unwilling to lose a fee. Most companies' leadership teams and boards do not want to pay a hefty fee to be told they are wrong.
Consultants also have societal bias. They like to go where the wind is blowing. Thus, if DEI is the key factor, everything is focused on DEI. If a "green" approach is taking flight, they push environmental issues. If crime is a problem, they want to focus on how to make their clients appear to be in favor of crime prevention and protecting customers. Please do not write to me and say that I am opposed to DEI, "green" initiatives, or reducing crime; I am not. I am only pointing out that consultants tend to avoid going against prevailing trends. Like it or not, they prefer focusing on the short run.
Businesses have to work hard not to get caught up in political agendas, and often, consultants are not the ones who will help them avoid social pitfalls. It is possible that the marketing firms did not force Cracker Barrel to focus on the value of its current brand. While we will never know, I wonder if at least one of the firms did not offer some resistance to the proposed changes.
Board Evaluation.
While I am not privy to the decision-making process that drove Cracker Barrel, I doubt that the board and management had a knock-down, drag-out discussion of the alternatives. I am familiar with a Fortune 500 company that had to address whether to make a significant change. To decide what to do, the company divided the board into two groups. Each group took one side of the issue and was responsible for making the case for their side. The resulting interchange was dramatic. The result—the company decided not to make the change. Perhaps this approach could have been utilized by Cracker Barrel to dampen the degree of the change.
Fortunately for Cracker Barrel, it had not redone a lot of stores or pushed the new logo with a great deal of zeal. Additionally, the president of the United States came out in opposition to the changes. Thus, the company got dramatically increased name recognition and a boost from a president who is probably very popular with Cracker Barrel's existing clientele. (Yes, I like Cracker Barrel; no, that does not determine my political beliefs.)
Cracker Barrel will overcome its mistakes. After all, Coke overcame changing its formula, and Bud Light will eventually overcome its DEI misstep. All will survive because once they made a major mistake, they tacked back into the long-term prevailing wind. The only certain fatal mistake a company can make is not to admit when they have made a major mistake.
It should be noted that individuals, like businesses, can make wonderful decisions, rest on their laurels, discover there is a problem, and then overreact. We are all guilty of making this type of mistake.
If you have not read the blog that describes the "However View," click here.
