Why Cracker Barrel’s Stock Drop Wasn’t a ‘Buy the Dip’ Moment

The old (left) and new (right) logos for Cracker Barrel. (Courtesy Cracker Barrel)

When shares of Cracker Barrel fell as much as 15% Thursday in a backlash over the restaurant chain’s logo change, it may have seemed like a golden opportunity to get in on an undervalued stock. After all, a new logo doesn’t change a company’s fundamentals, and it might be worth the gamble if the uproar quickly blows over.

But because the slide was driven largely by short interest in the stock and was accompanied by large price swings, it was probably wise to sit this one out.

Despite falling 15% to around $50 a share early Thursday, the stock pared more than half those losses by end of day. The large short interest—23% of shares available for public trading are shorted—helped drive the initial decline. When more than 10% of a company’s shares are shorted, that means a lot of investors expect the price to fall.

Cracker Barrel short sellers have had a tough year, and before Thursday lost an estimated $280 million in 2025, according to an analysis from S3 Partners. Short sellers make money when a stock price falls, but coming into Thursday, Cracker Barrel was up 12% in 2025 and 40% higher over the last 52 weeks.

That all changed when the stock dropped enough for short sellers to recoup their losses on Thursday, at least on paper, at the lowest intraday price. Anyone looking to buy had only a narrow window to snap up shares at the lowest prices.

By Friday, the stock had stabilized, closing down less than a percentage point at $54.40, with shares gaining another 0.4% in premarket trading Monday. While that is 8% less than Wednesday’s close, there are other reasons for potential buyers to tread lightly.

Cracker Barrel’s growth has been stalling. The company reported earnings in July that showed it blew past earnings per share estimates, but posted unimpressive same-store sales growth. Its revenue growth has also been fairly flat.

Analysts are expecting same-store sales to increase a mere 2.5% for the current fiscal year on flat sales of $3.47 billion, according to FactSet. Just two of the nine analysts who follow Cracker Barrel rate it a Buy. That puts the heat on the company to impress in September when it reports its full-year earnings.

Critics have blasted Cracker Barrel’s new logo, which removes the large barrel next to the company’s name and the man sitting nearby known as Uncle Herschel. They claim it is part of a broader move by the company to go “woke” while promoting diversity, equity, and inclusion.

But Cracker Barrel has pushed back on those claims. “Our values haven’t changed, and the heart and soul of Cracker Barrel haven’t changed,” the company said in an emailed statement to Barron’s.

While Uncle Herschel is no longer on the logo, he “remains front and center in our restaurants and on our menu,” the statement added.

Write to Anita Hamilton at anita.hamilton@barrons.com