With 41 restaurants, the chain has reached a size that demonstrates its feasibility, yet provides significant potential for future growth. A couple of years ago, it internally developed Cracker Barrel Corner Market as a way to cater to the then-trendy home meal replacement market. This test concept was shuttered during its market test due to lackluster results. Failing with a test concept is always disappointing, but those companies that never take risks are unlikely to be leaders. While taken to task by investors who feared the company didn't have a new growth concept, CBRL should be given credit for not pursuing a concept that didn't offer sufficient returns.
Many investors wait to invest in a stock until management has proven they are adept businesspeople.
CBRL has clearly done that over the past fifteen years. Nonetheless, this year's expected slowdown in earnings growth does mean investors will have to closely monitor results over the next year to ensure that management is steadying Cracker Barrel. With its immense share of company's current revenue and profits, CBRL cannot move into higher earnings waters with its main engine failing. But if you believe in management's ability to refurbish that engine, the new propellers that the company will deploy might just kick the ship back on its growth trajectory. The Motley Fool.