Cracker Barrel faces backlash after logo rebrand

The old logo was first used in 1977. 
(Cracker Barrel image)

Since its launch in 1977, Cracker Barrel's signature logo, with its rustic charm, bib-overall-clad farmer and barrel, has symbolized a cozy place where weary travelers could eat a hearty meal, shop in the old-timey store and hit the road refreshed. When the company released its logo update last week without the farmer or the barrel, an uproar ensued.

The chain replaced its nearly 50-year-old logo with a "streamlined version featuring just the chain’s name," reports Heather Haddon of The Wall Street Journal. "The move engulfed the restaurant in a culture-war firestorm, with commentators online and some customers accusing Cracker Barrel of eschewing its country charm and heritage for a sanitized image."

The heated dust-up has "shaved tens of millions of dollars from the public company’s market value, spawned calls for boycotts and risked the casual-dining chain’s turnaround plan," Haddon explains.

Cracker Barrel hasn't made any move to step back from the logo update, but released a statement saying, "We could’ve done a better job sharing who we are and who we’ll always be. . . .We know we won’t get everything right the first time, but we’ll keep testing, learning and listening to our guests and employees.”

The new logo is part of the company's 3-year rebranding plan aimed at addressing declining sales and mediocre scores by remodeling stores and updating menu options. Haddon reports, "After catering to retirees and families on road trips, Cracker Barrel now aspired to court younger guests."

Meanwhile, online forums have continued to push Cracker Barrel to ditch the new logo and store changes. Haddon adds, "Others wondered why the controversy was occurring in the first place."

New, lifesaving antibiotics don't make it to patients. Researchers say a different business model is needed.

Antibiotics have played a major role in helping to extend the average life expectancy across the world by fighting infectious diseases. But the companies that develop and produce antibiotics are struggling to make profits on the antibiotics they produce, causing severe problems in efforts to fight newer disease strains and keep patients alive. "The Treasure Called Antibiotics" explains the drugs' impact: "Prior to the beginning of the 20th Century, infectious diseases accounted for high morbidity and mortality worldwide. The average life expectancy at birth was 47 years. . . . The antibiotic era revolutionized the treatment of infectious diseases worldwide, although with much success in developed countries. . . . In the U.S., the average life expectancy at birth rose to 78.8 years."

Stock prices slide on new antibiotic companies.
(Graph by Josh Ulick,WSJ, from Dow Jones data)

But those once powerful drugs are no longer always effective. Antibiotic-resistant bacteria require new antibiotics; however, the companies that create new strains don't make money, reports Dominique Mosbergen of The Wall Street Journal. "The push for antibiotics to fight fast-evolving superbugs is snagging on a broken business model. Six startups have won Food and Drug Administration approval for new antibiotics since 2017. All have filed for bankruptcy, been acquired or are shutting down. About 80% of the 300 scientists who worked at the companies have abandoned antibiotic development, according to Kevin Outterson, executive director of CARB-X, a government-funded group promoting research in the field."


The crux of the problem is the current model for drug company profits, "which counts on companies selling enough of a new treatment or charging a high enough price to reward investors and make a profit — isn't working for antibiotics," Mosbergen explains. "New antibiotics are meant to be used rarely and briefly to defeat the most pernicious infections so bacteria don't develop resistance to them too quickly. Companies have priced them at 100 times as much as the generic antibiotics doctors have prescribed for decades, costing a few dollars per dose. Most have sold poorly."

Infectious disease specialist Dr. John. H. Rex told Mosbergen, "Antibiotics are like fire extinguishers. You really want these drugs available, but you mostly don't want to use them. That's the paradox." Mosbergen reports, "New antibiotics should get support similar to treatments for rare diseases, said Ryan Cirz, a co-founder of Achaogen, which filed for bankruptcy in 2019 less than a year after the FDA approved its drug Zemdri for complicated urinary tract infections. . . . The Orphan Drug Act of 1983 provides subsidies, tax breaks and additional years of market exclusivity to drugmakers that develop treatments for diseases affecting fewer than 200,000 people in the U.S."

"About 13,000 people in the U.S. each year develop a severe type of drug-resistant infection that Achaogen's drug Zemdri was developed to defeat," Mosenberg reports. "Up to half of people hospitalized with such infections die. They are among the more than 35,000 people in the U.S. who die annually from drug-resistant bacterial or fungal infections, a toll that has risen in recent years."

In 2019, the United Kingdom started a "subscription-style model to pay drugmakers for new antibiotics based on their potential public-health value," Mosbergen adds. "U.S. lawmakers have considered similar legislation. Bipartisan bills reintroduced in the House and Senate in April committed $6 billion to purchase new antibiotics to treat drug-resistant infections. They haven't received a vote." Dr. David Hyun, director of the Antibiotic Resistance Project at Pew Charitable Trusts, told Mosbergen: "It sounds like the intent is to save companies, but we're really talking about trying to fix the antibiotic pipeline itself."

High-tech rural Ky. greenhouse AppHarvest, which shipped its first tomatoes last month, begins public trading Monday

AppHarvest tomatoes are prepared for shipping. (Photo provided by AppHarvest)

AppHarvest, a company that aims to bring more high-tech agriculture jobs and fresh produce to Eastern Kentucky, is on a roll. The start-up, which Fast Company says may transform Appalachia into an "agricultural powerhouse," shipped its first tomatoes a few weeks ago, got a plug from Martha Stewart, and now it's set to make its stock-market debut.

Novus Capital Corp. completed its merger with AppHarvest this week, and on Monday the freshly-minted entity (which will be called AppHarvest) is expected to begin trade on the Nasdaq. AppHarvest CEO and founder Jonathan Webb will continue to lead, Jayson Derrick reports for Benzinga.

Trump talks tit-for-tat tariffs, unspecified protection for farm interests; China says it would respond; who has leverage?

President Trump said Thursday evening that he is considering an additional $100 billion in tariffs on Chinese goods, in retaliation for tariffs China said it would impose on a long list of U.S. imports, from soybeans and pork to tobacco and ginseng. The Chinese announcement, which came without an effective date for the tariffs, came in response to Trump's $50 billion in import duties on Chinese steel and aluminum, which are still going through the formal approval process.

In a statement, Trump said "China has repeatedly engaged in practices to unfairly obtain America’s intellectual property," and "Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers." Trump said he had asked Agriculture Secretary Sonny Perdue, "with the support of other members of my Cabinet, to use his broad authority to implement a plan to protect our farmers and agricultural interests." He offered no details. In a statement this morning, the White House said the trade moves "are a response to years of unfair trade practices by China."

"In response to the possible new U.S. tariffs, China’s Commerce Ministry said Beijing would respond with its own countermeasures should it come to that," reports Bob Davis of The Wall Street Journal. The Journal's Washington Bureau chief, Gerald Seib, writes that Trump's announcement "was almost certain to cause fears of a full-scale trade war among investors, farmers and businesses with ties to Chinese trade." The news came after the close of stock trading, but recent trade tensions with Beijing have already fueled wide price swings in recent trading sessions." Stock and agricultural commodity markets are down this morning, and falling.

"Why would President Trump threaten steep tariffs on Chinese imports, rattling stock markets?" asks the Journal's Greg Ip. "It’s partly because this is a negotiation, and a negotiator must show a tolerance for pain if his demands aren’t met. For Mr. Trump to succeed, China must believe its pain will exceed that of the U.S. in a trade war and settle on his terms. Whether he’s right depends heavily on who has the most leverage. Economically, it's the U.S.," because Chinese exports to the U.S. are 4 percent of its economy, while those from the U.S. to China are only 0.7 percent of our economy.

"China imports so much of the world’s soybean supply that it has few alternatives to the U.S.," Ip writes. "Brazil, the only other major supplier, is already reaching its capacity. That means China would have to keep importing American soybeans while its tariff rippled through to the price of tofu, bean curd, animal feed and thus chicken and pork," hurting Chinese consumers. "Perhaps the biggest risk to China from a trade war is that global manufacturers no longer regard it as a reliable base from which to supply the U.S. and shift operations elsewhere."

However, "The political leverage is with China," Ip writes. "Chinese leaders don’t have to worry about losing elections or critical editorials if its consumers pay more for soybeans. The communist leadership prioritizes growth, but prioritizes long-term geostrategic interests even more. . . . The U.S.’s political pain threshold is low, which other countries regularly exploit." The Associated Press reports, "Seven months before the 2018 midterm elections, Trump’s faceoff with China . . . has exposed an unexpected political vulnerability in what was supposed to be the Republican Party’s strongest region: rural America."

Coal may have gotten so bad that it's getting good for investors; production has surged since April

U.S. coal production recently hit historically low level, but is rebounding, and investors seem to think it has bottomed out, BB&T capital markets analyst Mark Levin said in a note to clients last week. Tim Loh of Bloomberg reports on that, adding: "Some coal stocks are rallying as a recovery in natural gas prices brings the power-plant fuels closer to parity." With a chart, Bloomberg cites a two-month rise in stock prices of Alliance Resource Partners and CNX Coal Resources and notes a report from the Energy Information Administration that weekly coal production is up 26 percent since April.

Levin said in his note, “Markets are a forward-looking mechanism, and what they are saying right now about coal in 2017 is bullish.” He said bankruptcies of major coal companies have reduced the over-supply built up during a mild winter, and a hot summer would lead to higher demand. Also in coal's favor is a 60 percent rise in natural-gas futures since March, Loh reports: "That has made coal mined in the Powder River Basin of Wyoming and Montana and, to a lesser extent, in the Illinois Basin, more cost-competitive, said Andrew Cosgrove, an analyst at Bloomberg Intelligence."

Still, "Coal bulls face daunting challenges," Loh writes, quoting Cosgrove: “The sentiment back in January was about as low as it could possibly get. Some people invest off that premise and you never know. Coal’s been beaten up for the better part of six years. Any green shoots whatsoever, people may choose to hang their hat on that.”

Coal bond prices keep falling, down 17% in second quarter; Alpha Natural Resources down 70%

Coal bond prices fell 17 percent in the second quarter, marking "the fourth consecutive quarter of price declines and the worst performance of any industry group by a long shot," Tom Randall reports for Bloomberg. Alpha Natural Resources had the biggest decline, at 70 percent, while Peabody fell 40 percent and Arch 30 percent.

"Bonds fluctuate less than stocks because the payoff is fixed and pretty much guaranteed as long as the borrower remains solvent. A 17 percent decline is huge, and it happened at a time when other energy bonds—oil and gas—were rising," Randall writes.

The biggest concerns facing the coal industry are that 17 percent of coal-fired plants will shutter over the next few years, China's coal demand is remaining flat and renewable energy is on the rise, Randall writes. Also, declining bond prices means "the cost of borrowing money goes up. And coal needs more money. Coal companies are allowed to avoid costly insurance premiums by showing they have the capital to clean up after themselves. It's called self-bonding. This year the federal government has started taking a closer look at whether the struggling coal companies still qualify."

"In the past year, global stock prices for coal companies are down almost 50 percent, but it's in the bond market that coal is really getting hammered," Randall writes. "The focus of energy finance has shifted from coal to renewables, and it's not likely to turn back." (Read more) (Bloomberg map: Coal plants on the way out by 2020. To view a larger map, click here.)

Shareholders push for fracking disclosure

Shareholders are the latest group pushing for oil and gas companies to disclose plans for dealing with possible pollution from hydraulic fracturing. "The resolutions announced Friday, filed with companies such as Chevron and Exxon Mobil, take aim at an increasingly common industry practice that has been blamed for tainting water supplies and land with chemicals," Darryl Fears of The Washington Post reports. "The shareholder groups include the New York state pension fund, Domini Social Investments, Trillium Asset Management and The Sisters of St. Francis of Philadelphia."

"The resolutions called on the companies to recycle waste water, disclose the type of chemicals used in the operations and lessen their toxicity," Fears writes. Andrew Logan, director of the oil and gas program for Ceres, a coalition of investors and environmental groups that work with companies to improve their business practices, explained, "This is really about enhancing the long term-value of these companies." He added, "They want to see these companies succeed. The industry's ability to continue to develop shale gas reserves depend on the public's acceptance of fracking that it's safe." (Read more)

Rural stock picks do very well in 2010

The Daily Yonder 40 -- forty stocks picked to reflect the rural economy -- had a very good year. Make that a very, very good year. The selection of stocks rose 31.4% this year, a gain that swamped all the major stock indexes, according to Bill Bishop, James Branscom and John Borden of the Daily Yonder. In 2010, the Dow Industrials rose 11%,  the S&P 500 rose 12.8% and the NASDAQ rose 16.9%. Not even close to the Daily Yonder 40.

Among the strongest performers was Tractor Supply, the retailer that sells rural America "the stuff you need out here." Tractor's good fortune just may reflect the extremely strong farm economy, which had land and crop prices rising, according to Bishop, Branscom and Borden. Tractor Supply was up 83.1%. Other winners: Grand Old Opry owner Gaylord Entertainment rose 82% this year. Family Dollar was up 78.6%; Sturm Ruger, up 57.6%; Cabela's, up 52.5%.

Nine stocks were losers: Dean Foods ("milk is still oversupplied"), Monsanto ("under antitrust scrutiny by the Department of Justice"), Alico, ConAgra, International Speedway ("people continued to stay away from NASCAR"), Plum Creek Timber, Penn Virginia, Skywest and Universal Corp. 

As for next year, companies interested in clean energy should be successful, food companies have vowed to increase their prices, equipment sales continue to look strong, and the Northwest is increasing its exports of wood products to China. (For a full list of the stocks and to read more)

Municipal bond market takes big hit, raising questions for local government

After performing well since the 2008 financial collapse, municipal bonds took their biggest hit in two years last week. "Concern over the increasingly strained finances of states and cities and a growing backlog of new bonds for sale overwhelmed the market last week," Mary Williams Walsh of The New York Times reports. "After performing so well for so long, munis and funds that invest in them fell hard." The declines were small compared to the bonds' gains over two years, but investors were left wondering if this was a brief setback or something worse.

"The big question confronting this market is how state and local governments will manage their debts," Walsh writes. "Many are staggering under huge pension and health care obligations that seem unsustainable." Some on Wall Street have wondered if "indebted states and cities might face a crisis akin to the one that brought Greece to its knees." Still others say it is too early for such dire predictions. "I think it’s too early to say that it’s more than a correction," Richard A. Ciccarone, the chief research officer of McDonnell Investment Management, told Walsh. "The facts just don’t support a serious conclusion that the whole market’s going downhill. They could. We’ve got some serious liabilities out there."

The municipal bond market had been strong as investors looked to tax-sheltered investments as Bush administration tax cuts are set to expire. "People seek a tax shelter like municipal bonds because the interest is usually not taxed, and the bonds are considered very safe," Walsh writes. Tax-exempt bonds have been harder to find this year as more governments have switched to taxable bonds. "The causes of the week’s big decline are clouded by unusual factors like the looming end of the Build America Bonds program, which has prompted local governments to race new bonds to market before an attractive federal subsidy is reduced," Walsh writes. (Read more)

Pension-fund coalition asks Massey shareholders to oppose re-election of 3 board members

A coalition of pension funds in eight states is opposing the reelection of three Massey Energy board members in wake of the April explosion that killed 29 miners at the company's Upper Big Branch Mine in West Virginia. A letter signed by the groups, which together own 1.57 percent of Massey's shares, "urged shareholders to oppose the May 18 re-election of Massey President Baxter F. Phillips and outside directors Richard M. Gabrys and Dan R. Moore," report Joann S. Lubin and Kris Maher of The Wall Street Journal.

Retired Adm. Bobby Inman, the board's lead independent director, is campaigning for the three members' re-election, telling the Journal that if Gabrys and Moore get fewer than half the votes cast, "It will make it extremely difficult to find competent people" for the board. The coalition pointed to conflicts of interest among the three members as reasons they shouldn't be reelected, specifically the disaster and their service on the board's safety committee. Gabrys was recently appointed to head the board's investigation into the explosion. (Read more)

The coalition includes the California State Teachers’ Retirement System, the Connecticut state treasurer, the Illinois State Board of Investment, the Maryland State Pension and Retirement System, the New York State Common Retirement Fund, the New York City Employees’ Retirement System, and the Connecticut, North Carolina, Oregon and Pennsylvania state treasurers, reports Ken Ward Jr. of The Charleston Gazette on his Coal Tattoo blog. "Massey Energy has an extensive history of persistent and serious safety violations. We believe the three board members who serve on the Safety, Environmental, and Public Policy Committee have failed to address these concerns," North Carolina Treasurer Janet Cowell said. "Ultimately, that has consequences for long-term shareholder value." (Read more)

The same coalition last month called on the board to direct Massey CEO Don L. Blankenship to step down as chairman. In recalling her time as editorial page editor of the Gazette, Susanna Rodell, writing in The Atlanta Journal-Constitution, says the isolation of the region helped Blankenship. "For years it seemed no one outside the state cared that he had succeeded in buying his own justice," she writes. "It also helped the man to believe in his own mythology. For a few years, he seemed invincible." Now that the tide has seemingly turned against Blankenship, she concludes "the least we can do, as participants in this drama, is to remember who’s risking their lives to keep our lights on, and encourage our lawmakers to keep up the pressure on Big Coal and its enablers to clean up their act." (Read more)

Rural-oriented stocks doing better than others

Two years ago today, the Daily Yonder began tracking the stock prices of 40 diverse, publicly traded companies that do much of their business in rural America. The record shows that the "Yonder 40," as it is called, was doing better just before the economic downturn and is coming out of it more quickly. (Yonder chart)

"The Yonder 40 stock index has lost 27 percent of its value since July 1, 2007," Co-Editor Bill Bishop reports. "The Dow [Jones] Industrials — 30 of the nation’s largest corporations — have lost 37 percent. And the S&P 500 — a broader index of large companies — has lost 39 percent. The only common index that comes close to the Yonder 40’s performance has been the NASDAQ listing of smaller firms. The NADAQ has lost 29.5 percent in the last two years."

Bishop adds, "The Yonder 40 was an experiment of sorts, so it is not exactly clear why these rural stocks are doing better than the broader stock indices. In much of mid-America, unemployment rates have been lower than in the rest of the country, especially in agricultural counties. However, rural manufacturing has been particularly harmed during the recession and unemployment in these counties is running well above the rest of the country."

The story mentions several individual companies, including those that have been dropped from the index for various reasons. One is newspaper publisher Lee Enterprises, which was dropped "because its stock prices dropped so low the company was in danger of being delisted by the New York Stock Exchange," Bishop reports. "It is now trading for considerably less than a dollar," after starting the index at $21. The best performer has been coal producer Walter Energy, "up 25 percent from July 1, 2007, even though it has taken a huge tumble from its highs." The best so far this year has been Cabela's, the chain of huge sporting-goods stores. It's up 107 percent since Jan. 1, to $12.30 a share on June 30.

Cracker Barrel returns to original corporate name

Cracker Barrel Old Country Store became a huge success by marketing rural food and culture. Now, after mixed results in its first attempt at diversifying, and selling off the Logan's Roadhouse chain last year, its corporate name is returning to the original we all know and leaving one known only to investors. The company "announced Wednesday that its shareholders overwhelmingly approved changing the corporation's name" from CBRL Group to the old name, reports The Lebanon Democrat, in the company's hometown of Lebanon, Tenn. (Read more)

Michael A. Woodhouse, the company's chairman, president and CEO, said in a release, "With our return to a single-concept company and to further build on our strong and highly-differentiated brand, we are pleased to return to the company's original name of Cracker Barrel Old Country Store Inc." The company's stock will continue trading as CBRL on NASDAQ. It topped $50 a share in March 2007 but dropped to $25 by January 2008 and is trading today at just under $20.

Wall Street's worst week was better for rural firms

After a disastrous week in the stock market, the Daily Yonder reports that its index of rural-oriented stocks, the Yonder 40, fared better than both the Dow and the S&P. Since July 2007 the Dow dropped 37 percent, the S&P 40 percent, while the Yonder's lost only 30 percent. While not exactly good news, it suggests that rural-oriented firms have fared slightly better in the economic crisis. (Yonder chart)

The Yonder created the index to serve as a barometer of the rural economy. The stocks are made up of publicly traded companies that "do much of their business in rural America," it explains. All but two of the stocks dropped last week. Tractor Supply and Plum Creek Timber both made modest gains but, writes the Yonder's Bill Bishop, "For the rest of the 40, the news was mostly grim, as prices dropped in the face of good news and bad." For example, "Family Dollar Stores reported that its fiscal fourth-quarter net income rose 41 percent on strong sales, likely spurred by government stimulus checks," but the stock still dropped 9 percent last week. Frontier Communications was down 27 percent, DirecTV Group lost 21 percent and Fleetwood Enterprises Inc. sank 29 percent. (Read more)