Dive Brief:

• Cracker Barrel bought Maple Street Biscuit Company in an all-cash transaction for $36 million on Friday, according to a company release. The chain has a footprint of 28 corporate-owned and five franchised fast casual restaurants in seven states. 
• Cracker Barrel will transition its Holler and Dash Biscuit House stores to Maple Street concepts in the next few months. Maple Street CEO Scott Moore will remain in his role and report directly to Sandra B. Cochran, CEO of Cracker Barrel. 
• "The breakfast and lunch-focused fast casual category is an attractive segment. ... The acquisition accelerates our penetration in this segment and provides growth for delivering shareholder value," Cochran said in a statement. 

Dive Insight:

The Maple Street Biscuit Company acquisition is a surprise twist in Cracker Barrel's long-winded struggle to improve its Holler and Dash concept. Earlier this year, activist investor Sardar Biglari wrote Cochran a letter urging that Cracker Barrel sell the fast casual brand, which he called "an ill-conceived project destined to fail."

The chain, which launched in 2016 and operates seven locations, could have been Cracker Barrel's ticket to strong fast casual sales. The segment scaled at a compound annual growth rate of 7% between 2013 and 2018, and was the only U.S. restaurant division that gained diner traffic during the period, according to NPD Group. 

The brand also allowed Cracker Barrel experiment with new technologies — like cloud-based POS systems, self-order kiosks and mobile ordering devices carried by waitstaff — that help attract valuable Gen Z consumers. 

But Biglari called the move was "miscalculated" and "not a good use of [their] capital." Cracker Barrel didn't share Holler and Dash's performance in its Q4 earnings release or any of its previous quarterly filings in 2019, so its impossible to know just how much the fast casual brand was hurting its overall performance. 

By folding its existing Holler stores under the Maple Street brand, Cracker Barrel should be able to gain deeper insights into the fast casual segment and possibly solve for whatever operational burden was dragging performance at the chain — all while maximizing synergies with another Southern-style restaurant. 

This acquisition comes just three months after Cracker Barrel took a $140 million non-controlling stake in eatertainment concept Punch Bowl Social. With both of these investments under its belt in such a short amount of time, its clear that Cracker Barrel is hungry for market diversification. The strategy makes sense, given the casual dining segment's notoriously slow-moving sales growth. But the real question is whether or not the sum of these deals will make investors happy or incite more concern over business ventures outside of the brand's wheelhouse.