UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

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¨	Definitive Proxy Statement
x	Definitive Additional Materials
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Cracker Barrel Old Country Store, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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On October 25, 2012, after 5:30 p.m. Eastern Time, representatives of Cracker Barrel Old Country Store, Inc. (the “Company”) delivered the following presentation to Institutional Shareholder Services. This letter was also posted to the “Proxy Contest” section of the Company’s Investor Relations website, investor.crackerbarrel.com.

Fall 2012

On the Right Track, Generating

Exceptional Performance

WHY WE

BELIEVE SARDAR BIGLARI IS

WRONG

FOR

THIS BOARD

1

IMPORTANT ADDITIONAL INFORMATION

Cracker

Barrel

Old

Country

Store,

Inc.

(“the

Company”)

urges

caution

in

considering

current

trends

and

earnings

guidance

disclosed

in

this

presentation.

Except

for

specific

historical

information,

matters

discussed

in

this

presentation

are

forward

looking

statements

that

involve

risks,

uncertainties

and

other

factors

that

may

cause

actual

results

and

performance

of

the

Company

to

differ

materially

from

those

expressed

or

implied

in

this

discussion.

All

forward-looking

information

is

provided

pursuant

to

the

safe

harbor

established

under

the

Private

Securities

Litigation

Reform

Act

of

1995.

More

detailed

information

on

risks,

uncertainties,

and

other

factors

is

provided

in

the

Company’s

filings

with

the

Securities

and

Exchange

Commission,

press

releases

and

other

communications.

Cracker

Barrel,

its

directors

and

certain

of

its

executive

officers

may

be

deemed

to

be

participants

in

the

solicitation

of

proxies

from

Cracker

Barrel

shareholders

in

connection

with

the

matters

to

be

considered

at

Cracker

Barrel’s

2012

Annual

Meeting.

On

October

4,

2012,

Cracker

Barrel

filed

a

definitive

proxy

statement

(as

it

may

be

amended,

the

“Proxy

Statement”)

with

the

U.S.

Securities

and

Exchange

Commission

(the

“SEC”)

in

connection

with

any

such

solicitation

of

proxies

from

Cracker

Barrel

shareholders.

INVESTORS

AND

SHAREHOLDERS

ARE

STRONGLY

ENCOURAGED

TO

READ

THE

PROXY

STATEMENT

AND

ACCOMPANYING

PROXY

CARD

AND

OTHER

DOCUMENTS

FILED

WITH

THE

SEC

CAREFULLY

AND

IN

THEIR

ENTIRETY

WHEN

THEY

BECOME

AVAILABLE

AS

THEY

WILL

CONTAIN

IMPORTANT

INFORMATION.

Detailed

information

regarding

the

identity

of

potential

participants,

and

their

direct

or

indirect

interests,

by

security

holdings

or

otherwise,

is

set

forth

in

the

Proxy

Statement,

including

Annex

A

thereto.

Shareholders

can

obtain

the

Proxy

Statement,

any

amendments

or

supplements

to

the

Proxy

Statement

and

other

documents

filed

by

Cracker

Barrel

with

the

SEC

for

no

charge

at

the

SEC’s

website

at

www.sec.gov.

Copies

will

also

be

available

at

no

charge

at

the

Investor

Relations

section

of

our

corporate

website

at

www.crackerbarrel.com.

2

I.

Executive Summary

II.

Delivering on our Six Priorities

III.

Driving Best-in-Class Results

IV.

Why We Believe Sardar Biglari is Wrong for This Board

Appendix

Table of Contents

I. Executive Summary

4

Improve same store sales

and traffic trends

Accelerating same store sales

growth in last three quarters with Q4

traffic up 1.4%

Cut costs and leverage fixed

costs to enhance profitability

FY 2012 operating margin growth of

50 bps

Reconfigure the Board with

new members bringing a

fresh perspective

7

new

board

members

1

,

including

a

Fill in key management

positions to enhance

functional capabilities

Revitalized

leadership

–

five

senior

executives new to Cracker Barrel or

serving in new positions since

January 2011

Develop a long-term plan to

maintain operating

momentum

Same store sales outperforming

casual dining peers in Knapp-

Track™

for three consecutive

quarters

WHAT WE HAVE ACCOMPLISHED IN THE PAST YEAR

Delivering on the Company’s Promises

(1)

Changes to board since 20-Jun-2011.

(2)

As announced on 6-Aug-2012, to be effective following Michael A. Woodhouse’s retirement in early November 2012.

new

independent

Chairman

2

5

CBRL STOCK PRICE HAS INCREASED SIGNIFICANTLY

Since Announcement of Our Strategic Priorities We Have Delivered

Outstanding Shareholder Returns

Source:  Bloomberg, public filings, Company press releases, and IBES

Note: 12-Sep-2011; is closing price the day prior to announcement of Strategic Priorities on 13-Sep-2011.  Please see Appendix for reconciliation of

GAAP basis operating results to adjusted non-GAAP operating results.

(1)  Figure used for comparability to IBES estimates is GAAP basis, earnings per diluted share of $1.47. When adjusted for the impact of the extra week

in FY’

12 and certain charges in the current and prior year, adjusted earnings per diluted share were $1.20.

68.4% INCREASE

$30

$40

$50

$60

$70

2011

Nov-

2011

Jan-

2012

Mar-

2012

May-

2012

Jul-

2012

Sep-

2012

CBRL reports 1Q12 EPS

of $1.09 excl. proxy costs,

4.8% higher than analyst

expectations

2011

A majority of

shareholders vote for

CBRL's slate of directors

CBRL reports 3Q12 EPS of

$0.86 excl. proxy costs, 16.2%

higher than analyst

expectations

$39.86

CBRL reports 4Q12 EPS

of $1.47, 13.1% higher

than analyst expectations

26-Apr-

2012

CBRL hosts Analyst and

Investor Day reviewing

strategic initiatives

21-

Feb-

2012

CBRL reports 2Q12 EPS of

$1.20 excl. proxy costs, 5.3%

higher than analyst expectations

13-

Sep-

2011

New CEO Sandy

Cochran announces

strategic priorities

Sep-

Nov-2011

Dec-

-May-

2012

Sep-

2012

1

22-

20-

22

19-

$67.11

Daily from 12-Sep-2011 to 28

-Sep-2012

6

Since December 2011 Proxy Vote²

Since Announcement of Our Strategic Priorities¹

CBRL HAS SIGNIFICANTLY OUTPERFORMED ITS PEERS

No Matter What Benchmark You Use, CBRL Has Outperformed

Cracker Barrel

Peer Set

S&P 500 Restaurant Index

S&P 600 Restaurant Index

S&P 1500 Restaurant Index

S&P 500 Index

90%

100%

110%

120%

130%

140%

Daily from 20-Dec-2011 to 28-Sep-2012

36.4%

25.8%

21.9%

16.1%

3.1%

1.0%

90%

100%

110%

120%

130%

140%

150%

160%

170%

Daily from 12-Sep-2011 to 28-Sep-2012

68.4%

35.1%

34.8%

17.8%

15.4%

24.0%

(1)

12-Sep-2011; is closing price the day prior to announcement of Strategic Priorities on 13-Sep-2011.

(2)

20-Dec-2011; date of CBRL’s 2011 Annual General Meeting, proxies voted.

Source:  Bloomberg

Note:  Peer set includes BH, BOBE, EAT, CAKE, DRI, DENN, RT, TXRH. S&P Restaurant Index includes the restaurant companies in the S&P 500 Index:  CMG, DRI,

MCD, SBUX, YUM.  S&P 600 Restaurant Index includes the restaurant companies in the S&P 600 Index:  BJRI, BH, BWLD, CEC, CBRL, DIN, JACK, PZZA, PEET, RRGB,

RT, RUTH, SONC, TXRH.  S&P 1,500 Restaurant Index includes the restaurant companies in the S&P 1,500 Index:  BJRI, BH, BOBE, EAT, BWLD, CEC, CAKE, CMG,

CBRL, DRI, DIN, JACK, MCD, PNRA, PZZA, PEET, RRGB, RT, RUTH, SONC, SBUX, TXRH, WEN, YUM.

7

OUR SHAREHOLDERS HAVE BENEFITED FROM OUR

PERFORMANCE AND RETURN OF CAPITAL POLICIES

($ in millions)

Source:  Public filings and Bloomberg

Note: 12-Sep-2011; is closing price the day prior to announcement of Strategic Priorities on 13-Sep-2011.

$ 663.5

$22.4

$915.8

$14.9

$1,616.6

CBRL Equity

Market Cap.

Total

Shareholder

Value

12-Sep-2011

Increase in

CBRL Equity

Market Cap.

28-Sep-2012

Increase in

CBRL Equity

Market Cap.

= $700.7

FY 2012

Dividends Paid

FY 2012

Shares Repurchased

28-Sep-2012

8

WE BELIEVE THIS VALUE CREATION RESULTS FROM

SUCCESSFUL EXECUTION OF OUR STRATEGIC PRIORITIES

Source:  Public filings

Note:  Announcement of Strategic Priorities on 13-Sep-2011.

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Comparable Restaurant

Traffic

(4.2)%

(3.8)%

1.1 %

0.6 %

1.4 %

Average Check

2.8 %

2.2 %

2.4 %

2.5 %

2.4 %

Comparable Restaurant

Sales

(1.4)%

(1.6)%

3.5 %

3.1 %

3.8 %

Comparable Retail Sales

(0.7) %

(1.3)%

3.4 %

0.3 %

3.1%

Our Customers Have Responded to Focus on Menu, Marketing, and Execution

Announcement

of Our Strategic

Priorities

9

WHY WE ARE HERE…AGAIN

Despite losing by a significant margin in last year's proxy fight, Sardar Biglari remains

inexplicably insistent in his campaign against Cracker Barrel.  Why do we say

“inexplicably?”

Because of all we accomplished over the past year

What would Biglari have done differently?

–

We don’t know –

he hasn’t raised specific new ideas or suggestions to

management

or

the

Board,

despite

having

many

opportunities

to

do

so

We

believe

Sardar

Biglari

has

a

conflict

of

interest,

a

history

of

“creeping

control”

that

is not in the best interest of shareholders, and a questionable track record on

corporate governance

Despite being offered two independent seats (for the second year), he turned the

offer down

–

Biglari refuses to consider any settlement offer unless he is personally appointed to

the Board

–

Our shareholders determined he was not right for the Board last year

•

We agreed and believe he is not right for the Board this year either

This discussion should be about the business and who’s got it on the right path

II. Delivering on our Six Priorities

11

New marketing messaging

Reinforce Authentic Value

Refined menu and pricing

Increase Variety & Everyday Affordability

Enhanced restaurant operating

platform

Sustainably Improve the Guest

Experience

Innovative tactics driving retail

sales growth

Deliver Value & Connection With the

Brand

Focused cost reduction

Offset Commodity Pressures and Other

Costs

Balanced approach to capital

allocation

Enhance Shareholder Value

WHAT WE TOLD YOU WE’D DO 12 MONTHS AGO

Key Priorities

Objectives

12

(4.2%)

(3.8%)

1.1%

0.6%

1.4%

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

NEW MARKETING MESSAGE

“Hand Crafted by Cracker Barrel”

Source:  Public filings

Launched

national

cable

advertising

for

the

first

time,

focusing

on

brand building during the busiest seasons (Q2 & Q4)

Utilized radio advertising to promote products and value

Leveraged billboards to support travel business

Hired new advertising agency Havas Worldwide (formerly known as

Euro RSCG Worldwide)

Continued Investment in Billboards

First National Television Campaign

Comparable Restaurant Traffic

13

REFINE MENU AND PRICING 

Guest

Satisfaction

Results

Show

Overall

Value

Scores

at

Historic

Highs

Launched salad refresh as part of the

summer seasonal promotion

–

Feature salad, including dressing

and crackers, under 600 calories

–

Exceeded expectations for mix and

guest satisfaction

2

Better-

For-You

Daily

Lunch

Specials

Highlighted an attractive $5.99 price point

Drove week-day lunch traffic

Reinforced value perception across all day-parts

14

(1)

Source:

Nation's

Restaurant

News

and

WD

Partners,

2012

Consumer

Picks

family

dining

segment

survey.

(2)  Weighted by attribute importance.

(3)  100-149 responses.

3

During the year, received all-time company high scores in nine categories on the guest feedback

program

For the second year in a row we have received top honors in the family dining segment of the Consumer

Picks

survey

conducted

for

Nation’s

Restaurant

News

magazine

Past Year’s Focus on Guest Experience Has Driven Significant Improvements to Guest Satisfaction

Overall Satisfaction

Intent to Recommend

Overall Value

ENHANCE RESTAURANT OPERATING PLATFORM

July-2011

July-2012

70.0%

71.0%

July-2011

July-2012

59.1%

61.1%

Rank ¹

Chain

Score ²

1

Cracker Barrel Restaurant and Old Country Store

70.3%

2

Marie Callender's ³

62.1

3

Bob Evans Restaurants

61.2

4

The Original Pancake House ³

59.7

5

IHOP

53.5

6

Steak ‘N Shake

52.1

7

Village Inn

51.9

8

Perkins Restaurant & Bakery

51.5

9

Big Boy

50.2

10

Friendly’s Ice Cream

47.5

11

Shoney’s

45.5

12

Huddle House ³

44.8

13

Denny’s

43.9

14

Waffle House

41.4

July-2011

July-2012

69.7%

70.6%

15

INNOVATIVE TACTICS DRIVING RETAIL SALES GROWTH

Game Plan for Growing Retail Sales…

Source:  Public filings

Quarterly Retail Same Store Sales

4

Merchandising

Strategy

Support the restaurant

by reinforcing the

emotional connection to

the Brand

Be a destination retailer

for specific occasions

and drive traffic for the

restaurant

+

Unique

Nostalgic

Seasonal

Everyday Needs

April-2012:  Appointed new SVP of

Retail, Laura Daily

(0.7)%

(1.3)%

3.4%

0.3%

3.1%

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

16

FOCUSED COST REDUCTION

Source:  Public filings

(1)

Adjusted

for

53

rd

week

in

FY’12,

proxy

contest

expenses,

severance

and

restructuring

charges.

Please

see

Appendix

for

reconciliation

of

GAAP basis operating results to adjusted non-GAAP operating results.

5

Improving Productivity of the Box

Margin and Process Improvement

Eliminating Annual G&A and Labor Expenses

April-2012: Realigned field leadership

July-2011: Restructured home office

Labor Management System

Improves direction of weekly training, productivity,

and execution

Hourly wage expense down 50bps in Q4 2012

Transportation Management System

Improves efficiency in the distribution of retail

merchandise

Improved

Technology

Streamlined

Supply    

Chain and

Purchasing

Increasing

Labor

Productivity

Enhanced

Operating

Systems

Leveraging Our Support Cost Base

Adjusted EPS   & Operating Inc as % of Sales

FY 2011

FY 2012

$3.81

$4.34

FY 2011 Q4

FY 2012 Q4

$1.01

$1.20

FY 2011

FY 2012

6.9%

7.4%

1

17

BALANCED APPROACH TO CAPITAL ALLOCATION

6

Dividend Yield

Dividend Payout Ratio

2.1 %

3.0 %

3.6 %

2.8 %

2.3 %

2.1 %

1.3 %

0.0 %

0.0 %

0.0 %

CBRL -

One

Year Ago

CBRL

DRI

BOBE

EAT

TXRH

CAKE

BH

DENN

RT

Peer Median:  1.7%

20.5 %

46.1 %

54.6 %

45.6 %

40.8 %

38.3 %

27.6 %

0.0 %

0.0 %

0.0 %

CBRL -

One

Year Ago

CBRL

DRI

BOBE

EAT

TXRH

CAKE

BH

DENN

RT

Peer Median:  32.9%

2

3

Source:  Bloomberg and public filings

Note:  Market data as of 28-Sep-2012.

(1)

(2)

(3)

Calculated as latest annualized latest dividend per share divided by last twelve months reported diluted earnings per share.  Adjusted diluted

earnings per share and / or diluted earnings per share from continuing operations used as disclosed.

CAKE

not

adjusted

for

impact

of

53

rd

week

in

FY’11

due

to

lack

of

disclosure.

Adjusted

for

53

rd

week

in

FY’12,

proxy

contest

expenses,

severance

and

restructuring

charges.

Please

see

Appendix

for

reconciliation

of

GAAP basis operating results to adjusted non-GAAP operating results.

1

III. Driving Best-in-Class Results

19

Sales Growth

~5%

Operating Income Growth

~8-10%

Earnings Per Share Growth

~12-15%

Total Shareholder Return

~15-18%

Decisive Action Driving

Total Shareholder

Return

BUILDING ON OUR RECENT SUCCESS

Continued focus on six business priorities

Focus on increasing average unit volume in existing stores

Increase retail sales with unique and nostalgic merchandise

Drive increased profitability in existing locations

Continued commitment to profitable new unit growth

Allocate capital in a way to maximize value

Extend the power of the brand beyond the physical store

Long term value creation through e-commerce & development of branded products platform

Focus on Operational Excellence in Existing Units AND

Profitable New Restaurant Growth

2012 –

2015 Strategic Plan

–

New store growth: 2-3% / per year; focus on most profitable growth, best locations, and flawless

execution

20

ACCELERATION OF COMPARABLE RESTAURANT SAME STORE

SALES VS. KNAPP-TRACK™

Three

Consecutive

Knapp-Track™

Beats

in

FY

2012

Source: Public filings and Knapp-Track™

Note:

Knapp-Track™

Casual

Dining

Index

Comparable

Sales

figure

is

an

approximation

based

on

respective

weekly

averages.

Cracker Barrel vs.

Knapp-Track™

(2.5)%

1.3%

2.1%

3.5%

(1.6)%

3.5 %

3.1 %

3.8 %

0.9 %

2.2 %

1.0 %

0.3 %

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

-Track

Cracker Barrel Comparable Restaurant Sales

Knapp

TM

Casual

Dining

Index

Comparable

Sales

21

A SECTOR LEADER IN TOTAL SHAREHOLDER RETURN

TSR

Since

Announcement

of

our

Strategic

Priorities

Source:  Bloomberg and public filings

Note:  Total Shareholder Return calculated by share price appreciation and dividends paid (assumes dividends paid are re-invested into the stock

(purchasing more shares) on the ex-date of the dividend) over the past year.

(1)  12-Sep-2011; is closing price the day prior to announcement of Strategic Priorities on 13-Sep-2011.

68.4%

74.8%

35.7%

36.8%

28.4%

25.6%

22.4%

3.7%

4.1%

3.9%

0.5%

5.0%

2.7%

72.1%

78.9%

39.6%

39.5%

37.3%

33.4%

28.3%

22.4%

(3.7)%

CBRL

EAT

BOBE

DENN

CAKE

DRI

TXRH

BH

RT

Share Price Appreciation

Dividends Paid

Peer Median: 35.3%

1

Daily from 12-

Sep-

2011 to 28-

Sep-2012

22

Refresh Select Menu Categories

Reinforce value proposition for guests with a

refresh of Country Dinner Plates

Introduce better-for-you programs, including new

sides and Wholesome Fixins’

Grow Retail Sales with Unique

Merchandise

Focus on unique, exclusive, authentic

merchandise

Improve productivity with visual merchandising

and space planning

Build on Successful Handcrafted

Marketing Campaign

Continue national media strategy

Introduce

new

“Hand-crafted”

creative

advertisements for TV, radio, and billboards

Invest in and Leverage Technology to

Support Operations and Reduce Costs

Implement technology to improve efficiencies and

food quality

Streamline processes to increase labor

productivity

Focus on Maximizing

Shareholder Returns

Target 2-3% annual new unit growth over the next

three years

Pay competitive dividends and repurchase shares

Improve E-commerce Business

and Develop Branded Products

Platform

Grow e-commerce awareness and revenues

Lay groundwork to sell Cracker Barrel branded

products in grocery stores

UPDATED BUSINESS PRIORITIES TO CONTINUE DRIVING

PERFORMANCE THROUGH 2013

Key Priorities

Objectives

1

2

3

4

5

6

23

A RENEWED BOARD HELPING TO DRIVE PERFORMANCE

Note:  Represents board changes as implemented or announced.  Represents Board members standing for election at Cracker Barrel 2012 Annual

Shareholder Meeting.

(1)  As announced on 6-Aug-2012, to be effective following Michael A. Woodhouse’s retirement in early November 2012.

New Within Past 18 Months

Tom Barr, Vice President, Global Coffee, at Starbucks Coffee Company

Independent

Sandy

Cochran,

President

and

CEO,

Cracker

Barrel

and

former

CEO,

Books-A-Million

James Bradford, Dean of Vanderbilt’s Owen Graduate School of Management and former President and

CEO

of

AFG

Industries,

Inc.;

Designated

Independent

Chairman

of

the

Board

of

Cracker

Barrel

Glenn Davenport, Retired Chairman and CEO, Morrison Management Specialists

Norman Johnson, Executive Chairman and Former CEO, CLARCOR Inc.

William

McCarten,

Chairman

of

the

Board,

DiamondRock

Hospitality

Company

and

former

President

and

CEO, HMS Host Corporation

Coleman

Peterson,

President

and

CEO,

Hollis

Enterprises,

LLC

and

former

EVP

and

Chief

People

Officer,

Wal-Mart Stores, Inc.

Richard

Dobkin,

retired

Managing

Partner

of

the

Tampa,

FL

office

of

Ernst

&

Young

Martha Mitchell, retired Senior Partner and SVP, Fleishman-Hillard, International Communications

Andrea Weiss, President and CEO, Retail Consulting and former Chairman, Cortefiel Group

1

ANALYSTS CONTINUE TO COMMENT FAVORABLY ON THE STRATEGY

PUT FORTH BY THE INCUMBENT BOARD AND NEW MANAGEMENT…

24

Source:  Publicly available equity research reports, permission to use quotations neither sought nor obtained

Selected Analyst Commentary

IV. Why We Believe Sardar Biglari is

Wrong for This Board

26

WHY WE BELIEVE SARDAR BIGLARI IS STILL WRONG FOR THIS

BOARD

New Cracker Barrel CEO and reconfigured Board laid out a new plan and are successfully executing that

plan –

we believe Biglari would be disruptive to current business momentum

We

believe

Biglari’s

presence

on

our

Board

would

create

a

conflict

of

interest

–

he

is

the

CEO

of

a

family

restaurant chain and CEO of a restaurant acquisition vehicle

We believe Biglari would want to be operationally involved but has failed to disclose his specific plans

or agenda for the business, either to management or directly to the Board

His repeated public pronouncements highlight his combative approach –

was offered two independent

board seats for representation (twice) but turned BOTH offers down

Biglari has a history of “creeping control”

that we believe is not in the best interest of shareholders: 

took control of Steak ‘n Shake over time without paying a premium

We believe Biglari has a questionable track record on corporate governance:  still proposing dual class

of high vote / low vote stock at Biglari Holdings and proposed excessive compensation for himself at

Biglari Holdings which received negative shareholder and ISS responses

Biglari Holdings just agreed to pay a $850,000 civil penalty to resolve a Federal Trade Commission

complaint for failing to comply with the Hart-Scott-Rodino Act in amassing its initial position in Cracker

Barrel –

a violation the FTC’s Chairman characterized as trying to abuse the law’s “passive investor”

exemption

27

BIGLARI HAS ARGUED THAT HE PURCHASED CBRL STOCK FOR

INVESTMENT PURPOSES ONLY…

(1)  Biglari Holdings, press release dated 23-Sep-2011.

However, Biglari’s Rhetoric Changes Over Time and We Believe Cannot Be Relied Upon

“…we told Chairman Michael

Woodhouse that we have

purchased stock for

investment purposes only”

–

Sardar Biglari

“Our intention was that even if

we were to purchase additional

stock, we would keep

ownership well under 20%.”

–

Sardar Biglari

Current ownership of 17.4% exceeds his previously

announced intentions

Biglari has twice attempted to gain board seats to

influence the Company –

not “investment purposes

only”

In September 2012, Biglari Holdings agreed to pay

$850,000 to settle charges that it violated anti-trust

rules when it purchased Cracker Barrel shares

1

1

28

…WHAT SARDAR BIGLARI RECENTLY CONFIRMED ABOUT

BIGLARI HOLDINGS

“We,

however,

are

control

investors”

1

“Biglari Holdings is an unconventional public company because it is in the business of

owning other businesses without regard to any particular industry along with the stipulation

that

all

major

capital

allocation

decisions

are

made

by

Sardar

Biglari,

Chairman

and

CEO.

”

2

“The logic underlying the dual class structure indicates that we could gain increased

flexibility in structuring acquisitions and financing transactions to augment our growth. As a

holding company, we believe that the greater flexibility resulting from our proposal would

transform into an advantage in our pursuit of other businesses. …We may also use such

stock

to

acquire

other

businesses

or

combinations

thereof.”

2

(1)

Biglari

Holdings,

2011

Letter

from

the

Chairman,

dated

10-Dec-2011.

(2)

Biglari Holdings, Schedule 14A, filed 12-Sep-2012.

Source:  Public filings

Note:  Emphasis added.

29

WHAT DOES BIGLARI REALLY THINK?

“Biglari Holdings is a jockey stock.

You are choosing the jockey; I am choosing the horses.

It

would

be

asinine

to

bet

on

the

jockey

and

then

deny

him

the

saddle

or

whip.”

1

Source:  Public filings

Biglari Holdings, 2011 Letter from the Chairman, dated 10-Dec-2011.

(1)

30

OUR VIEWS ON BIGLARI ARE SHARED BY WALL STREET

ANALYSTS

Selected Analyst Commentary

Source: Public news sources and publicly available equity research reports, permission to use quotations neither sought nor obtained

“

At

this

point

in

time

[Biglari]

hasn't

revealed

any

plan,

of

which

I'm

aware,

to

the

company.

I

think

the

company

wants

to

make

sure

if

he

has

designs

on

taking

over

this

company

and

its

business,

they'd

like

to

make

sure

the

shareholders,

other than just him, are well taken care of.”

-

Bob Derrington, Northcoast Research, as quoted in the San Antonio Express; 18-Oct-2012

“Mr. Biglari’s argument seems to be less focused on corporate governance and shareholder performance, which was

the basis of last year’s proxy fight, and more focused on demanding that as the largest

shareholder he deserves two

seats on Cracker Barrel’s board.

We are skeptical that the other 82% of Cracker Barrel’s shareholders would vote for two

executives

of a direct competitor, Steak ‘n Shake,

to join Cracker Barrel’s board. We find it interesting that if you exclude

the investment in Cracker Barrel, Biglari Holdings has not made many shareholder enhancing decisions the past two years.

Assuming the market is reflecting the CBRL investment gain in BH’s market valuation, we estimate BH’s market value would

be down about 10% since it became an active investor in Cracker Barrel on June 13, 2011 (vs. KBCM Restaurant Index

+30%).

We

estimate

the

CBRL

investment

represents

roughly

55%

of

BH’s

enterprise

value.

We

expect

Biglari

Holdings

will lose the proxy fight in November.”

-

Chris O’Cull, KeyBanc Capital Markets; 20-Sep-2012

“Mr. Biglari has not issued an alternative strategic plan for CBRL but

has suggested aggressive goals to drive sales and

traffic

without

supporting

details

as

to

how

such

results

would

be

realized.

Under

Sandy

Cochran,

who

became

CEO

in

September 2011, the company has performed strongly.

Numerous changes have been implemented ranging from board

composition (much higher quality board in our opinion) to marketing, cost management, and willingness to return cash to

shareholders.

…It

is

not

clear

what

Mr.

Biglari’s

plans

might

involve

or

if

they

could

be

as

effective

as

management’s

recent performance.”

-

Joseph T. Buckley, Bank of America Merrill Lynch; 19-Sep-2012

31

OUR VIEWS ON BIGLARI ARE SHARED BY WALL STREET

ANALYSTS (CONT.)

Selected Analyst Commentary

Source: Publicly available equity research reports, permission to use quotations neither sought nor obtained

“Whatever Biglari’s intentions for CBRL still may be, however, we continue to side with management in

this fight,

as the company already has enacted several measures to boost operational performance (as

evidenced by CBRL’s industry-leading comps in family dining), enhance shareholder value (e.g., increased

dividend 14% for FY12, removed operating and corporate-level costs), and improve managerial oversight (e.g.,

splitting the roles of CEO and Chairman of the Board). …We surmise there will be even less incentive for

shareholders to side with a potential Biglari-sponsored slate of Board nominees this November. Although

the potential for a second proxy fight remains, we now think a repeat of last year’s contentious fight

appears less likely.”

-

Stephen Anderson, Miller Tabak; 6-Aug-2012

“Mr. Biglari has a record of “creeping” takeovers. …

Biglari

Holdings is essentially sending excess cash from

Steak n Shake to the Lion Fund. These investments in the Lion Fund do not appear in Biglari Holdings’ balance

sheet due to the requirement to fully consolidate the Lion Fund in BH’s financial statements. In addition, the Lion

Fund’s portfolio has purchased significant interests in BH common stock, which is classified on BH’s balance sheet

as treasury stock, yet the shares remain outstanding. BH’s pro-rata ownership of its common stock through Lion

Fund as of June 13, 2012 was roughly 100,000 shares, but the Lion Fund, in total, owns roughly 200,000 shares.

Essentially, Mr. Biglari has voting control of roughly 15% of BH’s common stock, but he personally owns

roughly 10,000 shares (0.7%).

We wonder how BH decides between allocating excess cash to the Lion Fund and investing more in Steak

n’ Shake (since Mr. Biglari argues it is doing so well) or just returning it to BH shareholders.”

-

Christopher O'Cull, KeyBanc Capital Markets; 12-Jul-2012

32

BIGLARI OFTEN STATES HE IS A "CONTROL INVESTOR’’

BUT WE BELIEVE

YOU SHOULD NOT ALLOW HIM TO TAKE CREEPING CONTROL OF

CRACKER BARREL AS HE DID WITH STEAK 'N SHAKE

Source:  Public filings and Bloomberg

Stock price adjusted for reverse split to be comparable to current market price.

As per Biglari's Schedule 13D/A filing on 3-Feb-2010.

As per Biglari's preliminary proxy filing on 12-Sep-2012.

17-Aug-2007

Share Price:

$309.00

Biglari discloses

5.8% ownership in

Steak ‘n Shake

Nominates himself

and Cooley to the

Board

Purchased

through:

-

Lion Fund

-

Western Sizzlin

-

P. Cooley

Call Options:

-

20,000 shares

through Lion

Fund

-

561,000 shares

through Western

Sizzlin

7-Mar-2008

Biglari wins Proxy

Contest

19-Jun-2008

Biglari appointed Chairman

of the Board

Jul-2008

Two executive team

members resign

8-Aug-2008

Biglari appointed

CEO

Biglari originally claimed that

he had acquired shares

“for investment purposes”

Instead he:

Became Chairman and CEO

Merged with Western Sizzlin

22-Oct-2009

Announces Merger with

Western Sizzlin

BIGLARI

HOLDINGS

5.8%

Ownership

Today:

Control of 15.5%

and CEO

Share Price

(28-Sep-2012)

$365.06

8-Apr-2010

Renamed Biglari Holdings

Biglari only controlled 6.8% 

Renamed Biglari Holdings

Took control

1

2

3

(1)

(2)

(3)

INC.

33

EVEN

WITH

BIGLARI

HOLDINGS’

LARGE

STAKE,

BH

HAS

SIGNIFICANTLY UNDERPERFORMED CBRL

CBRL Represents over 50% of BH’s Market Cap

Source:  Bloomberg and public filings

Note: 12-Sep-2011; is closing price the day prior to announcement of Strategic Priorities on 13-Sep-2011.

90%

100%

110%

120%

130%

140%

150%

160%

170%

Sep-2011

Nov-2011

Jan-2012

Mar-2012

May-2012

Jul-2012

Sep-2012

Daily from 12-Sep-2011 to 28-Sep-2012

Cracker Barrel

Biglari Holdings

What value has Biglari

created for his

shareholders in his own

restaurant business

without CBRL?

34

BIGLARI AGAIN TURNED DOWN A GOOD FAITH SETTLEMENT

OFFER

Biglari Rejected The Following Settlement Proposal:

Biglari Holdings was offered two board seats subject only to the reasonable requirements that nominees:

–

Not be affiliated with Biglari Holdings

–

Not be a current executive officer or director of a competing restaurant company

–

Comply with CBRL’s long-standing publicly disclosed qualification criteria

This offer was subject to the minimal conditions that, Biglari Holdings:

–

Support the Board-recommended slate of nominees at the 2012 annual meeting that would include the two

nominees of Biglari Holdings

–

Not nominate other candidates or present shareholder proposals at the 2012 annual meeting

–

Not seek to call or support any special meeting prior to the Company’s 2013 annual meeting

Many proxy fights are settled with the appointment of one or more directors that are not affiliated with the

dissident, yet Biglari refuses even to consider nominating an independent director, insisting that is has to be him

and Cooley

Does

Mr.

Biglari

really

want

representation

or

simply

a

platform

for

himself?

–

In voting Biglari down last year, shareholders determined last year he wasn’t right for the Board

35

ONE THING THAT HAS NOT CHANGED AT BIGLARI HOLDINGS…

….It’s All About Sardar

36

OTHER SHAREHOLDER MATTERS

Compensation –

Pay for Performance Culture

Compensation Committee Review and Revisions of Compensation Practices in 2012

Compensation Policies

80% of CEO’s target total direct 2012 compensation, and 69% of other named executive officers, is contingent upon

measurable performance

Incentive programs have one, two and three year performance periods to promote both short and long term appreciation of

shareholder value

2012 Total Shareholder Return significantly outperformed the S&P 500, 600, and 1,500 Restaurant indices

Revenue growth, improved margins, and strong Return On Invested Capital performance resulted in incentive plan

performance in excess of targets

Initiated full review of compensation practices based on say-on-pay vote results and feedback from shareholders and proxy

advisory services in connection with 2011 annual meeting

Instituted a number of revisions to compensation practices as a result of this analysis:

—

Revised overall compensation philosophy to target total compensation paid to our executive officers at median of peer

group

—

Revised stock ownership guidelines to multiple of base salary for executive officers and total cash retainer for non-

employee directors: 

–

5x base salary for CEO

–

3x base salary for CFO and Executive Vice Presidents; 2x base salary for all other executive officers

–

For non-employee directors, greater of 5,000 shares or 5x the annual cash retainer

–

No covered persons may sell any shares until threshold is reached

—

Worked to clarify disclosure in CD&A of compensation performance targets and performance relative to them

—

Adopted anti-hedging policy for officers and directors

37

OTHER SHAREHOLDER MATTERS

Shareholder-Friendly Rights Plan is Fully Consistent with ISS Guidelines, Including a 20% Threshold

Adopted in April 2012 in response to threat that Biglari could gain creeping control without paying

a control premium

–

In

his

2011

“Letter

From

the

Chairman,”

Biglari

said

“We…are

control

investors

when

we

own

a

sizeable block of stock engendering influence”

–

Tennessee law preventing shareholders from voting shares above 20% without shareholder

approval is not sufficient.  By acquiring shares above 20%, Biglari could still prevent other

shareholders

from

voting

those

shares

and

gain

greater

influence

by

virtue

of

economic

ownership

Shareholder-friendly provisions include:

–

Rights

plan

would

not

be

triggered

by

“qualifying

offers”

(all-cash,

fully

financed

tender

offers

that remain open for at least 60 business days)

–

Rights plan is focused on creeping acquisitions above 20% and would not deter a non-coercive

cash tender offer for all shares

–

Rights expire if shareholders do not approve rights plan at November 2012 annual meeting

–

If shareholders approve, rights would expire on April 9, 2015

Shareholder-Friendly Rights Plan

38

WHY YOU SHOULD VOTE THE WHITE PROXY CARD

We have accomplished a great deal over the last year –

with more to come

Our reconfigured Board is highly engaged and continuously seeks to create value

We believe Biglari’s and Cooley’s presence would create a conflict of interest and

would be detrimental to the functioning of our Board

We again made a good faith offer this year to permit Biglari to appoint two

independent directors to the Board and again he rejected.  Is his fight about having

representation or just about him?

We believe Biglari’s historic playbook of creeping control and poor corporate

governance could harm Cracker Barrel and its shareholders

Appendix

40

RECONCILIATION OF GAAP BASIS OPERATING RESULTS

TO ADJUSTED NON-GAAP OPERATING RESULTS

(Unaudited and $ in thousands, except per share data)

(1) Severance, other charges and tax effects related to operational restructuring.

(2) (Charges) Gain and tax effects of impairment net of gain on sale of property.

(3) Refinancing costs and tax effects related to the Company's $750 million credit facility.

(4) Charges and tax effects of the proxy contest concluded at the Company's annual meeting of shareholders.

Fourth Quarter Ended August 3, 2012

Fourth Quarter Ended July 29, 2011

As Reported

Adjust

53rd Week

As Adjusted

As Reported

Adjust

1,2,3,4

As Adjusted

Total Revenue

$ 700,010

(51,059)

$ 648,951

$ 612,942

$ 612,942

Store Operating Income

97,577

–

(11,093)

86,484

74,660

–

74,660

General and Administrative Expenses

37,671

–

(1,370)

36,301

35,323

(2,172)

33,151

Impairment and Store Dispositions, Net

–

–

–

–

1,249

(1,044)

205

Operating Income

59,906

–

(9,723)

50,183

38,088

3,216

41,304

Interest Expense

11,354

–

(811)

10,543

16,327

(5,136)

11,191

Pretax Income

48,552

–

(8,912)

39,640

21,761

8,352

30,113

Provision for Income Tax

13,856

–

(2,632)

11,224

4,218

2,201

6,419

Net Income

$ 34,696

–

$ (6,280)

$ 28,416

$ 17,543

$ 6,151

$ 23,694

Earning

Per

Share

–

Basic

$ 1.49

–

(0.27)

$ 1.22

$ 0.77

$ 0.27

$ 1.04

Earning

Per

Share

–

Diluted

$ 1.47

–

(0.27)

$ 1.20

$ 0.75

$ 0.26

$ 1.01

Twelve Months Ended August 3, 2012

Twelve Months Ended July 29, 2011

As Reported

Adjust

1,4

53rd Week

As Adjusted

As Reported

Adjust

1,2,3,4

As Adjusted

Total Revenue

$ 2,580,195

(51,059)

$ 2,529,136

$ 2,434,435

$ 2,434,435

Store Operating Income

337,146

–

(11,093)

326,053

305,778

–

305,778

General and Administrative Expenses

146,171

(6,863)

(1,370)

137,938

139,222

(2,172)

137,050

Impairment and Store Dispositions, Net

–

–

–

–

(625)

830

205

Operating Income

190,975

6,863

(9,723)

188,115

167,181

1,342

168,523

Interest Expense

44,687

–

(811)

43,876

51,490

(5,136)

46,354

Pretax Income

146,288

6,863

(8,912)

144,239

115,691

6,478

122,169

Provision for Income Tax

43,207

2,027

(2,632)

42,602

30,483

1,707

32,190

Net Income

$ 103,081

$ 4,836

$ (6,280)

$ 101,637

$ 85,208

$4,771

$ 89,979

Earning

Per

Share

–

Basic

$ 4.47

$ 0.21

(0.27)

$ 4.41

$ 3.70

$ 0.21

$ 3.91

Earning

Per

Share

–

Diluted

$ 4.40

$ 0.21

(0.27)

$ 4.34

$ 3.61

$ 0.20

$ 3.81

41

A NOTE REGARDING PEER SET USED FOR BENCHMARKING

Last year our peer set included:

–

Biglari Holdings, Brinker International,

Cheesecake Factory, Darden Restaurants, P.F.

Chang’s China Bistro, Ruby Tuesday, and

Texas Roadhouse

–

During the past year P.F. Chang’s China Bistro

was acquired by Centerbridge Partners and is

no longer publicly traded

–

Based on feedback received we have added

Bob Evans Farms and Denny’s Corporation both

full-service restaurants chains

We believe this subset of casual and family dining

restaurants represents the most comparable set of

companies to benchmark CBRL performance

–

Leading casual / family dining concepts

–

Operational comparability

–

Similar scale

–

Geographical proximity

Rationale for Inclusion

Peer Set

Ticker

Company Name

Logo

BH

Biglari Holdings

BOBE

Bob Evans Farms

EAT

Brinker International

CAKE

The Cheesecake Factory

DRI

Darden Restaurants

DENN

Denny‘s Corporation

RT

Ruby Tuesday

TXRH

Texas Roadhouse

42

S&P RESTAURANT INDEX COMPOSITION

Respective S&P Restaurant Index Constituents

Ticker

Company Name

Logo

S&P

500

S&P

600

S&P

1,500

BJRI

BJ’s Restaurants

BH

Biglari Holdings

BOBE

Bob Evans Farms

BWLD

Buffalo Wild Wings

CAKE

The Cheesecake Factory

Cracker

Barrel Old Country Store

CEC

CEC Entertainment

CMG

Chipotle

Mexican Grill

DIN

DineEquity

DRI

Darden Restaurants

EAT

Brinker

International

JACK

Jack in the Box

CBRL

Ticker

Company Name

Logo

S&P

500

S&P

600

S&P

1,500

MCD

McDonald’s

PEET

Peet’s Coffee & Tea

PNRA

Panera Bread Company

PZZA

Papa John’s International

RRGB

Red Robin Gourmet

Burgers

RT

Ruby Tuesday

RUTH

Ruth’s Hospitality Group

SBUX

Starbucks

SONC

Sonic

TXRH

Texas Roadhouse

WEN

The Wendy’s Company

YUM

Yum! Brands