Cracker Barrel’s Logo Overhaul: A Cautionary Tale in Woke Capitalism

• Investors must rise above corporate culture wars to view the true drivers of portfolio risk and return

• Cracker Barrel’s saga follows failed politically charged campaigns from Bud Light and Target, while American Eagle’s playful, risqué ad landed well

• No matter what marketing teams conjure, key economic changes are ahead that could shape markets in the quarters to come

Sex sells, and woke capitalism doesn’t work. This past summer featured two divergent advertising campaigns, the first from struggling apparel retailer American Eagle Outfitters (AEO), and the second from a mainstay of the southern road trip, Cracker Barrel (CBRL). 

Sydney Sweeney’s provocative poses and “good jeans” captured young men’s attention, in what felt like a throwback to raunchy ads of two decades ago, à la Paris Hilton’s Carl’s Jr spot. A comparatively modest logo change at Cracker Barrel then stirred up controversy, described by critics as sterile and soulless. 

Removing the familiar figure of Uncle Herschel leaning on a barrel in favor of a minimalist wordmark was met with a 15% plunge in CBRL shares. It had the vibes of Target’s (TGT) woke turn in 2023 and Bud Light’s botched rebranding that year. 

AEO Played the 2005 Carl’s Jr Paris Hilton Card

Source: USA Today

For investors, it’s a reminder that corporate executive teams can quickly steer a once-respected company in the wrong direction. Most Americans—left, middle, and right—care little about the personal politics of those in the C-suites. 

But when managers are compelled to shift corporate strategy in favor of wokeness, that’s when red-blooded US consumers begin to boil over. For Cracker Barrel specifically, the seemingly insignificant logo redesign comes at a precarious time, when most households aim to cut back financially, and a barrel full of restaurant stocks is suffering. 

Let’s assess the damage with Cracker Barrel and properly frame it with today’s macroeconomy through the lens of the American consumer.

 Woke Capitalism: A Risky Strategy for Corporate Branding

By now, it should be clear to CEOs that even an indirect slight against “the good old days” and traditional American values would be greeted with hostility by US consumers. Indeed, the Cracker Barrel logo swap landed with a thud and loud voices on Fox News and vitriolic posts on X. While some lamented the loss of a beloved symbol of country comfort, others interpreted ditching the old man and a barrel as a hit against red-state values and tradition.

To be clear, execs at the top of the Tennessee-based $1.2 billion market cap restaurant chain assert that the change was a necessary update to keep the brand relevant. Dig into the background of CBRL’s Chief Marketing Officer, and you might reach a different conclusion. Cracker Barrel now faces a Target and Bud Light moment, amid perceptions that the red-state staple eatery turned its back on once-loyal customers. 

DEI Run Amok? 

Source: LinkedIn

You might recall similar sagas that continue to plague a pair of American brands:

1. Bud Light: The Mulvaney Fallout

In April 2023, Bud Light collaborated with transgender influencer Dylan Mulvaney, triggering an intense backlash from the right. Scathing hashtags and financially damaging boycotts ensued. Parent company Anheuser-Busch InBev (BUD) saw its US sales drop double-digits, with some estimates pinning the total hit to be in the tens of billions of dollars. That woke pivot was ill-timed, too, considering younger demographics simply don’t drink as much as Gen Xers and baby boomers.

2. Target: Rainbow Capitalism

At about the same time, Target’s Pride-themed merchandise for children sparked outcry from middle America and, ultimately, a policy rollback. The public was already exhausted with virtue signaling and performative social messaging then. So-called “rainbow capitalism” wasn’t so much responded to with hate by customers, but with eyerolls and an “enough is enough” attitude. Those feelings turned into real losses for Target. To this day, TGT shares are down significantly, while its market cap is about one-twentieth of Walmart’s. 

BUD and TGT Sharply Underperforming the S&P 500 Since Q2 2022

Source: Stockcharts.com

American Eagle’s Sexy Gamble Pays Off

Bud Light and Target are two cautionary tales asserting that those at the top of the corporate ladder should leave their personal values at home and focus on one thing: maximizing shareholder value. 

Together with the apparent success of American Eagle’s efforts to appeal to young men, it’s evidence that the cultural tide has turned, away from woke capitalism and toward traditional values. Look no further than President Trump’s 2024 win, which at times pounced on corporate culture wars run amok.

American Eagle, by contrast, struck gold with its '90s and early-2000s style of selling sex to young men. It was an edgy strategy, considering AEO stock was down by more than 60% from its 2021 peak when the 30-second spot dropped. (President Trump’s tariffs and fast-changing fashion trends weighed on the 30-year-old retailer.) The marketing ploy worked for a few reasons:

• First, it was apolitical, focusing on light humor and the most reliable eyeball-grabbing tactic of all. 

• Second, it was bold, but not divisive. 

• Third, it was perfect for the social-media age and generated viral discussion and even garnered applause from the White House.

Do people think Sydney Sweeney has great jeans? We don’t know yet, as AEO’s fiscal Q2 ended on August 2, just days after the hot commercial went live. Investors will have to wait until Q3 numbers are released on December 3.

The tape is the tell, though. In the one month ending on August 22, AEO stock was up 26%, while CBRL shares had sunk 20%. These are not macro-moving stocks, but we are talking about hundreds of millions of dollars in market cap gained for American Eagle and lost for Cracker Barrel.

AEO Flies Following the Sydney Sweeney Commercial

Source: Stockcharts.com

AEO +26%, CBRL -20%

Source: Stockcharts.com

What It Means for the US Consumer Economy and Restaurant Stocks

Zooming out to the macro, it’s clear that messaging matters and consumers command a powerful presence today. What if there is more to the Cracker Barrel blunder than a basic logo change? Perhaps the company, which relies on Americans traveling by interstate to vacation spots, is feeling the pinch from a more budget-conscious consumer?

Throughout this past earnings season, it was clear that restaurant stocks were struggling, sans Brinker International (EAT), parent company of Chili’s and Olive Garden. Stubbornly high labor cost growth among low-wage workers, sticky food inflation, and weakening discretionary spending by the bottom half of the wealth bucket have made the industry’s backdrop challenging.

Fast casual chains like Cava (CAVA), Sweetgreen (SG), and even Chipotle (CMG) are grappling with what many indicators suggest is slowing household spending. There seems to be some bifurcation in eating-out trends, too. Sit-down chains are faring better than fast-food joints and grab-and-go lunch establishments. This is when you must put on your macro hat: lower-income households are pulling back, but wealthier cohorts are spending freely.

Fast-Casual Restaurant Chains Face Slowing Sales

Source: CNBC

The so-called “wealth effect” may have something to do with it. People who own a sizable stock portfolio have seen their net worths jump not only this year, but ever since the bear market bottomed in October of 2022. Three years of rising equity prices afford those with financial assets to continue splurging, including on dining out at finer restaurants. For the US economy writ large, so long as the top, say 20%, keep spending, the macro may hold up, as that group is responsible for an outsized portion of total discretionary spending.

It’s not all bad news for the likes of Cracker Barrel. Its charming stores and down-home meals may still be in demand. Total US miles driven on highways has fully recovered, while TSA checkpoint numbers are at all-time highs for this time of year. Both metrics assert that in the face of lower economic growth and amid poor consumer sentiment, travel activity is holding up.

TSA Checkpoint Volume Up YoY

Source: Augur Infinity

US Miles Driven Logs a New High

Source: BofA Global Research

Lower-Income Consumers Pulling Back, But Represent a Small Portion of US Spending

Source: BofA Global Research

A Silver Lining: Fed Rate Cuts Could Lighten the Load

Small-cap Consumer Discretionary stocks have no doubt been under pressure. Struggles began when inflation turned higher in 2021, eventually catapulting to a 40-year peak in the CPI rate by June of 2022. The Federal Reserve’s interest rate hiking cycle was another blow. You see, small caps across sectors rely more heavily on short-term financing to fuel operations. As borrowing costs increased, earnings per share were hit hard. 

It’s not surprising that small caps remain below their November 2021 all-time high in what is now among the longest drawdowns in the Russell 2000 Index’s history. Recently, though, there have been inklings that those bearish doldrums could be lifting.

At Fed Chair Jerome Powell’s final Jackson Hole address, he hinted that interest rate cuts may happen sooner rather than later. It wasn’t a direct call for a lower policy rate, but traders interpreted the statement that “a shifting balance of risks may warrant adjusting policy” as meaning Fed easing will be the new normal, a 19% US effective tariff rate notwithstanding.

The thinking is that rate cuts will foster easier capital conditions, boost consumer and business confidence, and may lift spending among all wealth cohorts. Just as small companies suffered the most during the Fed’s 2022-2023 tightening cycle, they could benefit most in the quarters ahead. That bullish narrative hinges on one macro variable: recession or no recession.

Flash Headlines from Powell’s Jackson Hole Missive

Source: Kevin Gordon, Schwab, Bloomberg

On GDP and Tariff Watch Through 2026

The Trump administration inherited a slowing economy, one that was running on fumes from intense debt-funded stimulus coming out of the pandemic. It turns out that inflation-adjusted consumer spending over the first half of 2025 was negative. Consumption is responsible for two-thirds of US GDP, so we’ve seen total output slow in the past few quarters. 

For companies like Cracker Barrel and American Eagle, tariffs pose a significant headwind; higher import duties are effectively a tax on domestic businesses and consumers. In advance of the higher reciprocal levies that went into effect on August 7, Goldman Sachs estimates that more than half of tariff costs have been absorbed by US businesses. As the Christmas shopping season approaches, Goldman projects that households will bear 67% of the burden. 

Goldman Sachs: Businesses Taking the Early Tariff Hit, Consumers to Feel the Pinch Later

Source: Goldman Sachs

Now, tariffs generally apply to the cost of imported goods—they do not impact services spending to a large degree. Also consider that the cost of goods is less than the price tags we see on store shelves. For example, if a made-in-Vietnam trinket on display at a Cracker Barrel country store costs $5 and is sold for $10, a 20% tariff would increase the actual retail price by $1, not $2. We’ve also previously described that consumers are savvy enough to substitute tariffed items for non-tariffed items, so the actual impact may not be recession-inducing.

What’s more, remember all the fearmongering about a trade war and tit-for-tat retaliatory tariffs from other countries? Those have simply not transpired, which the mainstream media is silent about. On the same day as Powell’s big Jackson Hole address, Canada announced it was dropping its counter-tariffs on the US, even as the US continued to collect import duties from our neighbor to the north.

Canada Chickens Out? The ‘51st State’ Pulls its Retaliatory Tariffs.

Source: CNBC

A Manufacturing Renaissance Underway?

All the more encouraging are recent manufacturing survey data. S&P Global’s Manufacturing Purchasing Managers’ Index (PMI) for August was the best in more than three years. The more widely followed PMI survey conducted by the Institute for Supply Management (ISM) has been under the key 50 mark (the demarcation between growth and contraction) for 30 months. An upward turn in both gauges would support higher business confidence and, potentially, spending.

S&P Global US Manufacturing PMI: A Fresh 3-Year High

Source: S&P Global

ISM Manufacturing PMI Below 50 for the Better Part of Three Years, Poised to Rebound

Source: Trading Economics

Lower financing costs would indeed provide a boost to the “real” economy, away from the AI megatrend that has fueled tech-company earnings. President Trump’s One Big, Beautiful Bill Act (OBBBA) intends to promote domestic investment through key tax breaks, like the full-expensing provision for US investment and research & development costs. 

Together, easier monetary policy via the Fed lowering interest rates and the targeted fiscal stimulus in the OBBBA may be just the combination to thwart a protracted GDP slowdown...right when most consumers need help the most.

Actionable Insights for Macro Investors

Allio is committed to the values that made America great, honoring historical figures and founders without judging them by modern standards. We have no political affiliation or ideology. Instead, we value freedom of speech and freedom in markets. 

It's through this lens that we analyze the macro, and American consumers seem to be in sympathy with this common-sense stance. For your portfolio, here’s what to consider beyond basic asset allocation:

1. Monitor Branding Backlash Risk

Like it or not, “go woke, go broke” is a thing. Corporations can test that theory, but they do so at their own peril. We do not advocate stock picking, but if you do, you should research executive teams, particularly who sits in the marketing C-suite. Companies that depend on cultural signaling should be avoided.

2. Identify Trends that Unite, Not Divide

American Eagle’s Sydney Sweeney gimmick was daring but also tongue-in-cheek. It played well across most of the political spectrum, aside from extremists on the far left. AEO’s campaign didn’t dismiss anybody, but was wholly consumer-centric. Whether that helps the legacy fashion company sell jeans is another story.

3. Listen for Fed Speak and Watch Consumer Data

More important for your portfolio is the impact of interest rates and household spending. Monetary and fiscal policies on tap may promote a more sanguine business and consumer backdrop. 

4. Invest with the Big Picture In Mind

Media narratives and politically charged stories around culture wars only serve to distract individuals from reaching their financial goals. We call on investors to silence the noise, unfollow those that drive division, and be unbiased when analyzing the macro economy. 

The Bottom Line

Americans are fed up with corporate virtue signaling. We, collectively, will quickly fire back when companies attempt to push woke political viewpoints. Just ask executives at Target, the parent company of Bud Light, and, more recently, Cracker Barrel. In contrast, American Eagle proved that it could create a clever, culturally resonant campaign anchored not in politics but personality.

These make for compelling cable news profiles and maybe, one day, MBA case studies. They don’t, however, help investors reach financial independence. Effective strategies require dynamic asset allocation and portfolios that go beyond memes. 

Allio’s team of expert managers focuses on impactful macro trends. We deliver institutional-grade strategies with human oversight and advanced AI tools that rise above politics and culture wars.