The COVID-19 pandemic has taken its toll on the restaurant industry,
but it has also spurred growth for some fast-food chains. However, one quick-service restaurant that
hasn't seen as much of a pandemic-related uptick in business is Cracker Barrel.
The past year was "one of the most challenging" in the chain's 50-year history, according to CEO
Sandra Cochran during a quarterly earnings call in September 2021. Cochran said on the call,
"For years leading up to the pandemic,
Cracker Barrel outperformed the industry by leaning into our core competitive advantages,
including our authentic experiential brand, our culture of hospitality in our homestyle,
food and retail assortments, we remain focused on these core strengths."
During the call, it was revealed that Cracker Barrel's same-store sales had
decreased by nearly 7% as compared with 2019. The restaurant has also
raised prices by nearly 3% across the board, according to Bloomberg.
In effect, Cracker Barrel was trying to make up
for some of its revenue shortfall and pandemic-related supply chain snafus,
including the labor shortage and the accompanying increased cost of attracting workers.
So what will Cracker Barrel's next move be now that the company has been ordered by a
Tennessee federal trial court to pay a $9.4 million judgment? The payment
in question is going to a customer who was permanently injured and disabled as a result
of being served water that was tainted with a cleaning solution in 2014, according to CNN.
While he was dining at a Marion County, Tennessee, Cracker Barrel in April 2014,
William Cronnon was served a cup of ice water by a Cracker Barrel employee.
As soon as Cronnon took a sip of the drink, however, his mouth and throat began to burn.
As it turned out, the water served to Cronnon was tainted with a corrosive cleaning solution,
Eco-San, which can cause severe burns on contact. If ingested, the product can lead
to severe digestive tract burns, according to the manufacturer's safety information.
That sip left Cronnon with permanent, debilitating physical injuries for which
he is still under medical treatment. The injuries have negatively impacted
his earning capacity and enjoyment of life, according to the Chattanooga Times Free Press.
Apparently, it had been a matter of course at Cracker Barrel for employees to soak drink
dispensing parts overnight in Eco-San, which is an appropriate use for the cleaning solution.
However, in this case, a Cracker Barrel employee had allegedly used a water pitcher to soak those
dispensing parts in Eco-San. The next morning, restaurant staffers allegedly failed to clean out
the pitcher and then used it to dispense water, according to Cronnon's attorney, Thomas Greer.
"They were training their servers to soak those parts in an unmarked water pitcher like this."
The fact that Cracker Barrel had, at the time, endorsed the storage of chemicals in
unmarked containers swayed jurors to award significant punitive damages to Cronnon,
in addition to direct and consequential damages, according to Restaurant Business.
When Cronnon filed his initial lawsuit against Cracker Barrel in 2015, he sought $150,000 in
damages. But Cronnon's attorney made such a compelling case about the egregiousness of Cracker
Barrel's company policy of storing chemicals in unmarked containers — including the water pitcher
in question — that a judge ordered Cracker Barrel to pay $5 million in punitive damages,
as well as $4.3 million in compensatory damages, according to the Chattanooga Times Free Press.
Compensatory damages are damages that address both direct economic losses (like medical
bills) and indirect losses (like the reduced capacity to earn a living) suffered as a result
of a defendant's bad acts. Punitive damages are intended to both punish and effect future change.
In levying punitive damages, the jury was swayed by the "objectionable nature" of the incident, as
well as Cracker Barrel's "awareness of the amount of harm being caused" and its "unwillingness to
fix the problem or offer a 'prompt and fair settlement,'" according to court documents.
Cracker Barrel expressed its disappointment in the verdict, and Greer believes that an appeal
will be forthcoming. In any event, Tennessee law limits compensatory damages to well under
what was awarded, so it remains to be seen how this will affect Cracker Barrel's bottom line.
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