Cracker Barrel Sends Proxy Materials for Annual Meeting, Urges Rejection of Biglari Nominations, Proposal on $20/Share Special Dividend

Cracker Barrel Old Country Store, Inc. (“Cracker Barrel” or the “Company”)(Nasdaq: CBRL) has commenced mailing of its definitive proxy statement for theCompany's Annual Meeting of Shareholders to be held on November 13, 2013. In aletter to shareholders, Sandra B. Cochran, Cracker Barrel's President and CEO,provided an update on the Company's strategic priorities, and highlighted theCompany's ongoing strong operational performance.Ms. Cochran urged shareholders to elect the Company's nine nominees to theBoard of Directors and, once again, not to vote for the election of SardarBiglari and Philip Cooley. She also urged shareholders to vote against thenon-binding, advisory proposal on a $20 per share special dividend, which waspublicly proposed by affiliates of Biglari Holdings Inc. on September 16^th.On September 26^th, the Company announced that the Board had decided toinclude the proposal in the Company's proxy statement with a recommendationthat shareholders vote against it.“Together, the Board and management team have in place a long-term plan thatis designed to fully realize shareholder value through the promotion ofoperational excellence and by providing the best possible experience for ourcustomers. During the year ahead, we plan to continue to innovate our menu,refine our marketing message, improve the quality and breadth of our retailmerchandise, and drive our margins,” Ms. Cochran wrote in the letter toshareholders.During the 2013 fiscal year, Cracker Barrel delivered total shareholderreturns of approximately 65%, including a 60% increase in the Company's stockprice and approximately 5% in quarterly dividends. In addition, since theannouncement of the Company's strategic priorities in September 2011, CrackerBarrel's share price has increased 159%. This strong performance has beendriven by the Company's continued commitment to quality and service, resultingin seven consecutive quarters of positive comparable store traffic, restaurantsales and retail sales, and outperformance of the Knapp-Track™ casual diningindex.In the letter, Ms. Cochran also noted that Cracker Barrel has: * Returned approximately $68 million in cash dividends to its shareholders during the past two fiscal years and tripled the quarterly dividend since November 2011; * Returned approximately $18.5 million to shareholders through share repurchases during the last two fiscal years; and * Ranked first in the Company's category for Nation's Restaurant News' consumer survey three years in a row.Ms. Cochran commented on the proxy fight, saying: “We are disappointed thatMr. Biglari has chosen once again to seek to elect himself and Mr. Cooley toour Board of Directors, despite our shareholders having overwhelmingly votedagainst Biglari Holdings' nominees at each of the past two annual meetings.”Regarding the advisory vote on a $20 per share special dividend proposed byaffiliates of Biglari Holdings, Ms. Cochran noted: “The Board is keenlyfocused on effective capital allocation that delivers long-term value to allour shareholders and considers all methods of returning capital to allshareholders on an ongoing basis.”Ms. Cochran cited the Board's experience, knowledge of the Company andcommitment to work on behalf of all shareholders as strong arguments towardstheir re-election. She urged shareholders to sign and return the WHITE proxycard to vote "FOR ALL" nine of the Company's nominees to the Board and AGAINSTthe advisory vote on the $20 per share special dividend publicly proposed byaffiliates of Biglari Holdings. Text of Letter from Ms. Cochran to Cracker Barrel Shareholders:October 3, 2013Dear Cracker Barrel Shareholders,Cracker Barrel will hold its Annual Meeting of Shareholders on November 13,2013 at 305 Hartmann Drive in Lebanon, Tennessee. At this meeting we lookforward to updating all of you on our strong performance and the progress wehave made against our strategic priorities.CONTINUED DELIVERY OF SUPERIOR SHAREHOLDER RETURNSDuring fiscal 2013, Cracker Barrel delivered total shareholder returns ofapproximately 65%, including a 60% increase in the Company's stock price andapproximately 5% in quarterly dividends. In addition, since the announcementof the Company's strategic priorities in September 2011, Cracker Barrel'sshare price has increased 159%. These solid results have been driven by theCompany's continued commitment to quality and service, resulting in sevenconsecutive quarters of positive comparable store traffic, restaurant salesand retail sales, and outperformance of the Knapp-Track™ casual dining index.Additionally, Cracker Barrel ranked first in the Company's category forNation's Restaurant News' consumer survey three years in a row. The stockmarket has continued to recognize our success over the past two years as wehave outperformed both our peer group and the overall market.Total Shareholder Returns:30-Sep-2011 to 30-Sep-2013Cracker Barrel             171%S&P 500 Restaurant Index             41%S&P 600 Restaurant Index             87%S&P 1500 Restaurant Index             46%S&P 500 Index             55%            Cracker Barrel continues to focus on meaningful capital returns to itsshareholders, returning approximately $68 million in cash dividends during thepast two fiscal years and tripling the quarterly dividend since November 2011.The Company also returned approximately $18.5 million to shareholders throughshare repurchases during that same period.BOARD CHANGES AND ONGOING COMMITMENT TO BEST-IN-CLASS GOVERNANCEWe believe the Company continues to benefit from the effective leadership ofour Board of Directors. On August 26^th, we announced that Martha M. Mitchellwill retire from our Board at the end of her current term and will not standfor election at the 2013 Annual Meeting. Ms. Mitchell's service was exemplaryand her wise counsel served the Board and the entire Company well during hertime as a director.Today, we have a strong, capable and experienced Board of Directors that iscommitted to the highest standards of governance and works diligently tocreate new opportunities for enhancing shareholder value. Since June 2011, wehave added seven new directors, including six independent directors. Theircommitment, knowledge of the Company and experience have served Cracker Barreland its shareholders well and we believe they are best qualified to continueto do so.SARDAR BIGLARI AND PHILIP COOLEY: NOT THE RIGHT CHOICE FOR YOUR BOARD ANDOTHERS AGREEWe urge you not to vote for the election of Messrs. Biglari and Cooley butrather to show your support for the entire Cracker Barrel slate of Directorsby returning the WHITE proxy card to vote "FOR ALL" nine of the Company'snominees to the Board. We are disappointed that Mr. Biglari has chosen onceagain to seek to elect himself and Mr. Cooley to our Board of Directors,despite our shareholders having overwhelmingly voted against Biglari Holdings'nominees at each of the past two annual meetings. In 2011, approximately 74%of shares voted (excluding shares controlled by Biglari Holdings and itsaffiliates) supported the Cracker Barrel nominees; in 2012, approximately 90%of shares voted (excluding shares controlled by Biglari Holdings and itsaffiliates) supported the Company's nominees. We do not believe that havingMessrs. Biglari and Cooley join the Board would be in the best interest of theCompany or its shareholders.In making this decision, the Board took into account a number of ongoingconcerns regarding Messrs. Biglari and Cooley, including their backgrounds andqualifications; the uncertainty over Mr. Biglari's ultimate agenda; his poortrack record of corporate governance at Biglari Holdings and its affiliates;and the continued business and legal concerns over conflicts of interest.Last year, both ISS and Glass Lewis recommended that our shareholders notsupport the same slate of Biglari Holdings nominees that has been put forwardagain this year.In its 2012 report, ISS said: “For shareholders considering their vote in thisproxy contest, the most telling point might be that the start of all thismarket endorsement coincides not only with the dissident's announcement oftheir first, failed proxy contest, but with the new CEO's announcement of herstrategic objectives, which thus far appear to (be) delivering the goods anddriving meaningful increases in shareholder value.”*Glass Lewis said in its 2012 report: “Further foundering Biglari's most recentsolicitation are a series of relatively uncompelling and, at times, speciousarguments, which collectively do little to support a forward operating planthat is decidedly light on detail, despite the Dissident's industryexperience.”*Our Board believes these arguments hold true today, as our Company continuesto grow and to provide you with strong returns and a clear vision for thefuture.CALL FOR SPECIAL DIVIDEND NOT IN BEST INTEREST OF COMPANY OR SHAREHOLDERSWe have included in our proxy statement a non-binding, advisory proposal,publicly proposed by affiliates of Biglari Holdings, requesting that the Boardpay a $20 per share special dividend. We urge shareholders to vote AGAINST theproposal for the following reasons: * The Board is keenly focused on effective capital allocation that delivers long-term value to all our shareholders and considers all methods of returning capital to all shareholders on an ongoing basis; * A $20 per share special dividend, representing an aggregate amount of more than $475 million, would require a substantial increase in leverage and in the Company's risk profile. Such leverage would reduce the Company's flexibility to continue to invest in and grow the business in a way that the Board believes increases long-term results and enhances total returns to all shareholders; and * The Company's policies have strongly supported the generation of significant cash from its operating business, allowing Cracker Barrel to triple its annual dividend from an annualized rate of $1 per share in November 2011 to $3 per share currently. This increase was achieved while we maintained a prudent risk profile and allowed the operating results to significantly enhance the growth in the stock price.In Mr. Biglari's letter from September 16^th, 2013 proposing that the Companypay a $20 per share special dividend, he argues that the Company should bewilling and able to do so since we had offered in February 2013 to repurchasethe shares owned by affiliates of Biglari Holdings at the market price pershare at that time, which was approximately $65. We believe his argument hasseveral major flaws and ignores a number of important facts that led to theBoard's decision to offer to repurchase Biglari Holdings' shares earlier thisyear. These include: * The proposed $20 per share dividend, or aggregate amount of more than $475 million, represents an almost 60% greater cash expenditure and a significant increase in the Company's leverage and risk profile, compared to the approximately $305 million repurchase of Biglari Holdings' shares that was proposed in February; * The proposed repurchase of the entire ownership interest of Biglari Holdings, combined with a customary long-term standstill, would have eliminated the expense and distraction caused by the annual proxy contests initiated by Biglari Holdings, and the threat from what we believe to be Biglari Holdings' undisclosed agenda; and * The proposed repurchase of the entire ownership interest of Biglari Holdings was made after discussions with other shareholders during the last proxy contest where the Company was encouraged to try to facilitate an "exit strategy" for Biglari Holdings.A STRONG TEAM FOR THE FUTUREWe believe the Cracker Barrel management team continues to benefit from theexperience and leadership of our Board of Directors, all of whom areindependent directors other than me. Together, the Board and management teamhave in place a long-term plan designed to fully realize shareholder valuethrough the promotion of operational excellence and by providing the bestpossible experience for our customers. During the year ahead, we plan tocontinue to innovate our menu, refine our marketing message, improve thequality and breadth of our retail merchandise, and drive our margins. Thankyou for your ongoing commitment to Cracker Barrel and for your support of allof us on the Board and management team.I urge you to sign and return the enclosed WHITE proxy card to vote "FOR ALL"nine of the Company's nominees to the Board and AGAINST the advisory vote onthe $20 per share special dividend publicly proposed by affiliates of BiglariHoldings. To ensure that your vote is received in time, I urge you to vote bytelephone or via the Internet by following the instructions on the Company'sWHITE card. I also urge you NOT to sign any gold proxy cards sent to you byBiglari Holdings or its affiliates. Even a withhold vote for Mr. Biglari andMr. Cooley on his gold proxy card will cancel any previous proxy that yousubmitted to vote "FOR ALL" the Company's nominees.If you have any questions or require assistance with voting your WHITE proxycard, please call MacKenzie Partners, Inc., toll-free, at (800) 322-2885.Sincerely,/s/ Sandra B. CochranPresident and Chief Executive Officer*quote approval neither sought nor received