How Much Profit Do Steak N Shake Make Per Year
This is one of the important parts to look at when youre deciding to buy a franchise. Although not all franchise stores are equal and the same as they differ in location, size, etc., it is safe to gauge how much profit a Steak n Shake franchise can make in a year and see if its a number you can accept.
An interview with Maxim revealed that in 2020, the average Steak n Shake franchisee partner earned $161,079 in 2020. Some of the top performers were on track to earn $300,000 in their first year.
Press McDowell, a St. Louis, Missouri franchisee shared that he earned in 2 months what he made in 1 year in his previous job and that the $10,000 payment to join the franchise program is the best investment he ever made. McDowell made close to 20 times the amount of his previous job the first year of franchising the store.
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Remember that this is just one Steak n Shake franchisee and it doesnt mean that all franchise partners are smiling from ear to ear like with the example reported here.
If possible, interview 4 to 5 more franchisees and ask them the right questions about their experience. Find out what these operators struggle with. What makes them happy? Take the time to understand the pros and the cons of the business model from a variety of perspectives.
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The Chain Has An Identity Crisis
Steak n Shake is a confusing place for some. Its a fast-food chain with a drive-thru, but also has table service. In the end, it doesnt seem to be satisfying its customers on either front.
A YouTube user pointed to the fact that the wait and the price dont seem to be congruent: Its like they dont know what their identity should be. Its not acceptable for the only customer in the drive-thru to wait 25 minutes for their food and pay 30% more than you would at any other fast food place. They should remove the drive thru, up the quality of the food, and be the good late night burger joint.
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Financial Requirements And Fees
As mentioned, you technically do not own the Steak n Shake franchise unit outright, but rather a portion of it. The benefit to this structure, however, is that you only need to invest invest $10,000 into the opening of your outlet. These numbers only give you a general idea of what you need to start the franchise and may not include the all additional costs needed.
Here is a base overview of what the essential finance requirements are for a Steak n Shake franchise. It is also important to remember that although you are opening a franchise, you are considered a franchise partner and will receive 50% of the store profits.
It is important to note that these are just the initial costs youll need to get your business started. There may also be additional fees that are not accounted for in these numbers that depend on the location or type of store you want to open. Also, take into consideration that the franchise model you open will influence the amount of money youll spend.
Here is a breakdown of fees required of a Steak n Shake franchise. Unfortunately, the costs of developing the franchise and maintaining it are not available to the public.
|Type of Fee|
|Sub industry:||Fast Food|
Challenges Of Steak N Shake
A potential challenge is the lack of 100% ownership of the franchise. As a franchise partner, you are given 50% of the profits, despite running 100% of the day-to-day operations. If you look at the financial requirements, however, you will see that the small investment fee could make up for the lack of total ownership among some operators.
Steak n Shake seems to be using a similar approach to franchising as Chick-fil-A. After all, Chic-fil-A franchise doesnt actually own their business. The owners are actually the operators of the business. One of the requirements of becoming a Chic-fil-A partner is youll need to actively operate the store you open and it cant be used as a passive investment.
Heres another reason you should be concerned about the Steak n Shake company. The company has been losing a significant amount of money in recent years. For example, in 2020 the franchise lost $4.6 million and shuttered 70 locations over the past two years. No company can continue losing money year after year and expect to remain in business.
- Not having 100% ownership over your site.
- The franchise wants a manager to take over the operations of the restaurant.
- You need to be working in the Steak n Shake and involved in the day-to-day.
- This is not a passive investment opportunity.
- The company has been losing money for the past few years. This isnt sustainable.
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There Are Complaints About The Service
According to customer comments, the quality of service at the chain is abysmal, but there may be a good reason behind it. YouTube users who identify themselves as having worked at Steak n Shake have one resounding critique for the company: Stop treating your employees like theyre replaceable.
According to one, when Biglari took over the company, the Turnover rate skyrocketed, which meant that nobody stayed long enough to get good at their job, leading to lower quality and massive wait times.
Another ex-employee said Biglari implemented a $12 hourly wage cap for anyone that wasnt a manager, and cut down hours, which pushed out some of the chains most seasoned cooks. From there it was all downhill. Food quality dropped and wait times went up as unskilled teenagers replaced the good cooks. Servers started getting less tips because the food was bad and so the experienced wait staff quit not long after. Soon the whole store moved at a snails pace, the YouTuber said.
Steak N Shake Wants To Sell 400 Corporate Stores For Cheap
flickr: George Thomas
Steak n Shake isnt fooling around with its refranchising plans. The company announced August 13 its looking to deal its 400-plus company units , to would-be entrepreneurs who want to be hands-on, single-unit owner-operators for a paltry initial investment of $10,000. For comparison, the initial franchise fee for a Taco Bell operator is $45,000. Its $30,000 at Blaze Pizza. Per franchise disclosure documents, the initial investment for a classic Steak n Shake runs between $1.6$2.6 million.
I started my company with $15,000 and built a thriving enterprise, said Sardar Biglari, CEO of Biglari Holdings, owner of Steak n Shake, in a statement. I want to provide an opportunity to other entrepreneurs who are highly motivated to excel but lack the financial means. What will be important to become a franchisee is not great capital but great ability. We are seeking to harness the power of entrepreneurs and to create a company of owners.
Steak n Shake added that the offering to buy into the company as a franchise partner requires operators to successfully complete a six-month training program. The franchise partner would then get 50 percent of the restaurants profits. This is a partnership, shared-profit deal similar to the system Chick-fil-A deploys.
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Steak ‘n Shake
Is The Steak N Shake Worth The Cost To Invest
Becoming a franchisee isnt for everyone and no two franchises are the same which is why researching on your intended franchise is highly encouraged to prepare you for what you need and have to know about the business.
For Steak n Shake though, their franchise program acceptance is so low that thousands who apply get rejected all the time. According to the company, in order to be accepted, you must have a passion for excellence with great customer relations, want to please customers, are committed to high performance, and to delivering quality products. Lastly, you must be dedicated to guest service and prioritizing everything in their best interest.
Just because this is a low-investment opportunity, doesnt mean it will be easy to be accepted.
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If you think you are exactly what I just described, then what you need to do next is consider the money involved. Obviously, with their low franchise free program, anyone would be ecstatic to go and sign up for it. But keep in mind that the $10,000 means you will not be given 100% ownership of the business.
However, theres a reason that the company has successfully opened franchise stores for years. There are also several success stories from franchisees about growing their restaurant and earning so much more than what they initially put out.
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How Much Does It Cost To Open A Steak N Shake Franchise
According to estimates, an investment of between $672,000 and $1835,000 will be required to launch a Steak & Shake franchise. It costs between,000 and,000 to purchase a Steak n Shake franchise, which allows you the right to operate your own restaurant under the Steak n Shake brand. Fee for royalties: 5.5 percent
Advantages Of Steak N Shake
The popular Midwestern-focused restaurant has a lot of benefits. One of the most important benefits to franchising is that the company has withstood all types of economic circumstances without fail. For example, Steak n Shake grew from $268 million in sales to $549 million in sales, even during the economic recession of 2008. In the past decade, the All-American chain has doubled in size, proving its popularity even further.
With over 600 units already established in twenty states, theres still potential to develop in other states. Right now, Steak n Shake wants to open 1,000 units nationwide, in states that havent already been occupied by the franchise.
The franchise has a loyal following, primarily in the Midwestern United States. It is a mid-scale, casual dining option, ideal for middle class families looking for a great meal to enjoy together. The menu of steak burgers, thin and crispy french fries, milkshakes, and chili is already a popular choice amongst their loyal customers, and their menu continues to grow as new trends and ideas come into play.
As a franchise partner, you will be able to operate all aspects of the 24-hour restaurant and become successful both financially and career-wise. Financially, youll receive 50% of the restaurant profits as well as receive a guaranteed $100,000 minimum salary in your first year. Being a franchise partner means that you can reap the rewards of opening a franchise without completely emptying out your pockets.
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How Much Is It To Open A Steak And Shake
The projected total expenditure required to open a standard Steak n Shake free-standing Quick Service restaurant ranges from $1,208,000 to $1,687,000, depending on the size of the business. There are several alternative operational configurations available, each with its own set of charges that are distinct from the classic freestanding restaurant.
INVESTMENT AMOUNT: $10,000 TOTAL INVESTMENT We are presenting you with the option to become a business owner without the need to make a substantial financial commitment. For further information about becoming a Franchise Partner of an existing company-owned Steak n Shake store in your region, click here.
Franchise Fraud By Steak N Shake
Steak n Shake Franchisor Fraud: Franchisor Shakes Down New Franchisee by Fraudulently Hiding Costs
Cornerstone Investment Partners, LLC v. Steak N Shake Enterprises, Inc., 2015 WL 4094630, United States District Court, D. New Jersey
Franchise fraud again. Not surprisingly, another franchisee carcass was spotted lying outside the federal district court in New Jersey last week. The franchisee plaintiff, Cornerstone Investment Partners I, LLC , sued its franchisor, Steak n Shake Enterprises, Inc., the defendant. The franchisor moved to dismiss the franchisees case, and the Court granted the motion. In deciding the motion, the Court, as required, relied exclusively upon the allegations of the franchisee in its Complaint a summary of these facts is set forth below as part of the analysis.
Defendant Steak n Shake operates and grants franchises for restaurants offering burgers and milkshakes. Cornerstone initially sought information about one of Steak n Shakes traditional Classic restaurants, which notably operate twenty-four hours a day for seven days a week, feature a full menu, contain typically between 3000 and 4000 square feet of space, and offer dine-in, drive-thru, and carry-out service. Beginning January 2011, defendant began to also offer franchises for Signature restaurants, which, in contrast to the Classic restaurant, are smaller and offer a more limited menu.
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An Open Letter To Steak And Shake
Dear Steak and Shake,
You are an asshole for the following reasons:
Youre being an asshole, thats what.
Please kindly revaluate your life and your choices, as I will be doing the same.