Section V Financial Performance Representations And Analysis
- The historical financial performance representations in this section include unaudited results for:
- the 12-month period ended December 23, 2020 for 192 company-operated and 84 traditional franchise Restaurants which had been in continuous operation for at least 18 consecutive months as of December 26, 2019 and
- the 12-month period ended December 25, 2019 for 254 Company-Operated Restaurants and 96 Traditional Franchise Restaurants which had been in continuous operation for at least 18 consecutive months as of December 27, 2018.
- Steak n Shake has not included sales results from locations based on its franchise partner franchise offering, or non-traditional locations.
- As used in this Item 19, the term Net Sales is the same as Gross Receipts upon which your continuing fees are based .
- Also excluded from fiscal year 2020 is the 53rd week ended December 30, 2020. This week has been excluded for comparability purposes.
- For the majority of the Company-Operated Restaurants and the Traditional Franchise Restaurants, the dine-in component of the business was either closed or severely restricted beginning in the second quarter of 2020 and extending through the end of 2020.
There’s Not That Much That’s Good For You
Sure, everyone loves a milkshake once in a while, but that’s the thing it’s usually just once in a while. There’s a ton of health-conscious consumers out there, and even if you’re not looking for an ultra-healthy, super-delicious meal that’s still affordable, it’s safe to say you’re also not looking for a heart attack on a plate. And if you hit Steak ‘n Shake, well, there aren’t that many options there that aren’t horrible for you.
They’ve gotten some attention for their horribly unhealthy meals, too, named in the Center for Science in the Public Interest’s Xtreme Eating Awards. In 2015, their completely unnecessary 7×7 Steakburger ‘n Fries and Chocolate Fudge Brownie milkshake made it onto the list, coming in at a whopping 2,530 calories and 68 grams of saturated fat combined. That’s enough to make your arteries start to clog just thinking about it.
And when SFGate looked at what you had to choose from when it came to healthy options there, there wasn’t a heck of a lot. They recommended just the mini Steakburger Shooter , and noted that even the healthier-sounding turkey club came with your entire day’s worth of sodium. That’s unfortunate, because in the 21st century restaurants just need to have decently healthy choices to keep all their customers happy and coming back through those doors.
Can I Grind My Own Steak Burger Patties
Absolutely, but you dont need to. Chicago Steak Company offers ground steakburger patties that are already prepared with its award-winning meat and ready for you to cook and serve. You can also ask a butcher to grind your choice pieces of steak when you visit, although this may add some extra costs to your bill. Some butchers may already have ground steak available for you to purchase.
Grinding your own steakburger patties, however, can be a great way to ensure that youre getting exactly what you want in your burgers. For example, you can keep as much fat content as you want or go for a leaner patty by trimming the fat before grinding. Grinding your steak also gives you the freshest meat, unlike buying it from the grocery store or butcher, where it could be sitting for hours before your purchase.
Here are a few tips that can help you grind your own steak for burger patties:
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There’s A Really Big Burger
Some restaurants can’t help but to give you enough food to stunt your growth. The shock value meal something large enough that it drives TV hosts to try and eat it exists in many popular restaurants. If you think the classic Steak ‘n Shake is above that, they’re not. The 7×7 is exactly what it sounds like: Seven patties, seven pieces of cheese. That’s one full pound of burger! It’s advertised as a ‘Late night menu’ item , but any Steak ‘n Shake will make it for you, anytime.
As you can guess, it’s not exactly the same as eating a salad 1330 calories are packed into that monster, which isn’t that bad when you think about it. But the 98 grams of fat and almost 4500 mg of sodium will keep your cardiologist in business. If your thing is watching people stuff their head holes with food, there are plenty of videos of people eating a 7×7. Some take it on like a traditional burger, while others peal it away and eat it one layer at a time. There’s no wrong way to eat it providing you hit the elliptical for two hours when you’re done.
Just How Bad Are The Numbers
How bad is it? In May 2019, Steak ‘n Shake announced they had closed 44 restaurants “temporarily,” according to QSR Magazine. At the time of the announcement, there were 367 corporate locations and 213 franchise stores in operations. Understandably, those numbers were down quite a bit from the previous year, when they had 415 corporate-run locations and 201 franchise stores.
Even more telling are the other numbers. Customer traffic fell 7.7 percent in the first quarter of 2019, and same-store sales fell 5.1 percent over the course of 2018. That followed two previous years of sales losses, and that’s not good for anyone involved. All in all, 2018 ended with a $10.7 million loss, according to IBJ, and in the first quarter of 2019, they had a loss of a whopping $18.9 million.
Steak ‘n Shake is part of Biglari Holdings, and when Sardar Biglari addressed the shareholders in their annual April meeting, he made it very, very clear that a turnaround was going to take time. Does Steak ‘n Shake have that kind of time? It’s hard to tell, but no business can sustain those kind of losses and that kind of downward momentum for long.
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Are Steak Burgers Always Made With Ground Steak
Steakburgers are usually made in the same way that ground beef hamburger patties are with a grinding process that chops up the meat to make it easily moldable into a patty. However, this isnt the only way that you can make patties from steak to create your perfect burger.
Some restaurants and people who enjoy steakburgers at home have adopted a different technique: Adding steak in its whole form to a toasted bun instead of a ground patty. In other words, you cut the steak from the bone to make a boneless portion, cook it to your desired level of doneness, and add it to the bun with your favorite toppings. Its like a burger steak that combines everything you love about hamburgers and steak.
Here at Chicago Steak Company, you can choose the option you like best. We offer gourmet steakburger patties that are already ground and shaped into bun-sized patties for you. But we also have boneless cuts that will do the job as the meat on your juicy burger. Our boneless strip steaks and boneless ribeye steaks, for example, can be cut to fit your bun for a steakburger with unbeatable flavor.
They Think Milkshakes Will Make It Better
In 2019, Sardar Biglari told investors that in spite of all the difficulties, he had a plan to fix the company. Unfortunately, it was not a plan that inspired confidence.
According to CBS News, part of the plan was cutting costs. Legit, sure, but Biglari wanted to cut costs around $1 million a year, he claimed by getting rid of the cherries that have been on the top of Steak ‘n Shake’s trademark milkshakes for more than eight decades. How well is that going to go over with longtime fans?
There’s more to the plans, too, says IBJ. In addition to saving money by removing the cherries, Biglari offered up plans to reinvent the milkshake-making process. The theory was that it was going to help them speed up their service, which was one of the big things they identified as a problem with the company. But when Biglari added that it was going to cost $40 million to update their equipment and put the plan into action, investors were doubtful.
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It Inspired Shake Shack
If you’re a die-hard fan of Shake Shack, you have Steak ‘n Shake to thank for your favorite spot. According to Thrillist, Shake Shack founder Danny Meyer told The New York Times that his career path was started with a visit to the Steak ‘n Shake in St. Louis when he was just a teen. I’m sure Steak n’ Shake isn’t thrilled about inspiring the competition, but they can probably take it as a compliment.
Speed Has Always Been A Problem
So how long is the wait at Steak ‘n Shake? If you’re in a hurry, Steak ‘n Shake probably isn’t your best bet. When the steakburger finally hit New York, people eager to eat what the rest of the country eats found it takes too long. Turns out, the city that does things in a New York minute doesn’t have time for a 25-minute wait at lunch. The same problem that caused the Texarkana Steak ‘n Shake to try counter service befalls most locations. There are horror stories on the internet of two-hour visits and 25-minute drive-thru experiences. There are no published average wait times available, but according to most online reviews, you better plan on waiting for a while.
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There Was A Lawsuit Over Menu Prices
In an attempt to keep up with the Joneses and all their $5 price points, Steak ‘n Shake got into the game by offering certain meals at $4. It wasn’t just a few items either, it’s practically the whole menu. Obviously that cuts into profitability, but at the same time if you’re getting people into your restaurant specifically for the $4 meal, $4 is more than zero dollars. But not every restaurant saw it that way.
In 2013 in Colorado, customers that looked for the $4 menu were surprised to see it was a $5 menu or even more. That wasn’t the only market 50 franchises banded together to fight the low-price menu, citing sales decreases estimated to be $900,000 a year. The franchises accused parent company Biglari of bullying the price point onto franchises. Some franchises settled with the parent corporation although the terms were not disclosed. Others, like in Colorado, were found in violation of overcharging customers by false advertising. It remains a touchy subject for franchises.
Considering A Steak N Shake Franchise Dont Overlook These 37 Important Franchise Fees
If you are considering a Steak n Shake franchise, dont get blindsided by these 37 important franchise fees .
1. Franchise Fee: $25,000
- For each Franchise Agreement you sign, you must pay Steak n Shake an upfront fee upon execution of the Franchise Agreement . The Franchise Fee is $25,000 however, Steak n Shake reserves the right to charge a different fee for Restaurants operating from Captive Facilities.
2. Area Development Agreement Fee: the sum of: the amount of the Initial Franchise Fee for the first Restaurant you will open plus a non-refundable deposit for each additional Restaurant that you are obligated to open under the ADA
- ADAs are granted at Steak n Shakes sole discretion. To secure development rights pursuant to an ADA, you must pay Steak n Shake an ADA deposit equal to the sum of: the amount of the Initial Franchise Fee for the first Restaurant you will open plus a non-refundable deposit for each additional Restaurant that you are obligated to open under the ADA.
- The amount of the Per Unit Deposit Steak n Shake requires will vary depending on the number of Restaurants you are granted the right to develop within your Development Area, your restaurant management experience, your creditworthiness, and such other factors as the market for Steak n Shake By Biglari Restaurants within your Development Area.
3. Computer Equipment and Proprietary System Fees: varies
- Due Date: Weekly on Friday.
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Where Steak N Shake Lost Its Way
Steak ‘n Shake
Steak n Shake emerged out of the Great Recession as one of the industrys steadiest performers. After same-store sales plummeted 7.1 percent in 2008, the brand put together seven straight years of positive gains, including a 7.5 percent run in 2010 that stacked on a 4.1 percent increase the year before.
If you track back to when present management took over on August 5, 2008, Steak n Shake was losing $100,000 per day. By the end of 2009, it was generating $100,000 per day, the company said. Over the next nine years, its aggregate pre-tax earnings were about $185 million and those earnings translated into an even greater sum of distributable cash.
Accelerate to the present, and the comeback story has lost its rosy undertone. Sardar Biglari, CEO of Biglari Holdings, wrote in a letter to shareholders, signed February 22: The decade of control under current management ended much like it startedwith heavy losses.
Steak n Shakes average-unit volumes have been on the decline, too. The company posted AUVs of $1,839.51 in 2017 and had total systemwide sales of $939.99 . The year before it reported AUVs of $1.9 million and systemwide sales of $1,027 .
Ever since we took control of Steak n Shake, we have been steadfast in our formula for success: providing the highest quality burgers and shakes at the lowest possible profit per customer from an ever-increasing number of customers, Biglari wrote.
We failed customers by not being fast and friendly, he said.
The Chain Has An Identity Crisis
Steak ‘n Shake is a confusing place for some. It’s a fast-food chain with a drive-thru, but also has table service. In the end, it doesn’t seem to be satisfying its customers on either front.
A YouTube user pointed to the fact that the wait and the price don’t seem to be congruent: “It’s like they don’t know what their identity should be. It’s 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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Owner Of Steak N Shake Restaurants In Springfield Missouri Sells Them To A Franchisee
Gary Leonard sold to another franchisee his six Steak n Shake restaurants in the Springfield, Missouri, region, including the historic one on Route 66.
The Springfield News-Leader reports Leonard is retiring after 48 years in the business. The new owners are Mike and Lisa Stennett, who hold franchises in Missouri and Arkansas.
The story contains statements from both parties:
Mike and Lisas experience and their strong ties to the Ozarks makes them the perfect successors to the business and legacy that my family and our team have built, Leonard said. We are thrilled to leave our restaurants, customers and employees in such capable hands. We thank Gary and his family for being such good stewards of their Steak n Shake stores in Springfield, said Mike Stennett in the Thursday news release. We are so excited to embrace this wonderful community.
Stennett, like Leonard, holds a long family history with Steak n Shake. Stennetts father joined the restaurant chain in 1968. Mike joined his dad in the business in 1990 at a site in Branson, Missouri.
The news comes the same week the financially struggling corporation announced it was abandoning its table service for self-service kiosks. The chain already was in bad shape before the COVID-19 pandemic, which has worsened its condition.
Despite a round of restaurant closures in 2019, Leonard told us in a all of his Steak n Shakes are independently franchised and will be open for a long time in to the future.
Wait Times Are Frustrating
Steak ‘n Shake’s success is predicated on the fact that it can get its food out fast. But, according to customers who sounded off online, the chain’s speed of service falls far behind its peers.
On , the sentiments are similar: “‘Steak & Wait’ as my friend has called it.”
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Whats The Difference Between Steak Patties And Beef Patties
A hamburger consists of ground beef using various meats from a cow. Although steak comes from the same animal, you get a better grade of meat with a steak patty.
Steak is usually ground with a grinder or chopped using a food processor to form the patty. But, the patty will come from a specific steak cut, much like youd order from a restaurant. A ground steak burger, then, is usually more expensive than a hamburger because youre getting an actual cut of steak in patty form rather than the leftovers you get in a beef patty.
The grade of meat is what helps keep a steak patty super juicy and flavorful if cooked correctly. Most steak patties are leaner with a lower fat content than beef patties, and they will dry out quickly if you dont cook them properly.