Purchasing A Steak ‘n Shake Franchise
Total Investment: $10,000. Liquid Capital Required: $10,500.Franchise Partners must complete an extensive, multi-week training program before taking ownership of an existing Steak ‘n Shake. With robust franchise support available, Steak ‘n Shake Franchise Partners are equipped to handle decisions and reap the rewards of achieving the American Dream.
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History Of Steak N’ Shake
In 1934, Steak ‘n Shake pioneered the concept of a “better burger” by hand-crafting its famed Steakburger made with 100% beef and prized cuts like sirloin, strip, ribeye, and T-bone. Steak ‘n Shake opened its first restaurant in Normal, Illinois and developed over half of its first twenty locations near Illinois universities. Since Steak ‘n Shake began offering its on-campus format, several universities have surveyed student preference for restaurant brand candidates. In every single case reported, Steak ‘n Shake has performed at the top of students’ choice in restaurant brands.
Steak N Shake Operations & Support
Steak n Shake, a chain of casual restaurants in the US, offers franchise owners a wide range of support services. The company will give owners all the information they need to run the business before they jump in. They give their franchise their operational services and make sure the franchisee is aware of new developments and service suggestions.
Payrolls, accounting, and other administrative services are also covered by this support. they also offer good local and international marketing support. Offer a newsletter, templates, and other operational and marketing supports.
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Steak N Shake Training Expenses: $16000 To $55000
For the initial standard training that Steak n Shake offers, there is no fee. These costs do not include the wages paid to ones management, hourly employees, or franchise owners.
These projections are based on the expenses one will have for travel, meals, and lodging while ones managers are through training. Depending on how many people you train and how far you and your employees must drive to the approved training location that Steak n Shake specifies, your fees may vary. The minimum requirement is that ones general manager and restaurant manager attend a new restaurant opening and travel to Steak n Shakes San Antonio or Indianapolis office for some of the training. The maximum requirement is that one is located in close proximity to Steak n Shakes certified training restaurant. The top end range includes the projected cost for flights, ground transportation, meals, and housing and is based on the assumption that ones management will travel to a licensed training restaurant.
Real Estate/Rent: Not Included
In-line fast service restaurants are frequently rented spaces. Rent prices vary widely depending on a number of variables, such as market demand for specific places, the propertys location, accessibility, and local demographics.
The amount of rent you will pay may also be affected by rent credits or landlord-provided allowances for tenant upgrades.
How Much Do Steak N Shake Franchise Owners Make
According to the 2020 financial year, 192 company-operated restaurants and 84 traditional franchise restaurants operated for more than 18 months straight. the annual Net Sales figure for FY20 as per 2021 fdd appears to be
For conventional franchise eateries
Net sales on average is $1,346,332
Most profitable net sales is $2,826,778
Most cheap net sales is $524,382
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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.
Why Is The Steak ‘n Shake Buy
According to Sardar Biglari, CEO of Steak ‘n Shake’s parent company Biglari Holdings, the initial investment is so low compared to how much it really costs to open many franchises in order to open the door to cash-strapped entrepreneurs like Biglari once was. In 2018, Biglari stated, per QSR, that he “started company with $15,000 and built a thriving enterprise,” adding that he “want to provide an opportunity to other entrepreneurs who are highly motivated to excel but lack the financial means” and that what the company is looking for in Franchise Partners “is not great capital but great ability.”
While that may give you the warm fuzzies, the Franchise Partner deal may not be the golden ticket it seems. For one thing, sales vary enormously at Steak ‘n Shake locations . The brand has been struggling to stay open since before starting the buy-ins in 2018 and, according to Restaurant Business, nearly filed for bankruptcy in 2021.
However, QSR reported in February 2022 that Biglari’s grand plan seemed to have turned things around for the burger vendor and that the low entry fee really was key to his vision. Steak ‘n Shake’s current plan relies on go-getter Franchise Partners to whip failing locations into shape. The aim of the lower-than-industry-average fee is to encourage energetic, hands-on management overhauls by providing hands-on managers a vested interest in the location’s outcome. Receiving 50% of profits seems pretty vested from here.
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Things You Need To Know About The Steak N Shake Franchise
Shifts to Quick-Service Format
1. Steak n Shake made headlines in the fall of 2018 when it announced a massive refranchising initiative. It wasnt the proposed structural change, though, that garnered news it was the fact Steak n Shake put locations on the block for $10,000 in hopes of fostering a single-operator system similar to the one Chick-fil-A built an empire on.
2. At the end of 2019, chairman of the board Sardar Biglari estimated it would take roughly three years to transition 400 or so company-run stores to a network of franchise partners. Since then, most of the attention has centered on Steak n Shakes store closures, mounting losses, and declining traffic: 107 restaurants were temporarily shuttered as of December 31, 2019.
3. Biglari provided some updates in the companys 2019 annual report. Among the key points, Steak n Shake still plans to reopen most of the temporarily closed restaurants, he wrote in a letter to shareholders. Only theres one big update: Theyre all going to be counter service.
4. Steak n Shake has deployed servers since its 1934 debut in Normal, Illinois. All models were sit-down for the companys first 78 years. A quick-serve format arrived in 2012 and grew through universities, casinos, airports, gas stations, shopping centers, and other nontraditional outlets. By the end of 2018, there were 87 quick-service locations including international operations.
Suffers Sales Declines and Restaurant Closures Due to COVID-19
Start A Steak N Shack Franchise For As Low As $10000
In Normal, Illinois, in February 1934, the American chain restaurant Steak n Shake opened its doors. Gus Belt, the founder of Steak n Shakes, came up with the concept of a premium burger and milkshake. They are well-known in the US for their high-quality menu. the company that offers steak burgers, fries, milkshakes, and numerous other items. Steak n shake is a fast food franchise with locations in the United States.
Steak n Shake offers hand-dipped milkshakes, round, sirloin, and T-bone steak burgers that are made in front of customers, as well as sandwiches, hot dogs, and salad. The company served more than 370,000 customers each day at its various locations across the nation. Many Steak & Shake locations are open every day of the year. Biglari Holdings, which beliefs in gradually winning over customers, owns the entire company in 28 states and now has more than 450 Steak n Shake restaurants, and that number is rising. I will outline the key aspects of Steak N Shake which will help you in your decision of owning this franchise opportunity.
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Steak N Shake Swot Analysis
Aside from the numbers, a potential franchisee must take into consideration the strengths and weaknesses of a business because getting into the franchise industry is a longterm commitment.
So before you sign a franchise agreement, make sure you familiarize yourself with the good and bad of a franchise. You want to be prepared for whatever this restaurant concept throws your way.
Computer Equipment And Proprietary System Fees: Varies
The IT staff at Steak n Shake will work with you to order the necessary computer systems prior to the opening of your business. On these purchases, Steak n Shake does not pay any commissions or markups to the suppliers.
The price of the computer systems varies depending on the kind of restaurant youll run, as shown below. These prices are based on recent vendor quotes and are subject to increases if those vendors demand them.
Quick-service format costs around $77,123. Non-traditional location varies from $19,000 to $38,000 , Roadside format costs around $41,924 and Classic to quick-service conversion format costs around $57,7732.
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Hear What Students Are Saying About Steak ‘n Shake
@JDeCap37“Steak ‘n Shake is the best thing to happen to Bloomsburg.”
@TGeorgeCL“Just voted to have Steak ‘n Shake added to the Ole Miss Campus, this needs to happen.”
@grace_bacon“Steak ‘n Shake is going to be the best thing to happen to Ole Miss.”
@Karaiyn“I seriously want @steaknshake on #wku campus today. I’m STARVING. Come on noon.”
A SURVEY WAS CONDUCTED AT THE UNIVERSITY OF MISSISSIPPI FOR THE STUDENTS TO VOTE ON A NEW FOOD OFFERING. 2,500 STUDENTS WERE POLLED.
Why Work With A Franchise Broker
A good franchise broker can help you to find the right franchise. They provide:
Recommendations based on their assessment of historical financial performance instead of just franchise marketing materials.
Franchise matches based on your goals, strengths, and passions.
Demographic analysis to find franchises that could work in your area.
A portfolio of franchises to meet almost any budget, interest, or goals.
Referrals to other specialists, like franchise lawyers.
Information on financing sources.
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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.
Steak N Shake Training & Support Offered
Franchisees who want to operate a Steak n Shake restaurant must complete a rigorous 6-month training program that includes both classroom and on-the-job instruction in order to be approved for a franchise.
Franchisees will be taught every aspect of the business by the time a dedicated team is assigned to you. Additionally, opening assistance will be given to new franchise owners.
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Steak And Shake Owner Salary
Franchise partners made an average of $161,079 in 2020, with some on pace to make more than $300,000 in only their first year.
Steak n shake Conclusion
Fast-casual eatery Steak n Shake is proud of its American brand and serves excellent burgers and milkshakes. However, the industry has not been profitable in the past three years, and the number of restaurants closing has increased over that time.
In a very congested market, Steak n Shake competes against names like Shake Shack, Five Guys, and the typical fast food chains like McDonalds and Burger King.
The fact that the franchise is not wholly owned is a possible obstacle. Despite managing 100% of the day-to-day operations, you receive 50% of the profits as a franchise partner. However, if you look at the financial requirements, you will realise that the minimal investment cost might compensate for certain operators lack of full ownership.
Steak n Shake appears to be franchising in a manner akin to Chick-fil-A. Since they are a franchise, Chic-fil-A doesnt actually own their company. Actually, the business is run by its proprietors. You must actively run the store you build and it cannot be treated as a passive investment if you want to become a Chic-fil-A partner.
Franchise Deck Analysis And Overview
One of the well-known stake franchises in the US is Stake N. In 1945, the business embarked on its franchise journey. They are very considerate of their franchise because the franchise values their quality, vision, and mission greatly. The company offers low-cost restaurant business ownership opportunities. Additionally, provide strong operational and marketing support.
More than 600 restaurants are anticipated to open this year. But the business has flaws as well it is currently reported that over the past three years, the company hasnt experienced a significant decline in the number of units sold. Despite the fact that they are offering a fantastic business opportunity at a low cost with flexible business options, their recent profit trend must be taken into account before buying.
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Is The Steak N Shake Franchise Right For You
In order to open and operate a franchise, you must ask yourself whether or not you are qualified and experienced enough to do so. Opening a business is no small feat, but Steak n Shake may just be the right opportunity to get involved as a business owner. Ask yourself the following questions to see if this is the right business opportunity for you:
Do you have enough to liquid capital? Fortunately, this franchise only requires $10,000 of liquid capital to get started. Keep in mind, however, that if you consider royalty and advertising fees, development costs, and building maintenance that your investment will grow to several hundred thousand dollars.
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Are you capable of running this business? If you have no additional business venture, restaurant management experience, commitment to high performance, and a passion for customer service, then this job is the right one for you.
Another thing you need to consider is what specific location youll be running. Ideally, youll be taking over a location thats already profitable. If youre being asked to reopen a store with no existing customer base, theres going to be more risk associated with the location. Make sure to conduct your own due diligence and think about whether or not a location youre being offered is worth it.
What Business Can I Open With 50k
Here are some ideas:
- Consulting: Choose a niche, and make people pay for your expertise.
- Agency: Create a web development, app development, or marketing agency.
- Ecommerce: Set up an online shop and sell products online.
- Contracting: If you have construction or painting skills, you can start a contracting business.
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Are You A Good Fit For The Steak N Shake Franchise
You must first determine whether or not you are competent and experienced enough to develop and run a franchise. Opening a business is no easy task, but Steak n Shake might be the perfect way to get your feet wet as a business owner.
To determine if this is the correct business opportunity for you, ask yourself the following questions:
Are you able to liquidate your assets? This franchise, fortunately, just requires $10,000 in liquid money to get started. However, keep in mind that when you include in royalties and advertising fees, as well as construction and building maintenance costs, your investment will reach several hundred thousand dollars.
Are you qualified to lead this company? This position is for you if you have no other business ventures, restaurant management expertise, a dedication to excellent performance, and a love for customer care.
Another thing to think about is the place where youll be running. Ideally, youll be taking over an existing lucrative location. There will be additional risk involved with the site if you are requested to restart a business with no previous client base.
Make sure to do your own research and consider whether the place youre being given is worthwhile.
Finally, are you open to owning a franchise in part? Only franchise partners are allowed in Steak n Shake locations, which means youll get 50% of the revenues. This may appear to be unfair, yet it is actually a significant benefit for you.