Financing

Steak n Shake's sales and profit improve, but stores keep closing

While the brand has been selling stores to operating partners, traditional franchisees keep closing units. So does the company.
steak n shake earnings
Steak n Shake has closed well over 100 restaurants over the past five years. | Photo: Shutterstock.

Steak n Shake’s sales and earnings improved last quarter. Its store count did not.

Sales at the burger chain, owned by the San Antonio-based investment firm Biglari Holdings, increased 7% in the second quarter to $61.6 million, according to the company’s most recent earnings report. Profits from the chain more than doubled to $8.6 million.

But the number of locations appears to continue to shrink. The company has closed eight restaurants permanently so far this year. Franchisees, meanwhile, have shuttered 16, or about one out of every 10 locations operated by a traditional franchisee.

Overall, the brand operates 482 locations, including 177 that are owned by franchise partners that pay $10,000 and split the profits with the company after expenses. That’s down from 506 at the end of last year. Eleven of the 24 closures have taken place in the past three months.

Meanwhile, another 30 of the 167 corporate locations are temporarily closed. Five of those are to be sold. Another 15 are listed with brokers for lease or for sale and the company plans to refranchise the remaining 10. It’s not certain any of the 20 either being sold or planned to be sold could be reopened as Steak n Shake locations. The chain has reopened five locations so far this year that were listed as temporarily closed, and another four were shuttered permanently.

Biglari Holdings, which also operates the 36-unit buffet chain Western Sizzlin, does not report same-store sales for its individual brands, a practice it started shortly after the end of a seven-year-long string of positive same-store sales.

Weakening sales at the burger chain has ushered in an era of massive changes at the company, along with closed restaurants. The brand operated 612 restaurants five years ago but has closed 129 of them since then, not including the 30 that are temporarily shut down.

Steak n Shake had come days from filing for bankruptcy protection in 2021 until Biglari Holdings paid off its debt at the last minute.

The brand in the years since has undertaken a complex conversion from a full-service, family-dining chain with a drive-thru into a counter-service, burger-centric fast-food brand. It has also started selling corporate stores to franchise partners.

But after converting 175 of those locations between 2018 and 2022, it has converted just two so far this year, according to the company’s earnings report. Traditional franchisees, meanwhile, have closed 28 restaurants since the end of 2021.

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