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Franchise Deep Dive: Steak ‘n Shake Franchise Costs, Fees, Profit and Data

The classic burger franchise claims devoted entrepreneurs can operate a franchised restaurant for an initial investment of just $10,000 — but what’s the catch?

LAST UPDATED: December 15, 2022
NUMBER OF LOCATIONS: 178 franchise units and 199 company-operated units
REPORTED COST TO GET IN: $1,208,000 to $1,687,000 (or $10,000 for franchise partnership program)
REPORTED ROI (Item 19): $136,933 (average annual earnings by quartile)

Steak ‘n Shake is a beloved staple of American cuisine, serving premium burgers, milkshakes and fries. The 24/7 restaurant has garnered a loyal following over the years, 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. Today, as a franchise opportunity, the brand competes in a very crowded market, going against franchise giants like Shake ShackFive GuysMcDonald’s and Burger King.

How Many Steak ‘n Shake Locations Are There?

As of December 29, 2021, Steak ‘n Shake had 199 company-operated restaurants (42 were closed), 159 franchise partner units and 178 franchised units. 

Steak ‘n Shake started offering franchises all the way back in 1939 with a limited number of territories, but it did not make a general offering to sell franchises until 1991. In 2017, Steak ‘n Shake officially sold 173 franchised outlets and 412 company-owned outlets — a 17% increase from the year before. In 2019, the restaurant had a total of 568 total units, 17 more restaurants from 2018.

In 2018, Steak ‘n Shake launched a plan labeled the “franchise partnership program,” in which the brand offered single-unit, entrepreneurial-minded operators the opportunity to franchise with the concept for an upfront investment of just $10,000. Steak ‘n Shake then constructs the site, pays for equipment, and assesses a fee of up to 15% of sales, as well as 50% of profits.

Following the COVID-19 pandemic in 2020, the franchise lost $4.6 million and shuttered 70 locations. As of December 30, 2020, 57 of the 276 company-operated Steak n Shake stores were closed. Over the past two years, Steak ‘n Shake reopened 38 locations that were previously closed. The company still plans to re-franchise a majority of its closed company-operated stores. 

Today, the Steak ‘n Shake Company is a wholly-owned subsidiary of Biglari Holdings Inc. (“Biglari Holdings”), an Indiana corporation founded by Sardar Biglari. Biglari Holdings’ common stock is quoted under the symbols “BH.A” and “BH” on the New York Stock Exchange. 

What is the Steak ‘n Shake Business Model?

Most Steak ‘n Shake restaurant locations offer sit-down, drive-thru and front-window service, meaning franchise owners need to manage a hybrid of fast-food to-go service and diner-style sit-down service. Notably, Steak ‘n Shakes are often open 24 hours a day, seven days per week. The menu features burgers and hand-dipped milkshakes primarily, though other entrees, side items and drinks are also available.

There are three business models available to Steak ‘n Shake franchise owners: 

  • Classic Franchise: This 3,315-3,800 square foot design includes a theater that showcases the brand’s famous made-to-order Steakburgers and hand-dipped milkshakes. The dining area includes 99 seats and is open 24 hours, seven days a week, with a full menu.
  • Limited Menu, In-Line Concept: This 2,000-2,500 square foot model is less costly, with the simpler operation and a smaller menu. It is ideal for universities, shopping centers, and city centers. 
  • Non-Traditional Franchise: This 500-800 square foot option provides a unique kind of restaurant experience. With a very limited menu and a design that prioritizes to-go orders, it’s ideal for airports, train stations, plazas, casinos and malls.

How Much Can Steak ‘n Shake Franchise Owners Make?

The financial performance representations in Steak ‘n Shake’s 2021 Franchise Disclosure Document include unaudited profit earned by 82 Franchise Partners for the full year 2021 ended on December 29, 2021, and 29 Franchise Partners for the full year 2020 ended on December 30, 2020. 

Average Annual Earnings Distribution by Quartile:

  • First Quartile: $203,582
  • Second Quartile: $141,993
  • Third Quartile: $118,539
  • Fourth Quartile: $76,987

Highest Annual Franchise Partner Earnings: $297,243

Lowest Annual Franchise Partner Earnings: $48,980

Average Annual Earnings: $136,933

Median Annual Earnings: $128,383

It's important to note that Steak ‘n Shake’s overall system wide revenues have seen a decline year-over-year recently. Following nine consecutive years of positive operating earnings, 2019 saw revenues decline 21% to $594 million and further decline another 42% to $343 million in 2020.

How Much Does it Cost to Open a Steak ‘n Shake?

The estimated total investment necessary to begin the operation of a traditional Steak ‘n Shake free-standing QSR ranges from $1,208,000 to $1,687,000. Steak n Shake also offers various operating formats, and their costs are different from the traditional free-standing restaurant.

  • In-Line Quick Service Format: $454,000 – $1,371,000
  • Non-Traditional: $316,000 – $715,000
  • Roadside Format: $705,000 – $1,199,497

The following costs are part of the upfront costs included in the initial investment:

  • Construction Management / Fee: $0 – $35,000
  • Site Improvements: $172,500
  • Building or Leasehold Improvements: $621,000 – $762,860
  • Furniture & Fixtures, Equipment & Signage: $303,500 – $400,640
  • Pre-Opening Expenses: $5,000 – $10,000
  • Inventory and Supplies for Opening: $10,000 – $15,000
  • Training Expenses: $16,000 – $55,000
  • Architectural, Civil Engineering & Other Professional Fees: $35,000 – $78,000
  • Impact and Tap Fees: $5,000 – $78,000
  • Grand Opening Marketing Expenses: $0 – $25,000
  • Extension Fee: $0 – $10,000
  • Additional Funds for 3 months: $15,000 – $20,000

Ongoing Costs and Fees include:

  • Royalty and System Fee & License Fee: 5.5% of Gross Receipts weekly.
  • Marketing Fee: 3% of Gross Receipts weekly and can be waived for nontraditional locations.

What is the Franchise Fee for Steak ‘n Shake?

The Steak ‘n Shake franchise fee is $25,000. This is the upfront fee that must be paid when opening a Steak ‘n Shake franchise. 

However, there is a way to own part of a Steak n Shake for even less. For a total investment of $10,000, selected franchisees (who are called Franchise Partners) are granted the rights necessary to operate a previously corporate-owned Steak ‘n Shake restaurant. These franchise partners technically do not own the Steak ‘n Shake franchise unit outright but rather a portion of it. The main difference is franchise partners only receive 50% of the store profits, despite running 100% of the day-to-day operations. This is similar to Chick-Fil-A's notorious single-unit-operator franchise business model

Who is the Leadership of Steak ‘n Shake?

What Helpful Articles Can I Read to Learn More About Steak ‘n Shake?

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