Steak 'n Shake Hopes a Chick-fil-A-Inspired Model Will Right the Ship

According to an article in QSR, CEO of parent company Biglari Holdings, Sardar Biglari, wrote in a February 22 letter to shareholders that the company had withstood “heavy losses.” In the same letter, Biglari said that “Steak ‘n Shake’s same-store sales declined 5.1 percent in 2018.” Furthermore, “Steak ‘n Shake’s average-unit volumes have been on the decline, too,” according to the article.

Biglari blamed the losses on poor scaling: the brand failed to adapt its operations and kitchen design to increasing volume over time.

“We failed customers by not being fast and friendly,” Biglari said, according to the article. “To be a market leader in the fast food business, we should have paid greater heed to becoming, well, fast,” he said.

According to the article, “Steak ‘n Shake hopes to take a page out of Chick-fil-A’s book to remedy the issue.Earlier in the year, the brand announced it was franchising all 413 of its company-operated units. Specifically, the initiative centered on a single-unit strategy—akin to the chicken leader—in hopes of fostering a system where every operator is fully invested. The owner-operator model sells franchises to managers and other interested parties for just $10,000. But the new operator must split the store’s profit with the franchisor,” the article said. According to the article, Biglari said that the program “would feed the entrepreneurial spirit at Steak ‘n Shake.”

Read the full article here.