Lots of Hoosiers have warm-and-fuzzy feelings for Steak n Shake. Wall Street's feelings are an entirely different matter.
As the company readies to announce fiscal fourth quarter financial results this Thursday, investors are exasperated. The company has reported eight straight quarters of declining same-store sales. CEO Peter Dunn stepped down in August, and 76-year-old Chairman Alan Gilman took over. The board then tapped Merrill Lynch to help it review strategy.
Now a Texas investment group that owns more than 5 percent of the stock, Lion Fund, plans to plaster Steak n Shakeâ??s hometown of Indianapolis with billboards calling on shareholders to elect two of its principals to the board.
Does the chain has a future as an independent company?
As the company readies to announce fiscal fourth quarter financial results this Thursday, investors are exasperated. The company has reported eight straight quarters of declining same-store sales. CEO Peter Dunn stepped down in August, and 76-year-old Chairman Alan Gilman took over. The board then tapped Merrill Lynch to help it review strategy.
Now a Texas investment group that owns more than 5 percent of the stock, Lion Fund, plans to plaster Steak n Shakeâ??s hometown of Indianapolis with billboards calling on shareholders to elect two of its principals to the board.
Does the chain has a future as an independent company?
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Whether SNS has a market, or is a well-run operation, is almost irrelevant to the question of whether the company remains independent. SNS is 82% owned by institutional investors, whose operators need to make their quarterly bonus. If they think they can make a buck, they'll sell the company faster than you or I can turn off the light switch.
Texas investors are placing billboards around town trashing the company. The proper response, I think, is for the company to take care of its operational issues -- and to launch a full-blown campaign (with billboards) to preserve SNS's unique restaurant concept.
As for me, I'll vote against the Texas wheeler-dealers, and against any sale of the company.
As for the Texas investors, they ovbiously do not know how to conduct business. If you have a problem with a company (and your a are a big investor like the ones in Texas), you would need to voice your concerns with the company directly. IF there is no compliance, mututal understanding, or if the investing company refuses to listen to investors, YOU do not have to invest. Announcing it to the world through Billboard does not help the situation (unless that is the ONLY means of communication to them).
Granted, the prices of SNS are high, but I don't go for the price, I go for the food (and sometimes experience of a REST-aruant and not a WORK-aruant)
I will continue to support SNS through purchasing food at their restaruant, but I feel that if there are problems (like 2 full years of losses), maybe it is past time to look at what is going on. It is now time to act on change to bring people back. Another thing is, Yes now they are losing for 2 years, but what were the financial records stating prior to these losses. Was it the highest ever? Were they just steadly on the rise until 2 years ago? What about change? Not change completly but enough to bring people back. Listen to the customers and Investors.
Oh, that's right. The only companies he seems to know to buy are the ones affiliated with his business partner, Dan Laikin.
As for the billboard issue, apparently The Lion Fund used the same Billboard tactic for its Western Sizzler deal. That worked.
Unfortunately for SNS, it is a great Indiana institution (although founded in Illinois), but had an elitist Harvard CEO who had no restaurant experience and utilized a poor strategy of playing a pricing game (raising prices) to compete in the Burger industry. Eventually, this crumbled as the same-store-sales and earnings dropped because people can goto McDonald's, BK, Hardee's, even Culver's for a lower price point.
Arguably, Mc, BK, and Hardee's are not in the same category as SNS because of service and quality of products, but still most people will sacrifice quality for a lower price Burger....
It's quite routine for value investors to buy into a company that has lots of promise that's struggling then force changes to reap a large profit. Sometimes management is isolated and entrenched and need to have very public ridicule to force changes.
This is a VERY good thing for not just the value investor but ALL of the stockholders who have been hanging on waiting for some decent results. The only losers are the old, ineffective management team that's forced out by the new/reinvigorated board.