Steak n Shake changing its name, moving HQ to Texas

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Indianapolis is on the verge of losing one of its most prominent public companies.

The Steak n Shake Co. is planning to change its name to Biglari Holdings Inc. and move its headquarters to San Antonio. The Steak n Shake restaurant chain would remain as a subsidiary of the renamed company and retain a presence in Indianapolis.

Chairman and CEO Sardar Biglari plans to put the changes to a shareholder vote at the company’s annual meeting April 8 in New York City.


Biglari, 32, operates the private equity Lion Fund and other investment vehicles out of San Antonio, where his family has lived since they emigrated from Iran in the 1980s.

The Steak n Shake corporate Web site still lists the Century Building at 36 S. Pennsylvania St. as the company’s headquarters, but a Jan. 29 announcement about the pending name change includes a San Antonio dateline.

The company already lists San Antonio as the “address of principal executive officers” in recent Securities and Exchange Commission filings, and a high-ranking company official confirmed to IBJ that the publicly traded company will be based in Texas.

The company has reserved the ticker symbol BH on the New York Stock Exchange, and will switch from SNS on April 9 if a majority of shareholders approves the change.

It wasn’t clear whether local jobs would be affected by the move. Steak n Shake already has scaled back its headquarters operation but still has employees spread over a couple of floors it leases in the eight-story Century Building downtown. The company has just two named executive officers, Biglari and Interim CFO Duane Geiger.

Steak n Shake was founded in Normal, Ill., in 1934 but has had its headquarters in Indianapolis since the 1970s.

Any time a headquarters leaves, it’s a blow to the city, said Indy Partnership President Ron Gifford, who said he hadn’t heard about a potential move for Steak n Shake.

“Having a corporate headquarters is the equivalent of a company making a commitment to its home, both literally and figuratively,” Gifford said. “When a corporate headquarters moves, the investment in the community tends to decline.”

The company telegraphed a potential headquarters move in August 2008, when it withdrew a request for a $100,000 tax abatement and $200,000 state training grant in exchange for retaining 160 jobs and investing $2.5 million in new equipment at its local headquarters.

Biglari and other Steak n Shake officials did not return phone messages by press time.

Aggressive moves

Biglari used a proxy fight to seize control of the burger chain in 2008, then promptly cut costs, launched new promotions and trimmed spending on restaurant maintenance and investment from an average of $55 million per year to just $5.8 million last year.

The moves helped the chain break a 14-quarter streak of declining same-store sales, but also raised questions about whether Biglari is jeopardizing Steak n Shake’s future in exchange for short-term profits.

Biglari in June persuaded the board to transform Steak n Shake into a holding company for a diverse range of investments and give Biglari sole discretion over asset allocation. The board’s vote essentially allowed the hedge-fund owner to use the publicly traded company as a personal investment vehicle.

The unanimous vote came after Biglari, the board chairman, managed to push out every board member unwilling to give him dictatorial authority over Steak n Shake despite his relatively modest ownership stake. Biglari personally owns about 7 percent of the shares in Steak n Shake and controls another 5 percent through his Lion Fund.

The board now has five members, including Biglari, down from nine. Now that the board has given Biglari sole authority over all investments, the question is, who holds Biglari accountable?

Former interim CEO Wayne Kelley, who resigned from the board in March 2009, blasted the young executive at the time for ignoring the board’s advice and neglecting the Steak n Shake brand.

“Although our current chairman and CEO espoused openness and transparency, the opposite has been the case,” Kelley wrote in his resignation letter. “The board has not been actively involved in developing the vision and strategy of the business, but rather has been informed about it belatedly.”

Name game

Biglari, a supremely confident Warren Buffett disciple, hasn’t been shy about attaching his own name to the Steak n Shake chain. A photo and greeting from Biglari now welcome guests at each of Steak n Shake’s 486 locations in 21 states.

Renaming the parent company Biglari Holdings acknowledges a fledgling but successful turnaround—the company earned $5.5 million in its fiscal fourth quarter compared to a year-ago loss of $3.4 million. It also rebrands the company as something more than a hamburger and milkshake factory.

Biglari in August closed on a $23 million deal to merge Steak n Shake with another holding company he controlled, Western Sizzlin Corp., which franchises a chain of 105 steak restaurants and also owns stakes in Houston-based Mustang Capital Advisors and Bellevue, Wash.-based barter network ITEX Corp.

In December, Steak n Shake offered to acquire Fremont Michigan Insuracorp Inc. in a deal worth as much as $37 million, apparently so Biglari could use the small insurer’s $60 million investment portfolio to fund more acquisitions. The company also initiated an unusual 1-for-20 reverse stock split that pushed the per-share price above $300, out of reach for many short-term investors.

Steak n Shake investor Max Olson, who runs Salt Lake City-based Max Capital Corp., said the reverse split and name change are “unnecessary” but shouldn’t do any harm. He picked up his Steak n Shake shares as part of the deal with Western Sizzlin.

“I think maybe it’s a little too much, too fast,” said Olson, who met Biglari at last year’s annual meeting for Buffett’s Berkshire Hathaway in Omaha. “He’s done a fantastic job of turning the company around. But in my view, it would have been better to wait a little longer.”

Other investors see the change as necessary since they now are betting not so much on a single restaurant chain, but on the potential of an up-and-coming asset manager.

Channeling Buffett

In fact, the company’s latest annual report lists a new No. 1 risk-factor investors should consider before they buy Steak n Shake’s shares: the potential loss of Biglari.

“If for any reason the services of Mr. Biglari were to become unavailable, there could be a material adverse effect on our business, since he is singularly responsible for business and investment activities,” the company said.

Other risks include restaurant-industry competition, the economy and debt covenants—but those don’t merit a mention until later down the list.

Wall Street analyst Michael Gallo of New York-based C.L. King & Associates Inc. reiterated a neutral rating on Steak n Shake shares in a Feb. 1 note, citing a tough restaurant environment and the risk that Biglari will overpay for an acquisition.

“While progress over the last couple of quarters has been encouraging, we believe the key determinant of value creation going forward will be the success of Steak n Shake in transitioning into a conglomerate-like holding company,” he wrote.

Biglari guided his hedge fund to post strong returns in a booming market, and he successfully agitated for changes at Friendly Ice Cream Corp. that led to a profitable sale of the Massachusetts-based company. Otherwise, he doesn’t have much of a track record suggesting he is capable of designing his own version of Berkshire Hathaway.

He and Buffett share similar visions for what makes an attractive investment, along with an interest in courting long-term investors. Biglari’s desire to include himself in the branding for Steak n Shake calls to mind the approach Buffett has taken with Berkshire Hathaway’s Geico subsidiary, where the popular Gecko mascot frequently cites Buffett as evidence of the company’s strength and stability.

But there are differences, too. Berkshire Hathaway just split its B shares in the opposite direction, making them accessible to more investors as part of a $34 billion deal for the railroad Burlington Northern Santa Fe. Buffett didn’t name his company after himself, electing to keep the moniker of the now-defunct textile company that launched his conglomerate.

And Buffett famously earns a base annual salary of just $100,000, the same he’s taken home for more than 25 years.

Biglari, on the other hand, sought and received a 220-percent raise last year to $900,000, reimbursed himself about $500,000 for the proxy fight he used to take over Steak n Shake, and paid himself another $48,000 last year for travel expenses, including accommodations at the Conrad Indianapolis.•



  • Consistantly Horrible Service at Steak and Shake
    A year ago Steak and Shake service was OK. For the past several months service at two St. Louis S&S has been consistantly horrible. Very slow. Inaccurate. Sloppy. Unprofessional. The same horrible service at 4640 Chippewa St, St Louis, MO 1253 Hampton Ave, St Louis, MO If I were in charge, I'd fire everyone. Hire new staff. Pay them a decent salary. Train them well. Set quality standards. Pay bonuses for meeting those standards, fire people when standards are missed. I would focus on Enhancing the customer experience AND enhance the employee experience. A happy employee tends to give good service which leads to a happy customer which leads to more business and more profits...... If changes arent made soon I predict S&S will be out of business in the next 2 years.
  • sns
    He has not been there since 1980; check your facts.
  • optical illusion
    Just to comment on this. I have worked for six years at this company. I am in school for Radiology. So this isn't my life long dream to stay here. I do know when I started this company in 2006 it was an ethic and morale based company. The company cared for their customers and their employees. Now they have taken away vacation pay unless your a fulltime service trainer or manager. If you aren't some type of trainer of the sort you do not get vacation. Also they make you pay more for your food. We had a relief fund that was taken out of our pay checks in case a natural disaster or something else happened our employees they would have some help. They stop doing that. Where did that money go. My General manager does not give any incentive to his employees to move up in the company. There is a ladder to go up and if you have an interest in moving up he doesn't do it. I think maybe these things happen to him. Or its just bad management. There was more Morale in that store when I first started than there is now. There was a reason to work hard and do good. Not anymore. Also the work they have you do now is overwhelming. Some things employees have to do they shouldn't be asked to do. And if you call to complain to human resources you get a call back from the district managers instead of the company actually doing anything about it. Yeah Biglari is making money,but not the people who are doing the actual work! My store also has plenty of illegals working for them. The sad thing is as much as they shouldnt be working there they do really hard work for very little money with no raises ever and they have been there since the store opened. Its just a sad thing. On one end this man is making money but the people under him are starving!
  • menu
    I've been eating at steak&shake for some 50yrs. Very disappointed that they droped the veg beef soup from menu.
  • horrible food
    The Benton Harbor Mi. restaurant food was way overcooked and I suggested to the Manager to take the man off the grill because he was doing a terrible job. I don't know if he did or not he offered to remake the food but there were 6 in our group and we will not go back. I was terribly disappointed. And would like feedback from the Steak & Shake owner. thank you Vicki Cox
  • steak and shake
    I have heard that steak and shake will not allow the american flag to be flown or displayed on their properties since Mr Biglari took over. If this is true I will stop partonizing steak and shake and spend my american dollars else where.
  • Pleased to meet you!
    Bob Cronin made this company successful!
  • Get Real
    Listen up people, the new ownership turned a money loser into a money maker. Businesses don't exist to create jobs, the exist to make money for thier shareholders. That is all, end of story. So invest in the stock and reap the rewards that other investors have off of the new management, which is MUCH better than the old management. Stop crying about lost jobs an corporate headquarters, if the old management had done their job, and made the shareholders some money, then the new owner would not be in charge now.
  • from the inside
    listen to all of you who wanna defend his actions-let me tell you the real deal-they or he has removed every benefit-no more paid vacations-no more insurance-unless you use STARBRIDGE-or been with the company for 5 years-no more-stocks,bonds,or profit sharing-no maintenance dept-no human resources-no nothing-all of the corporate jobs are disappearing-and the low man jobs are at best-part time-so what crappy insurance you have-you can not obtain-for lack of hours-i have worked for this company for almost 20 years-and cannot believe what is happening-it used to be a wonderful comp to work for but now its full of unhappy workers-beginning in corporate and shooting all the way down to the servers who take care of the guest-nothing like a disgruntal employee in charge of you having a great experience-for all of you share holders who wanna defend this evil man-think about all the money paying out on unemployment-for all these ppl who have been reduced to part time hours-think of the welfare increase in food stamps-medical-and housing-believe me you will not come out ahead here-and many families are being DESTROYED in the process-it sure is a greedy world we live in-and such a greedy man who signs my paycheck-i only wish the economy was in better shape-for ppl like me who feel "STUCK" MAY god HAVE SHAME ON biglari AND ALL OF HIS FOLLOWERS
  • Hold the Mustard!
    So far this cast member of 'Greed' has successfully slashed base pay and a multitude of benefits for even its senior linepeople. Note the generic ma' and pop condiment containers (versus Heinz)...the removal of toothpicks and you get the picture. His publicized salary increase has come at the expense of his lowly employees and the general public. Bottom line. He's a creepy money mongrel. Ol' Gus Belt must be barfing in his grave!

    New Motto: "In Sight,...not for long"
  • Move
    He has every right to move his company but don't belittle people who decide not to eat there anymore.
  • Rolls eyes
    you people that say Ill never go there again are so full of your greasy french fries and double burger guts ...oh don't forget shakes.

    look the guy gets it hes making money with it too, so if you don't like that go to school get a degree and figure it out, hes been here since 1980, how long have you been here flipping burgers for 7.50 an hour?

    Good grief Tommy who are you to judge?
    • Tradition going down the tubes
      Came from Iran in 1980. Isnt anything American born and bred sacred anymore. Values and traditions out the window. Do we need to be concerned about our once beloved Steak n Shake funding terrorists? Dont judge me for asking that question, after so many stories coming about with even street corner vendors using their sales to fund such acts. My mother, father, aunts and uncles all worked for years at Steak n Shake...I was raised at there. I am very sad to hear that it maybe going away.
    • Big Liar
      Big Liar also dumped all Employee benifits for the little person and has instituted a no comment to the media (facebook or anything) so we can not comment about him or the company direction. I could be fired for expressing my own opion. Also hired his father to head up outdoor advertising.
    • Terrible Article
      Misleading editorial, full of misinformation. But more disturbing are the slanderous and paranoid statements in these comments. And the shareholder comment? Ahem, the stock has rocketed since Biglari took the helm. . . how is that bad for shareholders?

      Ego. . . perhaps so, but it's not objectionable if you can back it up, and Biglari has.

      Biglari has executed beautifully on turning a company around with deep embedded value that was being run into the ground by its previous board, not the other way around. In fact, there has been talk for several years among Buffet progeny in the value investing world of how incredible the SNS opportunity is. It's just now becoming clear how much embedded, untapped value there was in the company, evidenced by its cash flow and stock price.
      • Sardar Biglari
        What simple minded comments. Sardar made his own money and has shown over the years to be a postive force for the companies that he's been involved with. I understand locals being upset if the headquarters does leave, however; the ownership does have the right to determine the best place for their offices.
      • Ownership
        correction: Biglari only controls less than 7% of the company and owns less than 1% personally.
      • never be
        I've been going there since i was a teenager, I'm 62 now. It's sad to see how someone can come in and try to steal the image and name so easily. But your not dealing with rational thinking people, with old American values.I can find another favorite place to eat !!!
      • Another Example of Poor Reporting by IBJ
        Here's a release by SNS setting the record straight...
      • Wow
        This is an unexpected turn of events. I frequent Steak n Shake for many reasons, but mostly b/c of the local headquarters. I for one will not go as often (or ever) if most of the local corporate jobs are moved.
      • Eddie Lampert Jr.
        There have been some undeniable improvements in the restaurant operations in the last few years, at least from the customers' point of view.

        This guy is more of an Eddie Lampert than a Warren Buffett. The Lampert formula involves milking a cash cow (Steak n Shake in this case) to finance other leveraged acquisitions. It's a good formula as long as you buy good assets at good prices and your cash cow doesn't run dry. It will be interesting to see how this works out. Hope he doesn't wreck the burger chain in the process.
      • Ego
        Shareholders better wake up. The fact that he has to be idolized in the company name tells you his intentions. There is a major ego at play that doesn't care what anyone thinks.

        He will risk all of the company's capital (and leverage the assets) on schemes to make himself wealthy. And he will set it up so he keeps his fortune, no matter how many people or companies he destroys along the way.

        The worst of Wall Street is going to play out in front of us like a slow motion car wreck and Steak N Shake will not exist in a few years.

        Beware of self-made men; they worship their creator.
      • Ego
        Shareholders better wake up. The fact that he has to be idolized in the company name tells you his intentions. There is a major ego at play that doesn't care what anyone thinks.

        He will risk all of the company's capital (and leverage the assets) on schemes to make himself wealthy. And he will set it up so he keeps his fortune, no matter how many people or companies he destroys along the way.

        The worst of Wall Street is going to play out in front of us like a slow motion car wreck and Steak N Shake will not exist in a few years.

        Beware of self-made men; they worship their creator.
      • Sad for Indy
        The company was moved to Indianapolis by Bob Cronin in 1971
      • Seedy character
        If you have been following this story and watching it unfold for the past few years, then this action can't be a surprise. We should have put that weasel down back in '07.
      • BigliariBurgers?
        Any truth to the rumor the restaurant name is being changed to "Bigliari Burger"?? Why not? His ego needs a little more, I think...Bigilari School of Business...I can see it all...but the bigger question is, is this more than ego? Is this a sign of more corporate HQ's "hitting the crossroads" outta here?
      • Big Lari
        Any truth to the rumor that the Steakburger is being renamed the Big Lari Burger?
      • Looks like a scam....
        Get used to it... This guy does not look like a good guy for Indiana business. I won't go into detail here however it does seem like this guy is shady as hell and ready to steal the good name of Kelley School Of Business at IU... Not sure where this guy came from from seems to be that he is very shady and ready to break us down.... Tommy Callahan Jr.

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