The unusual move suggests new management of the struggling chain already may have found an opportunity to cut costs - and the moves could affect the local headquarters.
The package of incentives, which also was to include a $200,000 state training grant, was to be doled out in exchange for the company's retaining 160 jobs and investing $2.5 million in new equipment. It wasn't clear whether the chain also plans to decline the training grant.
Members of Steak n Shake's management team were unavailable for comment.
IBJ first reported in April on local government plans to throw Steak n Shake incentives to help the struggling chain keep its headquarters in Indianapolis.
The incentives, though modest, were unusual given that the company did not plan to expand or add employees. Its new equipment involves financial systems and store point-of-sale technology.
Steak n Shake Chairman Sardar Biglari and his San Antonio-based Lion Fund have been agitating for tighter cost controls, improved service and a shift to more franchised locations since shortly after they began buying Steak n Shake shares in August 2007.