Steak n Shake’s same-store sales slide again, profit falls

May 10, 2017

Steak n Shake’s decline in same-store sales last year carried over into 2017, as the Indianapolis-based burger chain and its fast-casual brethren continue to feel the pinch of increased competition and changing consumer tastes.

Same-store sales at Steak n Shake restaurants fell 3.3 percent in the first quarter, steeper than the 0.4 percent dip for all of 2016. Last year's decline marked the first drop in same-store sales since 2008.

That’s when Sardar Biglari, CEO of Biglari Holdings Inc., the San Antonio, Texas-based parent of Steak n Shake, gained control of the then-sputtering chain and launched a discount-pricing strategy credited with reviving the business.

Under Biglari, Steak n Shake put together 29 straight quarters of same-store sales increases, a streak that lasted from 2009 to 2016. At Steak n Shake, same-store sales refer to revenue from company-operated units open at least 18 months at the beginning of the quarter.

Analysts pay close attention to same-store sales because the measure is considered a better indicator of the long-term health of a company's operations.

Steak n Shake's overall revenue in the first quarter also fell, 2 percent, to $192.7 million, while profit dropped 57.5 percent, to $3.4 million.

In addition, the number of customers visiting Steak n Shake locations decreased 2.4 percent.

Revenue for Biglari Holdings' overall restaurant operations, which also include Western Sizzlin, fell 2.3 percent, to $195.7 million. Profit was $3.8 million, down from $8.9 million in the same quarter of 2016.

Biglari said rising restaurant operating costs driven by higher wages and benefits ate into profit margins.

Steak n Shake added nine franchised stores in the first quarter, bringing the total to 182. Overall, the chain has 599 locations, 417 of which are company-owned.

Western Sizzlin had 62 restaurants at the end of the first quarter after closing two locations during the quarter. All but three of the Western Sizzlin locations are franchises.

Biglari’s other holdings include insurance company First Guard and men’s magazine Maxim. The company also is a big investor in Cracker Barrel Old Country Store Inc.


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