Steak n Shake suffers first quarterly loss since last decade

November 6, 2017

Steak n Shake has suffered its first quarterly loss this decade, another troubling sign for the Indianapolis-based restaurant chain after years of growth under the ownership of Biglari Holdings Inc.

Steak n Shake on Friday reported a loss of $3.3 million for the third quarter ended Sept. 30, down from a profit of $10.4 million a year ago. The chain hadn’t suffered a quarterly loss since 2008, the year it was acquired by Texas-based Biglari.

Quarterly revenue at the chain fell 2 percent over the year-ago quarter, to $202 million, and customer traffic tumbled 6.7 percent.

Same-store sales, which measure revenue from company-operated restaurants that have been open at least 18 months, fell 2.2 percent.

Same-store sales have been declining since last year, when the company suffered its first annual drop in that category since 2008.

Under Biglari, Steak n Shake put together 29 straight quarters of same-store sales increases, a streak that lasted from 2009 to 2016.

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.

CEO Sardar Biglari did not comment on the third quarter results. Analysts say Biglari will likely be forced to adjust the value-pricing strategy that helped turn around the restaurant chain. Steak n Shake’s menu features 24 meals under $4 each, a price point getting difficult to sustain amid rising food costs.

San Antonio-based Biglari Holdings reported a quarterly loss of $24.7 million, or $20.09 per share, in its third quarter, down from a loss of $60.1 million, or $49.48 per share, in the year-ago period.

Revenue was $214.2 million, down from $216.7 million a year ago.

Steak n Shake operated 417 company stores and 199 franchises as of Sept. 30. It has opened 26 franchises this year.

In addition to Steak n Shake, Biglari’s holdings also include steak-restaurant franchisor Western Sizzlin, truck insurer First Guard, the men’s magazine Maxim, and a stake in Cracker Barrel.

Maxim ended a streak of 14-straight money-losing quarters with a $28,000 profit in the third quarter. The magazine had racked up roughly $31.5 million in red ink since Biglari acquired it in 2014.

Shares in Biglari were down 7 percent Monday morning, to $336 each. They are down more than 25 percent since the beginning of the year.


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