Steak n Shake executive blames woes on externals

May 10, 2007
Executives of Indianapolis-based Steak n Shake Co. told analysts this morning that a 4.7-percent decline in same-store sales in its second fiscal quarter likely was tied to higher gas prices, a decline in housing starts and higher mortgage foreclosure rates.

The restaurant chain said only 1.7 to 2 points of the 4.7 percent decline was caused by wintry weather in February and March.

Moreover, said President and CEO Peter M. Dunn, the same factors that crimped sales in the quarter ended April 11 are likely to continue the rest of the year.

Dunn's comments followed a late-Wednesday announcement that profit for the quarter fell 29.8 percent, to $6 million. Revenue increased 2.3 percent, to $201 million.

However, Dunn emphasized that he is optimistic about a long-term plan that's being implemented to improve customer service and products.

In June, Steak n Shake will roll out three grilled chicken sandwiches and, in July, salads, to address customers' health concerns. Yogurt milkshakes are being added to menus as well.

Steak n Shake also is updating employee training to address its most glaring problem: customer service, Dunn said.

"By way of context, w
e have not changed the training materials for Steak n Shake for long (time)," Dunn said. "I mean, many, many years-probably measured in decades."

Steak n Shake is considering redesigning the inside and outside of its locations, with one interior concept involving a retro heritage with music, he said.
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