UPDATE: Steak n Shake looks to cut store hours

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Hours could be pared at as many as 25 percent of Steak n Shake Co. stores in order to cut labor costs, an official of the Indianapolis-based restaurant chain told analysts in a conference call late yesterday.

An experiment with 12 stores showed that closing doors during certain periods rather than staying open around the clock had little impact on profits, said CEO Peter Dunn. Stores targeted for reduced hours will close at 1 or 3 a.m. week nights and open at 10 a.m.

Labor costs are important for Steak n Shake. The company spends about twice as much on labor per customer as fast-food restaurants, Dunn said.

Dunn wouldn’t discuss how the change might affect profits.

The discussion followed Steak n Shake’s reporting that same-store sales slid 4.3 percent in its third fiscal quarter ended July 4. It was the eighth straight quarter same-store sells fell.

The Indianapolis-based diner chain said total sales increased 2.1 percent, to $154 million. Profit was $124,000, compared with $7.3 million in the same period a year earlier. Profit for the latest quarter was dragged down by $5.4 million in pretax charges related to planned restaurant closings and an upgrade of IT systems.

The company said high gasoline prices and rising mortgage interest rates continued to pinch consumers, hurting results. Steak n Shake also reported that new chicken sandwiches and chicken entree salads had not significantly boosted customer counts, as had been hoped.

The 496-restaurant chain cut earnings guidance for the full year. It now expects per-share profit of 40 cents to 48 cents. Its previous guidance was 53 cents to 67 cents.

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