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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowShares of The Steak n Shake Co. have tumbled 20 percent over the last two trading days – driven down, in part, by the company’s announcement late Friday afternoon that sales remained weak.
The stock trended down throughout the day Friday and shed another $1.30 a share this morning, leaving it at $8.18. It now has fallen 55 percent since hitting $18.10 last February.
“They’re just in a difficult environment,” Conrad Lyon, an analyst with FTN Midwest Securities Corp., said this morning. “The brand is fine. They just need to get a clear path in front of them that works.”
In Friday afternoon’s announcement, the Indianapolis-based restaurant chain said same-store sales slid 9.5 percent in the first fiscal quarter, which ended Dec. 19. It’s the company’s 10th straight quarter of declining same-store sales. Steak n Shake also projected a quarterly loss of 4 to 5 cents per share. Earnings and other financials are scheduled for release Jan. 25.
Lyon said consumers are spending less money at restaurants, and the dollars they continue to spend have shifted toward fast-food outlets like McDonald’s, which has improved the quality of its menu.
Consumers are pulling back because higher oil prices are siphoning discretionary spending power. He also blamed the media for fanning concerns about the economy’s sliding into a recession.
Also, Steak n Shake operates in markets in the Midwest and Southeast where the mortgage foreclosure crisis hit hard. Its restaurants in Florida have been particularly affected.
The company in August announced that it had appointed a special committee of independent directors to “assist management in evolving the strategic plan and examining potential opportunities.” The committee has not announced its findings.
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