Report: Steak n Shake might file bankruptcy as early as next week

Because of restaurant closings, shrinking customer counts and the impact of the COVID-19 pandemic, revenue through the first nine months dropped 43%, to $267.6 million. (IBJ file photo)

Swamped by debt coming due in March, Indianapolis-based Steak n Shake is considering filing for bankruptcy protection as early as next week, sources told Bloomberg News.

Citing sources knowledgeable about the company’s confidential plans, Bloomberg said Steak n Shake’s advisers, including FTI Consulting and the law firm Latham & Watkins, are preparing a Chapter 11 filing.

The sources cautioned that plans for a bankruptcy could change. Steak n Shake also has considered out-of-court solutions.

A representative of San Antonio-based Biglari Holdings, Steak n Shake’s parent company, did not immediately respond to a request for comment.

IBJ reported Jan. 15 that the struggling company lacks the cash to pay off a $153 million loan that comes due March 19. A Chapter 11 filing could result in the company’s reorganization, sale or even liquidation.

The amount the company owes is daunting given its shrinking scale. Steak n Shake had 489 restaurants in operation as of Sept. 30, down 20% from the number in operation when it took out the loan in 2014, and customer traffic at those remaining restaurants has plummeted.

Based on publicly available data on debt trades, the $153 million outstanding as of the end of the third quarter was trading at a 48% discount, leaving it with a fair market value of just $80 million, according to a Securities and Exchange Commission filing.

“It tells me there are serious concerns over collection,” Hannah Joseph, an Indianapolis attorney who represents many restaurant clients but not Steak n Shake, told IBJ in January. “I don’t think it can mean anything else.”

The loan originally was for $220 million, but Steak n Shake whittled down the balance over the years, in part by buying back debt at a discount.

Steak n Shake stipulated when it took out that loan that it was backed only by that business and not by Biglari Holdings’ other assets. Those include insurance companies, an operator of oil fields and a big stake in Cracker Barrel Old Country Store.

Steak n Shake was founded in Normal, Illinois, in 1934 and moved its headquarters to Indianapolis in the 1970s.

It has not yet reported results for the fourth quarter of 2020. Because of restaurant closings, shrinking customer counts and the impact of the COVID-19 pandemic, revenue through the first nine months dropped 43%, to $267.6 million.

Steak n Shake reported a $12 million loss for the first nine months of 2020. That compares with a $23 million loss for the same period a year earlier.

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36 thoughts on “Report: Steak n Shake might file bankruptcy as early as next week

  1. Used to love to go there but service became horrible food quality became awful. I wish they just would return to their former days. Freddie’s reminds me of what steak n shake used to be.

    1. Their CEO wants them to be like Rally’s, not a sit down restaurant. They want customers to serve themselves from the counter.

      Biglari killed the chain.

    2. The food is horrible and low quality. You could hire the best staff in the world and it doesn’t change that the food quality is worse than McDonald’s at this point. And if you only allow your workers to work a few hours and minimally staff the store, the best server can’t take orders, run food, refill drinks, clean tables, prep tables, and clean the store. You need an entire staff for that that have the man-hours needed to run a restaurant.

  2. Steak n Shake’s problems started with the most horrible unprofessional illogical corporate management and structure on earth!
    How can any company stay afloat with $4.00 meals it cost them $6.00 to make?

    As the income went down, they start buying less quality food and ingredients.

    That turned their dedicated customer base off, then with less customers came less staff and that staff became less dedicated or qualified to bring good service as the dining rooms became empty.

    Then the drive up concept came about but nonetheless it was churning out the same poor quality of food they previously degraded down to.

    Many other business interests have tried to buy the chain and fix it, but the loony ceo and owner driving Steak n Shake in the ground won’t sell.

    1. You are right about that. That $4.00 menu, which worked at first, crushed them when food costs increased and Biglari refused to adjust.

    2. Biglari didn’t want you to be waited on, Darrell. He wanted you to go get that crummy food yourself.

      He had one move (be more efficient) which worked when there was fat to trim. But he had no other ideas, thought he was the smartest person in every room he was in, and was too stubborn to pivot. When you’ve replaced your board with your supplicants there is no one to tell you that you’re doing an awful job.

      We will get SnS one last time under Biglari ownership because my son loves the cheese offered with cheese fries. I promised him one last visit long ago when the writing was on the wall, and looks like I best follow through on that promise. I hope someone with a clue buys the chain and turns it around. I’m pretty sure most any McDonalds owner/operator could do a better job that Biglari.

  3. I was a Steak and Shake breakfast fan until the menu shrank almost as much as the quality. Steak and Shake’s glory days are long gone. Biglari killed it with stupidity, condescension and hubris. This failure will create a market opportunity for others. I feel sorry for anyone who paid for franchises. The real Steak and Shake has been gone for quite awhile now. Time to play Taps for its carcass.

  4. Like some many others, I used to love going to Steak N Shake, but Biglari has driven the chain into the ground. Parking lots were pretty empty even before Covid. People just want good food and good service at a reasonable price. Maybe Biglari needs to just sell his Cracker Barrel stake and then stay far away from it.

    1. I hope he does…geeze, I’d hate to see Cracker Barrel go down the same road as S&S.

      Agree with all; ‘so sad to see Steak and Shake go down like this. Gus Belt must be turning over in his grave…and he started the chain against all odds during The Great Depression!

    1. For all the disagreement on the IBJ comment threads, there’s universal dislike for the way Biglari has asset stripped SnS and run it into the ground.

      Biglari put his name on the sign (and charged the company for it!), he deserves the blame. Little wonder Cracker Barrel has laughed at his suggestions for “fixing” their problems.

    1. Yes! There is at least one located at I.65 and County Line Road. On the left, just before Emerson Ave. by the Kroger Marketplace.

    2. One in Carmel on Michigan Road just a bit past 96th, another in Westfield at 146th, and a third on the southside.

    3. Thanks for the lead. Had never heard of Freddie’s before, but would give them a try based on these comments. Went to SnS about 3 years ago in Bloomington. Had the worst fast food experience of my life. Vowed to never go there again. Sounds like Biglari and group are taking care of that problem for everyone…

  5. Hoping Biglari is soon consumed by his owned misguided ego. No reason a chain like S&S with a loyal fan base should have sunk so low but for lousy management.

    1. Biglari should sell the chain for $1. It’ll cost far more than that to wipe his name off the place.

  6. Biglari came in riding his white horse years ago; a sheep in wolf’s clothing. Nothing more than a total D-bag and a Bernie Madof protege. We need to get this great restaurant chain out of his hands and in the hands of a good operator. This guy can rot in Texas.

  7. I agree that their service, food quality and food choices have gone down. Maybe the bigger problems are waaay overextending themselves. Every time I go to France there is another Steak and Shake. They have corporate offices in Monte Carlo. They opened (and then closed) restaurants in Dubai. They are hodgepodged all over the country now – Vegas, Montana, etc etc. That has to be expensive to get their own high quality food/ingredients to. They got cocky and it did not pay off. Or maybe their plan is to become a European only restaurant.

  8. I was a huge fan of Steak & Shake when I first moved to Indianapolis in 2010, and for about 5 years it was our go to place for burgers and the in store experience frankly. I think around 2014 or 15 we had 2 meals in a row with these really greasy burgers, didn’t even taste like S&S and we’ve never been back, sadly. They were disgustingly greasy and clearly poor quality, not how I had ever viewed S&S prior.

    I’m not sure where they went wrong but I miss what they use to be. Kinda like Sears, I was a faithful Sears person until stores got dirty, inventory shrank, prices were no longer competitive and then they bought KMart, who they ultimately became store wise. Similar stories it appears. I hate seeing any business go under but especially in restaurant business, when you stop growing and evolving, you have begun your decent into irrelevance.

  9. So does this get rid of Biglari and his crap? Or does the court just look past the incompetence and allow him to keep something that he broke?
    Still a fan of S&S, but not of the corporate (mis)management…

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