Steak n Shake permanently closes 57 restaurants amid dismal first quarter

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Indianapolis-based Steak n Shake, already struggling before the COVID-19 pandemic, closed 57 restaurants in the first quarter—a stretch when it posted a nearly $11 million operating loss.

With its restaurants limited to drive-thru, takeout or delivery nationwide for much of March because of the virus outbreak, the burger chain saw quarterly revenue plummet by $59 million, or 35%, compared with the year-ago period, parent Biglari Holdings Inc. reported late Friday.

Fifty-one of the Steak n Shake closures were company-owned restaurants and six were franchised. The closings reduced the number of franchised stores to 247 and total restaurants to 553, down from 624 a year ago.

Steak n Shake said most of its dining rooms were closed by March 17 because of the pandemic. Plus, 62 of its corporate stores were temporarily closed.

“The COVID-19 pandemic had an adverse effect on our restaurant operations,” Biglari said in its quarterly report, which led to a re-evaluation of the carrying value of its restaurants and a decision to record a $10.3 million impairment charge. The non-cash impairment charge is separate from Steak n Shake’s operating loss for the quarter of $10.9 million.

Biglari said the impairment charge was warranted “because of the decision to permanently close 51 Steak n Shake restaurants as well as the expected impact of the COVID-19 pandemic on the future operating performance of other company-operated restaurants.”

Steak n Shake’s quarterly performance was actually an improvement over the first quarter of 2019, when it posted an operating loss of $18.9 million.

The chain has been struggling in recent years, with customer traffic counts sliding 22% from 2015 through 2019 and operating losses in 2018 and 2019 totaling $29 million.

Last year, Steak n Shake started transitioning company-owned restaurants to single-unit franchise partnerships. As part of that plan, it “temporarily” closed more than 100 locations as it sought franchise partners.

The chain said it increased total franchise partners to 39 in the latest quarter.

Steak n Shake’s outlook is even dimmer for the second quarter, with all of its dining rooms closed during April and beef shortages reducing profit margins.

The company has a $165 million term loan scheduled to be paid off in March 2021—a debt it lacks the ability to repay and is unlikely to be able to refinance.

Rating agencies already rank Steak n Shake on the lowest rungs of their creditworthiness ladders and further sounded the alarm bells in recent weeks after the chain paid off some of its debt at a discount—something a lender never would agree to if it thought it was going to be paid in full.

San Antonio-based Biglari Holdings reported a loss of $137.9 million in the quarter, or $400.37 per share, down from a profit of $9.8 million, or $28.36 per share, a year ago. Revenue fell from $181.9 million to $135.7 million.

Most of the company’s first quarter losses were due to $175.7 million in losses from investment partnerships managed by hedge fund Biglari Capital Corp.

In addition to Steak n Shake, Biglari Holdings has a broad range of investments—it holds nearly 9% of the Cracker Barrel restaurant chain, and also owns insurance companies, an operator of oil fields, men’s magazine Maxim and steakhouse franchising firm Western Sizzlin.

Like all restaurant companies, Cracker Barrel shares have plunged this year, dropping 38%.

Biglari Holdings’ Class A shares fell $7.37 Friday, closing at $322 each.

CEO Sardar Biglari did not return a phone call seeking comment.

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14 thoughts on “Steak n Shake permanently closes 57 restaurants amid dismal first quarter

  1. Big Larri blames Covid for losses when Steak n Shake lost $19M in Q1 of 2019? The train was off the tracks way prior to now! He continues to destroy a great brand. Maybe he should have put a better advertising face on, other than his!

  2. I hope someone who knows how to run a QSR with table service buys the remains from Biglari and turns it back around.


    This could be better than Shake Shack regionally, since there’s “brand memory”: a premium burger, table service, great fries, and shakes. I’m willing to pay more than $4 for that meal.

    1. When you went to Steak n Shake starting in 2019, it didn’t take long to realize they cut staff to a minimum. One night the Steak n Shake near my house had one server, one guy working the grill and one other person running the front. It was a disaster. Everyone was complaining. They lost a lot of business that night.

  3. For a couple of years, my wife has completely refused to step inside a Steak n Shake because of how dirty they all tend to be! (Can you say, “sticky, gross ketchup bottle”?!) Plus, the service is never reliable. This is too bad, because their food is usually good. I’ve never been in the food hospitality business, so I’m no expert, but I can only assume that poor management is the reason for the downfall.

  4. The “great and powerful” Biglari has singlehandedly destroyed a great brand due to his arrogance and pride. This is almost the same story line as what happened to Marsh Supermarkets. Few people are eating there due to filthy stores, poor service and brutally bad leadership. The losses have nothing to do with COVID or prices. What a putz…

  5. BigLiar [sic] was just looking for an excuse to close the operations. Why? Because he was already working to reduce their service to drive-thru and delivery BEFORE there was a virus. He got his wish – to see what the business would be like if he eliminated sit-down business and was forced to find out.
    And here’s the proof:
    “Indianapolis-based Steak n Shake—which used to differentiate itself from its burger competitors by offering table service—plans to convert more of its restaurants to more efficient counter-service-only franchises”