Steak ‘n Shake, keen to shift more of its restaurants to franchise ownership, is currently selling partnerships in all of its greater than 400 company-owned restaurants for an initial investment of $10,000. That’s a small part of the typical investment for a Steak ‘n Shake restaurant. Initial investment on a “classic format” Steak ‘n Shake ranges from $1.6 million to $2.6 million, according to the company’s franchise disclosure documents.
Qualified operators would need to complete a thorough six-month training program and would pay for the $ten thousand to get into the partnership. They could then be single-unit owner-operators. A spokesperson for Steak n Shake menu said that the master plan is to convert all the company’s corporate locations into these franchise partnerships.
The franchise partner would get 50% from the restaurant’s profits. The company failed to answer questions regarding who would be accountable for the expenses associated with building and site improvements. “I started my company with $15,000 and built a thriving enterprise,” Sardar Biglari, CEO of Steak ‘n Shake owner Biglari Holdings, said in a statement. “I desire to provide the opportunity to other entrepreneurs who are highly motivated to excel but do not have the financial means.”
“What will likely be important to become franchisee will not be great capital but great ability,” he added. “We are searching for to harness the strength of entrepreneurs and to produce a company of owners.” Biglari has wanted to shift the largely company-run Steak ‘n Shake into even more of a franchise business for many years. The organization owns and operates roughly two-thirds from the company’s greater than 600 locations.
“Our prospects in franchise operations-domestic and international-look bright,” Biglari wrote earlier this year in his annual letter to shareholders. But franchisees could be buying right into a brand which has struggled recently. The chain’s same-store sales declined 3.4% within the quarter ended June 30, such as a 6.4% decline in traffic. That came after having a tough 2017 that Biglari called “not a very good year” and “lugubrious” within his letter.
A number of restaurant brands sell partnerships to owner-operators who then share in the profits. The most known example is Atlanta-based chicken chain Chick-fil-A. “I started my company with $15,000 and built a thriving enterprise,” said Sardar Biglari, CEO of Biglari Holdings, owner of Steak ‘n Shake, in a statement. “I desire to provide the opportunity to other entrepreneurs that are highly motivated to excel but do not have the financial means. What is going to make a difference to become franchisee will not be great capital but great ability. We have been trying to harness the strength of entrepreneurs and to create a company of owners.”
Steak ‘n’ Shake added the offering to get in to the company as a franchise partner requires operators to ensure that you finish a six-month training program. The franchise partner would then get 50 percent from the restaurant’s profits. It is a partnership, shared-profit deal just like the system Chick-fil-A deploys.
Steak ‘n’ Shake is looking to quickly shift its business structure coming from a heavy corporate-owned structure to your system run mostly by single-unit franchisees. The business said this would “achieve operational tpjpgz by marshaling the efforts and strengths of entrepreneurs.” Founded in 1934 in Normal, Illinois, Steak ‘n Shake had 173 franchised domestic units and 412 company-run stores in 2017, which had been a total increase of 17 from the previous year. The business posted average-unit volumes of $1,839.51 (in thousands) along with total systemwide sales of $939.99 (in millions). The season before, is Steak and Shake open today had 568 total domestic units (415 company-run) after adding 17 restaurants from your previous year. It had higher AUV ($1.9M) and increased systemwide sales of $1,027 (in millions).