![]() The company’s confidence in the new service model, and resolve to roll it out, means the majority of earnings generated in 2020 “will not be available to Biglari Holdings.” In other terms, it’s going to take a significant investment to accomplish the goal, with financial softness along the way. The Burger Gold Rush is On at Steak 'n Shake Steak ‘n Shake 'Temporarily' Closes 44 Restaurants Steak 'n Shake's ‘Temporary’ Closures Rise to 103 Steak 'n Shake is Turning Into a Fast-Food Chainġ06 Steak 'n Shakes are 'Temporarily' Closed Steak ’n Shake Permanently Closes 51 Company Stores Steak 'n Shake to Auction 15 Company-Owned Locations Steak ‘n Shake Closes More Restaurants as Quick-Service Flip Begins Steak ‘n Shake Has Permanently Shut 82 Restaurants This Year Steak ‘n Shake Exploring Restructuring Strategy, Report Says Steak ‘n Shake Could Soon Declare Bankruptcy, Per Report Steak ‘n Shake Avoids Bankruptcy, Accuses Lender of Takeover Attempt “In effect, the pandemic hastened the inevitable,” Biglari said. It just would have taken several years to get there before, Biglari said.Ĭoronavirus prompted the company to set a much firmer target, making the call to emerge from the public health crisis with a different service model for Steak ‘n Shake’s entire system. ![]() To the earlier point, Steak ‘n Shake’s counter-service dreams weren’t born out of COVID. “A refusal to invest, however, would mean that our competitors would retain their edge.” “A conversion to a bonafide quick-service restaurant chain will, we believe, enhance the company’s economics,” he added. “The dining room with table service was undoubtedly a revenue center, but it was not a profit center,” Biglari said. However, Steak ‘n Shake's labor now runs at about 29 percent of net sales, albeit at a lower sales volume. “The Achilles’ heel of increased labor costs in the dining room negated our other advantages, resulting in an overall handicap.”īy eliminating the unprofitable business dining rooms generated, the chain effectively reduced revenue by one half, Biglari said. “What I had previously assessed as a sustainable competitive advantage proved to be anything but when our labor expenses continued to rise over the last several years,” Biglari said. Pre-COVID, labor costs ran at 38.5 percent of net sales for Steak ‘n Shake-an alarmingly high number that placed it at a 6–8 percentage point disadvantage compared with category peers. “Simply put, the operation of dining rooms with table service was a money loser,” he said. A combination of labor-intensive, slow production and high-cost table service proved a faulty business model for Steak ‘n Shake well before coronavirus, Biglari said. This wasn’t a pandemic-specific trigger, though. Steak ‘n Shake increased off-premises sales at comparable stores 14.3 percent in 2020 as dine-in felt the COVID cut. “We are embracing efficiency and transitioning the service model to empower our guests to place and pick up their own orders,” Biglari said. Rather, Steak ‘n Shake guests will initiate transactions at a kiosk. There won’t even be attendants behind counters. Steak ‘n Shake, a full-service brand for its first 78 years, is in the process of equipping units with what Biglari labeled “advanced self-service.” When customers return, there won’t be servers. The upshot being, Steak ‘n Shake no longer carries debt.Īnd that reignites the original conversation. It was able to avoid Chapter 11, seemingly at the 11th hour, as it satisfied the burden with capital from Biglari Holdings. found itself on the doorstep of a financial restructuring, with the deadline to pay off $153 million in debt fast approaching. But no sale took place and parent company Biglari Holdings Inc. Steak ‘n Shake ended up trying to sell 15 properties to fund remodels. Yet what does this look like? It’s a path Biglari shared pre-pandemic before COVID-19 locked up capital. And one aspect involves fully transitioning Steak ‘n Shake to a quick-service restaurant chain. The brand finds itself in the midst of a “radical transformation,” chairman Sardar Biglari said in a letter to shareholders. ![]() While they’re not going away, they won’t ever look the same, either. ![]() Across Steak ‘n Shake’s footprint, most of the legacy chain’s dining rooms remain closed.
0 Comments
Leave a Reply. |