Steak ‘n Shake Inc. has temporarily closed 103 company operated restaurants this year as the brand’s parent company looks for a franchise partner to take over the units, according to a mid-year regulatory document filed by Biglari Holdings Inc.
The brand has more than doubled the number of temporary closures since the first quarter, when it reported 44 temporary closures in May. At least one of the temporarily closed restaurants has reopened in St. Louis. It is now being operated by a local franchisee, according to the St. Louis Post-Disptach.
“Since 2017, Steak 'n Shake has experienced sales declines, which is the primary reason for Steak 'n Shake’s lower profitability. To mitigate the sales declines and increase profitability, Steak 'n Shake is emphasizing its franchise partnership,” the San Antonio, Texas-based company said in an Aug. 2 quarterly report.
Same-store sales at Steak ‘n Shake declined 5.9% in the second quarter ended June 30. Guest traffic dropped 9.2%.
For the past three completed fiscal years, Steak ‘n Shake’s same-same-store sales have declined 5.1%, 1.8% and 0.4%, respectively, according to NRN Top 200 research.
In a February statement to shareholders, Biglari chairman Sardar Biglari said Steak ‘n Shake’s disappointing three years can be attributed to failing at speed and service.
“Despite our unwavering dedication to product quality and low prices, we erroneously stayed with equipment and kitchen design that was ill-suited for volume production,” the shareholder letter stated. “The effect has been high-cost, labor-intensive slow service. We failed customers by not being fast and friendly.”
As of June 30, Biglari had 520 Steak ‘n Shake restaurants and 56 Western Sizzlin restaurants.
Biglari’s revenue from restaurant operations in the second quarter was $160.1 million, down from $200.6 million in the same quarter, last year. The company reported a net loss of $1.4 million from its restaurant operations, compared to a $1.6 million gain in the second quarter of 2018.
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