Steak ‘n Shake, willing to shift more of its restaurants to franchise ownership, is now selling partnerships in all of its greater than 400 company-owned restaurants for an initial investment of $ten thousand. That’s a small fraction 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 will have to complete an extensive six-month training program and would spend the money for $10,000 to get to the partnership. They would then be single-unit owner-operators. A spokesperson for the full Steak and Shake menu with prices for 2019 claimed that the plan is always to convert all of the company’s corporate locations in to these franchise partnerships.
The franchise partner would get 50% of the restaurant’s profits. The organization failed to answer questions concerning who will be accountable for the costs 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 want to provide an opportunity to other entrepreneurs that are highly motivated to excel but lack the financial means.”
“What is going to be important to become franchisee is not great capital but great ability,” he added. “We are trying to find to harness the power of entrepreneurs and to create a company of owners.” Biglari has wanted to shift the largely company-run Steak ‘n Shake into much more of a franchise business for years. The company owns and operates roughly two-thirds in the company’s more than 600 locations.
“Our prospects in franchise operations-domestic and international-look bright,” Biglari wrote earlier this coming year in his annual letter to shareholders. But franchisees could be buying into a brand which includes struggled as of late. The chain’s same-store sales declined 3.4% inside the quarter ended June 30, including a 6.4% decline in traffic. That came after having a tough 2017 that Biglari called “not a really good year” and “lugubrious” in his letter.
Several restaurant brands sell partnerships to owner-operators who then be part of the profits. The highest 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 an opportunity to other entrepreneurs that are highly motivated to excel but do not have the financial means. What is going to be important to become franchisee is not great capital but great ability. We have been seeking to harness the power of entrepreneurs and to make a company of owners.”
Steak ‘n’ Shake added the offering to buy to the company being a franchise partner requires operators to successfully finish a six-month training course. The franchise partner would then get 50 percent in the restaurant’s profits. This can be a partnership, shared-profit deal similar to the system Chick-fil-A deploys.
Steak ‘n’ Shake looks to quickly shift its business structure coming from a heavy corporate-owned structure to a system run mostly by single-unit franchisees. The organization said this could “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 was an overall increase of 17 from the previous year. The company posted average-unit volumes of $1,839.51 (in thousands) and had total systemwide sales of $939.99 (in millions). The year before, www.storeholidayhours.org/steak-n-shake-holiday-hours-open-closed-today had 568 total domestic units (415 company-run) after adding 17 restaurants through the previous year. It had higher AUV ($1.9M) and increased systemwide sales of $1,027 (in millions).