Steak ‘n Shake Closes Sullivan Location
Last week’s closing of the local Steak ‘n Shake adds to a growing list of more than 30 restaurants the chain has shuttered since January due to poor performance and a shift in ownership strategy. About one-third of the closings have occurred in the St. Louis region, including Ballwin, Chesterfield, Ellisville, St. Ann, and Maryland Heights.
According to published news reports, Steak ‘n Shake has about 600 locations, with about 200 being owned by franchisees. The Indianapolis-based company announced last August that it plans to sell the remaining 400 under a franchisor-franchisee agreement. The Sullivan store is corporate-owned and could reopen if a new ownership agreement is reached.
The company says its plan is to sell corporate locations under an agreement similar to other chain restaurants. The idea is to turn Steak ‘n Shake into an owner-manager model, with a local franchisee owning and focusing on only one restaurant. The plan calls for company-owned restaurants to be sold to franchisees for $10,000 each, with profits being split and the property/equipment leased from Steak ‘n Shake.
In a 2018 letter to shareholders, parent corporate owner Sardar Biglari of Biglari Hodlings said recent times have been rough for Steak ‘n Shake. “For the past three years, we have been in decline, with same-store sales below the average for the industry,” wrote Biglari.
The company acknowledges that the current interior kitchen design and management style was unprepared for a significant shift from quick-serve family dining to drive-thru, which now accounts for slightly more than half of all revenue. Future plans include new equipment, quicker drive-thru service, and improved customer relations.
The closed locations will presumably remain inactive until new ownership agreements are reached. Efforts to reach a Steak ‘n Shake spokesperson were unsuccessful.