Steak ‘n Shake, keen to shift more of its restaurants to franchise ownership, is currently selling partnerships in all of its more than 400 company-owned restaurants for an initial investment of $ten thousand. That’s a 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 curriculum and would pay the $10,000 to buy in to the partnership. They would then be single-unit owner-operators. A spokesperson for Steak and Shake menu stated that the plan is always to convert all the company’s corporate locations in to these franchise partnerships.
The franchise partner would get 50% of the restaurant’s profits. The business did not answer questions as to who would be accountable for the expenses related to 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 wish to provide the opportunity to other entrepreneurs who definitely are highly motivated to excel but lack the financial means.”
“What will likely be important to turn into a franchisee will not be great capital but great ability,” he added. “We are trying to find to harness the effectiveness of entrepreneurs and to produce a company of owners.” Biglari has wished to shift the largely company-run Steak ‘n Shake into even more of a franchise business for a long time. The business owns and operates roughly two-thirds in the company’s a lot 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 would be buying into a brand which includes struggled lately. 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 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 notable 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 who definitely are highly motivated to excel but do not have the financial means. What is going to be important to become a franchisee is not great capital but great ability. Our company is wanting to harness the strength of entrepreneurs and to produce a company of owners.”
Steak ‘n’ Shake added that the offering to buy in to the company as being a franchise partner requires operators to successfully complete a six-month training curriculum. The franchise partner would then get 50 percent of 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 design coming from a heavy corporate-owned structure to a system run mostly by single-unit franchisees. The company 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 was 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, www.storeholidayhours.org/steak-n-shake-holiday-hours-open-closed-today had 568 total domestic units (415 company-run) after adding 17 restaurants from the previous year. It had higher AUV ($1.9M) and increased systemwide sales of $1,027 (in millions).