Steak ‘n Shake, eager to shift more of its restaurants to franchise ownership, is currently selling partnerships in all of its a lot more 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, in accordance with the company’s franchise disclosure documents.
Qualified operators would need to complete a comprehensive six-month training course and would spend the money for $10,000 to purchase to the partnership. They might then be single-unit owner-operators. A spokesperson for Steak and Shake menu claimed that the plan is to convert all of the company’s corporate locations into these franchise partnerships.
The franchise partner would get 50% from the restaurant’s profits. The company did not answer questions concerning who will be responsible 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 will be important to turn into a franchisee is not really great capital but great ability,” he added. “We are trying to find to harness the power of entrepreneurs and to produce a company of owners.” Biglari has desired to shift the largely company-run Steak ‘n Shake into much more of a franchise business for years. The organization owns and operates roughly two-thirds from the company’s greater than 600 locations.
“Our prospects in franchise operations-domestic and international-look bright,” Biglari wrote earlier this season in his annual letter to shareholders. But franchisees will be buying right into a brand which has struggled lately. The chain’s same-store sales declined 3.4% in the quarter ended June 30, such as a 6.4% decline in traffic. That came after having a tough 2017 that Biglari called “not a very good year” and “lugubrious” in the letter.
Numerous 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 who are highly motivated to excel but lack the financial means. What will make a difference to become a franchisee is not really 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 purchase into the company as being a franchise partner requires operators to successfully finish a six-month training course. The franchise partner would then get fifty percent in the restaurant’s profits. This is a partnership, shared-profit deal just like the system Chick-fil-A deploys.
Steak ‘n’ Shake looks to quickly shift its business model coming from a heavy corporate-owned structure to some system run mostly by single-unit franchisees. The organization said this might “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 had been an overall total increase of 17 through the previous year. The organization posted average-unit volumes of $1,839.51 (in thousands) along with total systemwide sales of $939.99 (in millions). The year before, Steak and Shake hours of operation 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).