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Steak ’n Shake same-store sales growth streak ends

Rare decline comes amid weaker sales industry-wide

Late last week, Biglari Holdings Inc. quietly announced second-quarter earnings that included a 0.7-percent decrease in same-store sales and a 2.1-percent decline in traffic at its flagship Steak ’n Shake chain.

For the Indianapolis-based burger brand, the decline represented the end of an era. 
Steak ’n Shake last reported a same-store sales decline in 2008 — an impressive 29 straight quarters of growth. 

Executives did not respond to a request for comment. And Steak ’n Shake’s San Antonio-based parent company, Biglari Holdings, doesn’t provide quarterly earnings calls with analysts.

The decline comes amid a broad, industry-wide weakening in same-store sales. Several chains in the second quarter have reported worse-than-expected sales declines. A few have lowered earnings expectations as a result. 

Restaurant revenue at Biglari Holdings fell slightly, to $210.7 million, from $211.6 million the previous year, due largely to the decline in same-store sales. Restaurant earnings declined 7 percent, to $8.7 million, from $9.3 million the previous year.

Overall revenue fell 1 percent, to $219.1 million, from $222 million the previous year. Net income was $57 million, rising from a loss of $2.2 million the previous year. The biggest change in earnings came from income the company received from its investment partnership with Biglari Capital Corp., the investment firm controlled by Biglari Holdings CEO Sardar Biglari.

In December 2008, the last time Steak ’n Shake reported a same-store sales dip, the chain had named Biglari CEO, and the company unleashed a promotion offering four meals priced under $4. Traffic and sales quickly grew, and increased through the recession.

But in recent quarters, competing chains have jumped aboard the discount meal bandwagon. Wendy’s started offering its own 4 for $4 meal last year. McDonald’s, Burger King and Carl’s Jr./Hardee’s would start offering meal deals soon thereafter. Other chains began discounting heavily, too.

Steak ’n Shake, which has 571 locations, recently doubled down — or maybe more like sextupled down — on its $4 price point, offering 24 meals for under $4. 

Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze

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