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Steak n Shake airs first steps in strategic revamp

INDIANAPOLIS Pressed for strategic changes by two investor groups, Steak n Shake Co. said today that it would "critically" review costs and intensify its focus on field operations. The 490-unit casual-dining operator also said it would evaluate "potential opportunities" through a newly appointed financial advisor and a just-formed special committee of outside directors.

In addition, the new strategic plan calls for "simplifying initiatives," though Steak n Shake did not explain what it meant by that term.

Steak n Shake stressed that it has just begun to craft the new strategic plan, and did not disclose specifics of the directional change. "Management looks forward to sharing our evolved strategic plan with shareholders in the near future," said interim chief executive and president Alan Gilman.

The announcement follows Monday's disclosure that the activist investor who chairs The Lion Fund, owner of a 5.8 –percent stake in Steak n Shake, would seek seats on the company's board for himself and an associate. Sardar Biglari has previously used the holdings of The Lion Fund to seek board seats at Friendly Ice Cream Corp. and Western Sizzlin, where he currently serves as chairman.

In June, an investment group holding 9.5 percent of Steak n Shake's stock said it would pursue meetings with management to raise the value of the restaurant company's stock. The discussions could include "exploring an acquisition or other transaction,Ó the consortium said at the time. The group includes Dallas-based hedge fund HBK Investments LP, Lone Star Steakhouse & Saloon parent Lone Star Funds and Texas investor Robert J. Stetson.

In between those two developments, Peter Dunn abruptly resigned as president and CEO of Steak n Shake after five years in the posts. The stated reason was to pursue other opportunities.

In disclosing today that it was drafting a new strategic plan, Steak n Shake said it has retained Merrill Lynch & Co. as a financial advisor. It also appointed a committee of three non-management directors to assist in considering strategic alternatives. It did not say if a sale or merger could be among the possibilities.

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