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 part 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 have to complete an extensive six-month training program and would spend the money for $10,000 to buy into the partnership. They might then be single-unit owner-operators. A spokesperson for Steak and Shake value menu said that the program would be to convert each of the company’s corporate locations in to these franchise partnerships.
The franchise partner would get 50% from the restaurant’s profits. The business failed to answer questions regarding would you be accountable 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 wish to provide a chance to other entrepreneurs who definitely are highly motivated to excel but lack the financial means.”
“What will likely be important to become franchisee is not really great capital but great ability,” he added. “We are trying to find to harness the strength of entrepreneurs and to make a company of owners.” Biglari has wished to shift the largely company-run Steak ‘n Shake into even more of a franchise business for many years. The business owns and operates roughly two-thirds in the company’s more than 600 locations.
“Our prospects in franchise operations-domestic and international-look bright,” Biglari wrote earlier this coming year within his annual letter to shareholders. But franchisees would be buying right into a brand that has struggled as of late. The chain’s same-store sales declined 3.4% in the quarter ended June 30, together with a 6.4% decline in traffic. That came after having a tough 2017 that Biglari called “not a really good year” and “lugubrious” in the letter.
A number of restaurant brands sell partnerships to owner-operators who then share in the profits. The most known 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 the opportunity to other entrepreneurs that are highly motivated to excel but lack the financial means. What is going to be important to become a franchisee is not great capital but great ability. We are wanting to harness the effectiveness of entrepreneurs and to make a company of owners.”
Steak ‘n’ Shake added that this offering to buy to the company as a franchise partner requires operators to ensure that you complete a six-month training program. The franchise partner would then get 50 % of the restaurant’s profits. This can be a partnership, shared-profit deal like the system Chick-fil-A deploys.
Steak ‘n’ Shake looks to quickly shift its business model from a heavy corporate-owned structure to a system run mostly by single-unit franchisees. The company said this could “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, that was an overall increase of 17 from the previous year. The business posted average-unit volumes of $1,839.51 (in thousands) and had total systemwide sales of $939.99 (in millions). The entire year before, what time does Steak and Shake open 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).