Activist shakes up Steak n Shake after taking control

After months of agitating for changes at The Steak n Shake Co., investor Sardar Biglari finally got a shot at putting his
theories into action.

Biglari took over as executive chairman June 19, and in short order halted development of new locations, closed several stores
and began scouring the locally based company’s books for cost savings. He also dropped an 18-year contract with local ad firm
Young & Laramore.

But the 400-restaurant chain’s losing streak continued as a harsh recession took a toll on even the strongest of fast-casual
restaurants. On Dec. 23, Steak n Shake reported its 14th consecutive quarter with a same-store sales decline.

Shares in the company closed at $6.37 on the day Biglari took over. They cratered to less than $3 in the following months
before heading back to around $5 at year-end.

Biglari and his San Antonio-based Lion Fund had been agitating for tighter cost controls, improved service and a shift to
more franchised locations since shortly after they began buying Steak n Shake shares in August 2007.

The 30-year-old investor had sought to take over as chairman immediately after winning two board seats in March, but encountered
resistance from sitting board members. The company named board member Wayne Kelley as interim chairman and CEO, and elevated
Chief Financial Officer Jeffrey Blade to the post of interim president.

Undeterred, Biglari added former Steak n Shake executives and other investors to his dissident group and continued to buy
shares, adding more than 105,000 shares to an 11-percent stake in May alone.

Biglari, who models his approach after Warren Buffett’s, made his fortune by selling an Internet service provider he founded
at the peak of the dot-com boom. In 2000, he started The Lion Fund, an activist investment vehicle focused on finding companies
that meet his GULP strategy-"growth at an unreasonably low price."

He sees Steak n Shake as a textbook example.