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Steak n Shake has long been one of those concepts and product lines, like Noble Roman’s, that was so good it managed to survive in spite of suicidal (and even imbecilic) business decisions. But Biglari has so intertwined his fast food mentality, cost-slicing tactics, and bargain-basement philosophy with the operational set-up of stores that the important audience decided they’d had enough – the actual customers who pay for what he’s selling. He didn’t care about the generations of old customers who kept him in business – he had to attract the Taco Bell dwelling bargain hunters who want it fast and for pennies. Quality? What’s that?
SnS was always a hybrid concept that wasn’t ever meant to be fast food – even the drive-thru has never worked there properly, and it can’t. It never could. They’d frankly be better off to return to the car hops they had into the 1980s. At least he’d attract the nostalgic crowd, if nothing else. The food doesn’t lend itself to being passed through a window in under three minutes, any more than a Denny’s or a Ruby Tuesday. And slashing staff has made basic restaurant operation impossible now. You can’t run a SnS with two or three people.
Biglari thinks cheap is the answer, and yet look down the street and you’ll see that Culvers is cleaning his clock. Similar menu items, labor- and time-intensive food preparation, no conveyor belt style of cooking, lots of employees. Even similar (if not better) food now that Big Larry’s shucked off any notion of food quality. Yet they haven’t slashed their prices to attract hordes of penniless teenagers. And they’ve taken a rational approach to expansion.
Now that he’s got his name attached to SnS as part of his bizarre formula and claims his own name has some hilariously inflated financial value, I fear that he’ll kill the company but cling to the brand to his last gasp of life rather than let anyone else resurrect it. The hedge fund wünderkinds have destroyed more great businesses in this country in the last twenty years, and he’s about to do this one in.
The above quote about “fast food” speaks to the root of the issue.
The Culver’s and Freddy’s of the world are taking off and doing pretty well with the customers who used to eat at Steak and Shake when they wanted something nicer than McDonalds. Literally, I take my kids to Freddy’s and tell them “this is what Steak & Shake burgers used to taste like”. Which is why we go to Freddy’s instead of Steak & Shake even though it costs more.
Meanwhile, Biglari has a higher end brand and he’s bound and determined to serve a fast food product. He’s losing stores and customers so fast he will never make the pivot to fast food.
No understanding of his brand, no understanding of his customers, and no one around to help give his advice on how to fix the mess because he doesn’t want it that way. I’d love to see how long he would last if he actually had to run one of his own stores as the manager.
Maybe someone will buy the brand out of the inevitable bankruptcy and relaunch it in my lifetime and it’ll be good, even great, again. But the sooner the company closes, the better.
I was the VP/Human Resources & Training at Steak n’ Shake during their renaissance from 2009 to 2017. My employment was terminated in 2017; Mr. Biglari desired a “change in strategic direction.” Obviously, his changes since my departure have resulted in more harm and good.
During my tenure, we emphasized the importance and role of people and training. It appears that those principles have all fallen on deaf ears now. Mr. Biglari is brilliant, but self-centered, egocentric and in his mind, infallible.
Mr. Biglari spent millions of dollars on fresh-cut French fries, restaurant growth in the Middle East, shake machines for convenience stores, and frozen Steakburgers that didn’t look or taste like the original. All of these ideas failed.
His inner-most circle paid him lip service to feed his desires. As an outlier to that group, every suggestion for improvement I and other outsiders made were considered inappropriate. It was a recipe for failure.
Potential franchise partners beware; Mr. Biglari will take at least 10% of your profits; if you know anything about restaurant margins, run away fast!
SnS will continue to erode, but somehow Mr. Biglari will prevail. He is and will always be a very wealthy man. In his wake, will be a countless number of poor, worn-out, bullied people who tried to do their best for the Company only to be labeled as failures!
Rest in Peace SnS
DK