{"id":679,"date":"2015-05-20T01:00:48","date_gmt":"2015-05-20T08:00:48","guid":{"rendered":"http:\/\/sintelsystemspos.com\/?p=679"},"modified":"2015-05-05T13:29:02","modified_gmt":"2015-05-05T20:29:02","slug":"steak-n-shake-stokes-its-franchise-business","status":"publish","type":"post","link":"https:\/\/sintelsystemspos.com\/ja\/steak-n-shake-stokes-its-franchise-business\/","title":{"rendered":"Steak ‘n Shake Stokes Its Franchise Business"},"content":{"rendered":"

\"Steaknshake\"<\/a>A strategy to expand without significant capital expenditures has Steak ‘n Shake franchising more aggressively.<\/p>\n

A recent Nation’s Restaurant News (NRN) report on Steak ‘n Shake’s financial results notes that according to a 2014 annual report released by parent Biglari Holdings total earnings before income taxes fell nearly $2 million, to $26.5 million in 2014, from $28.4 million a year ago, and nearly $20 million from 2012.<\/p>\n

Given the strong presence Sintel Systems has in the retail, restaurant and service industries’ point of sale marketplace, we share these service sector growth trends with our customers and franchise hopefuls looking for key insights and opportunities in order to help them make the best decisions from the very beginning.<\/p>\n

Here are the highlights of the NRN.com post, “Steak \u2019n Shake: Franchise expenses weigh on 2014 profit”:<\/p>\n

\u2022 In his annual letter to shareholders, Sardar Biglari, chairman of San Antonio-based parent Biglari Holdings Inc. writes, “The major factor for the recent downturn has been our aggressive spending to stoke our franchise business.” Biglari suggested that the “intrinsic value” of Steak \u2019n Shake increased in 2014, despite the decline, because of those investments. “We have been trading near-term earnings to develop higher long-term cash flows,” he wrote.<\/p>\n

\u2022 In 2009, Biglari’s first year controlling the chain, capital expenses fell from $31.4 million to $5.8 million. But last year those expenses rose again. According to the company\u2019s annual report, Steak \u2019n Shake spent $25.4 million on capital spending.<\/p>\n

\u2022 The number of franchise units was 71 locations in 2010. Currently there are 124 Steak ‘n Shake outlets. Steak \u2019n Shake’s franchise revenue grew from $4.2 million to $12.2 million during that time. NRN notes that there are 540 Steak \u2019n Shake units in total.<\/p>\n

\u2022 Biglari also writes that Steak ‘n Shake has started building company-owned units in “high-profile, iconic locations to create more awareness of the brand” and showcase the chain\u2019s new counter service model. NRN notes that includes units in Santa Monica, Calif., at the Third Street Promenade, and in New York City. The company has also opened units in France and Spain.<\/p>\n

\u2022 NRN writes that general and administrative expenses for Steak ‘n Shake have increased by more than $20 million over the past two years, from $44 million in 2012 to $64.9 million last year. Two years ago, Biglari Holdings\u2019 restaurant operations spent 6 percent of revenues on general and administrative spending, which includes legal fees and marketing associated with franchising. Last year, the company spent 8.3 percent of revenues on those expenses.<\/p>\n

\u2022 Revenue rose 3.9 percent during the fiscal year ended Sept. 24, to $765.6 million, from $737.1 million a year ago. Much of the increase was on same-store sales, which rose 2.9 percent, the company said. Traffic rose 2 percent for the year.<\/p>\n

\u2022 Earnings per unit have fallen from $110,200 in 2012 to $63,700 in 2014, the lowest level since 2009. Steak \u2019n Shake has not seen same-store sales decline since the first quarter of 2009. Same-store sales rose 3.4 percent during the fourth quarter of 2014.<\/p>\n

\u2022 In his annual letter, Biglari said the company\u2019s overall strategy for Steak \u2019n Shake has been to strengthen its long-term competitive position by giving consumers strong value. Steak \u2019n Shake served 114 million customers in 2014, he wrote, compared with 112 million in 2013 and from 85 million in 2008, the year before Biglari took control of the chain in a proxy vote.<\/p>\n

\u2022 “Our pricing philosophy is not to maximize profit per customer, but to offer products at the lowest possible prices to an ever-increasing number of customers, thereby continuing to stimulate aggregate profits,” Biglari wrote.<\/p>\n

\u2022 The company says it has kept prices constant, despite rising beef costs, which have risen $19 million since 2009, Biglari wrote. The company’s annual report noted that last year\u2019s beef price increase was more than offset by declines in other commodities.<\/p>\n

Read the full NRN.com post here<\/a>.<\/p>\n

For more insights into franchising and the franchise-seeking mindset, check out our related posts, These Sliding Franchises Must Get Back To The Basics<\/a>, The Top 12 Franchises, Based Upon Average Annual Single-Store Sales<\/a>, Inside A Baskin-Robbins Turnaround<\/a>, and 7-Eleven Readies Its Wilson Farms Buyout For Franchisees<\/a>.<\/p>\n

Sintel is the only full-service, direct-to-user point of sale provider \u2014 no resellers, no middleman. From software development to franchise incubator to ongoing support, part of Sintel’s commitment to our customers and industry is to share information on how to achieve success.<\/p>\n

Before you make your franchise move, consider calling Sintel Systems for a free phone consultation to help weigh and understand your options. We serve as a franchise incubator for clients across the retail, restaurant and service industries, forming lasting partnerships with our clients that you simply can\u2019t get from a reseller.<\/p>\n

If you are interested in learning more about Sintel\u2019s point of sale (POS) systems and how our knowledge and support can impact your future success, call us for a complimentary phone consultation.<\/p>\n

Sintel Systems<\/a>\u00a0is the only direct to end user full-service provider of tailored Point of Sale systems across retail, restaurant and service industries, including\u00a0frozen yogurt shops<\/a>,\u00a0pizzerias<\/a>,\u00a0sushi restaurants<\/a>,\u00a0caf\u00e9s<\/a>\u00a0and\u00a0retail stores<\/a>.<\/p>\n

As a single source for business solutions, our experienced, knowledgeable team negotiates the complex POS landscape for you to enable you to find the right POS system for your business and budget.\u00a0Hardware<\/a>\u00a0–\u00a0Software<\/a>\u00a0–\u00a0Support<\/a><\/p>\n

Questions or Comments:\u00a0Contact us<\/a>\u00a0855-POS-SALES\u00a0www.SintelSystems.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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