Steak ‘n Shake Inc.
Steak ‘n Shake’s Franchise Partner system aims to create
success stories among its franchisees.
By Alan Dorich, Knighthouse Media
For Steak ‘n Shake Inc., its Franchise Partner program is about more than just making money. The Indianapolis-based restaurant chain also is focused helping people achieve their dreams of owning and operating their own business, CEO Sardar Biglari says.
“Every man and woman is entitled to pursue the American dream,” he declares. “Because we favor the ideal of opportunity for all, we have designed a franchise system in which those who are passionate about serving others, and who wish to go into business for themselves but not by themselves, can fulfill the dream of being an owner – and with it the prospect of becoming an American success story.”
Biglari also is the founder, CEO and chairman of Biglari Holdings Inc., which owns Steak ‘n Shake. The chain’s history goes back to 1934, when founder Gus Belt started it in Normal, Ill., with the goal of serving the finest steakburgers and milkshakes in the industry.
After Biglari Holdings took control of the chain in 2008, it successfully evolved Steak ‘n Shake from a struggling brand in the casual-dining segment into a successful one in the quick-service restaurant business. The lack of operations execution in recent years is causing the company to radically change the culture — to one of ownership.
Shaking Things Up
Today, Steak ‘n Shake has 685 company-operated and franchise locations in the United States and internationally. However, there is still work to be done as the chain is currently overhauling its efficiency and implementing advanced production techniques.
“Consequently, we are developing a tailor-made system designed to speed up service, deliver consistency and reduce labor while safeguarding our customer’s love affair with the craftsmanship behind our handmade, homemade creations,” Biglari says. “Our aim is to change not our products but the process by which we create our delicious steakburgers and milkshakes.”
Through its Franchise Partner program, Steak ‘n Shake is focused on implementing advanced production techniques and building a culture of ownership at the unit level. To attract owner-operators, the chain is franchising all of its company-operated units.
“After all, franchising is the epitome of entrepreneurship,” he says, noting that the company does not seek absentee owners. “Rather, we seek entrepreneurs with a consummate commitment to the business. In doing so, we aim to harness the power of enterprising operators.”
Its franchise agreement, he adds, requires that the franchisees give only $10,000 upfront. “Because of our significant investment in the business, including construction of the restaurant and its equipment, we assess a fee of up to 15 percent of sales as well as 50 percent of profits,” he says.
Through this arrangement, “A franchise partner is able to earn considerable sums, which is the way we want it,” Biglari says. “Our thinking behind such a lucrative agreement is simple: the best way to create wealth for ourselves is to first create wealth for our franchise partners.”
One franchisee that has benefited from the Franchise Partner system is Alok Shivpuri, who is a 50 percent partner in his Steak ‘n Shake restaurant in Rockwell, Texas. A longtime veteran of the industry, he joined the chain and took over an existing restaurant after discussing the opportunity with Biglari.
“I decided I definitely wanted to try to do this and the benefits were enormous,” he recalls, adding that the company shoulders the responsibility for multiple aspects of the business, including payroll. “Steak ‘n Shake takes care of that for me.”
This has allowed him to focus on what he does best: operating a restaurant. The company also provides him with a wealth of resources, including a marketing tool kit which proved useful.
“I’ve seen almost a 14 percent increase in my breakfast business,” he reports, adding that the location also watched its monthly guest counts rise steadily for the past year.
“That’s not only because of me but also the support I get ,” he asserts, adding that Steak ‘n Shake plans to make changes to his location. “In the next month, they’re re-designing my kitchen equipment to make my drive-thru more efficient.”
Transforming the Industry
Biglari says, ”The essence of our program is to simultaneously achieve standardization while unleashing the entrepreneurial spirit of the operators,” he says. “We expect the combination to reinvent Steak ‘n Shake as the best quick-serve restaurant company in the premium burger segment.”
Shivpuri says, “Going in this Franchise Partner direction is the smartest thing for me. I think the sky is the limit for us franchisees.”