If you’ve noticed fewer Steak ‘n Shakes when looking for a milkshake your last road trip, you weren’t imagining things. The chain has never been as huge a player in the American burger chain space as names like McDonald’s and Wendy’s, but Steak ‘n Shakes signature fresh steakburgers have been winning a devoted following for generations since its founding in 1934. Things changed in 2008 when the old-school chain was purchased by activist investor Sardar Biglari. Then sitting at 490 locations the chain was struggling with declining sales and the onset of the economic decline caused by the 2008 financial crisis. During the next decade Biglari aggressively expanded the brand, hitting a peak of 626 locations in 2018. But since then Steak ‘n Shake has been in decline. As of this writing, ScrapeHero reports that the chain has 397 locations in the U.S.
What happened? Well Steak ‘n Shake has seen a lot of changes in its business model since 2008, as CEO Biglari has chased different types of business. The rapid expansion of the 2010s was done with an eye towards low prices and faster service, but for most of its history Steak ‘n Shake had differentiated itself from other burger chains by being a full service restaurant. This meant diner-like interiors where you were served at a table. The high expense of this setup was incompatible with the rapid expansion Biglari was chasing, and in 2018 and 2019 the once growing chain started losing money, which has led to even bigger changes.
The Steak ‘n Shake’s declining numbers
Since 2020 Steak ‘n Shake has been completely transforming its business model, going from diner table service to quick service, and changing from a company-owned model to franchising. In 2021 to save money the company started having customers order at self-serve kiosks instead of at tables. It has also been allowing partners to buy store locations from the company as franchises, and now more than 60% of the locations are franchises, compared to the early 2010s when over 80% of the stores were company-owned. Still, even the number of franchised units has begun to fall in recent years, and many of the remaining company-owned locations are reportedly low-profit. So while Steak ‘n Shake has returned to profitability the last few years, a lot of that may have come from the shuttering of struggling locations, not just improved business practices. Steak ‘n Shake has recently gotten rid of many of its top level executives as well.
Those constant changes are also reflected by recent stories like Steak ‘n Shake switching to beef tallow for making its fries, which was seen as a politically-charged move to gin up business by appealing to the Make America Healthy Again movement of RFK Jr. The website also currently displays a logo touting the chain’s recent adoption of Bitcoin payments. Whether these moves will actually help the declining chain is anyone’s guess, but right now it seems like Steak ‘n Shake needs any help it can get.
