The Untold Truth Of Steak 'N Shake

Once upon a time, Steak 'n Shake was a humble regional chain restaurant with only a few locations in its home state of Illinois (via Funding Universe). It now consists of more than 500 locations throughout 28 states — and can even be found overseas. This doesn't mean it's been all smooth sailing for the burger and milkshake restaurant. The last few years, in particular, have seen Steak 'n Shake encounter more than its fair share of turmoil. And yet, the chain is still alive and kicking as it approaches its centennial anniversary.

So what is Steak 'n Shake's secret to success that has enabled it to stay in business for so long? And what problems nearly derailed that longevity streak and almost caused the chain to shut off the lights for good? From the restaurant's shrinking footprint and brush with bankruptcy to its international expansion and late-night television appearance, here is the untold truth of Steak 'n Shake.

Steak 'n Shake is more than just a restaurant — it's part of Americana. After all, the burger chain has been feeding happy customers for more than 90 years. It all started way back in the 1930s with a man named Gus Belt. Wanting to attract more customers to his gas station in Normal, Illinois, Belt opened a small adjoining chicken-and-beer restaurant and called the business Shell's Chicken. Not long after, however, he realized the area was full of similar eateries. In 1934, Belt scraped the chicken concept, as well as the gas station operation, and converted the business into a full-fledged restaurant named Steak 'n Shake (via Funding Universe).

The new burger and shake concept was an immediate hit. Soon after opening the initial location, Belt purchased several nearby restaurants and converted them to Steak 'n Shakes. His restaurants served food curbside to customers in their cars. By the end of the '30s, there were eight Steak 'n Shake restaurants throughout Illinois.

Belt passed away in 1954, leaving the business in the hands of his wife, Edith. Steak 'n Shake remained in the Belt family until Edith sold the business to East Coast steakhouse chain Longchamps in 1969.

If you're hankering for a T-Bone, Steak n' Shake is not the place for you. Despite its name, the chain has never sold steaks. Instead, it has been hawking its famous Steakburgers for the better part of a century.

When Gus Belt founded Steak 'n Shake in the 1930s, he was determined to offer the restaurant's customers the highest-quality food. This meant making his burgers out of steaks, including round, sirloin, and T-bone cuts. To make sure diners knew exactly what they were getting, Belt would bring the steaks into the restaurant and grind the meat and form it into patties right in front of his guests. This showmanship gave rise to Steak 'n Shake's slogan, "In Sight It Must Be Right."

While the meat grinding stunt has been retired and you're no longer able to see how the patties are made, Steak 'n Shake's Steakburgers are still made exclusively from top-grade meat nearly 90 years later.

It's not uncommon today for large corporations to own a wide variety of subsidiary businesses. Just look at long list of brands belonging to Amazon and Disney. What is a little more unique, however, is for parent companies to own brands in several unrelated industries.

That's why you might just do a double-take when perusing this list of brands owned by Steak 'n Shake parent company Biglari Holdings. While there is another restaurant chain (Western Sizzlin), the rest of Biglari's portfolio includes two insurance companies, an oil company, and maybe most surprising, Maxim magazine. The Steak 'n Shake owner purchased the men's magazine in 2014 when the publication was struggling financially. "As the new owner, we look forward enthusiastically to making long-term investments in pursuit of revitalizing the Maxim brand," Bulgari CEO Sardar Bulgari said in a statement at the time (via Indianapolis Business Journal). "Maxim's inclusion into our collection of companies will benefit from our financial strength."

Perhaps Biglari Holdings bought the magazine to help promote its burger chain. Last year, Maxim published an article on the potential windfall investors could make from opening their own Steak 'n Shake franchises.

Have you ever dreamed of owning your own fast-food restaurant? Well, one can be yours for less than the price of a car. In 2018, Steak 'n Shake announced a new franchise partner program in which an investor could pay a mere $10,000 to own their own location (via QSR magazine). For comparison, it costs $20,000 upfront to open a KFC, $45,000 to open a Taco Bell, more than $139,000 for a Subway, and at least $2 million to own your Wendy's (via Delish).

Under terms of the deal, the franchisee keeps 50 percent of the store's profits with the other half going to the parent company. "I started my company with $15,000 and built a thriving enterprise," said Sardar Biglari, CEO Steak 'n Shake owner Biglari Holdings. "I want to provide an opportunity to other entrepreneurs who are highly motivated to excel but lack the financial means. What will be important to become a franchisee is not great capital but great ability. We are seeking to harness the power of entrepreneurs and to create a company of owners." In addition to the initial fee, franchise owners have to complete an extensive, six-month training program. As of February 2022, Steak 'n Shake had 159 franchise-partner restaurants, according to QSR magazine.

In 2014, Steak 'n Shake opened two restaurants in the United Arab Emirates, according to the Indianapolis Star. Both stores were closed the very next year, however. Just a few months later, Steak 'n Shake debuted its first location in Kuwait. That restaurant lived a short life as well, ceasing operations in 2017 (via Rinnoo).

While Steak 'n Shake has struggled to take hold in the Middle East, it's had far more success in Europe. The burger chain unveiled restaurants in the popular tourist destinations of Cannes, France, and Ibiza, Spain in 2014, according to the Indianapolis Star. "If Steak 'n Shake is willing to [expand] without compromising who they are, they will be successful," franchising expert Bill Church told the outlet. "I can't think of a more Americanized brand than Steak n Shake." Church appears to have been correct. There are now more than two dozen locations in France, as well as Steak 'n Shake restaurants in Italy and Portugal.

If you're Steak 'n Shake aficionado, you may have noticed a troubling trend taking place over the last several years: the chain is shrinking. At the close of 2018, Steak 'n Shake had 626 stores to its name, according to QSR magazine. Twelve months later, that number had dropped to 610. Things went from bad to worse the following year.

Business Insider reported Steak 'n Shake's net sales fell nearly $61 million during the first quarter of 2020 compared to the same time period in 2019. That represented a 36.8% drop in revenue. Dwindling sales combined with the effects of the COVID-19 pandemic forced Steak 'n Shake to continue cutting the fat. By October, the chain had closed down 82 restaurants in 2020 alone, reducing its total footprint to 528 stores.

There does seem to be a light at the end of the tunnel, however. In March 2021, the restaurant announced it had opened a dozen new locations and would be unveiling an additional 33 stores by the end of the year (via RestaurantNews.com). According to its website, there are more than 550 Steak 'n Shake restaurants in operation today.

The COVID-19 pandemic forced a lot of changes upon the restaurant industry, particularly in the way eateries get their food from the kitchen to their customers. For Steak 'n Shake, this situation created an opportunity to bring back a trademark feature from back in the day. In August 2020, the burger chain announced that it would be resuming car hop service at hundreds of locations across the country (via Dayton.com). The service, in which food is delivered to customers' vehicles and consumed in the restaurant's parking lot, was very popular in Steak 'n Shake's early days. "Our modern version of the Drive-In not only reinforces those early days with delivery right to your car, but it also fits perfectly into today's reality, offering our guests a way to enjoy dining out of the house while still protecting their family's health," Steve May, Steak 'n Shake's senior vice president, said in a press release (via Dayton.com).

Customers wanting to use the service simply needed to park in one of the participating location's designated parking spots. Once there, they could use the Steak 'n Shake app to place their order and select the "car hop" option. A server would deliver a tray full of food, which could be attached to the vehicle's window, just as they did in the good ol' days. Customers could eat in their cars or at socially distanced picnic tables.

We know all about Steak 'n Shake's car hop service, in which servers deliver food directly to customers' cars. But what if you arrive by a different mode of transportation? Such as, say, a boat? Believe it or not, once upon a time a Steak 'n Shake location in East Peoria, Illinois was indeed happy to serve you right there on the dock. Steak 'n Shake posted proof of the long-ago service on its Pinterest page and its caption sounded just as surprised by the photo as the rest of us. "Who knew @Steak 'n Shake delivered to boat docks? Apparently in Peoria, IL in 1939 we did!" the post read. It was accompanied by a vintage photo of boats docked at a marina with a sign reading, "Steak 'n Shake Boat Landing for Food Service."

East Peoria is located on the banks of Peoria Lake and the Illinois River, so it was a natural extension of the car hop service. Customers could spend the day out on the water and, when hunger struck, simply dock their vessels at Steak 'n Shake's boat landing. Then all they'd have to do was place their order and wait for trays of juicy steakburgers to be delivered right to their boat. All without ever stepping a foot on land.

If you haven't been inside a Steak 'n Shake lately, you're in for quite a surprise when you return. According to QSR magazine, the chain is transitioning from a sit-down, fast-casual restaurant to a full-on fast-food eatery. The most notable change is the elimination of table service. Citing high costs, Steak 'n Shake announced in early 2020 that it would no longer be employing servers at its restaurants, which it had done since opening 1934. Instead, customers can order at the counter. It wasn't a completely new idea, as Steak n' Shake has had quick-serve locations in its footprint since 2012, although those were at nontraditional outlets such as colleges, airports, and gas stations.

Steak 'n Shake wasn't done with its modern makeover. In 2021, the burger chain announced that it would be transitioning to a digital ordering system (via QSR magazine). Instead of ordering food from a person, customers will use self-ordering kiosks inside the restaurants' dining rooms. "We are embracing efficiency and transitioning the service model to empower our guests to place and pick up their own orders," said Sardar Biglari, chairman of Steak 'n Shake parent company Biglari Holdings. "The dining room with table service was undoubtedly a revenue center, but it was not a profit center. A conversion to a bonafide quick-service restaurant chain will, we believe, enhance the company's economics."

Steak 'n Shake struck promotional gold in 2008 when it introduced a new budget-friendly menu consisting of four meals all under $4. According to the Indianapolis Star, the burger chain recorded sales growth in 16 consecutive quarters after rolling out the new menu. While it may have been popular with diners, there was one group of people that was none too pleased with the rock-bottom prices: Steak 'n Shake franchise owners.

In 2013, five Steak 'n Steak franchisees sued the parent company, claiming Steak 'n Shake did not have the legal authority to set menu prices at individual franchise locations and that the value menu was eating away at their profits. "Steak 'n Shake effectively controls both the buy and sell prices for every food item sold by franchisees," the lawsuit said. "Lower menu prices would mean financial disaster for many franchisees."

The group of restaurant owners included the longest-operating Steak 'n Shake franchisee, Stuller Inc., which claimed the $4 menu would reduce annual sales at its five stores by $900,000. Stuller and Steak 'n Shake eventually settled out of court. Another franchisee agreed to hand off ownership of its two restaurants to the parent company. This came after Steak 'n Shake allegedly disabled the locations' computer systems and halted food deliveries when it found out the restaurants were charging more than $4 for the meals.

Franchisees aren't the only ones who have accused Steak 'n Shake of unfair practices. The chain was also sued by its own employees. In 2014, two St. Louis-area Steak 'n Shake managers filed a lawsuit against the parent company for allegedly not paying them for overtime hours worked, according to QSR magazine. The suit claimed the employees were misclassified as exempt, then forced to work more than 50 hours per week and perform non-managerial tasks (via Restaurant Business Online). Over the next three years, the suit grew to include nearly 300 managers in and around St. Louis.

In 2019, a jury sided with the employees, awarding them roughly $3 million. Just a few months later, however, a U.S. District Judge decided that number was too low. He doubled the managers' award to $6 million and made Steak n' Shake responsible for paying the plaintiffs an additional $1.7 million for legal and other fees.

The burger chain wasn't out of the woods yet. By this time, it had entered mediation with several hundred other restaurant managers from around the country after they filed a similar suit. In July 2019, Steak 'n Shake agreed to settle both class-action lawsuits for a combined $8.35 million, according to the Journal Star.

Racing fans may be particularly familiar with Steak 'n Shake's logo. After all, they've seen it go round and round and round. In 2015, the burger chain signed on to become the primary sponsor of the No. 15 Indy racing car, according to Autoweek. The vehicle is owned by Rahal Letterman Lanigan Racing, which itself is co-owned by none other than avid Steak 'n Shake fan David Letterman. "I've been eating them since I was 11. Finally, free Steakburgers!" Letterman said at the time.

"Dave Letterman clearly loves Steak 'n Shake, and we love teaming up with champions. After all, the best way to be a champion is to unite with champions," said Sardar Biglari, chief executive officer of Steak 'n Shake's parent company Biglari Holdings Inc. (via Autoweek). "As we enter the IndyCar series with Rahal Letterman Lanigan Racing, without a doubt we are sponsoring the very best in racing and we are honored to be associated with the team, whose name is synonymous with winning."

Steak 'n Shake scored a major expansion coup in 2012 when the chain opened a location smack dab in the middle of New York City (via Eater NY). The restaurant, Steak 'n Shake's first in New York, was coincidentally located next door to the Ed Sullivan Theater. Why was this a case of serendipity, you ask? At the time, the theater was home to one of Steak 'n Shake's biggest fans: David Letterman. The comedian grew up eating Steakburgers in his native Indiana and now hosted "The Late Show" at the Ed Sullivan Theater.

Letterman wasted little time welcoming his new favorite neighbors. Not long after the restaurant opened its doors, the comedian dedicated a roughly 10-minute segment of his show to praising his favorite burger joint. It wasn't all just kind words, though — Letterman was hungry. To conclude the segment, he sent his camera crew over to the restaurant and ordered two Steakburgers with cheese and a couple of shakes, according to Eater NY. Next thing you know, a Steak 'n Shake server walked out of the restaurant, into the Ed Sullivan Theater, and on stage with the host himself, all with the cameras rolling. Letterman and his bandleader Paul Shaffer ripped open the bag and enjoyed the burgers and shakes right then and there.

What's better than a cheeseburger? A double cheeseburger, of course. And what could beat a double cheeseburger? A triple cheeseburger! This progression usually stops there, though — if you add too many patties, a burger becomes unwieldy. Steak 'n Shake is not most burger restaurants, and it went above and beyond to prove that a few years back.

In 2013, the burger chain unveiled a new All Nighter late-night menu that was available exclusively from midnight to 6 a.m. (via Eater). It included all the usual suspects you'd expect to find on such a menu: nacho fries, tacos, chicken fingers, etc. But amidst these typical late-night foods was one completely unique menu item. The 7x7 Steakburger, as Steak 'n Shake called it, was a cheeseburger consisting of seven beef patties and seven slices of American cheese. Costing $7.77, the mammoth meal contained an eye-popping 1,330 calories and 98 grams of fat, according to Delish. If you added on an order of fries, those numbers jumped to 1,570 and 109, respectively.

Unfortunately for the gluttonous eaters of the world, the 7x7 is a thing of the past. Steak 'n Shake's current burger offerings stop at three patties.

You can buy a lot of products from restaurant brands at grocery stores these days, and Steak 'n Shake is no exception. In 2014, the burger company unveiled a line of frozen grocery store items (via the Indianapolis Business Journal). "We want to take the [the chain's brand recognition] and extend it beyond the four walls of a restaurant. The brand has been around for years, and the idea is to make that more available to folks," Bill Jachthuber, the chain's vice president of brand licensing, said at the time. "For whatever reason, people may not be able to go to the restaurant," company spokesman Jim Flaniken added. "This is another channel for providing the Steak n Shake product."

The burger chain's grocery store rollout began with a trial run of strawberry, chocolate, and vanilla milkshakes. When the frozen treats proved to be a hot commodity, Steak 'n Shake quickly expanded its product line to include double and bacon double Steakburgers, Frisco and patty melts, cheese and chili cheese fries, and chicken bites. You can currently find a wide variety of Steak 'n Shake grocery products, including hash browns, seasoning mix, and Steakburger shooters.

Interestingly, this was not Steak n Shake's introduction to grocery stores. The brand has sold chili in cans and microwavable containers since the 1980s.

As we've seen, Steak 'n Shake has found itself on the wrong side of a couple of lawsuits in recent years. But in 2018, the fast-food chain was the one looking for justice in a truly bizarre case involving a former employee and a not-so-flattering social media post (via St. Louis Public Radio).

It all started innocently enough when a Missouri Steak 'n Shake server named Melissa White was grilling a hamburger patty to eat herself when she claimed to have seen worms in the meat. She brought the patty to her managers but allegedly refused to allow them to inspect it. Instead, she stormed out of the restaurant, burger meat in hand, telling customers she was fired for reporting worms in the food (Steak 'n Shake said White wasn't fired but quit).

White didn't stop there. She took to Facebook with a message that read, in part, "JUST GOT FIRED FROM STEAK N SHAKE IN FLORISSANT ... BECAUSE I FOUND LIVE WORMS WHILE COOKING A STEAK PATTY MOVING INSIDE OF IT AND REFUSED TO SELL THAT MEAT." The post was shared 36,000 times in two weeks, prompting Steak 'n Shake to sue White for defamation. It cited a health inspector's report that found no problems with the meat and a picture showing that the "worms" were just pieces of fat, according to the St. Louis Post-Dispatch. In 2021, a jury sided with the restaurant chain, awarding Steak 'n Shake $80,000.

In 1981, the Steak 'n Shake company was sold to E.W. Kelley and Associates, an investment group founded by Ed Kelley (via Restaurant News). Kelley may not be a household name, but the products he helped bring to market can be found in households across the country.

Prior to starting his new business venture, Kelley was a prominent executive in the food industry (via Midland Daily News). Two of the companies he worked for were Standard Brands, which eventually merged with Nabisco, and General Foods, which did the same with Kraft (via Funding Universe; the American History Business Center). During his time there and with other food and beverage producers, Kelley helped introduce numerous well-known grocery products that you'll still find on the shelves today. The list includes Cool Whip, Klondike ice cream bars, Grey Poupon Mustard, Smirnoff vodka, A-1 Steak Sauce, and Tang.

Kelley led Steak 'n Shake for decades, up until his death in 2003. Under his watch, the chain more than tripled in size, growing from 125 stores to 412.

Knowing that Steak 'n Shake has closed dozens of restaurants in the last few years, it likely comes as no surprise to learn that the chain's financial situation hasn't been in pristine shape lately. But what fans likely don't know is just how bad the situation was. It turns out, the burger joint was on the precipice of bankruptcy. According to Restaurant Business Online, Steak 'n Shake repaid a $102 million loan last year just weeks before the debt was due. If the chain hadn't been able to make the payment, it likely would have had to file for debt protection. In fact, Restaurant Dive reported that the chain was already working with legal and financial advisers in preparation for a bankruptcy filing.

The story doesn't end there, however. In a surprising turn of events, Steak 'n Shake turned the tables and sued one of its lenders, Fortress Investment Group. The restaurant chain claimed Fortress intentionally tried to push it into bankruptcy in order to then buy out the company. Steak 'n Shake retracted the lawsuit less than two months later (via Restaurant Business Online). The very next week, however, it was hit with another suit. Wilmington Trust, the administrative agent on Steak 'n Shake's loan, said the debt had not been fully paid off, contrary to the restaurant's claim. It claimed the burger chain still owed $3.7 million in damages and $4.85 million in interest.