Food - News
The Real Reason Steak 'N Shake Restaurants Are Disappearing
By JAMES LEWIS
Notable for its milkshakes and Steakburger, Steak ‘n Shake was built on a 20th-century business model that saw profit for the first time in years in 2021. The reason behind the profit, however, is that Steak ‘n Shake has been struggling to keep up with the times, closing down 90 restaurants since 2018.
Tackling labor shortages, problems with supplies, rising food prices, and a $153 million debt left Steak ‘n Shake with a serious cash shortage. To solve this problem, the restaurant has overhauled its business model to operate the stores via franchises, with 159 of its stores now under franchise.
Under the new plan, Steak 'n Shake takes a $10,000 investment fee, up to 15% of franchise sales, and 50% of profits without having to manage day-to-day business. While this idea — which has boosted average employee sales from $64,000 to $118,000 — doesn’t guarantee success, it is cheaper.