Steak 'N Shake Just Announced Sad News For Fans
Steak 'n Shake, the restaurant that made a name for itself serving hand dipped milkshakes and prime burgers, has seen its share of turmoil. And now, the company is facing even more adversity, as it becomes another victim of the COVID-19 pandemic.
Steak 'n Shake announced that it has permanently closed a total of 57 locations across the country; 51 of the restaurants were company-owned, and six were franchised. To offset losses caused by coronavirus shutdowns, Steak 'n Shake's owner, Biglari Holdings, has also sold one restaurant to a franchisee, and 10 stores to its operating partners. The closures are the latest problems to hit the chain, which has changed owners several times. At this time, the locations of the shuttered restaurants have not been announced.
The company explained what prompted the restaurant's slowdown in its quarterly report, saying, "Most of our restaurant dining rooms were closed by March 17, 2020 with the remainder closing before the end of the first quarter because of the COVID-19 pandemic. In addition, as of March 31, 2020, 62 of the 306 company-operated stores were temporarily closed. As of March 31, 2019, 44 of the 408 company-operated stores were temporarily closed."
The report further explained, "The COVID-19 pandemic has adversely affected our operations and financial results. During the first quarter, we closed the dining rooms in all our restaurants. However, most of our restaurants remained open with limited operations such as takeout, drive-through, and delivery. However, the COVID-19 pandemic could cause disruptions to our supply chain. Moreover, we cannot predict how the outbreak of COVID-19 will alter the future demand of our products."
Steak 'n Shake founder was dedicated to his restaurant
Steak 'n Shake was born in Normal, Illinois, after its founder Gus Belt decided to abandon his idea of opening a fried chicken and beer restaurant next to a gas station. Belt's idea was simple: To serve freshly ground burgers made of steak to his guests. To drive home the quality of his burgers, he would wait until the dining area was full before pushing a barrel full of T-bones, sirloins, and round steaks across the room. Belt would then start grinding the meat in front of his customers to make his famous Steakburgers (via Restaurant News).
Pushing a wheelbarrow with steak through a crowded restaurant wasn't the only thing Belt did. He created an open kitchen so customers could also watch their Steakburgers being cooked, and for this he coined the motto, "In Sight It Must Be Right." Belt also liked going through his customer's discards to find out what they weren't eating, and to use this insight to tweak his menu (via Mental Floss).
Belt stayed at the helm of his restaurant until he passed away in 1954 and left Steak 'n Shake to his wife Edith, who operated the chain until 1969, when she sold her stake to Longchamps for $17 million, which had visions of turning Steak 'n Shake into a fast food restaurant. The brand changed hands again in 1971 when it was sold to Franklin Corporation, and under their stewardship the chain grew to 130 locations across the country by 1975 (via Restaurant News).
What will Steak 'n Shake's future be post-pandemic?
The chain went back to its roots after a new owner, E. W. Kelley and Associates, took over the chain in 1981. The New York Times reports that at the time, the group was known for buying up underperforming companies and trying to fix them up. According to Mental Floss, Group head Ed Kelley, who is something of a legend in the food industry for his work on legends like Tang, Klondike Bars, Cool Whip, and Grey Poupon, is also credited for revitalizing the restaurant around at the turn of the 21st century, before he passed away in 2003 (via Restaurant News).
Steak 'n Shake has definitely seen better days. The restaurant that inspired the birth of Shake Shack is nowhere near as successful as its upstart competitor is today. The brand's current owner, Biglari Holdings, says the chain's lackluster performance in 2019 was a "drag" on its overall results, and that its numbers in the last three years have gone from bad to worse. "Net sales decreased by $60,903 or 36.8 percent during first quarter 2020 compared to 2019. Franchise royalties and fees decreased by $1,443 or 21.7 percent during 2020 compared to 2019," the quarterly report stated.
It remains to be seen whether the holding company is able to save the brand the way Ed Kelley did decades before. There are currently 306 company-operated stores, 39 franchise-partner stores, and 208 traditional franchises.