How Much It Really Costs To Open A Steak 'N Shake Franchise
Do you fantasize about having your own franchise? Well, Steak 'n Shake parent company Biglari Holdings wants to make you King or Queen of your own Steakburger Kingdom for only about twice what the Washington Post says the average American spends on commuting to work each year. Truth be told, you wouldn't own that Steak 'n Shake outright, you'd just rule it. The $10,000 buy-in program, launched in 2018, gives would-be franchisees the opportunity to essentially buy partial ownership of existing company-owned Steak 'n Shake locations. Steak 'n Shake calls franchisees in this program "Franchise Partners."
What exactly does being a "Franchise Partner" get you? A six-month training program, a somewhat vague "robust franchise support system," 50% of your location's earnings, and "[u]nlimited earning potential" (via Steak 'n Shake). Doesn't seem too shabby considering buy-in Franchise Partners don't have to put up any of the cost of building the restaurant in the first place, though they do need to "oversee all aspects of the restaurant" in a "hands-on" manner. The $10,000 initial investment is significantly cheaper than, say, opening a Subway for between $139,500 and $341,000, and has far fewer barriers to entry than opening a McDonalds or a Burger King, which require franchisees to have a significant net worth and a whopping $1 million in liquid assets (via Delish).
Why is the Steak 'n Shake buy-in so low?
According to Sardar Biglari, CEO of Steak 'n Shake's parent company Biglari Holdings, the initial investment is so low compared to how much it really costs to open many franchises in order to open the door to cash-strapped entrepreneurs like Biglari once was. In 2018, Biglari stated, per QSR, that he "started [his] company with $15,000 and built a thriving enterprise," adding that he "want[ed] to provide an opportunity to other entrepreneurs who are highly motivated to excel but lack the financial means" and that what the company is looking for in Franchise Partners "is not great capital but great ability."
While that may give you the warm fuzzies, the Franchise Partner deal may not be the golden ticket it seems. For one thing, sales vary enormously at Steak 'n Shake locations (via VettedBiz). The brand has been struggling to stay open since before starting the buy-ins in 2018 and, according to Restaurant Business, nearly filed for bankruptcy in 2021.
However, QSR reported in February 2022 that Biglari's grand plan seemed to have turned things around for the burger vendor and that the low entry fee really was key to his vision. Steak 'n Shake's current plan relies on go-getter Franchise Partners to whip failing locations into shape. The aim of the lower-than-industry-average fee is to encourage energetic, hands-on management overhauls by providing hands-on managers a vested interest in the location's outcome. Receiving 50% of profits seems pretty vested from here.