Steak ‘n Shake is undeniable Americana:
red and chrome 1950s diners with thick milkshakes and greasy Steakburgers. But
what’s the true cost of keeping those 1950s prices? Keep watching to find out.
Steak 'n Shake has its roots in the Midwest. The first restaurant was founded in 1934 in an
Illinois town fittingly called Normal. Since then, the franchise has exploded to hundreds
of locations, operating in the U.S., Europe, and the Middle East. These days, the restaurant offers
typical fast food options like burgers, fries, and chicken fingers, with many locations open 24/7.
Steak 'n Shake has one of the rare dining concepts that are good for both dine-in and
drive-thru service. The charming vintage atmosphere and hearty portions create the
sense that you’re eating more of a meal than you could at your typical fast food chain.
However, the price point remains just as low as those other establishments.
Steak 'n Shake’s famous $4 combo menu is its biggest draw. The offerings include 3
burger options, like the Double Steakburger and Bacon 'n Cheese Single Steakburger,
as well as the chicken fingers. You really can't beat getting a complete meal for less than $5.
Back in 2013, some Colorado customers were surprised to see that the discounted menu
items were listed at $5 apiece. Since it wasn't profitable for franchisees to sell meals for $4,
many locations entered into a dispute with owner Biglari Holdings. Some franchisees settled, but it
has definitely remained a point of contention. The meal deal is a major part of Steak 'n
Shake's national marketing, even though it might result in a financial loss on the company's end.
“Twenty four meals under four dollars, just like in 1934.”
“Four dollars was a lot in those days, that can’t be right!”
The entire Steak ‘n Shake menu is pretty no-nonsense. Burgers, milkshakes, fries,
hot dogs, and chili make up the bulk of their offerings, so there are very few core items that
the kitchen has to keep stocked at all times. They keep things interesting by offering tasty burger
toppings like garlic butter and caramelized onions, but the core items remain minimal.
It's definitely more profitable for a restaurant to streamline its menu, which cuts down the cost
of buying ingredients regularly. To make the various steaks and shakes, the company needs to
have several shelf-stable toppings on hand that it can buy in bulk. It doesn't need to load its
fridges with produce that spoils quickly. Steak ‘n Shake cuts down on food waste by
limiting perishable items and buying ingredients that can be used for several different meals.
While the ingredients are minimal, they’re also high quality. The burgers use a mix
of ground round, sirloin, and T-bone, while milkshakes use premium ice cream.
However, Steak 'n Shake's menu is also littered with more profitable items,
such as coffee and soda, which often have high mark-ups.
Another guaranteed money maker in the restaurant business is the kids menu — something that Steak
‘n Shake definitely works to its advantage. The chain offers an extensive kids menu containing
mini portions of regular menu items. The price point per menu item remains
between 4 and 5 dollars, with drinks included in the kids combos. However,
the significantly reduced portions are an easy way to increase profits.
Steak 'n Shake’s owner Biglari Holdings is an investment company worth $270 million.
Outside of Steak 'n Shake, it owns several profitable companies, allowing it to sustain
a typically unsustainable business model. Biglari has a wide range of businesses in its portfolio,
including the Western-Sizzlin restaurant group, the Maxim media company, Southern Oil Company,
and a few insurance businesses that contribute to its profit margin.
It's typical for major fast-food chains to be backed by corporations with diversified assets.
This backing allows the chain to offer competitive low-cost options. However,
this model is particularly crucial for Steak ‘n Shake, which rarely sells menu items over $10.
Like many fast-food companies, Steak 'n Shake is also saving money when it comes to worker wages.
Restaurant jobs are notorious for lighter paychecks, but it depends on what position
you hold at the business. Steak 'n Shake team members and cooks currently make
around $12.10 to $12.60 an hour, according to Indeed. If you're a shift manager, you
make a bit more — around $14.37 — and a general manager makes about $18 an hour. There are also
insurance benefits available for team members, which is a major expense on the company's side.
Steak 'n Shake is currently pivoting to a self-service model in an effort
to increase efficiency — especially in light of
the recent labor shortage. The company began implementing self-service kiosks,
cutting down on costs by minimizing the number of employees needed each shift.
In recent years, Steak 'n Shake has seemingly paired down its already simple
menu as well. Items can vary from location to location, but comparing menus from 2022 and 2018,
it’s clear that the current selection is significantly streamlined.
Back in 2018, Steak 'n Shake offered different sandwiches like grilled chicken or a turkey
club. It also had a salad menu, which has since disappeared entirely. The 2022 menu includes
very little outside of hot dogs, Steakburgers, and milkshakes, making for a simpler operation.
There is little room for error, and profits can remain comfortably the same.
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