Steak n Shake Keeps Expanding

Steak n Shake expects to open approximately nine company-owned and six franchised stores during fiscal 2008. The company will also rebuild two older units and remodel four to six units with an updated restaurant design that adds the historic winged logo to the building exterior.

As of Sept. 26, there were 491 Steak n Shake restaurants operating in 21 states, including 435 company-owned restaurants and 56 franchised units. The 2008 expansion plans will follow the opening of 16 new company-owned and six new franchise restaurants in 2007.

The changing economic conditions that are affecting all retailers was one of several causes cited by Steak n Shake's acting CEO and chairman, Alan Gilman, in the company's comments on its performance for the fourth quarter and year that ended Sept. 26. He said that the company was "clearly disappointed with the operating results" and called fiscal 2007 "a very challenging year for Steak n Shake related primarily to issues of store-level brand execution, compounded by a difficult on-going consumer environment." Gilman said that Steak n Shake's strategy for the coming year will be to focus on "simplifying business initiatives, intensifying the focus on field leadership and store-level execution, as well as critically reviewing the company's cost structure."

For the fourth quarter, Steak n Shake's revenues slipped to $151.1 million compared with $152 million in the fourth quarter of 2006, and same-store sales for company-owned location slipped by 3.9%. Diluted earnings per share of five cents, after a two-cent charge for one-time expenses, compared with 27 cents per share in the fourth quarter last year.Net earnings totaled $1.5 million in this year's fourth quarter, compared with $7.5 million in the fourth period a year ago.

For the year, the company's total revenues increased 2.4% to $654.1 million, and same-store sales for company-owned locations declined 3.8%. Full-year earnings totaled $11.8 million and 42 cents per share, compared with earnings of $1 per share and a total net of $28 million in 2006.

In August, Steak n Shake appointed a special committee of independent directors to examine strategic opportunities. The committee is working with Merrill Lynch & Co. as its financial adviser.