Steak ‘n Shake focuses on global expansion with new design concepts
that meet its customers’ and franchisees’ needs.
By Janice Hoppe-Spiers
With more than 600 locations in eight countries and counting, Steak ‘n Shake has its sights set on leading and dominating the premium burger and milkshake segment of the industry. “We believe we have an exceptional value proposition for our customers,” says Tom Murray, CFO of franchise operations. “If you look at the quality of our product – the fact that we cook everything to order, use cuts of steak to make our steakburgers and all of our shakes are hand-dipped – it’s just an amazing value.”
The original double ‘n cheese steakburger with fries is the Indianapolis, Ind.-based company’s most popular order. The meal is served up for just $3.99. Steak ‘n Shake’s shakes start at $2.99 for basic strawberry, vanilla and chocolate while its specialty shakes ring up at $3.69.
“Everyone likes the value and high-quality food,” Murray adds. “From the time of the recession in 2008 through 2016, on a cumulative basis we have generated 40 percent more same-store traffic. That’s an amazing growth trend.”
Steak ‘n Shake’s average unit volumes [AUVs] have grown from $1.4 million in 2008 to $1.9 million last year. The company began 
franchising in 1939, which was just five years after Gus Belt founded the company in Normal, Ill. From 1939 through 2010, Steak ‘n Shake opened 71 franchise units.
“That’s one per year,” Murray adds. “You can tell that over a 70-year period franchising wasn’t a strategy for the company. From 2010 through 2016 we opened 102 franchise units. Last year we added 29 units and this year we look to exceed that number. We are in growth mode both domestically and internationally. It’s an exciting time to be part of the brand.”
Steak ‘n Shake serves more than 150 million customers annually. “It’s just our business model to provide extraordinary quality and customer value, and we believe we can compete in any market,” Murray says.
As the company says, “There are two kinds of people in the world: people who love Steak ‘n Shake and people who don’t yet know Steak ‘n Shake.”
Designed to Suit
As the pioneers of premium steakburgers and milkshakes, Steak ‘n Shake says the company appeals to franchisees because it’s a proven and iconic brand. As a growing company, it offers franchisees a broad range of investment and design options.
Steak ‘n Shake is best known for classic full-service restaurants which are found throughout the Midwest and Southeast. Menu items are served 24/7 and the restaurants have a drive-thru for added convenience.
The company recently reduced the size of its classic, full-service restaurant prototype – which had been as large as 4,200 square feet – down to 3,000 square feet. The 3,000-square-foot locations will now be standard size unless a store is expected to produce much more than the average AUV.
“Last year, in our goal of trying to improve the return on investment for franchisees, we came up with a smaller, more-efficient full-service prototype,” Murray says. “We introduced it in the middle of last year and the first openings will be later this year. We took a hard look at ethe value-added from the additional space and how we could come up with a more efficient prototype where we wouldn’t lose many seats but tighten up the back of the house a bit.”
Steak ‘n Shake also recently expanded its concept to meet the demands of different parts of the country and non-traditional locations. For example, land and labor are generally more expensive on the west and east coasts, so the company has developed a freestanding counter service prototype. It has also developed a counter service concept for inline venues.
“We are growing through non-traditional venues like universities, airports and casinos, so the design is very flexible,” Murray adds. “With inline and non-traditional you have to be more flexible and work with the space you are given. We have been able to fit a Steak ‘n Shake anywhere on an efficient basis and it’s working well. We offer a lot of options to meet franchisees’ needs.”
Total Support
Steak ‘n Shake believes its systems and support are unmatched in the industry. “The amount of support we provide a franchisee is exceptional,” Murray says. “The goal of the Wings Team is to go in and train for a period before the opening and then during the opening,” Murray says. “Our openings are amazing; significant volume is done in the first week and it really stresses the operations. The Wings Team is there to help with that. The goal is that when they leave they have left behind the team well trained at a highly stressful time so they are able to run any station and run operations after they leave.”
The company assists franchisees from start to finish. Steak ‘n Shake is there from site selection and construction right up through turning it over to the location’s operations people. The company also provides operational assistance during the opening.
“Once the unit is open we have a team of franchise directors in the field who also visit the units,” Murray explains. “Each franchise director is assigned a certain number of franchisees and it’s their responsibility to go to the units and help improve operations by looking at labor scheduling, food cost and waste and any operational aspect of the restaurant. We place a very high priority on franchisee profitability and franchisee relations as we know those are critical to the success of our franchise system.”
Building a Franchise
Steak ‘n Shake always looks for franchisees with restaurant experience, but will partner with a business owner with no experience if they have already identified and designated someone to run the day-to-day operations. “We have to certify and approve of the person and be comfortable with their experience,” Murray says.
The company is looking to expand the brand throughout the country and has a mix of single-unit and multi-unit operators to meet its vision of becoming the leader in the premium burger and milkshake segment. “A single-unit operator is very appealing to us in that the operator will be extremely focused on the operations of that restaurant and the success of that restaurant,” Murray explains.
“We do have other operators who we value extremely who want a development agreement for a certain area,” he continues. “It really depends on what the franchisee is looking for in his or her investment into Steak ‘n Shake. If someone wants one Steak ‘n Shake in a particular area and that’s all they want, we encourage that because they will be 100 percent dedicated. On the other hand, there are some franchisees that want to open several units in certain areas of the country and we are happy to work with them if they have the wherewithal, financially and operationally, to be a multi-unit operator.”
Quality Partners
Every decision made at Steak ‘n Shake starts with the customer in mind. “That’s why it’s so important for us to live by the simple principle that we provide the highest-quality burgers and shakes at the lowest possible prices,” Murray says.
To ensure it is able to pass on savings to its customers, Steak ‘n Shake values vendors that think the same way. “We push our vendors hard and they really have to embrace that culture of being able to provide a low-cost product for us and then we can pass that on to the franchisee in the form of a lower investment, which is then passed onto the customer,” Murray explains. “We do have some very loyal and good vendors we work with, but every vendor gets evaluated constantly to be sure we get the best.”
Evolving to Convenience
As Steak ‘n Shake shows with its new design concepts, convenience is a necessity today in the restaurant industry. “How do we make it more convenient for the customer and improve speed of service?” Murray asks. “That’s really what everyone’s focused on these days. Self-ordering kiosks and tablets at the table are examples of that. We are constantly focused on improving the customer experience.”
When Steak ‘n Shake develops a new idea, it is generally tested in some of its 417 corporate-owned locations before being rolled out to its franchisees. “We implement something in our stores first to make sure we get the kinks out,” Murray says. “Because we own 417 of our own restaurants, we are not making systemwide decisions in a vacuum without skin in the game, which is an advantage to franchisees.”
Moving forward, Steak ‘n Shake will continue to focus on global brand expansion while adding conveniences for its customers. “We are seeing that this brand travels well and is resonating well outside the Midwest and even outside the U.S.,” Murray says.
