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Steak n’ Shake Franchises: Revenue, Costs & Profits (2023)

With close to 160 franchise stores across the US, Steak n’ Shake is fast growing and popular franchise opportunity in the quick-service restaurant space. We think there’s a good reason for that.

Indeed, whilst you would invest on average $288,000 to open a new franchised restaurant, one Steak n’ Shake makes on average $1,135,000 in sales per year…!

In this article we’re looking at how profitable is a Steak ‘n Shake franchise. To do that, we’ll look at how much you can earn using the latest Franchise Disclosure Document, and whether this is a good investment. Let’s dive in!

Key stats

Franchise fee$10,000
Royalty fee1.0%
Marketing fee10.0%
Investment (mid-point)$288,000
Average sales$1,135,000
Sales to investment ratio3.9x
Payback period*3-4 years
Minimum net worth$1,500,000
Minimum liquid capital$500,000
Source: Franchise Disclosure Document 2022
Steak n Shake franchise business plan template

Steak n Shake Franchise Business Plan

All the stats: startup costs, profits, breakeven, etc.

5-year financial projections built with the FDD

Excellent 4.8/5 based on 70 reviews

Excellent 4.8/5 based on 70 reviews

Steak ‘n Shake: an introduction

Steak ‘n Shake is a leading American casual food chain restaurant with 600+ stores in 28 states in the U.S., Europe, Saudi Arabia, and Qatar.

Headquartered in Normal, Illinois, Steak ‘n Shake was founded in 1934 by Gus Belt, who pioneered the concept of premium burgers and milkshakes.

The Steak ‘n Shake franchise started in 1939 with a limited number of franchises. Steak ‘n Shake started offering general franchises in 1991, and by 2020, it had 159 franchise locations in addition to the 272 company-operated Steak ‘n Shake restaurants in the US.

The Steak ‘n Shake franchise is a wholly-owned subsidiary of Biglari Holdings. It offers various forms of franchise restaurants, such as freestanding quick service, in-line quick service, non-traditional, and roadside.

Steak ‘n Shake franchising: pros and cons

The pros

As a new franchisee, you expect to reap some good benefits from your new investment. A Steak ‘n Shake franchise has the following advantages:

  • Corporate support: The Steak ‘n Shake franchise provides would-be franchisees with tremendous corporate support. New franchises can consult with the field operations manager and management development programs on how to smoothly manage franchise operations
  • Thorough training: Starting a franchise can be daunting, even if you already have experience in the field. Steak ‘n Shake offers extensive training to newly launched franchise managers to get them underway. You get quality on-the-job training about day-to-day operations as well as proprietary operations tools
  • Marketing and advertising support: Marketing forms an important part of a franchise’s plan to promote its products. Steak ‘n Shake employs a robust marketing and advertising strategy consisting of television commercials, price-driven discounts, print marketing, and building brand loyalty. This helps new franchises attract new customers without much spending
  • Great growth potential: operating a Steak ‘n’ Shake franchise offers great growth potential. Steak ‘n Shake is one of the fastest-growing casual fast-food chains in the United States, with over 600 locations across 20 states. It has plans to add another 1,000 stores to cover all the states
  • Guaranteed first-year income of $100,000: Not many franchisors can guarantee prospective franchisees a profit in their first year of operation. However, the Steak ‘n’ Shake franchise does. So as a new franchisee, you are assured of an income of $100,000 in your first year

The cons

Operating a Steak ‘n Shake franchise has the following drawbacks:

  • No full franchise ownership: The Steak ‘n Shake franchise operates on a franchise partnership basis. What this means is that you co-own the restaurant with the parent company. As such, you get 50% of the profits
  • Not a passive investment: The Steak ‘n Shake franchise requires that franchisees be involved in the day-to-day management of the franchise. This means that you must work full-time in the restaurant as a new franchisee
  • Low profitability: In recent years, the profits posted by the once vibrant chain store have not been so promising. This acts as a deterrent to interested franchisees
  • Competition: Steak ‘n Shake faces stiff competition from McDonald’s, Shake Shack, and Burger King. This is because customers are getting quality options and the culinary landscape is changing

How much does it cost to open a Steak ‘n Shake franchise?

As a franchisee, you would invest an average of $288,000 to open a Steak ‘n Shake franchise restaurant.

In addition to the initial franchise fee, you will also pay for other costs like: training expenses, site improvements, leasehold improvements, furniture, equipment, opening inventory and supplies, grand opening marketing expenses, etc.

Here’s a summary of the different costs you should pay for:

Type of ExpenditureAmount
Initial Franchise Fee$10,000
Formation costs$2,639 – $28,696
Operating expenses$152,458 – $381,961
Total$165,097 – $410,657
Source: FDD 2022
Steak n Shake franchise business plan template

Steak n Shake Franchise Business Plan

All the stats: startup costs, profits, breakeven, etc.

5-year financial projections built with the FDD

Excellent 4.8/5 based on 70 reviews

Excellent 4.8/5 based on 70 reviews

What’s the average revenue for a Steak ‘n Shake?

We estimate that a Steak ‘n Shake franchise makes $1,135,000 in sales per year on average

Note that the FDD doesn’t provide any information when it comes to the Average Unit Volume (AUV). Instead, we had to make assumptions as shown below.

Franchise royalties and fees$24,772,000$17,698,000$19,853,000
Royalty fee11.0%11.0%11.0%
Total revenue of all franchises$225,200,000$160,890,909$180,481,818
Number of franchises185183159
Source: Franchise Disclosure Document 2022

How profitable is a Steak ‘n Shake franchise?

We estimate that a Steak ‘n Shake franchise makes $204,000 in profits per year (18% EBITDA margin).

Note that Steak n’ Shake doesn’t provide any detailed information about the financial performance of its franchises in its latest Franchise Disclosure Document. Instead we had to make assumptions which we have summarized below.

Profit and lossAmount% revenue
Gross Profit$851,32975%
Royalty fee$(11,351)1%
Marketing fee$(113,511)10%
Other OpEx$(136,213)12%
Source: Estimates

What is the owner’s compensation?

We estimate that a Steak ‘n Shake franchisee can make up to $170,000 per year.

Here we assume the owner’s compensation is paid in dividends, out of net profits. Indeed, net profits are the profits available to be paid to shareholders and the franchisee once all expenses have been paid for. Of course, owners and franchisees often get a compensation both in the form of a salary and dividends.

Assuming a 10-15% net profit margin, here’s what we would obtain for the owner’s compensation:

Net profit10%15%
Owner’s compensation*$115,000$170,000
* Assuming paid out of dividends

Is a Steak ‘n Shake a good investment?

Despite being a profitable venture, assessing Steak ‘n Shake’s profits alone don’t tell us much about whether this is a good investment or not.

In order to answer this question, we need to look at the payback instead: the number of years it takes franchisees to recoup their original investment.

We estimate the average Steak ‘n Shake franchise has a 3-4 years payback. In other words, it takes 3 to 4 years on average for franchisees and their investors to recoup their investment.

Therefore, we consider Steak n’ Shake to be a very good investment from a financial perspective: the profit potential justifies the upfront investment.

Steak n Shake franchise business plan template

Steak n Shake Franchise Business Plan

All the stats: startup costs, profits, breakeven, etc.

5-year financial projections built with the FDD

Excellent 4.8/5 based on 70 reviews

Excellent 4.8/5 based on 70 reviews

How does Steak ‘n Shake compare vs. other franchises?

FranchiseInvestment ($)Sales ($)Payback (years)Min. net worth ($)Min. liquid capital ($)
Dunkin' Donuts,0001,056,5211.44.9500,000250,000
Krispy Kreme,0003,400,0004.11.62,000,000300,000
Little Caesars,022,850798,1130.88.5350,000150,000
Steak 'n Shake, Milshakes815,6261,346,3321.74.01,500,000500,000
Crumbl Cookies,2241,582,0903.12.1300,000150,000
Taco Bell,4131,650,0003.61.91,500,000750,000
Smoothie King,108573,2690.88.0300,000100,000
Jersey Mike's,3231,220,5862.14.7300,000100,000
Nothing Bundt Cakes,6501,307,2802.42.7600,000150,000
Jimmy John's,650874,8451.73.9300,00080,000
Texas Roadhouse,209,5002,955,5340.79.5n.a.200,000
Kung Fu Tea tea250,125353,2371.44.7n.a.25,000
Burger King,242,9501,215,9701.06.81,500,000500,000
Sonic Drive-In,467,0831,617,0001.16.01,000,000500,000
Panera Bread,290,5002,599,4321.15.97,500,0003,000,000
Pizza Hut,575906,9111.06.9700,000350,000
Dairy Queen Cream1,404,2201,143,1800.88.2750,000400,000
Jack in the Box,195,8001,755,5030.812.51,000,000250,000
Papa John’s,6951,101,1273.12.1750,000250,000
Five Guys,2251,203,3662.42.8500,000250,000
Carl’s Jr.,860,3351,419,5160.88.71,000,000500,000
Baskin-Robbins Cream465,100316,8150.79.8250,000125,000
Applebee’s American5,137,9662,356,9650.514.51,000,000500,000
Denny's American3,785,4591,639,5490.415.41,000,000500,000
Papa Murphy's,174580,4411.35.0275,000125,000
Auntie Anne's,692343,1351.55.6300,000100,000
Firehouse Subs,186888,3561.44.6350,000100,000
Tropical Smoothie Cafe,500961,9692.23.0350,000125,000
Marco’s Pizza,625895,5232.03.3400,000100,000
Cold Stone Creamery Cream310,956417,5881.35.0250,000100,000
Church’s Chicken,195,1471,395,0881.25.71,000,000300,000
Moe’s Southwest Grill,3701,013,3611.35.21,000,000100,000
Tim Hortons,242,7501,188,2401.07.0500,000100,000
Checkers & Rally's,8471,039,7731.25.4750,000250,000
Charleys Philly Steaks,806786,2331.54.3500,000100,000
Buffalo Wild Wings,546,9002,534,1480.79.31,500,000750,000
Rita's Ice Cream215,839248,3401.25.8300,000100,000
A&W Restaurants,750851,2121.16.2350,000150,000
Hungry Howie’s Pizza,682806,8991.93.5750,000200,000
McAlister’s Deli,424,9631,865,8611.35.11,000,000500,000
Round Table Pizza,2501,037,8161.35.0500,000200,000
Qdoba Mexican Eats,250972,9621.54.5
Taco John’s,119,0001,124,9801.06.61,000,000400,000
Scooter’s Coffee,143,250797,1010.79.6500,000200,000
Einstein Bros. Bagels,075885,0111.25.71,000,000536,500
Great American Cookies,275452,7711.25.7250,000100,000
Wienerschnitzel dogs873,300880,9801.06.6600,000250,000
Blaze Pizza,4501,096,4321.37.9500,000300,000
Wetzel's Pretzels,571748,8572.03.4300,00050,000
Pizza Ranch,268,3001,174,0880.418.61,000,000297,000
Del Taco,406,8501,345,3411.07.02,000,000500,000
Schlotzsky’s, Salads1,102,9331,053,3330.322.21,000,000300,000
Captain D’s,7781,067,8160.419.01,000,000350,000
Biggby Coffee,575648,3520.320.0300,000100,000
Which Wich,375281,8860.322.2500,000150,000
Marble Slab Creamery Cream407,360251,0520.416.7250,000100,000
Mountain Mike's Pizza,900865,7130.320.0300,000100,000
Huddle House,743712,4280.513.3600,000300,000
L&L Hawaiian Barbecue,350612,9210.333.3500,000150,000
Chicken Salad Chick, Salads651,0001,202,0200.320.0750,000250,000
Golden Chick,975917,6092.52.62,000,000425,000
Waba Grill,000466,5361.06.51,000,000250,000
Bruster’s Ice Cream Cream663,925466,6960.79.5375,000150,000

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