Steak ‘n Shake Franchise In USA Cost, Profit, Wiki, How to Apply

Are you interested in opening and operating a franchise without breaking the bank? Steak ‘n Shake claims you can own a restaurant for a mere $10,000 investment. At first glance this looks like a way to get into the franchise game without going into debt or having half a million dollars in liquid capital available. But with any claim like this, you’ve got to wonder what’s the catch?

I dug into the all the little details and terms of this opportunity inside this franchise review so make sure to read all the details and analysis below. But one catch I need to point out right away is you won’t own 100% of the Steak ‘n Shake franchise you manage. Instead, you’re considered a “franchise partner” that receives 50% of the store profits.

In spite of this ownership distinction, Steak ‘n Shake still claims you’ll make $100,000 in your first year operating the business meaning you can expect a fast return on the initial investment. Based on my research, the income claim is legitimate. This is low-risk, high reward offer is compelling to anyone evaluating franchise opportunities, wants to be actively involved in the business, and looking for a solid income.

With $10,000, a dream, and strong work ethic, you can in fact partner with Steak ‘n Shake to operate a restaurant. But make sure you understand all the little details of this arrangement before joining the team. I explain the pros and cons of this uniquely structured restaurant opportunity in the franchise review below.

Table of Contents

Financial Requirements and Fees

See Also: Ghasitaram’s Sweets Franchise

As mentioned, you technically do not own the Steak ‘n Shake franchise unit outright, but rather a portion of it. The benefit to this structure, however, is that you only need to invest invest $10,000 into the opening of your outlet. These numbers only give you a general idea of what you need to start the franchise and may not include the all additional costs needed.

Here is a base overview of what the essential finance requirements are for a Steak ‘n Shake franchise. It is also important to remember that although you are opening a franchise, you are considered a “franchise partner” and will receive 50% of the store profits.

Fees/ Expenses	Amount Needed
Liquid Capital	$10,500
Net Worth	$10,000
Royalty Fee	5.5%
Estimated Initial Investment	$672,000-$1,835,000

Here is a more detailed breakdown of the costs and fees required to partner up in a Steak ‘n Shake franchise. Keep in mind that the site costs will vary depending on what type of franchise you open. There are a few kinds of franchise sites which you will find out about later on:

Fee	Low-End Costs	High-End Costs
Initial Franchise Fee	$25,000	$40,000
Working Capital	$15,000	$20,000

It is important to note that these are just the initial costs you’ll need to get your business started. There may also be additional fees that are not accounted for in these numbers that depend on the location or type of store you want to open. Also, take into consideration that the franchise model you open will influence the amount of money you’ll spend.

See Also: Master Shakes Franchise

Here is a breakdown of fees required of a Steak ‘n Shake franchise. Unfortunately, the costs of developing the franchise and maintaining it are not available to the public.

Type of Fee	Amount
Royalty Fee	5.5%
Advertising Fee	Not available

Average Sales / Revenue per Year

Average sales and revenue changes each year depending on local demand, costs of labor, maintenance costs, advertising, commercial lease rates, and other unique variables. However, it is estimated that the company makes a total of $939,990,000 each year. Per systemwide sales, each unit makes an average of $1,027,000.

Steak ‘n Shake consists of 415 company-owned outlets and 201 franchised outlets.

Franchise Facts

Total Units	600+
Incorporated Name:	Steak ‘n Shake Operations, Inc.
Franchising since:	1939
Industry:	Restaurant
Sub industry:	Fast Food

The restaurant was founded in Normal, Illinois, in 1934. Upon franchising in 1939, the company quickly began growing. In 2017, Steak ‘n Shake officially sold 173 franchised outlets and 412 company-owned outlets – a 17% increase from the year before. In 2019, the restaurant had a total of 568 total units, 17 restaurants more from 2018.

How Much Profit Does a Steak ‘n Shake Franchise Make Per Year?

As a whole, the company makes an average of $939,990,000 sales per year. In terms of per unit, systemwide sales are an average of $1,027,000. Remember – you are only a “franchise partner” and do not retain 100% of the profits. Depending on which type of franchise you open, you will receive a portion of the profits. Most often than not, you’ll obtain 50% of the profits.

See Also: HITACHI ATM Franchise

Things To Consider

Type of Franchise

Typical restaurant locations have sit-down, drive-thru and front-window service, resulting in a hybrid of fast-food to-go service and diner-style sit-down service. Many Steak ‘n Shake restaurants are open 24 hours a day, seven days per week. The menu features primarily burgers and hand-dipped milkshakes, though other entrees, side items, and drinks are also available.

Steak ‘n Shake has multiple kinds of franchises to invest in. The typical outlet has a sit-down, hybrid service that serves fast-food and sit-down service. It’s open 24 hours a day, seven days a week and offers an All-American menu of burgers, milkshakes, and other similar entrees.

Here are the floor plans that are available to you:

Classic Franchise: This design offers a theatre that showcases their famous made-to-order Steakburgers and hand-dipped milkshakes. There are opportunities to convert already-established buildings into classic franchises. The building size estimates between 3,315-3,800 square feet, including a drive-thru. The dining area includes 99 seats and is open 24 hours, seven days a week, with a full menu.

Limited Menu, In-Line Concept: This model is a less costly option for prospective franchisees. It has a simple operation and is centered around a smaller variety of menu options. There’s more rapid counter service, which is ideal for universities, shopping centers, and city centers. This in-line concept occupies 2,000-2,500 square feet, only has 40 seats, and may have a drive-thru.

Non-Traditional Franchise: This option provides a unique kind of restaurant experience. At only 500-800 square feet, it’s ideal for airports, train stations, plazas, casinos, and malls. The limited menu is ideal for a common seating area, such as a food court.

Location

See Also: Mithaas Franchise

Steak ‘n Shake is an American restaurant chain located primarily in the Midwestern United States. Although the Midwest is where it’s primarily located, there are also locations in the Southern, Mid-Atlantic, and Western United States as well as internationally.

Finance

The owner of Steak ‘n Shake believes in the opportunity to invest in a franchise without major debt or investment. That is why the franchisee only has to have liquid capital of $10,000 to franchise one of the sites.

The company believes that ability and skill is more important than large capital, however once you take a further look at the financial breakdown you can see that there are plenty of other fees and costs unassociated with the initial investment. The good news is, however, that you are not required to have a net worth of over a million dollars. Many popular franchises require a hefty amount in financial resources. Steak ‘n Shake, however, does not.

Advantages of Steak ‘n Shake

The popular Midwestern-focused restaurant has a lot of benefits. One of the most important benefits to franchising is that the company has withstood all types of economic circumstances without fail. For example, Steak ‘n Shake grew from $268 million in sales to $549 million in sales, even during the economic recession of 2008. In the past decade, the All-American chain has doubled in size, proving its popularity even further.

See Also: Punjabi Chaap Corner Franchise

With over 600 units already established in twenty states, there’s still potential to develop in other states. Right now, Steak ‘n Shake wants to open 1,000 units nationwide, in states that haven’t already been occupied by the franchise.

The franchise has a loyal following, primarily in the Midwestern United States. It is a mid-scale, casual dining option, ideal for middle class families looking for a great meal to enjoy together. The menu of steak burgers, thin and crispy french fries, milkshakes, and chili is already a popular choice amongst their loyal customers, and their menu continues to grow as new trends and ideas come into play.

As a franchise partner, you will be able to operate all aspects of the 24-hour restaurant and become successful both financially and career-wise. Financially, you’ll receive 50% of the restaurant profits as well as receive a guaranteed $100,000 minimum salary in your first year. Being a franchise partner means that you can reap the rewards of opening a franchise without completely emptying out your pockets.

Another benefit of partnering with Steak ‘n Shake is the support and consultations you have with their Field Operations manager. When you open a restaurant for the first time, it can be intimidating. Steak ‘n Shake eases this intimidation by consulting with you on day-to-day operations, providing your first training hours, engaging you in operating systems training as well as implementing Management Development Programs. The Manager of Field Operations will provide you with resources – such as meetings with seasoned staff and employees – to ensure your success.

You will also receive their Operating Standards System, Manager-in-Training and Management Development Programs. Through your Manager of Field Operations, you will have the multi-functional resources of the Steak n Shake Company working on your behalf. You even get proprietary operations and administration tools as well as a program that assists new Operating Partners in opening a restaurant for the first time.

SeeAlso: Tea Trails Franchise

Marketing and advertising can be daunting, especially if you have yet to dip your foot into that particular industry. Steak ‘n Shake makes this new territory easier with television commercials, price-driven discounts, print marketing, and building of brand loyalty. There’s no need for you to produce your own advertising materials – it’s already done for you. With their fun, light-hearted approach to marketing copy, Steak ‘n Shake is proven to draw in customers who are loyal to the brand.

One of the final and most exciting parts of the Franchising Partner experience is the guaranteed minimum $100,000 salary in your first year. Many franchises cannot guarantee such a significant income, yet Steak ‘n Shake promises you will reap these financial rewards despite only having $10,000 in liquid capital.

Main Advantages

Huge potential for growth
Loyal brand following
On-going corporate support
Provided Marketing and Advertising
Thorough training.
Guaranteed $100,000 salary in your first year.

Challenges of Steak ‘n Shake

A potential challenge is the lack of 100% ownership of the franchise. As a franchise partner, you are given 50% of the profits, despite running 100% of the day-to-day operations. If you look at the financial requirements, however, you will see that the small investment fee could make up for the lack of total ownership among some operators.

Steak ‘n Shake seems to be using a similar approach to franchising as Chick-fil-A. After all, Chic-fil-A franchise” doesn’t actually own their business. The owners are actually the operators of the business. One of the requirements of becoming a Chic-fil-A partner is you’ll need to actively operate the store you open and it can’t be used as a passive investment.

Here’s another reason you should be concerned about the Steak ‘n Shake company. The company has been losing a significant amount of money in recent years. For example, in 2020 the franchise lost $4.6 million and shuttered 70 locations over the past two years. No company can continue losing money year after year and expect to remain in business.

Main Challenges

See Also: House Of Cafe Franchise

Not having 100% ownership over your site.
The franchise wants a manager (you) to take over the operations of the restaurant.
You need to be working in the Steak ‘n Shake and involved in the day-to-day.
This is not a passive investment opportunity.
The company has been losing money for the past few years. This isn’t sustainable.

Is the Steak ‘n Shake Franchise Right for You?

In order to open and operate a franchise, you must ask yourself whether or not you are qualified and experienced enough to do so. Opening a business is no small feat, but Steak ‘n Shake may just be the right opportunity to get involved as a business owner. Ask yourself the following questions to see if this is the right business opportunity for you:

Do you have enough to liquid capital? Fortunately, this franchise only requires $10,000 of liquid capital to get started. Keep in mind, however, that if you consider royalty and advertising fees, development costs, and building maintenance that your investment will grow to several hundred thousand dollars.

Are you capable of running this business? If you have no additional business venture, restaurant management experience, commitment to high performance, and a passion for customer service, then this job is the right one for you.

Another thing you need to consider is what specific location you’ll be running. Ideally, you’ll be taking over a location that’s already profitable. If you’re being asked to reopen a store with no existing customer base, there’s going to be more risk associated with the location. Make sure to conduct your own due diligence and think about whether or not a location you’re being offered is worth it.

Finally, are you willing to partially own a franchise? Steak ‘n Shake restaurants only allow franchising partners, which means that you’ll gain 50% of the profits. This may seem unfair, and yet it is actually quite a good advantage for you. While you receive less profits, your initial financial investment is far lower than other franchises. As well as this, you are still guaranteed $100k in income during your first year. Learn more about the Franchise Partner opportunity here at the official website.