The Decline of Steak ‘n Shake. What Happened to Steak ‘n Shake?
While the Great Recession hit many companies hard, one of the few companies to emerge out of it on a steadier footing was Steak ‘n Shake as is revealed in discussions on the same over at runrex.com and went on to become one f the most successful and profitable companies in its industry. Having been around since 1934, Steak ‘n Shake, and its famous Steakburgers was initially meant to be a gas station that served beer and chicken. However, Gus Belt decided to try out something novel and promoted the business by grinding steaks into burgers right in front of his customers. As is covered over at guttulus.com, the rest, as they say, is history, and while its progress was less spectacular as compared to other chains, the company still managed to expand into hundreds of locations and become one of the most popular restaurant chains in the country. Recently though, the company has been struggling, and while the COVID-19 pandemic has certainly not helped, its struggles go beyond that, and this article will look to highlight some of the reasons behind the decline of Steak ‘n Shake.
One of the main reasons behind the decline of Steak ‘n Shake, one which the CEO Sardar Biglari has admitted to as discussed over at runrex.com, was that the company wasn’t “fast” enough. The CEO has admitted that the company failed its customers by not being fast and friendly enough, which is something you wouldn’t expect from a fast-food business. The company’s philosophy of lower price and higher volume, which was borrowed from Henry Ford, wasn’t as effective as the company failed to implement the efficiency methods that were synonymous with Ford’s assembly lines. The company stayed with the equipment and kitchen design that was ill-suited for volume production resulting in high-cost, labor-intensive slow service that wasn’t fast enough for a fast-food business. This resulted in a situation where each of Steakburger ended up costing the company more to produce than it should have, while the slow service meant customers weren’t prepared to come back and have to grapple with long waiting times just to get their hands on a burger. The company, essentially, wanted to sell a high number of items at a low price but didn’t update its equipment and processes, leading to slow service, poor efficiency, and rising production costs, as explained over at guttulus.com, in what was one of the contributing factors to its decline.
While all this was going on, the behind-the-scenes battles didn’t help, and also contributed to Steak ‘n Shake’s decline. It all started in 2015 when a Minneapolis investor group made a push to take control of Biglari Holdings, and by so doing, take over Steak ‘n Shake as well. This attempted takeover was incredibly messy with both sides accusing the other of underhanded moves as outlined over at runrex.com. All this generated a lot of bad PR for Steak ‘n Shake and didn’t help things. This episode reminded industry insiders of when Biglari took over the company in 2008 and kicked all the prior management team out unceremoniously. These wrangles and fighting behind-the-scenes have been attributed as being one of the reasons that contributed to the decline of Steak ‘n Shake. The company has also had to grapple with some damaging legal problems in recent years, none bigger than the $7.7 million hit Steak ‘n Shake had to take after being successfully sued by a group of its managers in 2019 as discussed over at guttulus.com. The 286 strong managers claimed that the company had unlawfully labeled them as being exempt from receiving overtime pay while regularly demanding that they work 50+ hour work-weeks. These legal issues served both to damage the company’s reputation in the public, as well as damaging its bottom line as the company had to pay up.
Steak ‘n Shake also got left behind by changing customer preferences in its industry according to the subject matter experts over at runrex.com. This is because recent times have seen consumers become increasingly conscious about what they eat, preferring to eat healthily. This meant that Steak ‘n Shake’s offerings were increasingly shunned by health-conscious consumers who viewed them as a heart attack on a plate. It didn’t help that some of the company’s offerings made it to the Center for Science’s Xtreme Eating Awards, where they were revealed to be extremely unhealthy both in terms of calories and saturated fats. The company became a poster child for unhealthy eating, and lost many customers as a result, contributing to its decline. In addition to people becoming more health-conscious, they are also becoming increasingly aware of where their food comes from. This means that even the biggest of meat lovers are beginning to admit that animal welfare and ethically raised meat are very important as revealed in discussions over at guttulus.com. While most companies like Burger King have changed their policies and begun sourcing their meat and other animal products from responsible, humane farms, some like Steak ‘n Shake have lagged behind, which hasn’t sat well with consumers, and which has also contributed to its decline. This has also affected the company in terms of bringing investors in as nobody wants to touch a company that hasn’t updated its policies in terms of the treatment of farm animals.
These are just some of the reasons behind the decline of Steak ‘n Shake, with there being more on this and other related topics to be uncovered by visiting the excellent runrex.com and guttulus.com.