Steak 'N Shake Helps Boost Biglari Holdings' 4Q Earnings

Biglari Holdings Inc. reported Saturday a 28.3-percent increase in fourth-quarter net income, driven by traffic and same-store sales gains at its Steak 'n Shake chain.

San Antonio, Texas-based Biglari Holdings, which also owns the Western Sizzlin brand, reported net income for the fourth quarter ended Sept. 28 of $10.8 million, or $8.08 a share, compared with $8.4 million, or $6.26 a share, in the same quarter last year. Revenue for the quarter totaled $168.3 million, up from $164.4 million in the year-ago quarter.

Sardar Biglari, who is in a heated proxy battle for a seat on the board of Cracker Barrel Old Country Store Inc. of Lebanon, Tenn., also cited traffic increases at Steak 'n Shake in a letter to CBRL shareholders Friday, saying customer traffic had "increased a cumulative 28 percent" since he assumed control in 2009.

The flurry of letters from both sides intensified last week ahead of Cracker Barrel's Dec. 20 shareholders meeting.

Biglari did not address the Cracker Barrel efforts in his annual letter released Saturday to Biglari Holdings shareholders, but he did say Steak 'n Shake same-store sales were up 4.2 percent in the fourth quarter in addition to a 7.5-percent increase in the year-ago quarter. Customer traffic was up 4.8 percent, he said, compared with a 10.6-percent increase in the same quarter last year.

Biglari also said the company was ramping up efforts to franchise Steak 'n Shake and would open its first "Signature" unit, which relies on a more limited menu and counter-service format rather than table service. The first Signature unit is to open in New York City on Jan. 12, he said.

The new format, he added, may be more appealing to potential franchisees as it offers a less costly investment, smaller footprint and simpler operation "ideally suited to shopping centers."

The menu will focus on core menu items, like steak burgers and milk shakes, Biglari said.

"I believe Steak 'n Shake is a brand that will become global," Biglari wrote. "To speed this idea into reality, franchising becomes integral to our growth."

In the past 18 months, eight freestanding Steak 'n Shake units, which the company calls the "Classic," have opened with average annual revenue of $2.7 million, Biglari said.

Biglari Holdings currently has 490 Steak 'n Shake units, of which 413 are company operated, and 92 Western Sizzlin restaurants, five of which are company operated.

Contact Ron Ruggless at ronald.ruggless@penton.com.
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