Steak n Shake has been pleasing people’s taste buds for almost a century with its unique Steakburgers and famous hand-dipped milkshakes. Since 1934, the brand has formed a memorable place in the busy world of fast food. Over the past few years, Steak n Shake has changed a lot, mainly focused on its franchising plan, to freshen up its presence and give new entrepreneurs a chance. The article offers details on the possibilities with the Steak n Shake business, explaining its advantages, monetary requirements, how to begin the application and its future prospects.

The brand remains popular because its figures are very good. By the end of March 2023, the company ran more than 490 locations across the United States and this is because it is recognized everywhere. Many locations are using or planning to use the company’s innovative “Franchise Partner” program which has a very low starting cost.

For example, the initial expense required by a regular franchise varies from $155,970 to more than $2.3 million, depending on what it is and the place it’s located in. It shows that the brand responds to different people’s business needs by scaling up in two ways. Typically, a Steak n Shake franchise restaurant that is a franchise middle sells $1.6 million annually, demonstrating the market’s profit potential.

Brief History & Brand Recognition

Steak n Shake Franchise

The beginning of Steak n Shake took place in Normal, Illinois, in February 1934 with Gus Belt as its founder. What made his vision special was offering premium burgers from steak and authentic handmade milkshakes.

He made his customers believe in the quality of the ingredients by bringing big barrels of steaks like T-bone, sirloin and round into the restaurant and then preparing them right in front of everyone. Because of the open way they worked, the company created the famous slogan, “In Sight, It Must Be Right,” meaning they prioritized quality and honesty.

Steak n Shake has always been recognized as an American diner with customary counter service and long-running late-night options. Many neighborhoods welcomed the bread-grilled pounds of hamburgers and mouth-watering milkshakes this restaurant offered.

In 2008, Sardar Biglari led Biglari Holdings which acquired Ruth’s Chris Steak House. Under Biglari’s guidance, the company has switched from a full-service restaurant to a much simpler quick-service version, placing more importance on customers using drive-thru and kiosks. As the franchise model evolves, interest in similar opportunities—like understanding the Amul Franchise Cost—has also grown among aspiring food entrepreneurs.

It has kept the main product offerings, but also responds to people’s new desire for fast and convenient services. Even with these changes in operation, the Steak n Shake brand is still well-known. Many people, whether they are families or young adults, enjoy its stylish look, focus on fresh food and unique dishes. The history and special products of the brand make it easier for franchisees to get their businesses started.

Why Consider a Steak n Shake Franchise?

Those who want to start a business may find several important benefits in becoming a Steak n Shake partner.

  • Low Entry Cost (for Franchise Partner Program): Many people become owners because the $10,000 start-up Min. Franchise Fee for the Franchise Partner program is much less than usual.
  • Established Brand & Recognition: Steak n Shake has built a strong reputation over many years and its name is famous. That keeps extra marketing costs low for people starting with the franchise.
  • Proven Business Model: Franchisees rely on successful operating systems, recipes, formulas for supply and service procedures that have been used for a long time.
  • Comprehensive Training & Support: Steak n Shake offers complete training over multiple weeks, mostly from local teams and equally supports you with payroll, accounting and other administrative services.
  • Turnkey Opportunity: With many franchises, franchisees can take over restaurants that are already in operation which makes the process less complicated and faster.

Understanding Steak n Shake's Unique Franchising Model

A. The "Franchise Partner" Program (The Game Changer)

Steak n Shake’s Franchise Partner, is perhaps the most singular aspect of Steak n Shake’s latest model of franchising tailored for owner-operators who are motivated to succeed, yet have limited capital.

  • What is It: The Franchise Partner program offers qualified people the opportunity to operate a Steak n Shake restaurant that is currently company-owned at a trivial cost of entry. In this model, the Franchise Partner will not own the real estate or the building; they are being given the right to operate the restaurant. This is largely viewed as a tactic by Biglari Holdings to transition company-owned opportunities into franchised units and hand-over the ongoing operation to committed owner-operators who care about the profitability of the unit. The existence of Steak n Shake’s location, brand, and equipment are provided to the Franchise Partner and it now becomes the responsibility of the Franchise Partner to handle the day-to-day operations, customer service, and local marketing.

Steak n Shake Franchise Partner Cost: The total investment into the Steak n Shake partner concept is a surprisingly low $10,000. Even though this is often referred to as an escrow deposit (which is 100% refundable), the $10,000 fee makes it indeed one of the most accessible restaurant franchises available in the industry. This very low cost greatly reduces the barriers to entry for prospective and current restaurant owners.

Franchise Partner Responsibilities: Franchise Partners are expected to be fully engaged in the daily operations of their restaurant. Some of these responsibilities include:

  • Full-Time, Hands-On Operation: This is a requirement, Franchise Partner owners are not absentee owners and must be personally involved in daily restaurant operational activities.
  • Managing all Lines of Business: This includes the drive-thru line of business, takeout, and third-party delivery.
  • Quality Control: This includes managing quality to ensure that customers are receiving the best quality Steakburgers and shakes, following brand product preparation and presentation standards.
  • Great Service: Providing patrons with great service and the best dining experience.

Steak n Shake Franchise Partner Profit: 

Profit sharing is an important aspect of it. Franchise Partners keep 50% of the money the restaurant makes from sales. Partners at Steak n Shake are offered opportunities to make significant income. Some state that in their first year as Franchise Partners, individuals will at least earn $100,000 which helps to ensure a strong start and financial assurance.

It has been estimated that Franchise Partners make $136,933 annually, with some ranking among the best making up to $297,243. At the same time, it’s true that earnings are not guaranteed, since some partners earn as few as $48,980. Being able to earn as much profit as possible is important to many, because higher profits for the business mean more rewards for the Franchise Partner. 

  • Steak n Shake Franchise Requirements for Franchise Partner:
    • Total Investment: $10,000 (as mentioned above).
    • Operational Commitment: Must be a full-time, hands-on operator with no other active ventures.
    • Training: Must complete a multi-week (or 6-month) on-the-job training and make a definite commitment.
    • Leadership & Passion: Proven success in past Business Leadership roles with demonstrated positive results, good to greatness is a passion, excellence defines you, high performance personifies you and a passion for richly creating superb guest service.
    • Servant Heart: A person who dedicates themselves to improving the lives of others, aligned with our customer service attitude.

B. Traditional Franchising (Single & Multi-Unit Options)

While the Franchise Partner program gets a lot of attention due to the low bar for entry, Steak n Shake has also always provided traditional franchising for individuals or groups wanting a more traditional ownership model which sometimes demands new builds or conversions.

  • Overview: Traditional franchising alternatives provide more traditional ownership of the café including potentially owning real estate or long-term leaseholds, also the capital outlay is significantly higher than the Franchise Partner program. The traditional model is generally appropriated for investors with operating experience as multi-unit operators or having access to substantial funding for setup. Steak n Shake has also traditionally offered a few franchise alternatives:
    • Classic to Quick-Service Conversion: One option is taking an existing classic diner and converting it to a more efficient quick-service.
    • Roadside Format: This format is designed for a busy roadside location where there is high traffic.
    • Non-Traditional: This is for smaller footprints catering to airports, universities, entertainment venues, or transport centres.
    • In-line Quick Service Format: This will be used for cafés located in shopping centres or in urban locations.
    • Freestanding Quick Service Format: This traditional freestanding restaurant format comes with a drive-thru capability.

Steak n Shake Franchise Cost (Traditional): The overall initial costs of a traditional Steak ’n Shake franchise will vary considerably depending on the format, location, and new build or conversion. The costs can be large amounts:

  • Overall Range: Approximately $155,970 to $2,340,385.
  • Specific Format Ranges (approximate):
    • Classic to Quick-Service Conversion: $155,970 to $344,790
    • Roadside Format: $705,000 to $1,199,497
    • Non-Traditional: $316,000 to $715,000
    • In-line Quick Service Format: $454,000 to $1,371,000
    • Freestanding Quick Service Format: $1,344,419 to $2,340,385

Steak ‘n Shake Franchise Fee (Traditional):  The stated franchise fee for a typical Steak ’n Shake franchise is $25,000. This is a one-time fee that goes to the franchisor for the right to use their name, trademarks, and operational system. For example, if an Area Development Agreement is in place, then a per unit deposit (like $20,000 to $25,000) plus a territory fee (for up to $20,000 as a per unit fee) may come into play and be credited toward each individual unit’s franchise fee. 

Financial Qualifications or Requirements (Traditional): The financial qualifications for a traditional Steak n Shake Franchise include some specific asset requirements (which show that the candidate has capital and liquidity):

  • Net Worth – For traditional kiosks, a minimum net worth of $1,000,000 (not inclusive of your primary residence).
  • Liquid Assets – Furthermore the candidate must have at least $500,000 in liquid assets (either cash or assets that are readily convertible to cash). These requirements show that franchisees have the financial strength to justify the substantial initial investment and cover the potential operating cash needs.

Deeper Dive into Costs & Fees (Across Both Models)

After the initial investment as well as the franchise costs, whether as Steak n Shake Franchise Partners or franchisees for traditional locations, will incur ongoing fees for the benefit of the system continuity, marketing and support infrastructure. 

A. Ongoing Fees

Royalty

Franchisees in either franchise model will likely pay an ongoing royalty fee. For Steak `n Shake, it is a typical fee of 5.5% of weekly gross receipts (i.e. gross sales). This fee compensates the franchise for the ongoing use of the brand name, proprietary systems, and support. 

Contribution of Advertising/Marketing Fund

Franchisees in traditional and non-traditional locations will pay some type of fee that may go toward the advertising or marketing fund to assist national and regional marketing strategies that affect the franchise system as a whole.

The percentage is slightly different across reporting sources for Steak `n Shake – some say 1% and others report a range of 1% – 4% of gross sales. The minor discrepancies involve some identifying a 1% of gross sales as a required advertising and marketing service fee, and others citing 3% of Gross Receipts weekly for marketing fees – (these fees may be waived for non-traditional franchises), and some state 4% of monthly gross sales.

Potential franchisees should obtain the most recently published Franchise Disclosure Document (FDD) to obtain the most up to date and accurate information.

B. Financial Performance & Transparency (Steak n Shake Franchise Profit)

To become a franchisee, it is very important to focus on how profitable the business could be. Even though Steak n Shake shares financial information in its FDD, these details should always be analyzed with the help of a financial counselor.

  • Average Unit Volume (AUV): Steak n Shake restaurants which are franchised, usually report an average gross sales amount of around $1.625 million to $1.63 million per year. Another estimation shows that the Average Revenue Per Unit is $1,233,146. Such figures indicate how much a typical unit earns in revenue.
  • Franchise Partner Profit Sharing: Franchise Partners take home 50% of the net profits that their restaurant earns. In the year 2020, many Franchise Partners made an average of $161,079 annually, but the best applicants might have exceeded $300,000. Franchise Partners are given at least $100,000 in the first year to give them a base for earnings.
  • Operating Profit Margins (Traditional): Traditional franchises with an operating margin of 15% could make $244,500 in EBITDA if their annual revenue is $1.63 million. Even though EBITDA is not the owner’s personal income, it indicates how much profit the business produces and, therefore, how much income dividends or draws may be.

The Application Process: How to Secure Your Steak ‘n Shake Franchise Opportunity

Becoming a Steak ‘n Shake franchisee or Franchise Partner means going through a routine process to make sure candidates suit the brand and are properly qualified. Although the process may change slightly, there is a basic structure that is used.

A.Initial Inquiry

Usually, the first thing to do is show your interest either through their official website (https://steaknshakefranchise.com/) or by contacting their franchise development team. Typically, you have to fill out an online form that includes your name and contact details and mentions which type of opportunity catches your eye (Franchise Partner or Traditional).

B. Financial Review.

Once an inquiry is made, interested people will receive a request to finish a detailed application. You will have to provide extensive information about yourself, your job and your finances for this application. For franchisees following traditional routes, the process requires seeing their detailed financial statements for checking net worth and liquid assets. Even though the initial cost is minimal for Franchise Partners, they must confirm they have enough personal resources to pay for day-to-day living.

C. Interviews:

Highly qualified people will usually go through several rounds of interviews. The interview process helps both employers and applicants find out if they are a good match. The company checks if the candidate understands the business world, leads effectively, feels strongly about the brand and fits the company culture.

The candidate can also take this chance to find out more about how the franchise works. Sometimes, interviews include the franchise development team, franchise operators and leaders within the organization.

D. Training Program:

Getting trained through Franchise Partners’ detailed program is very important for them. During the many weeks of hands-on training (mostly six months for Franchise Partners), participants get to learn all jobs in a Steak n Shake restaurant, focusing on food, serving customers, controlling inventories and managing the team. Using this hands-on style, franchisees are prepared with what is needed to successfully operate a fast food restaurant.

e. Foreign Direct Investment review

A copy of the Franchise Disclosure Document must be handed over to interested individuals 14 days prior to buying a franchise or committing any money. The FDD tells you important details about the franchisor, the franchise, the business’s past profits (Item 19), the cash required, regular expenses, duties and legal information. You should be sure to discuss the FDD with an attorney and a financial advisor before you make decisions.

F. Choosing and approving the Site (in Traditional).

Site selection and obtaining approval is one of the crucial stages for traditional franchisees. The fast food chain usually advises and approves location options after checking demographics, traffic patterns, visibility, accessibility and how much competition exists in the area. Often, Franchise Partners find this step easy as they buy over a business that has been running successfully for Orangetheory.

H. Signing the agreement.

When all the previous parts are done, every party is happy and due diligence is complete, the final action is the signing of the franchise agreement by both parties. The terms of the franchise arrangement are set out clearly in the document, including everything the franchise and franchisor can and cannot do, the time limit for the agreement, fees and the process for ending it.

What to Expect as a Steak n Shake Franchisee / Franchise Partner

Operating a Steak n Shake restaurant as either a traditional franchisee or a Franchise Partner is both a challenging and rewarding venture. Here are some key highlights for future operators: 

  • Hands-on business structures: Both franchise models are owner-operator based, especially the Franchise Partner model. This ultimately means you are involved in the day-to-day operations of the restaurant. That encompasses hiring and managing staff, overseeing food specifications and quality, working directly with customers, and achieving financial standards.
  • Rigorous training: Be prepared to go through an extensive training program that covers every aspect of the business. This training is essential for maintaining brand standards and keeping the business running smoothly.
  • Quality commitment: As a Steak n Shake restaurant, we take pride in our “Steakburgers” and hand-dipped shakes. Franchisees need to be committed to ensuring quality standards, and product specifications are followed and maintained.
  • Customer service focus: Customer service is vital. Expect to ensure a warm and friendly atmosphere that quickly addresses customer feedback (both good and bad).
  • Operational expectations: You are part of a proven system, where you are able to take advantage of Steak n Shake’s operational procedures, supply chain & delivery, and technology solutions (such as POS systems, and inventory management).

Pros and Cons of a Steak n Shake Franchise

Like all businesses, a Steak n Shake franchise has both pros and cons.

Pros:

  • Prestigious Branding: Take advantage of a nearly 90-year-old brand with memory-evoking nostalgia and a loyal customer base.
  • Product Differentiation: The “Steakburger” and hand-dipped shakes are products that separate Steak n Shake from most fast-food concepts.
  • Low Barrier to Entry (Franchise Partner): The Franchise Partner program has a very low entry point of $10,000, making it easy to get into direct ownership.
  • Profit Share (Franchise Partner): Franchise Partners share in the returns of the franchisee so other than purchase investment, the interest of the Partners is aligned with the franchisor as they both earn 50% of net profits, which could make for a lucrative income with the right position.
  • Full Operations & Training with Support: You get a set up to success through proven operations and training, and in addition to other operational support, there is ongoing marketing support.

Cons:

  • Intense Competition: Operating in a fiercely competitive fast-food/casual dining market with many established national businesses.
  • High Operating Demands: Restaurant businesses generally require a lot of hands-on support, lots of hours, and very detailed attention.
  • Profit Sharing Structure (Franchise Partner): It is very good to have somewhere you can invest less money, but you are also only getting 50% of net profits. Some people may not like to give up 50% of the revenue and may find it limiting in terms of ownership compared to traditional models. (Even though traditional models have substantially higher levels of investment).
  • No Other Business Interests (Franchise Partner): Franchise Partners are required to be without any other active business interests. This limits the ability to diversify. 
  • Dependence on the Franchisor: Although your franchisor will provide you support, the requirement for franchise owners to adhere to strict franchisor rules and policies can curtail entrepreneurial freedom.

Conclusion: Is Steak n Shake the Right "Shake" for Your Future?

The Franchise Partner program in the Steak ‘n Shake Franchise lets people who want to own a business take advantage of its benefits. The model makes it possible for most people to join the franchise by requiring only $10,000, better than other similar businesses, giving them the right to work with a famous American brand. Strong leaders in operations, a love for the brand and hands-on dedication to the business allow such franchisees to earn a lot because their success is closely tied to the franchisor’s.

Even so, people considering franchising should be sure to weigh the positives and negatives. Restaurants are busy workplaces that keep employees busy for many hours. Because the investment in this program is low, its users are required to share their earnings, as well as follow strict operating rules that stop them from opening further businesses. Unlike other options, traditional franchising gives owners a secure spot in the business, though it costs a lot to start up.

The final decision comes down to a person’s money, acceptance of risk, ability to run a restaurant and dedication to the business. You should carry out substantial research, examining the latest FDD and talking to professionals, as this is very necessary. If you prefer role-plays and see yourself injecting new energy into a famous restaurant, a Steak n Shake franchise can be a perfect pick for a future in the restaurant industry.

FAQs

How much money is expected from a Steak ‘n Shake Franchise Partner in the beginning?

The first cost for joining the Steak ‘n Shake Franchise Partner program is only $10,000.

How many profits does a Steak ‘n Shake Franchise Partner usually gain?

A portion of 50% of the restaurant’s net earning is given to Franchise Partners. Each year, it is reported that they earn an average of $136,933 and some partners earn as high as $297,000. As part of the offer, there is a guaranteed amount of $100,000 for the first year.

How much do you have to pay as ongoing fees to own a Steak ‘n Shake franchise?

Part of the ongoing fees earns the franchisor a 5.5% royalty in addition to an advertising/marketing fee of 1% to 4% of gross sales.

Is it possible to become a regular Steak ‘n Shake franchisee?

Besides the Franchise Partner program, Steak ‘n Shake also provides regular single-unit and multi-unit franchises that ask for a much bigger upfront investment of between $155,970 and $2.3 million.