Steak and shake franchise serves burgers and milkshakes. so we are going to see how to start a Steak and shake franchise in this post.
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Steak and shake franchise
Since its inception in 1934 in Normal, Illinois, Steak ‘n Shake has acquired significant brand strength and a devoted fanbase. Today, this 77-year-old iconic American brand, which pioneered the concept of quality Steak Burgers and hand-dipped milkshakes, has relaunched its franchising program.
And it is looking for single and multi-unit operators to help it develop its network of almost 500 QSR sites throughout 22 states.
Steak ‘n Shake offers potential franchisees a wide range of investment and best-in-class aesthetic design options, including Steak ‘n Shake Signature, a new smaller-footprint format well-suited for shopping centers, building on its current best-in-class string of 10 consecutive quarters of positive same-store sales growth despite the Great Recession.
Steak ‘n Shake Signature is a low-cost variant with a more straightforward operation.
Are you want to start and run a franchise without breaking the bank?
According to Steak ‘n Shake, anyone can own a restaurant for as little as $10,000. At first appearance, this appears to be a method to enter the franchise business without getting into debt or having half a million dollars in cash on hand.
But, as with any claim, you have to ask what the catch is.
Inside this franchise evaluation, I delved into all of the finer points and terms of this opportunity, so be sure to read all of the specifics and analysis below.
However, there is one caveat that I must tell you straight away: you will not own 100% of the Steak ‘n Shake business you manage. Instead, you’re referred to as a “franchise partner,” and you get 50% of the store’s revenues.
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About Steak and shake franchise
In February of 1934, Steak ‘n Shake opened its doors in Normal, Illinois. Gus Belt, the founder of Steak ‘n Shake, was the first to introduce the notion of premium burgers and milkshakes.
The company’s name has been a symbol of its history for over 75 years. Steakburger was the meaning of the term “steak.” Hand-dipped milkshakes were referred known as “shakes.”
Gus was adamant about serving the best burgers and shakes in town to his clients. To demonstrate the quality of his burgers, he would bring in a barrel of steaks (including round, sirloin, and T-bones) and ground the meat into burgers right in front of the customers. As a result, their iconic motto was born.
In Sight, It Must Be Right.
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 a 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.
You can collaborate with Steak ‘n Shake to open a restaurant with $10,000, a dream, and a strong work ethic. However, before joining the team, make sure you comprehend all of the finer points of the arrangement.
In the franchise review below, I go through the benefits and drawbacks of this unusual business opportunity.
Steak and shake franchise Fees
As previously stated, you do not control the whole Steak ‘n Shake business unit, but rather a section of it. However, the advantage of this structure is that you only need to invest $10,000 to begin your business.
These figures are merely a rough estimate of what you’ll need to get started with the franchise and may not include all of the additional fees.
Here’s a quick rundown of the basic financial criteria for a Steak ‘n Shake franchise. It’s also worth noting that, despite the fact that you’re starting a franchise, you’ll be deemed a “franchise partner” and will earn half of the revenues.
- Liquid Capital -$10,500
- Net Worth- $10,000
- Royalty Fee -5.5%
- Estimated Initial Investment -$672,000-$1,835,000
A more complete analysis of the costs and fees associated with partnering in a Steak ‘n Shake franchise can be found here. Keep in mind that the fees of setting up a franchise will vary based on the sort of business you choose.
There are a few different types of franchise sites that you will learn about later:
Steak and shake franchise Fee
- Initial Franchise Fee $25,000 $40,000
- Working Capital $15,000 $20,000
- Royalty Fee 5.5%
- Advertising Fee Not available
It’s vital to keep in mind that these are only the start-up expenditures for your firm. Additional costs that are not included in these figures may apply depending on the location or type of shop you intend to start.
Also, keep in mind that the franchise model you choose will have an impact on the quantity of money you spend.
Yearly Sales / Revenue Average
Each year, average sales and revenue fluctuate based on local demand, labor expenses, maintenance costs, promotion, commercial leasing rates, and other unique factors.
However, it is believed that the corporation generates $939,990,000 in annual revenue. Each unit earns an average of $1,027,000 for every systemwide sale.
There are 415 company-owned and 201 franchised Steak ‘n Shake locations.
In 1934, the restaurant opened in Normal, Illinois. The firm swiftly expanded after franchising in 1939. Steak ‘n Shake sold 173 franchised locations and 412 company-owned locations in 2017, it is up 17 percent from the previous year. In 2019, the restaurant had 568 total units, and also up 17 from the previous year.
How Much Profit Does a Steak ‘n Shake Franchise Makes?
The corporation has an annual revenue of $939,990,000 on average. In terms of per-unit sales, the system as a whole has a $1,027,000 average. Keep in mind that you are merely a “franchise partner” and do not receive 100% of the income.
You will earn a percentage of the revenues depending on the sort of franchise you open. The majority of the time, you’ll get half of the earnings.
Consider the following things
Sit-down, drive-thru, and front-window service are common at typical restaurant settings, resulting in a mix of fast-food to-go and diner-style sit-down service.
Many Steak ‘n Shake locations are open seven days a week, 24 hours a day. The menu focuses on burgers and hand-dipped milkshakes, but there are also additional meals, side dishes, and drinks to choose from.
Steak ‘n Shake offers a variety of franchise opportunities. In a typical location, there is a sit-down, hybrid service that offers both fast food and sit-down service. It serves an all-American menu of burgers, milkshakes, and other such dishes 24 hours a day, seven days a week.
Steak ‘n Shake is an American restaurant franchise with locations mostly in the Midwest. Although it is mostly found in the Midwest, it is also found in the Southern, Mid-Atlantic, and Western United States, as well as worldwide.
The proprietor of Steak ‘n Shake believes in the possibility of investing in a franchise without incurring significant debt or capital outlay. As a result, to franchise one of the locations, the franchisee simply needs $10,000 in liquid cash.
The corporation feels that aptitude and expertise are more significant than enormous sums of money, but a closer examination of the financial statement reveals that there are several other fees and charges not related to the initial investment.
The good news is that you do not need to have a net worth of more than a million dollars to qualify. Many famous brands need a large financial investment. Steak ‘n Shake, on the other hand, does not.
The Benefits of Steak ‘n Shake
There are several advantages to eating at this iconic Midwestern eatery. One of the most essential advantages of franchising is that the firm has successfully weathered all sorts of economic conditions.
Even amid the 2008 economic slump, Steak ‘n Shake increased its revenues from $268 million to $549 million. The All-American chain has doubled in size in the last decade, demonstrating its continued appeal.
There are still opportunities to expand in other states, despite the fact that over 600 units have already been constructed in twenty states.
Steak ‘n Shake is now looking to open 1,000 locations around the country in places where the franchise has not yet established itself.
The franchise has a devoted fanbase, mainly in the United States’ Midwest. It’s a mid-range, informal dining alternative that’s perfect for middle-class families seeking for a delicious dinner to share.
Steak burgers, thin and crispy french fries, milkshakes, and chilli are already popular among their dedicated fans, and their menu continues to expand as new trends and ideas emerge.
As a franchisee, you’ll be able to manage all areas of the 24-hour restaurant and achieve financial and professional success. In terms of money, you’ll get 50% of the restaurant’s revenues and a guaranteed $100,000 minimum wage in your first year.
As a franchise partner, you may reap the benefits of owning a business without entirely draining your bank account.
Another advantage of working with Steak ‘n Shake is the help and consultations you will receive from their Field Operations manager. It might be frightening to operate a restaurant for the first time.
Steak ‘n Shake alleviates this fear by advising you on day-to-day operations, delivering your initial training hours, including you in operating system training, and establishing Management Development Programs.
To guarantee your success, the Manager of Field Operations will give you with resources, such as meetings with seasoned staff and workers.
Their Operating Standards System, Manager-in-Training, and Management Development Programs are also included. You will have the multi-functional resources of the Steak n Shake Company working on your behalf through your Manager of Field Operations.
You’ll also have access to exclusive operations and administration tools, as well as a programme that guides new Operating Partners through the process of operating their first restaurant.
Marketing and advertising may be intimidating, especially if you’ve never worked in the field before. With television ads, price-driven reductions, print marketing, and brand loyalty building, Steak ‘n Shake makes breaking into this new region a lot simpler.
You don’t have to create your own marketing materials because it’s already been done for you.
Steak ‘n Shake has a demonstrated track record of attracting brand loyal customers with its entertaining, lighthearted approach to marketing language.
The guaranteed minimum $100,000 pay in your first year is one of the final and most exciting aspects of the Franchising Partner experience.
Many franchises cannot guarantee such a high level of income, but Steak ‘n Shake claims that even with only $10,000 in cash capital, you will be able to achieve these financial goals.
- Growth potential is enormous.
- Customer loyalty to the brand
- Marketing and advertising services were provided on an ongoing basis by the company.
- Thorough preparation is required.
- In your first year, you’ll be guaranteed a salary of $100,000.
Challenges in franchise business
The absence of 100 percent ownership of the business might be a problem. Despite overseeing 100% of the day-to-day operations, you are granted 50% of the earnings as a franchise partner.
However, if you check at the financial criteria, you’ll see that the little investment charge might compensate for certain operators’ lack of entire ownership.
Steak ‘n Shake appears to be franchising in the same way that Chick-fil-A does. After all, the “Chick-fil-A franchise” does not own the company. The proprietors are also the business’s operators.
One of the qualifications for being a Chick-fil-A partner is that the store you create must be actively operated and not utilised as a passive investment.
Another reason to be concerned about the Steak ‘n Shake firm is this. In recent years, the corporation has been losing a large amount of money.
For example, the franchise lost $4.6 million in 2020 and closed 70 stores in the previous two years. No company can expect to stay in business if it continues to lose money year after year.
- Not having complete control over your website.
- The franchise is looking for a manager (you) to take over the restaurant’s operations.
- You must work at Steak ‘n Shake and be involved in the day-to-day operations.
- This is not a low-risk, low-return investment.
- For the past few years, the firm has been losing money. This isn’t going to last.
Are You a Good Fit for the Steak ‘n Shake Franchise?
You must first determine whether or not you are competent and experienced enough to develop and run a franchise. Opening a business is no easy task, but Steak ‘n Shake might be the perfect way to get your feet wet as a business owner.
To determine if this is the correct business opportunity for you, ask yourself the following questions:
Are you able to liquidate your assets? This franchise, fortunately, just requires $10,000 in liquid money to get started. However, keep in mind that when you include in royalties and advertising fees, as well as construction and building maintenance costs, your investment will reach several hundred thousand dollars.
Are you qualified to lead this company? This position is for you if you have no other business ventures, restaurant management expertise, a dedication to excellent performance, and a love for customer care.
Another thing to think about is the place where you’ll be running. Ideally, you’ll be taking over an existing lucrative location. There will be additional risk involved with the site if you are requested to restart a business with no previous client base.
Make sure to do your own research and consider whether the place you’re being given is worthwhile.
Finally, are you open to owning a franchise in part? Only franchise partners are allowed in Steak ‘n Shake locations, which means you’ll get 50% of the revenues. This may appear to be unfair, yet it is actually a significant benefit for you.
While you will earn less money, your initial financial investment will be far smaller than that of other franchises. In addition, your first year’s earnings are guaranteed to be $100,000. Visit the official website to learn more about the Franchise Partner opportunity.