If you are an entrepreneur looking to invest in a fast-food restaurant chain, then Steak ‘n Shake must have crossed your mind.
And if you are wondering how much a Steak ‘n Shake franchise owner makes, then this guide is for you!
Here we have covered all the information that you may need in order to invest in this franchise, including profit earnings, sales figures, payback period, etc.
About Steak ‘n Shake
Steak ‘n Shake is an American quick-service restaurant known for its three premium items: steak burgers, milkshakes, and fries, and it was founded by Gus Belt in 1934 in Normal, Illinois.
Before starting Steak ‘n Shake, Gus used to own a gas station, and to make it more alluring to the customers, he thought of starting a small business alongside his gas station.
As such, he started offering Chicken, fries, and coleslaw to customers for 45 cents.
Eventually, he and his wife turned the gas station into a restaurant and named it Steak ‘n Shake, where Steak referred to their hallmark sandwich, and Shake referred to their milkshakes.
They have been serving wholesome food for over 85 years now and have expanded to over 550 restaurants in 28 states.
Steak’ N Shake offers franchising to individuals who have some experience in running a successful business.
It offers multiple types of franchise models and an exclusive franchise program that requires investment of only $10,000.
Sounds too good to be true? Keep on reading to find out what’s the drill.
((https://www.steaknshake.com/about-us/))
Steak ‘n Shake Franchise Key Investment Figure
| Franchise fee | $25,000 |
| Royalty fee | 5.5% |
| Marketing fee | 3.0% |
| Investment (mid-point) | $816,000 |
| Average sales | $1,346,000 |
| Minimum net worth | $1,500,000 |
| Minimum liquid capital | $500,000 |
Steak ‘n Shake Franchise Partner Program
Steak ‘n Shake offers a franchise partners program that requires only a $10,000 investment, and in return, the franchisee gets 50% of profits and ownership of the company.
However, since the company started offering this program in 2018, it has received over 35000 applications and only a few people have been selected.
Rumor has it that Steak ‘n Shake franchise Partner Program has an acceptance rate of only 1%.
Once you get accepted, you will have to complete a six-month training period. In the first year itself, you will receive 50% profit along with a guaranteed minimum salary of $100,000.
This might sound too good to be true, but with an acceptance rate of 1%, you would need a lot more than luck to get selected.
Apart from the Steak ‘n Shake franchise Partner Program, this company also offers various franchise models to invest in. Keep on reading to find out the investment amount that you will need for those.
Steak ‘n Shake Franchise Investment
You will need an investment of $815,626 on average to start a Steak ‘n Shake franchise.
However, here’s a list of different types of Steak ‘n Shake franchise models and the investment required to open them:
| Freestanding | $1,208,000 – $1,687,000 |
| Non-Traditional | $316,000 – $715,000 |
| Classic to QuickService | $155,970 – $344790 |
| In-line | $454,000 – $1,371,000 |
| Roadside | $705,000 – $1,199,497 |
How Much Does A Steak ‘n Shake Franchise Owner Make?
The revenue of each Steak ‘N Shake franchise, may vary based on the location of the franchise, operating expenses, staff members, etc.
However, as per the FDD, the Steak ‘n Shake franchise owner makes $1,346,332 in annual revenue on average. This number is based on the performance of 159 franchised restaurants operating in the year 2020.
Also, during this time, the least performing Steak ‘n Shake franchised outlets made $524,382 in annual revenue. Whereas the highest-performing outlets made $2,826,778 in annual revenue on average.
How Much Does Steak ‘n Shake Employee Earn?
The salary of a Steak ‘n Shake employee may vary based on their skills, position, department, location, etc.
However, as per Indeed, Steak N Shake pays its employees an hourly pay of approximately $8.87 per hour for an entry-level position, say of a Housekeeper, to $17.87 per hour for a higher-level position, say, a Closing Manager.
In annual terms, the average Steak N Shake pay ranges from $15,000 per year for Busser or Dishwasher to $90,000 per year for Software Engineer.
Pros & Cons Of Steak ‘n Shake Franchise
Pros Of Steak ‘n Shake Franchise
- Provides extensive training.
- Provides extensive on-going corporate support.
- Guaranteed $100,000 salary to new franchisee in the first year for Franchise Partner Program.
- Great marketing and advertisement strategies.
Cons Of Steak ‘n Shake Franchise
- Franchise Partner Program does not have 100% ownership rights.
- Not a passive investment opportunity.
- Low-profit margin.
- External Competition.
Steak ‘n Shake Franchise Average Revenue & Profit
For a traditional Steak ‘n Shake franchise, franchise owners make net sales of $1,346,332 a year on average.
The 30% adjusted EBITDA of Steak ‘n Shake corresponds to $397,168.
And since Steak ‘n Shake has not disclosed its COGS, rent, labor cost, etc.
After deducting all these expenses, we estimate that a Steak ‘n Shake franchise owner makes an average annual net profit of $200,000 per year corresponding to a 15% profit margin.
| Profit-and-loss | Amount ($) | As % of sales |
|---|---|---|
| Sales | $1,346,332 | 100% |
| COGS | $(336,583) | 25% |
| Rent | $(107,707) | |
| Labor | $(390,436) | 29% |
| Royalty + marketing fees | $(114,438) | 14.25% |
| Adjusted EBITDA | $397,168 | ~30% |
If we talk about the company itself then in the year 2020, Steak ‘n Shake made net loss of $24.6 million. And even in 2019 and 2018, it made losses of $6.6 million and $46.9 respectively.
Steak ‘n Shake Franchise Failure Rate
Let us have a look at the data shared in the table below to find out the failure rate of Steak ‘n Shake franchise.
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Traditional Franchised | 2018 | 173 | 173 | +12 |
| 2019 | 185 | 185 | -2 | |
| 2020 | 183 | 183 | -24 | |
| Company-Owned | 2018 | 412 | 412 | -2 |
| 2019 | 410 | 410 | -45 | |
| 2020 | 365 | 365 | -93 | |
| Total Outlets | 2018 | 585 | 595 | +10 |
| 2019 | 595 | 548 | -47 | |
| 2020 | 548 | 431 | -117 |
Steak ‘n Shake has been in decline over the last three years. Between 2018-2020, 24 franchise locations closed, and 97 company-operated locations closed.
The numbers are concerning and paint a negative picture of the company.
Steak ‘n Shake Franchise Payback Period
To determine the Steak ‘n Shake franchise payback period let us look at this numbers:
| AVERAGE INVESTMENT | $815,626 |
| AVERAGE REVENUE PER OWNER | $1,346,332 |
| AVERGAGE PROFIT PERCENTAGE | 15% |
| AVERGAGE PROFIT PER YEAR | $200,000 |
| AVERAGE PAYBACK PERIOD | 4 years |
PAYBACK PERIOD = TOTAL INVESTMENT / PROFIT PER YEAR
= 815626/200000 = 4.07 = 4 Years based on median
The average investment for a Steak ‘n Shake Franchise is $815,626.
With an average profit percentage of 15%, the average profit per year is $200,000.
This means that the average payback period for a Steak ‘n Shake Franchise is 4 years, and the total investment of $815,626 would be recovered within this period.
What Is Steak ‘n Shake Known For?
Steak’ N Shake is a fast food chain that is known for its quintessential steak burgers and a wide variety of milkshakes.
What differentiates Steak ‘n Shake from their fellow competitors is that they always serve premium quality, fresh and hygienic products to their customers.
In fact, to prove this point, the founder came up with the concept of the open kitchen, where the customers could see their meat being ground right in front of them.
Another point worth mentioning is that their meat includes no preservation, antibiotics, or hormones.
So if you have never been to Steak ‘n Shake then here are some popular items on their menu that you must try:
- Original Double’ n Cheese Steakburger.
- Bacon Cheese Fries.
- Classic Steak Frank.
- White Truffle Prime Steakburger.
- Frisco Melt.
- Jalapeno Crunch Steakburger.
- Patty Melt.
- Chicken Sandwich.
Is Steak ‘n Shake A Profitable Franchise?
Steak ‘n Shake is a profitable franchise to invest in, with franchise owners earning $200,000 a year on average in net profits for traditional restaurants.
Even if we talk about the Steak ‘n Shake franchise partner program, then eligible candidates earn a fixed $100,000 plus 50% net profits in the first year itself.
However, the Steak ‘n Shake company is a loss-making company, and there has been a constant decline in the revenue and profits of Steak ‘n Shake over the past three years.
Steak ‘n Shake Franchise Earning Potential
The earning potential of a Steak ‘n Shake franchise, is dependent on a number of factors.
Although most Steak ‘n Shake franchise owners make $200,000 in net sales on average, the top-performing outlets have made as much as $2,190,628 in net sales.
This indicates that there might be a potential to earn more amount of profit from this franchise.
Wrap Up
Now that we have discussed the details of the Steak ‘n Shake franchise, this is what we conclude:
The Steak ‘n Shake Franchise Partner Program, which requires an investment of only $10,000, is a great opportunity to invest in. However, it has an acceptance rate of only 1%, so the chances of you getting approved for this option are pretty weak.
But, there are other franchise models that Steak ‘n Shake offers that you can invest in and expect to make $200,000 in profits on average.
The only considerable issue with this company is that over the past few years, it has been declining and making a loss.
So you must talk to the franchisor and discuss the financials before you decide to invest in this franchise.
Read: Top 50 Franchise
Frequently Asked Question
What is the royalty and marketing fees for Steak 'n Shake franchise?
Steak ‘n Shake franchise charges a royalty fee of 5.5% of net sales and marketing fees of 3.0% of net sales.
What is the financial requirment to open a Steak 'n Shake franchise?
The candidate who is willing to start a Steak ‘n Shake franchise must have the following:
- Minimum net worth of $1,500,000.
- Minimum liquid capital of $500,000.
What is the intial franchise fee of Steak 'n Shake franchise?
The initial franchise fee of Steak ‘n Shake franchise is $25,000.
Amit Gupta is the founder of DrFranchises – a digital marketing agency that helps brands rank better on Google Maps through local SEO strategies. Amit has over 11 years of experience in digital marketing, SEO, email marketing, and social media marketing. He’s also the owner of multiple franchises and has helped countless brands achieve success online. When he’s not working, Amit can be found playing with his dog.