Indianapolis-headquartered Steak 'n Shake is changing the format of its stores to speed up service and reduce operational costs. The transition comes as the company lost more than $18 million last year.
The 85-year-old business has changed ownership a few times throughout its history. One consistent element has been the table service that separated it from other burger competitors.
Details in the annual report to shareholders made clear the ongoing financial distress, along with plans to try to revive the chain by switching from table to countertop service.
Indiana University Kelley School of Business associate professor of marketing Lopo Rego says Steak 'n Shake will have to find ways to continue to compete while redefining its customer experience.
“Now that’s one fewer differentiating point,” says Rego. “And is it gonna be just like all the other players in the category? And then consumers are going to start looking at – if there’s no table side service – is the food as good as the competition? Are they as quick? Are the locations as convenient?”
He says the changes are necessary, but management will need to communicate with customers.
“Everyone that has gone to Steak 'n Shake expects to see something, right? They might not value it as much as they did say ten years ago, but they still expect to see it there,” says Rego.
The change in service style will aim to reduce labor costs the company says are higher than its competitors. Purdue University associate professor Carl Behnke says labor costs are impacting the entire food industry and expects a big push for automation to adjust.
“Restaurants are being forced to evolve right now and my gut suspicion is that you know Steak 'n Shake ran into the evolution. Somehow they’re profit loss statement got pressured and they’re trying to make a change,” Behnke says.
The company says it temporarily closed more than 100 stores with plans to reopen most of the locations after converting them to counter service.
Rego says the other piece critical to the company returning to profit is having more franchise operations instead of the company operating most stores.
If you appreciate this kind of journalism on your local NPR station, please support it by donating at: https://wvpe.thankyou4caring.org/