What Are Operating Procedures of Steak n Shake Franchise
Considering a franchise opportunity with Steak 'n Shake? Understanding the operational model and financial commitments is crucial for your success. Discover what it takes to become a franchisee and explore our comprehensive Steak n Shake Franchise Business Plan Template to guide your investment.
| # | Operating Procedure | Description |
|---|---|---|
| 1 | Unit Conversion Model | Steak 'n Shake franchises are primarily established through the conversion of existing company-owned restaurants, with no new territories currently being offered for traditional development. This model focuses on transitioning operational control to franchise partners within established locations. |
| 2 | Franchisee Role | The franchise opportunity is designed for active, hands-on owner-operators who are deeply involved in the daily management and success of their unit. It is explicitly not positioned as a passive investment, requiring significant personal commitment to operational excellence. |
| 3 | Financial Partnership Structure | The franchise agreement involves a profit-sharing model where franchisees receive 50% of the unit's profits after all expenses and fees are paid. This structure, combined with a 5.5% royalty fee and a 10% marketing fee, distinguishes it from many traditional franchise models. |
| 4 | Application and Approval Process | Prospective franchisees undergo a rigorous application process, including financial vetting, interviews, and background checks, to ensure suitability for the brand's operational philosophy. The company meticulously reviews candidates to align them with specific available locations and market needs. |
| 5 | Investment Requirements | The initial investment for a Steak 'n Shake franchise ranges from $165,097 to $410,657, with a required cash investment of at least $10,000 and a net worth ranging from $500,000 to $1,000,000. These figures reflect the capital needed to take over and operate an existing unit. |
Key Takeaways
- Steak n Shake operates a unique franchise partnership model where the company owns the restaurant and equipment, and the franchisee manages the business for a share of the profits, differing from traditional franchising.
- The initial franchise fee is a low $10,000, significantly below the industry average, with the total investment ranging from $165,097 to $410,657, and a net worth requirement of $500,000 to $1,000,000.
- Franchisees pay up to 20% of gross sales in royalties and advertising fees (5.5% royalty, 10% marketing) and earn 50% of the remaining restaurant profits, with potential for annual incomes exceeding $100,000 for successful operators.
- The franchise training program is intensive and spans several months, including over 500 hours of hands-on experience, covering all operational aspects from food preparation to financial management.
- Prospective franchisees must be full-time, hands-on operators with impeccable credit, no bankruptcies, and sufficient liquidity to cover personal expenses during the unpaid 6-month training period.
- Available franchise locations are exclusively existing company-owned restaurants being converted to the partner model, primarily in the Midwest, South, and Mid-Atlantic regions.
- While the low initial investment is attractive, the high royalty and fee structure and the 50% profit split mean profitability is heavily dependent on the operator's management skills in controlling food and labor costs, with the average unit showing a negative gross profit margin according to the provided P&L data.
What Is The Steak n Shake Business Model?
The Steak 'n Shake business model, as of June 2025, operates as a franchise partnership program. This approach is designed as a more accessible alternative to traditional franchising. In this model, the corporation retains ownership of the restaurant and its equipment. The franchisee's role is to manage and operate the business. Their compensation is tied to a share of the profits generated by the restaurant.
Becoming a Steak n Shake franchisee under this program involves a fixed fee of $10,000 for the right to operate a single unit. This initial franchise fee is notably lower than the industry average, which often sits above $40,000 for similar opportunities. This lower entry cost is a significant factor for many aspiring entrepreneurs looking into a Steak n Shake franchise opportunity.
In exchange for this reduced initial investment, franchise partners agree to pay 15% of their gross receipts to the corporation as franchise royalties. An additional 5% of gross sales is allocated for advertising, bringing the total revenue share paid to the corporation to up to 20%. After these payments, the franchise partner earns 50% of the remaining restaurant profits. This structure aims to create a shared success framework for both the franchisor and the franchisee.
When considering a Steak n Shake franchise, understanding these financial arrangements is crucial. The total initial investment can range from $165,097 to $410,657, with the required cash often starting at $10,000. Prospective franchisees will also need to meet net worth requirements, typically between $500,000 and $1,000,000. The Steak n Shake franchise cost and requirements are detailed in their Franchise Disclosure Document (FDD).
The average annual revenue per unit is reported at $136,933, with a median of $128,383. However, revenue can vary significantly, with the lowest reported at $48,980 and the highest reaching $297,243. The breakeven time for a unit is typically around 12 months, with an investment payback estimated at 22 months. These figures provide a benchmark for assessing the potential profitability of a Steak n Shake franchise.
The franchise agreement details the operational standards and expectations. The franchise training program is designed to equip new owners with the necessary skills to manage their establishment. For those interested in how to open a Steak n Shake franchise, understanding the application process and the specifics of the franchise agreement details is essential for a successful launch.
Key Considerations for Aspiring Franchisees
- Low Entry Fee: The $10,000 franchise fee is a significant draw, making it more accessible than many other franchise opportunities.
- Profit Sharing Model: Understand the 50% profit share structure and how it balances with the 20% revenue share paid to the corporation.
- Investment Range: Be prepared for a total investment that can exceed $400,000, despite the low initial franchise fee.
- Operational Management: As the operator, your ability to manage daily operations will directly impact profitability.
The number of franchised units has seen a decline, from 183 in 2019 to 143 in 2021. Concurrently, company-owned units also decreased from 410 in 2019 to 272 in 2021. This shift in unit distribution is an important trend to consider when evaluating the current Steak n Shake franchise opportunity. For a comprehensive guide, exploring resources on How to Start a Steak n Shake Franchise in 7 Steps: Checklist can be beneficial.
How Much Does A Steak n Shake Franchise Cost?
When considering a Steak n Shake franchise opportunity, understanding the financial commitment is paramount. The Steak n Shake business model for new franchisees has a unique approach. Instead of building a new location, the franchise partnership program focuses on operating an existing company-owned restaurant. This significantly alters the typical franchise investment.
The primary financial outlay for this specific Steak n Shake franchise model is an initial, non-refundable franchise fee of $10,000. This fee grants you the rights to operate a previously established restaurant. It's important to note that this program bypasses the substantial real estate and construction costs often associated with Quick Service Restaurant (QSR) ventures. For perspective, building a new QSR location from the ground up can easily range from $15 million to $25 million, as of early 2025 estimates.
Beyond the franchise fee, prospective partners must also meet certain financial requirements. You'll need to demonstrate a minimum net worth of $10,000. Additionally, sufficient liquidity is necessary to cover your personal living expenses throughout the comprehensive training period, which is a critical component of the Steak n Shake franchise requirements. This ensures you can focus entirely on learning the business without financial strain.
Digging deeper into the financial figures from the latest Franchise Disclosure Document (FDD), the total initial investment for a Steak n Shake franchise can range from $165,097 on the low end to $410,657 on the high end. The required cash on hand also mirrors this range, from $10,000 to $410,657. The FDD also specifies a net worth requirement of $500,000 to $1,000,000, which is a crucial Steak n Shake franchise requirement to be aware of. While the initial franchise fee is $10,000, the overall financial preparedness is key for becoming a Steak n Shake franchisee.
For ongoing financial obligations, the royalty fee for a new unit is 5.5% of revenue, and the marketing fee is 10%. The average annual revenue per unit is reported at $136,933, with a median of $128,383. It’s worth noting that while the breakeven time is estimated at 12 months and investment payback at 22 months, the average annual revenue figures presented in the P&L table show a cost of goods sold (COGS) exceeding revenue, resulting in a negative gross profit margin of (17.6%). This highlights the importance of thoroughly understanding the Steak n Shake business model and its operational dynamics before committing to a Steak n Shake franchise agreement.
Tips for Evaluating the Steak 'n Shake Franchise Investment
- Understand the Unit Economics: Carefully review the provided P&L statements and revenue data to grasp the profitability potential and challenges.
- Assess Liquidity Needs: Ensure you have enough personal funds to cover living expenses during the training period, as this is a key franchise requirement.
- Compare to Industry Standards: Research average revenue and profitability for similar QSR franchises to benchmark your expectations.
- Review the Franchise Agreement Details: Pay close attention to royalty fees, marketing contributions, and any other ongoing financial obligations.
The number of franchised units has seen a decline, from 183 in 2019 to 143 in 2021, while corporate units have also decreased from 410 to 272 in the same period. This trend is important context when evaluating the Steak n Shake franchise opportunity. For a comprehensive understanding of the financial implications, it's advisable to explore What are the Pros and Cons of Owning a Steak 'n Shake Franchise?
Is A Steak n Shake Franchise Profitable?
The profitability of a Steak n Shake franchise hinges significantly on the operator's skill in managing costs and driving sales. While specific figures can vary widely, reports from late 2024 suggest that successful franchise partners can earn an average of over $100,000 annually. This income is directly tied to the restaurant's net profits, with the franchisee receiving 50% after all operating expenses and franchise fees—which can range up to 20% of gross sales for royalties and advertising—are accounted for. For instance, a unit achieving $15 million in annual sales and maintaining a 15% profit margin, equating to $225,000 in net profit, could yield a franchisee share of approximately $112,500.
The success rate for a Steak n Shake franchise is not uniform; it is heavily influenced by the specific location and the effectiveness of its management. The company has been strategically shifting towards a franchise partner model, a move designed to boost operator engagement and, in turn, enhance unit-level profitability. This strategy appears to be yielding positive results, with the company reporting improved performance in stores that have transitioned to this model throughout 2024.
Understanding the financial landscape for a Steak n Shake franchise involves looking at the investment and potential returns. The initial investment can range from $165,097 to $410,657, with a franchise fee of $10,000. The required cash on hand mirrors this range, from $10,000 up to $410,657, and a net worth of $500,000 to $1,000,000 is typically required. While the average annual revenue per unit was reported at $136,933 in the provided data, median revenue was $128,383, with the highest reaching $297,243. It's important to note that the provided P&L data indicates a negative gross profit margin of (17.6%) based on average revenue and cost of goods sold, which highlights the critical importance of efficient operations and sales volume. For a deeper dive into potential earnings, explore How Much Does a Steak 'n Shake Franchise Owner Make?
Key Considerations for Steak n Shake Franchisees
- Operational Efficiency is Paramount: Given the reported gross profit margins, meticulous cost control and efficient inventory management are crucial for achieving profitability.
- Sales Volume Drives Income: The franchisee's income is directly proportional to the net profit generated, making strategies to maximize sales a top priority.
- Location Matters: The success rate can vary significantly by location; thorough market research is essential before committing to a specific site.
- Understand Fee Structures: Be aware of the total fees, including royalties and marketing, which can amount to up to 20% of gross sales.
The Steak n Shake franchise business model has seen shifts, with a decrease in franchised units from 183 in 2019 to 143 in 2021, alongside a reduction in corporate-owned units. This trend suggests a strategic refocusing on the franchise partner model to potentially improve overall system performance.
Operating Procedure To A Steak N Shake Franchise Unit
What are the requirements for a Steak n Shake franchise?
To become a Steak n Shake franchisee, the core requirement is a commitment to being a full-time, hands-on operator. This is not a passive investment; you must dedicate your entire professional time to managing your single restaurant unit.
Financially, the initial franchise fee is $10,000. Beyond this, candidates need impeccable credit, no history of bankruptcies, and sufficient personal liquidity to support themselves through the 6-month, unpaid training period. The cash required can range from $10,000 up to $410,657, with a required net worth between $500,000 and $1,000,000.
A proven track record of leadership is essential, ideally with at least two years of restaurant or retail management experience. This demonstrates your capability to oversee all facets of the Steak n Shake business model.
How to open a Steak n Shake franchise?
The journey to opening a Steak n Shake franchise begins with completing the franchise application process on their official website. This initial step gathers fundamental details about your financial standing and management background.
If you meet the preliminary criteria, you'll enter a multi-stage vetting process. This includes interviews, background checks, and a thorough review of your financial and professional history. This comprehensive evaluation can take several months to complete.
Upon successful approval, the final stages involve signing the Steak n Shake franchise agreement, submitting the $10,000 franchise fee, and commencing the mandatory, intensive Steak n Shake franchise training program. For a detailed breakdown of the steps involved, you can refer to How to Start a Steak n Shake Franchise in 7 Steps: Checklist.
Key Considerations for Aspiring Franchisees
- Operator Commitment: The Steak n Shake business model heavily relies on the owner being actively involved in daily operations.
- Financial Readiness: Ensure you have the necessary capital for the initial investment and enough liquidity to cover personal expenses during the unpaid training. The total initial investment can range from $165,097 to $410,657.
- Management Experience: A strong background in restaurant or retail management is crucial for demonstrating your ability to run a successful unit.
| Initial Investment Range | $165,097 - $410,657 |
| Franchise Fee | $10,000 |
| Net Worth Requirement | $500,000 - $1,000,000 |
| Royalty Fee | 5.5% of revenue |
| Marketing Fee | 10% of revenue |
| Breakeven Time | Approximately 12 Months |
Operating Procedure To A Steak N Shake Franchise Unit
What does the franchise training program cover?
Becoming a franchisee involves a robust training program designed to equip you with the skills needed to run a successful restaurant. This intensive, multi-month curriculum covers all facets of restaurant operations. You'll delve into everything from precise food preparation and maintaining strict quality control standards to mastering customer service protocols. Financial management is a cornerstone, with in-depth education on reading profit and loss statements, effective inventory control, and managing labor costs. You'll also become proficient in using the brand's proprietary point-of-sale and back-office software systems. A significant emphasis, projected at over 500 hours in 2025, is placed on hands-on, in-restaurant experience. This ensures you're fully prepared to lead your team and navigate the daily realities of the business.
What are the Steak n Shake franchise fees?
The initial commitment for a Steak n Shake franchise opportunity begins with a $10,000 franchise fee. This fee is paid upon signing the franchise agreement and is non-refundable, securing your right to operate a single restaurant. Beyond the initial fee, you'll be responsible for ongoing royalty and service fees. These fees collectively amount to up to 15% of the restaurant's gross weekly receipts. It's important to note that this percentage is higher than the typical Quick Service Restaurant (QSR) industry average, which often falls between 4% and 8%. Additionally, franchisees are required to contribute up to 5% of gross sales to a national and local advertising fund. This fund supports brand-wide marketing initiatives and promotional campaigns.
Franchise Fee Breakdown and Benchmarks
| Initial Franchise Fee | $10,000 |
| Royalty Fee (as per FDD) | 5.5% of gross weekly receipts |
| Marketing Fee (as per FDD) | 10% of gross sales |
| Typical QSR Royalty Average | 4-8% |
Understanding these fees is crucial when evaluating the Steak n Shake business model. While the initial fee is modest, the ongoing royalty and marketing contributions are significant factors in your overall operational costs and potential profitability.
Key Considerations for Aspiring Franchisees
- Training Intensity: Be prepared for a comprehensive, multi-month training program that requires full immersion in restaurant operations.
- Financial Management: Strong financial acumen is essential, as you'll be responsible for detailed profit and loss tracking, inventory, and labor costs.
- Ongoing Fees: Factor in the 15% royalty and service fee, as well as the 5% marketing contribution, when projecting your business's financial performance.
- Hands-On Experience: The significant hands-on training component means you'll be actively involved in the day-to-day management of the restaurant.
For those considering different paths in the restaurant industry, exploring options is always wise. You might want to look into What Are Some Alternatives to the Steak 'n Shake Franchise?
Investment and Revenue Insights
| Low Initial Investment (FDD) | $165,097 |
| High Initial Investment (FDD) | $410,657 |
| Cash Required (FDD) | $10,000 - $410,657 |
| Net Worth Required (FDD) | $500,000 - $1,000,000 |
| Average Annual Revenue per Unit (FDD) | $136,933 |
| Median Annual Revenue per Unit (FDD) | $128,383 |
The Steak n Shake franchise opportunity presents a detailed operational procedure and a specific fee structure. Understanding these elements is vital for anyone looking to become a Steak n Shake franchisee and assess the overall Steak n Shake franchise cost and potential Steak n Shake franchise profitability.
Operating Procedure To A Steak N Shake Franchise Unit
Understanding the operational framework of a franchise is crucial for any aspiring franchisee. The Steak 'n Shake franchise model establishes a clear partnership structure designed to define responsibilities and revenue sharing.
What are the Steak n Shake franchise agreement details?
The Steak 'n Shake franchise agreement outlines a partnership where the franchisee operates as an independent contractor responsible for the day-to-day management of the restaurant. Importantly, Steak 'n Shake retains ownership of the building, land, and equipment. This unique arrangement means the franchisee's role is primarily focused on operational execution and staff management. The agreement details a profit-sharing structure: the franchise partner earns 50% of the restaurant's monthly operating profit after all expenses and corporate fees are deducted. This model creates a direct incentive for the franchisee to maximize profitability. The term of the agreement is typically long-term, but it includes specific clauses that allow the franchisor to terminate the agreement if the operator fails to meet defined performance metrics, operational standards, or financial obligations. These are critical details to review thoroughly, as outlined in the What are the Pros and Cons of Owning a Steak 'n Shake Franchise?
What is the Steak n Shake franchise owner income potential?
The income potential for a Steak 'n Shake franchise owner is directly correlated with the performance of their individual unit. The 50/50 profit split model is designed to be highly motivating. For top-performing partners in 2024, annual incomes were reported to exceed $200,000.
As of early 2025, average annual sales for a Steak 'n Shake location are estimated to be between $12 million and $18 million. If we consider a location with $15 million in sales and a hypothetical 12% net profit margin, the restaurant's profit would be $1.8 million. Under the 50/50 split, the franchise partner's income would be $900,000. However, it's vital to remember that profitability is significantly influenced by the operator's skill in managing key costs. Food costs typically range from 28-32% of sales, and labor costs usually fall between 25-30% of sales. Effective management of these areas can substantially increase the owner's take-home pay.
| Key Financial Metric | Benchmark |
| Initial Investment Range | $165,097 to $410,657 |
| Franchise Fee | $10,000 |
| Royalty Fee (New Unit) | 5.5% of sales |
| Marketing Fee | 10% of sales |
| Net Worth Requirement | $500,000 - $1,000,000 |
| Financial Performance | Data |
| Average Annual Revenue per Unit (2021) | $136,933 |
| Median Annual Revenue per Unit (2021) | $128,383 |
| Lowest Annual Revenue per Unit (2021) | $48,980 |
| Highest Annual Revenue per Unit (2021) | $297,243 |
| Breakeven Time | 12 Months |
| Investment Payback | 22 Months |
Tips for Maximizing Franchise Owner Income
- Focus on efficient inventory management to keep food costs within the target 28-32% range.
- Optimize staffing levels to control labor costs, aiming for the 25-30% of sales benchmark.
- Continuously monitor customer feedback and operational efficiency to drive sales volume.
- Leverage the franchisor's marketing support while also exploring local marketing opportunities.
Operating Procedure To A Steak N Shake Franchise Unit
When considering a steak n shake franchise opportunity, understanding the existing franchise locations is crucial. As of June 2025, the steak n shake business model focuses on transitioning existing company-owned restaurants to franchise partners. This means there are no new territories being offered for traditional development. Instead, the company identifies specific corporate stores for conversion. These available locations are primarily concentrated in the Midwest, South, and Mid-Atlantic regions of the USA. Prospective franchisees should inquire about available locations during the application process, as the final placement is determined by steak n shake based on their operational needs and your suitability for a particular market.
Where are Steak n Shake franchise locations available?
- Available steak n shake franchise locations are exclusively existing company-owned restaurants being transitioned to the franchise partner model.
- No new territories are offered for traditional development.
- The company selects specific corporate stores for conversion, often offering these opportunities to candidates already in their pipeline.
- Concentrations of available locations are found in the Midwest, South, and Mid-Atlantic regions of the USA.
- Prospective franchisees can discuss available locations during the application, but final placement is at steak n shake's discretion.
What is the Steak n Shake franchise application process?
The steak n shake franchise application process is designed to be thorough, ensuring a good fit for both the franchisee and the brand. It begins with an online inquiry and the submission of a detailed application form. This form requires comprehensive information regarding your financial net worth, liquid assets, and management history. Following an initial screening, qualified candidates will undergo a series of rigorous interviews with the franchise development team. These interviews are designed to assess your leadership skills, business acumen, and alignment with the brand's hands-on operational philosophy. The final stages involve a comprehensive background check, a review of your credit history, and final approval from the executive committee before the steak n shake franchise agreement is offered.
Understanding the steak n shake franchise requirements is the first step to becoming a steak n shake franchisee. The cash required for a steak n shake franchise ranges from $10,000 to $410,657, with the initial investment falling between $165,097 and $410,657. The initial franchise fee is $10,000. Prospective franchisees typically need a net worth between $500,000 and $1,000,000. For those looking to understand the steak n shake franchise cost, it's important to factor in these figures. The average annual revenue per unit is reported at $136,933, with a median of $128,383. The breakeven time is estimated at 12 months, with an investment payback period of 22 months.
Tips for the Steak n Shake Franchise Application
- Ensure all financial information provided in the application is accurate and well-documented.
- Be prepared to articulate your leadership experience and how it aligns with the demands of operating a restaurant.
- Research the specific markets where steak n shake franchise locations are available to demonstrate your understanding of the business landscape.
- Understand that the steak n shake franchise agreement details will be thoroughly reviewed during the final approval stages.
| Initial Investment Range | $165,097 - $410,657 |
| Initial Franchise Fee | $10,000 |
| Required Net Worth | $500,000 - $1,000,000 |
| Average Annual Revenue per Unit | $136,933 |
| Royalty Fee | 5.5% of gross sales |
| Marketing Fee | 10% of gross sales |
| Breakeven Time | 12 Months |
| Investment Payback | 22 Months |
For those interested in the steak n shake franchise, it's also beneficial to explore What Are Some Alternatives to the Steak 'n Shake Franchise? to ensure it aligns with your long-term business goals.
Operating Procedure To A Steak N Shake Franchise Unit
Is Steak n Shake a good franchise to buy?
The Steak n Shake franchise opportunity presents a unique proposition, particularly for aspiring restaurant operators with limited capital. The initial investment is remarkably low, starting at just $10,000, which stands in stark contrast to the multi-million dollar entry barriers common in the broader franchise industry. This accessibility makes the Steak n Shake franchise opportunity particularly appealing for those looking to become a Steak n Shake franchisee without substantial upfront funding.
However, potential franchisees must carefully consider the model's financial structure. The royalty and fee structure can reach up to 20% of revenue, with a 50% profit split. This differs significantly from traditional franchise models where owners typically retain 100% of profits after a lower royalty fee, usually in the 4% to 8% range. This higher fee structure can impact the upside potential for franchisees. The success of this particular franchise partnership is heavily reliant on the individual's management prowess. It's an excellent avenue for a dedicated, hands-on manager, but it's crucial to understand that it's not designed as a passive investment, a point clearly communicated in the franchise disclosure documents for 2025.
For a deeper dive into the specifics, exploring What are the Pros and Cons of Owning a Steak 'n Shake Franchise? is highly recommended.
What is the Steak n Shake franchise success rate?
The Steak n Shake franchise success rate under their new partner program is still being actively assessed. The model is specifically designed to address the performance issues seen in historically struggling corporate-run stores by installing a vested owner-operator. Early indicators from 2024 suggest a positive shift. Anecdotal reports and company statements indicate that locations converted to the franchise partner model have experienced an average sales lift of 10-15%, coupled with improved profitability margins within the first year of operation, when compared to their previous performance as corporate-owned outlets.
To gain the most accurate understanding of the program's stability, prospective franchisees should meticulously review Item 20 of the 2025 Franchise Disclosure Document (FDD). This section provides crucial data on franchise terminations, transfers, and closures over the preceding three years, offering a clear, factual basis for evaluating the program's track record.
| Year | Franchised Units | Corporate Units | Total Units |
| 2019 | 183 | 410 | 593 |
| 2020 | 159 | 365 | 524 |
| 2021 | 143 | 272 | 415 |
The average annual revenue per unit is reported at $136,933, with a median of $128,383. However, the range can be quite broad, from a low of $48,980 to a high of $297,243. The cost of goods sold (COGS) is noted at 117.5% of revenue, resulting in a negative gross profit margin of (17.6%). Operating expenses account for approximately 39.8% of revenue, leading to an EBITDA of 8.6%.
Key Considerations for Operating a Steak n Shake Franchise Unit
- Initial Investment: While the franchise fee is a low $10,000, the total cash required can range from $10,000 to $410,657. Ensure you have sufficient liquid capital.
- Net Worth Requirement: A net worth of $500,000 to $1,000,000 is typically required, indicating the need for a solid financial foundation.
- Revenue vs. Costs: Pay close attention to the reported COGS exceeding revenue. Effective cost management and operational efficiency are paramount for profitability in this steak n shake business model.
- Owner-Operator Focus: This steak n shake franchise opportunity is best suited for individuals who are prepared to be actively involved in daily operations, rather than seeking a passive investment.