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Steak n Shake Franchise ProfileRestaurant Franchises > Quick-Service Restaurants |
What Are the Initial Investment Requirements for a Steak n Shake Franchise?
To open a Steak n Shake franchise, you should be prepared for an initial investment ranging from $165,097 to $410,657. This includes a franchise fee of $10,000. Additionally, you will need to demonstrate a net worth of $500,000 to $1,000,000 and have access to cash between $10,000 and $410,657 to cover startup costs and working capital. Understanding these financial commitments is crucial for aspiring franchisees to ensure they are adequately prepared for the investment.
What Are the Ongoing Fees Associated with a Steak n Shake Franchise?
Steak n Shake franchisees are required to pay a royalty fee of 5.5% on gross sales, along with a marketing fee of 10%. These ongoing fees are essential for maintaining brand presence and supporting marketing initiatives. Franchisees should factor these costs into their financial planning to accurately assess the profitability of their business.
What Is the Average Financial Performance of a Steak n Shake Franchise?
On average, a Steak n Shake unit generates annual revenue of approximately $136,933, with a median of $128,383. However, revenues can vary significantly, with the lowest recorded at $48,980 and the highest at $297,243. It's important for potential franchisees to understand these figures to gauge the potential return on investment and make informed decisions about their franchise ownership.
What Is the Expected Timeline for Profitability with a Steak n Shake Franchise?
Franchisees can expect to reach breakeven within approximately 12 months of operation, with an investment payback period of around 22 months. This timeline can help aspiring franchisees set realistic financial goals and understand the time commitment required to achieve profitability in their Steak n Shake franchise.
Steak n Shake Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
The minimum total assets (minus liabilities) you must possess.
Net Worth Required:
The estimated period to recoup your total investment.
Investment Payback:
The initial fee paid to join the franchise system.
Franchise Fee:
Ongoing percentage of revenue paid to the franchisor.
Royalty Fee:
Regular contribution toward the franchise’s advertising fund.
Marketing Fee:
The estimated timeframe to recover your initial costs.
Breakeven Time:
The total amount required to launch the franchise.
Initial Investment:
The minimum liquid capital you must have on hand.
Cash Required:
The typical yearly revenue generated per franchise location.
Average Revenue:
The middle value of yearly revenue among franchise locations.
Median Revenue:
The largest reported annual revenue among franchisees.
Highest Revenue:
The smallest reported annual revenue among franchisees.
Lowest Revenue:
A broad sector defining similar types of franchise businesses.
Industry:
A more specific division within the broader industry.
Category:
The key individuals guiding the franchise’s strategy and growth.
Leadership:
The official business address of the franchisor’s headquarters.
Corporate Address:
Available financing options to help start the franchise.
Funding Year:
The main organization that owns the franchise brand.
Parent Company:
Steak n Shake Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
| Units | 2019 | 2020 | 2021 |
|---|---|---|---|
| Total Units | 593 | 524 | 415 |
| Net Change YoY | -69 | -109 | |
| Franchised Units | 183 | 159 | 143 |
| Net Change YoY | -24 | -16 | |
| Corporate Units | 410 | 365 | 272 |
| Net Change YoY | -45 | -93 |
Initial Investment
The Steak n Shake franchise requires an initial investment ranging from $165,097 to $410,657. This includes a franchise fee of $10,000, which contributes to the start-up costs necessary for opening a new location. Prospective franchisees should also be prepared for additional cash requirements that can go up to $410,657, depending on various factors like location and build-out expenses.
Financial Performance
On average, Steak n Shake units generate annual revenues of approximately $136,933, with a median revenue of $128,383. However, revenue can vary significantly, with the lowest reported annual revenue at $48,980 and the highest reaching $297,243. Understanding these figures is crucial for franchisees to set realistic financial expectations and performance benchmarks.
Royalty and Marketing Fees
Franchisees are required to pay a royalty fee of 5.5% on gross sales, along with a marketing fee of 10%. These fees contribute to the overall brand marketing and operational support provided by Steak n Shake, which can help drive customer traffic and brand recognition in a competitive market.
Breakeven and Payback Period
The average breakeven time for a Steak n Shake franchise is estimated at 12 months, indicating that franchisees can expect to recover their initial investment within the first year of operation. Additionally, the investment payback period is around 22 months, which is a critical metric for evaluating the financial viability of the franchise opportunity.
Corporate and Franchise Units
As of 2021, Steak n Shake operates a total of 415 units, with 143 being franchised and 272 corporate-owned. The number of franchised units has seen a decline over the years, from 183 in 2019 to 143 in 2021. This trend may reflect broader industry challenges or shifts in the company's growth strategy, which potential franchisees should consider.
Average Annual Expenses
Franchisees should anticipate various running expenses, with total estimated costs around $165,097 as a base estimate. Key expenses include rent, equipment rental, administrative fees, marketing contributions, and payroll. Understanding these costs is essential for effective financial planning and ensuring the long-term success of the franchise.
Frequently Asked Questions
The initial investment for a Steak n Shake franchise ranges from $165,097 to $410,657, which includes the initial franchise fee of $10,000.