Steak ‘n Shake wants to expand into new regions of the country with its aggressive franchising campaign.

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Many people that grew up in the Midwest believe the best burger wasn’t pre­ceded with “ham” but “steak.” To get a steakburger, families would hop in their station wagons and teenagers would borrow their parents’ car and drive to the nearest Steak ’n Shake restaurant. After 75 years, Steak ’n Shake is still supplying its customers with its classic sandwich and sees only growth in its future. The company says the key to its survival is its innovation.

“We do the smushed bur­ger – and that was never done before – and sear it when it cooks so it has a cara­melized taste,” it says. “There are no real com­petitors there. Others have tried to copy and come up with their own smus­hed burger, but we have the real deal and are the originators.”

Steakburgers may be what the restaurant is most famous for, but there is still the other half of its name, which Steak ’n Shake says holds its own. “Our shakes are the best in the country,” it declares. “They are hand-dipped shakes, using real milk and natural ingredients. These are not soft serve or come out of a slushy mac­hine.” Steak ’n Shake makes its own ice cream, which it believes gives the shakes a quality that cannot be found in other restaurant chains.

However, while the food is unique, the atmosphere is what sets Steak ’n Shake apart from its competitors. “We’re more like a family restaurant,” it says. “The customer does not bus their own tables, we bus the tables for them. We serve our products on glass and china with real silverware, not plastic or Styrofoam.” Steak ’n Shake’s customer base shares in the heritage of the company. “People grew up with Steak ’n Shake,” the company says.

“We never hear anything but feel good stories about the first time [a customer] had a burger, or going there with grandpa or on a date,” it adds. “Steak ’n Shake brings families and communities together. It’s the kind of stuff that is beyond getting a good meal or being the cheapest place to eat because our customer base holds the brand in the highest esteem.”

Getting Aggressive
Steak ’n Shake refuses to stay stagnant and understands that despite its solid customer base, it still needs to stay current in the industry. The company believes that while it has great success, there is still room to grow. “There are some developments, and we’re pulling out innovations to maintain what we have and go after a bigger piece of the pie,” the company says. “We are creating a more aggressive franchise program be­cause we operate 80 percent of the stores ourselves. The company has never been aggressive in recruiting franchise developers.”

Steak ’n Shake says that never in its history has it expanded its franchising program as much as it currently is. It explains this as an unprecedented opportunity to enter into a long–term partnership with one of the best and longest– tenured restaurants in America.

“We’re reaching beyond our traditional strength,” it explains. “Customers have mov­ed, so we are going to reach out and be willing to go beyond adjacent territories and bring in franchisee partners be­yond our field.”

The company is working to move outside of its Midwestern roots and expand throughout the country. The company notes that Steak ’n Shake locations would work in areas such as Phoenix, New York City, Dallas and New Orleans. As Midwestern kids have grown up and moved away, it says they carry their love of steakburgers with them, opening the door for the restaurant to expand. “If you take Phoenix, the brand is already there because half of the population of Phoenix has grown up in the Midwest,” it maintains. “Maybe you were in the army on a Midwest base or went to school in the Midwest. Now, today, we can reach beyond our core market. There are states wide open.”

As part of its franchising plan, Steak ’n Shake has approved footprints and floor plans to allow for growth in new regions. Previously, the company wanted to stick with a specific model of a 4,000-square- foot restaurant with a drive-thru and would always say “no” to a proposition of placing a Steak ’n Shake in an area that could not follow that model, such as Times Square. Now, the company says it would love to open a restaurant in the Big Apple. The company is hoping to build restaurants in strip centers, food courts, airports and stadiums. It is identifying its core items to offer at these locations where speed is more important than the breadth of the menu.

Steak ’n Shake also points out that through the adoption of the new franchising policy, not only will it expand restaurant operations, but also cut down on construction costs. “With the tight economy, how can you build and maintain customer needs and expectations, but at half the construction cost?” it asks. “You take out the construction and keep the same expectations of food and service. This will create value for ourselves and the franchisee.”

To open a Steak ’n Shake, a franchisee does not have to have a restaurant background or a million dol­lars to invest. The com­pany says it is wil­ling to work with those who wou­ld like to own a business and have solid understanding of corporate expectations. The company is able to find financial part­ners to help with the capital and hire restaurant man­agers for the day-to-day op­erations of the restaurant. The most im­portant aspect, it says, is the geo­graphical location of a potential franchise. The company pre­fers to grow with a multi-unit operator, rather than a single-unit, in a major market loc­ation such as Denver or Las Vegas.

Steak ’n Shake also is willing to open a franchise with a person who already owns other existing restaurants. “If we find an existing industry operator of other brands who may want to add another brand to their portfolio, we will work with them,” it says. “If you have five KFCs and can’t add another because you’ll cannibalize your stores, we will build a Steak ’n Shake franchise next to your KFC and help develop it in the marketplace.” The company believes people who are operating their second or third brand are better candidates because they already have an understanding of real estate and lending sources, as well as the personnel required to run a restaurant.

Steak ’n Shake will produce single-unit franchises in key locations such as major cities and attractions. Placing a single location in a remote area is setting up the franchise for failure, it explains. “We are a company with heart,” Steak ’n Shake says. “We don’t want anyone to lose money, especially in this economy.” He adds that Steak ’n Shake will not perform a franchise deal unless the company is certain the restaurant will be a success.

Providing Value
Along with its expansion of restaurants, Steak ’n Shake also has made innovations to its menu. For the first time, the company created a value menu with its “four under four” campaign. Choosing its four best-selling and most popular menu items, the company priced each item under $4 and bundled them with french fries. Steak ’n Shake describes the addition of the value menu as a bold move during the recession. “Everyone else was saying it was time to raise prices in order to pay the bills,” it exclaims. “We decided to go the opposite way and say ‘let’s give people value and see if they respond,’ and they have.”

It adds that the company’s profits have surged. Also, company research shows young people are coming into the restaurant in greater numbers, who Steak ’n Shake says will become customers for life. “We were innovative in a time where everybody is trying to squeeze more dollars out of people and it paid off,” it notes.