Steak 'n Shake CEO says this 1 change to chain's signature milkshakes could save $1M a year: report

Steak 'n Shake customers are concerned the burger chain's days may be numbered as dozens of restaurants shutter and the company reports a massive loss in the first quarter.

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The iconic diner-like chain, which is primarily concentrated in the Midwest, reported a nearly $19 million operating loss in the first quarter of 2019. That's in addition to the whopping $10.7 million sales loss it suffered in 2018 — its second-straight year in the red, the Indianapolis Business Journal (IBJ) reported this week.

At least 60 Steak n' Shakes around the country have been temporarily shuttered so far this year.

To make a comeback, Steak n' Shake chief executive Sardar Biglari apparently floated an unusual idea to save establishments some cash: eliminate cherries.

The 41-year-old founder of Biglari Holdings Inc. — the parent company of Steak n Shake, Western Sizzlin, First Guard and Maxim — made the surprising proposal during an April shareholders meeting in New York City.

“[Biglari] said at one point that Steak n Shake spends $1 million per year on cherries for milkshakes and that he would love to get rid of that $1 million,” an attendee claimed in a blog post on investing site Seeking Alpha, according to IBJ, which confirmed the statement with another verified Biglari shareholder.

“Three different shareholders pointed out, in conversations, how ridiculous that sentiment is. … Given all [the dubious expenses], shareholders were pointing out that maybe there is a better way to save $1 million rather than eliminating cherries from Steak n Shake’s milkshakes," the post continued.

At least 60 Steak n' Shakes around the country have been temporarily shuttered so far in 2019. (iStock)

But that's not the only change Biglari suggested.

He also detailed a plan to convert 400 restaurants to single-store franchisees and spend $40 million on new milkshake machines.

"For a total investment of $10K selected franchisees (who we call Franchise Partners) are granted the rights necessary to operate a franchised Steak ‘n Shake restaurant business. This opportunity requires that the individual be free of any other active business ventures and operate the restaurant on a full-time hands-on basis," Steak n' Shake explained in a news release about the opportunity, which it claimed would earn first-time franchise owners a "guaranteed minimum" of $100,000 within a year.


Some investors who met with Biglari last month, however, weren't entirely sold on his plans.

“He is literally inventing a new milkshake making process — he said at the meeting that this was going to be a patented process — and that is going to speed up service,” one shareholder, who wished to remain anonymous, told IBJ, adding that many shareholders agreed it was a "ridiculous" move.

Customers took to social media Wednesday to voice their complaints about the possibility of a Steak n' Shake milkshake without the cherry on top.

"Over my dead body," one Twitter user said of Biglari's idea to stop including cherries in shakes.

"But, they are necessary!" another exclaimed.

"We could boycott Steak ‘n Shake and make our milkshakes at home with as many cherries as we like. #BoycottSteaknShake," a third suggested.

Steak 'n Shake isn't the only big-name franchise struggling this year.

Earlier this month, fast food giant Subway said it closed more than double the number of restaurants in 2018 than it previously forecast, bringing its total to more than 2,300 over the last three years.

Fox Business' Jade Scipioni contributed to this report.