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Steak n’ Shake ditching table service for self-service kiosks

Steak n’ Shake ditching table service for self-service kiosks

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[Times-Union file photo]

CLEVELAND, Ohio — Steak ‘n Shake, founded in Normal 87 years ago, has long been somewhat of an anomaly, offering a fast food-style menu in a table-service setting. The presence of a drive-thru at most of its locations only added to this mixed message. The chain, which had been flirting with bankruptcy in recent weeks, recognized this disconnect in a letter to shareholders last month.

“Simply put, the operation of dining rooms with table service was a money loser,” wrote Sardar Biglari, chairman of Steak n’ Shake parent Biglari Holdings. “What I had previously assessed as a sustainable competitive advantage proved to be anything but when our labor expenses continued to rise over the last several years.”

The chain will now fully embrace the quick-service model and pivot from full-service and become a self-service restaurant.

“Steak ‘n Shake is in an era of radical transformation,” he said.

Currently, most of the chain’s dining rooms are closed due to the pandemic. But when they reopen, customers won’t place their orders through a server at their table or even at a counter with a cashier. They’ll use an unattended kiosk instead.

“We are embracing efficiency and transitioning the service model to empower our guests to place and pick up their own orders,” Biglari wrote.

He said it will cost between $100,000-$200,000 to remodel the interior of each restaurant, introduce a new point-of-sale system and install the kiosks. But the company believes the transformation, which also includes speeding up the production process and converting to a single-store owner franchise model, combined with Biglari Holdings paying off the chain’s $153 million debt, will set it up for success going forward.

“What is fundamental to the company — Steakburgers and milkshakes — remains the same,” Biglari said.

The company during the first quarter of last year closed 51 restaurants in its portfolio.

"The COVID-19 pandemic had an adverse effect on our restaurant operations, thereby resulting in the evaluation of company-operated restaurants for recoverability," Biglari Holdings said in a regulatory filing.

The investment firm's holdings also include Cracker Barrel restaurants, as well as Maxim magazine.

Gus Belt opened the first Steak ’n Shake in February 1934 at Main Street and Virginia Avenue after he added food to a Shell service station line-up of gasoline, tires and turtleburgers. The site is now a Monical’s Pizza.

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