How Steak n Shake Destroyed Itself and Became Its Own Worst Enemy

Steak 'n Shake: The Rise, Fall, and Shocking Truth Behind Its Decline.
This restaurant chain was once one of America’s most beloved fast-food chains, known for its famous Steakburgers and hand-dipped milkshakes. But today, it is a shadow of its former self, with declining sales, lawsuits, franchisee dissatisfaction, and a struggling business model. While many assume the pandemic was to blame, the truth is that Steak 'n Shake’s problems started long before 2020. In this video, we dive deep into the rise and fall of Steak 'n Shake, uncovering the bad decisions, mismanagement, and financial struggles that led to its downfall.

Founded in 1934, Steak 'n Shake was built on the promise of quality, with founder Gus Belt grinding steak into burgers right in front of customers. The restaurant quickly expanded, becoming a staple in American fast food. But everything changed in 2008, when billionaire Sardar Biglari took over the company through Biglari Holdings. Initially, his aggressive leadership turned the brand around, but over time, his cost-cutting measures and controversial decisions pushed the company into turmoil. From removing cherries on milkshakes to implementing a disastrous quick-service model, these changes alienated customers and franchisees alike.

Franchisees, once hopeful for profitable partnerships, soon found themselves trapped in restrictive contracts, overcharged for supplies, and unable to raise their own prices. Many filed lawsuits against the company, painting a grim picture of financial losses and corporate negligence. The issues extended to corporate managers as well, with Steak 'n Shake facing multi-million dollar lawsuits for unpaid overtime and unfair labor practices.

Another major problem was the shift away from a traditional dine-in experience. Steak 'n Shake was known for its sit-down service for 78 years, but in an attempt to cut costs, the company rushed into a quick-service model with self-service kiosks and drive-thrus. Customers were unimpressed, complaining about poor food quality, long wait times, and uninviting dining areas. What was supposed to modernize the brand ended up driving away loyal customers.

Steak 'n Shake’s menu also posed challenges. With no real healthy options and extreme calorie-loaded meals, it struggled to appeal to modern consumers who sought balance between indulgence and nutrition. The restaurant was even named in the Center for Science in the Public Interest’s Extreme Eating Awards for its massive 7x7 Steakburger and high-calorie milkshakes, which contributed to its perception as an outdated fast-food chain.

Today, Steak 'n Shake is battling against declining sales, increasing debt, and a tarnished brand reputation.

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00:00 The pandemic wasn’t to blame
00:51 Stake n Shake’s early success
01:16 2008: Crises and Biglari takeover
01:43 From turnaround to disaster
01:55 Sadar Biglari: A controversial leader
02:07 Biglari CEO pay controversy
02:46 The double-edged sword of bold decisions
02:57 How cost-cutting backfired
03:24 The infamous removal of the cherries
03:40 Disastrous move to quick-service
04:30 Why the new self-service model failed
04:56 The nightmare for Steak 'n Shake franchisees
05:31 The franchisee lawsuit that exposed everything
06:33 The managers’ lawsuit and wage violations
07:28 A critical flaw: The menu problem
07:45 Unhealthy choices alienating modern customers
08:03 The 7x7 Steakburger controversy
08:42 No real healthy options to attract new customers
09:11 Steak 'n Shake’s battle for survival
09:21 The cycle of debt and declining sales