How Much Does it Really Cost to Open a Steak ‘n Shake Franchise?

Getting a steak and shake franchise might just be worth the Investment and of course, the cost of this franchise is very affordable

Do you want to start and run a franchise without spending a fortune? According to Steak ‘n Shake, a restaurant can be yours for $10,000.

This initially appears to be a means to enter the franchise market without incurring debt or needing to have $500,000 in liquid capital on hand.

To purchase a Steak ‘n Shake franchise, you must have a minimum of $10,500 in liquid assets. Franchisees should budget at least $10,000 for their whole investment. Additionally, they provide veterans with a discount (15% off the initial franchise price).

Steak ‘n Shake nevertheless asserts that you will make $100,000 in your first year of operation despite this ownership differential, so you may anticipate a quick return on your initial investment. 

How Much is a Steak ‘n Shake Franchise

The franchise cost for Steak and Shake is $25,000 This is the initial investment required to start a Steak n Shake business. But there is a cheaper way to own a portion of a Steak n Shake.

Financial Requirements and Fees

As previously stated, you actually only control a piece of the Steak ‘n Shake business unit.

The advantage of this arrangement is that you may launch your outlet with just a $10,000 investment.

These figures just offer you a broad idea of what you’ll need to launch a franchise and might not account for all necessary additional expenses.

An outline of the fundamental financial criteria for a Steak ‘n Shake franchise can be found below. It’s crucial to keep in mind that even if you are starting a franchise, you are still a “franchise partner” and will get a cut of the sales.

Fees/ Expenses	Amount Needed
Liquid Capital	$10,500
Net Worth	$10,000
Royalty Fee	5.5%
Estimated Initial Investment	$672,000-$1,835,000

More Requirements

Here is a more thorough summary of the fees and costs associated with joining together to open a Steak ‘n Shake franchise.

Depending on the sort of franchise you open, the site expenses will change. You will learn more about a few other types of franchise sites later on:

Fee	Low-End Costs	High-End Costs
Initial Franchise Fee	$25,000	$40,000
Working Capital	$15,000	$20,000

It’s crucial to remember that these are simply the start-up charges for your firm. Depending on the location or kind of store you wish to open, there can potentially be other costs that are not included in these figures.

Additionally, keep in mind that the franchise model you choose will have an impact on your spending.

Type of Fee	Amount
Royalty Fee	5.5%
Advertising Fee	Not available

Average Sales/ Revenue Per Year

Every year, average sales and revenue fluctuate according to local demand, labor costs, maintenance costs, advertising, commercial lease rates, and other specific factors.

However, it’s projected that the business generates $939,990,000 in revenue annually. Each unit earns an average of $1,027,000 every systemwide sale.

There are 201 franchised locations and 415 company-owned locations for Steak ‘n Shake.

Steak ‘n Shake Franchise Cost

A typical Steak & Shake free-standing Quick Service restaurant is expected to require a total investment between $1,208,000 and $1,687,000 to open.

In addition to providing alternative operating models, Steak n Shake has different prices than a standard free-standing restaurant.

In-Line Quick Service Format: $454,000 – $1,371,000

Non-Traditional: $316,000 – $715,000

Roadside Format: $705,000 – $1,199,497

Additional Cost Breakdown

The upfront expenses covered by the initial investment include the following expenses. Numerous of these are one-time costs required to start the franchise.

Construction Management / Fee	$0 – $35,000
Site Improvements	$172,500
Building or Leasehold Improvements	$621,000 – $762,860
Furniture & Fixtures, Equipment & Signage	$303,500 – $400,640
Pre-Opening Expenses	$5,000 – $10,000
Inventory and Supplies for Opening	$10,000 – $15,000
Training Expenses	$16,000 – $55,000
Architectural, Civil Engineering & Other Professional Fees	$35,000 – $78,000
Impact and Tap Fees	$5,000 – $78,000
Grand Opening Marketing Expenses	$0 – $25,000
Extension Fee	$0 – $10,000
Additional Funds for 3 months	$15,000 – $20,000
Total	$1,208,000 – $1,687,000

Ongoing Fees and Costs

Royalty, system, and license fees: 5.5% of weekly gross receipts.

Marketing Fee: 3% of weekly gross receipts, which is refundable for non-traditional locations.

Franchise Facts

In 1934, the eatery was established in Normal, Illinois. When the business started franchising in 1939, it expanded swiftly.

Steak ‘n Shake sold 173 franchised locations and 412 company-owned locations in 2017, an increase of 17% from the previous year.

The restaurant had 568 total units in 2019, an increase of 17 eateries over the previous year.

How Much Does the Franchise Make Per Year

The business generates $939,990,000 in sales annually on average. Sales across the entire system average $1,027,000 per unit.

Keep in mind that you only receive a portion of the revenues as a “franchise partner.” You will get a share of the profits no matter what kind of franchise you open.

You’ll typically receive 50% of the revenue.

Things to Consider

Type of Franchise

The typical restaurant setting combines fast food-to-go and diner-style sit-down service with sit-down, drive-thru, and front-window service.

Numerous Steak ‘n Shake locations are open every day of the week, 24 hours a day.

The main items on the menu are burgers and hand-dipped milkshakes, although there are also additional entrees, sides, and drinks available.

Steak ‘n Shake offers a variety of franchise opportunities for investment.

The usual establishment offers both a sit-down and fast-food hybrid service. Burgers, milkshakes, and other similar meals are available on the all-American menu, which is available every day of the week, 24 hours a day.

Different Types of Franchise

The available floor plans are shown below:

1. Classic Franchise: It features a theater where their renowned made-to-order steakburgers and hand-dipped milkshakes are displayed.

There are chances to turn established structures into traditional franchises. The structure has a drive-thru and is estimated to be 3,315–3,800 square feet in size.

With a comprehensive menu available, the eating room has 99 seats and is open twenty-four hours a day, seven days a week.

2. Limited Menu, In-Line Concept: Prospective franchisees can choose this less expensive model. It operates simply and focuses on a limited number of menu choices.

There is quicker counter service, which is perfect for universities, malls, and urban cores. Only 40 seats, 2,000–2,500 square feet, and a drive-thru are possible for this in-line idea.

Non-Traditional Franchise: This choice offers a distinctive dining experience. It is perfect for airports, train stations, plazas, casinos, and shopping malls because it is only 500–800 square feet.

The small menu is perfect for a space with plenty of people sitting down, like a food court.

Location

American restaurant franchise Steak ‘n Shake has locations largely in the Midwest. Although it is largely in the Midwest, it is also present in the Southern, Mid-Atlantic, and Western United States as well as abroad.

The typical restaurant setting combines fast food-to-go and diner-style sit-down service with sit-down, drive-thru, and front-window service.

Numerous Steak ‘n Shake locations are open every day of the week, 24 hours a day.

The main items on the menu are burgers and hand-dipped milkshakes, although there are also additional entrees, sides, and drinks available.

Finance

The proprietor of Steak ‘n Shake feels that buying a franchise may be done without incurring significant debt or capital outlay.

Because of this, the franchisee just needs $10,000 in liquid capital to own a site.

The corporation contends that talent and expertise are more significant than enormous sums of money, but a closer examination of the financials reveals that there are several additional fees and charges that are not related to the initial investment.

The good news is that you do not need to have a net worth of more than $1 million.

A significant quantity of financial resources are needed for many well-known franchises. However, Steak ‘n Shake does not.

Advantages of Steak ‘n Shake

The well-liked eatery with a Midwest focus offers many advantages. One of the most significant advantages of franchising is that the business has consistently survived various economic situations.

The size of the All-American chain has grown in the last ten years, further demonstrating its appeal.

There is still room for growth with over 600 units currently constructed in twenty states.

Currently, Steak ‘n Shake plans to establish 1,000 locations around the country in states where the franchise has not yet established itself.

The franchise has a devoted fan base, primarily in the Midwest of the country. It is a mid-range, informal dining alternative that is perfect for middle-class families seeking a delicious dinner to share.

Among their devoted patrons, the menu of steak burgers, thin and crispy french fries, milkshakes, and chili is already a well-liked option, and their menu keeps expanding as new trends and ideas are implemented.

More Advantages

You will be able to manage every area of the 24-hour restaurant as a franchise partner and achieve financial and professional success.

In terms of money, you’ll get 50% of the restaurant’s earnings in addition to a first-year salary guarantee of at least $100,000. 

Being a franchise partner allows you to enjoy the benefits of opening a business without having to spend all of your money upfront.

The assistance and advice you receive from Steak ‘n Shake’s Field Operations manager is another advantage of working together.It can be intimidating to launch a restaurant for the first time.

By working with you on daily operations, giving you your first training hours, enrolling you in operating systems training, and implementing Management Development Programs, Steak ‘n Shake reduces your sense of apprehension.

Other Advantages

To help you succeed, the Manager of Field Operations will give you access to resources including meetings with seasoned personnel.

You will have the multifaceted resources of the Steak n Shake Company working for you through your manager of field operations.

You even get exclusive operations and management tools in addition to a program that helps new Operating Partners build their first location.

With the use of television advertisements, price-driven reductions, print advertising, and the development of customer loyalty. You don’t need to create your own promotional materials because it has already been done for you.

Steak ‘n Shake is proven to entice brand-loyal customers with its lighthearted, engaging approach to marketing language.

The guaranteed minimum $100,000 salary in your first year is one of the last and most thrilling aspects of being a franchising partner.

Main Advantages

• Significant room for expansion
• Loyal brand supporters
• Ongoing corporate assistance
• The provision of marketing and advertising
• Thorough training.
• Your first year’s compensation is guaranteed to be $100,000.

Challenges of Steak ‘n Shake

The lack of 100% franchise ownership could be a problem. Despite managing 100% of the daily operations, you receive 50% of the earnings as a franchise partner.

However, if you look at the financial requirements, you will realize that the minimal investment cost might compensate for certain operators’ lack of full ownership.

Steak ‘n Shake appears to be franchising in a manner akin to Chick-fil-A. Since they are a franchise, Chic-fil-A doesn’t actually own their company.

Other Challenges

Actually, the business is run by its proprietors. You must actively run the store you build and it cannot be treated as a passive investment if you want to become a Chic-fil-A partner.

Here’s another reason the Steak ‘n Shake corporation should worry you. The business has been suffering from huge financial losses in recent years.

For instance, the franchise lost $4.6 million in 2020 and closed 70 stores during the previous two years. No business can keep making losses year after year and expect to stay in operation.

Main Challenges

• Not having complete control of your site
• The franchise needs a manager (like you) to take over running the restaurant.
• You must be employed at Steak ‘n Shake and actively involved in daily operations.
• This is not a chance for passive investing.
• The business has been losing money for a while. This isn’t sustainable.

Is Steak n’ Shake Franchise Right For You

You must determine whether or not you are qualified and experienced enough to open and run a franchise before you do.

Although starting a business is no easy task, Steak ‘n Shake might be the ideal chance to do it. To determine if this is the correct business opportunity for you, ask yourself the following questions:

Do you have sufficient capital to liquidate? Fortunately, only $10,000 in liquid money is needed to launch this franchise.

But keep in mind that your investment will rise to several hundred thousand dollars if you factor in royalties and advertising fees, development expenditures, and building maintenance.

Are you qualified to manage this company? This position is ideal for you if you lack any extra business ventures and have expertise managing restaurants, a commitment to excellence, and a love for providing excellent customer service.

Conclusions

As a new franchisee, it is crucial to ask the necessary questions, and have all the important information at hand. This would help determine how successful your franchise will turn out.

We hope this article proves very useful to you, the Steak and Steak franchise might just be the best for you. 

Frequently Asked Questions