Second-quarter revenue at Steak n Shake nose-dived by 50 percent from a year ago due to the shut-down of restaurants and the closing of dining rooms, its San Antonio parent company reported Monday.
Biglari Holdings Inc.’s move to close Steak n Shake restaurants in response to the COVID-19 pandemic led the holding company to record a $7.8 million impairment charge in the second quarter. Steak n Shake revenue fell to $78.2 million in the latest quarter from $156 million a year ago.
Most of Steak n Shake’s dining rooms closed in the first quarter, while 59 of 289 company-operated Steak n Shake locations were temporarily closed. It also permanently closed about 60 stores.
Steak n Shake wants to reopen dining rooms with counter service, which will require “significant investments in equipment,” Biglari Holdings said in its quarterly financial report filed with regulators.
“Steak n Shake intends to fund these investments mainly by selling owned real estate via an auction process,” Biglari Holdings added.
On ExpressNews.com: Has San Antonio’s Sardar Biglari lost his touch?
Last week, Steak n Shake listed for sale 15 company-owned restaurant locations that it closed in the last year. The properties are spread throughout 10 states, including Texas, but none of the stores is in the San Antonio area.
Real estate brokers hired by Steak n Shake intend to conduct an auction Sept. 4, a news release said. Additional properties also are expected to be auctioned next month, the statement said.
Separately, Steak n Shake entities stand accused in a lawsuit of failing to pay rent on a store in San Antonio’s Alamo Ranch Shopping Center at 5511 W. Loop 1604.
BRE RC Alamo Ranch TX LP claims in a July 17 suit that it’s owed almost $4,500 on the 2,166-square-foot space as of July 2 from Steak n Shake entities. R. Spencer Shytles, a Plano attorney representing the landlord, declined to comment. Steak n Shake has not yet filed a response to the complaint.
Steak n Shake originally signed a lease for the space in 2012. The lease expires in 2029, the suit says.
A call to Biglari Holdings Chairman and CEO Sardar Biglari was not returned.
Biglari Holdings reported the pandemic has had an “adverse effect on our restaurant operations,” but its leader struck a more hopeful tone with shareholders at the company’s annual meeting in June.
“What this pandemic did is accelerated the entire process of changing the business model” at Steak n Shake, he said. “From an economic perspective, Steak n Shake, I think, has benefited from the pandemic.”
It’s difficult to see that from second-quarter results. Steak n Shake posted operating losses of $1.1 million in the second quarter, down from $3.1 million a year ago.
Overall, Biglari Holdings reported earnings of $42.5 million on $96.5 million in the second quarter. That compares with earnings of $22.2 million on $168.3 million in revenue in the same period of last year.
Gains from Biglari Holdings’ investment in two partnerships called the Lion Funds drove the increase in the company’s bottom line in the second quarter. The gains were $59.2 million in the second quarter, but Biglari Holdings has said its businesses are best analyzed before the effect of its investment results. Their biggest investment is Cracker Barrel Old Country Store Inc. shares.
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Biglari Holdings owns a mix of businesses, though Steak n Shake accounted for about 80 percent of the revenue in the latest quarter. The other businesses include the restaurant chain Western Sizzlin, Maxim magazine, First Guard Insurance Co. and Southern Oil Co.
Maxim, which Biglari has recast as the “leading voice of men’s luxury lifestyle,” earned $376,000 on $982,000 in revenue in the second quarter. That marked an improvement over the same period last year when it earned $132,000 on $865,000 in revenue.
Biglari Holdings acquired Maxim in 2014 with the idea of generating non-magazine revenue, primarily through licensing. But the company has had little to show for its $44 million investment.
Revenue at Biglari Holdings’ insurance subsidiaries nearly doubled in the second quarter, but that was largely due to the March acquisition of Southern Pioneer Property & Casualty Insurance Co., a specialty insurance underwriter. The insurance operations contributed $2.3 million in earnings in the second quarter.
Biglari Holdings’ Class A shares inched up $9.43 to close at $395 Friday. Its Class B shares rose $4.19 to close at $75.50. Both classes of stock are trading well off their highs for the year, however.
Patrick Danner Patrick Danner covers banking, insurance, business litigation and bankruptcies. To read more from Patrick, become a subscriber. pdanner@express-news.net | Twitter: @AlamoPD
The Link LonkAugust 10, 2020 at 12:00PM
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Steak n Shake’s 2Q revenue sinks by 50%, San Antonio parent reports - San Antonio Express-News
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