Steak n Shake’s restaurant closures due to the pandemic continue to depress the financial results for the chain and parent company Biglari Holdings Inc. of San Antonio.
The chain known for its burgers and milkshakes reported Monday that 106 of its 282 company-operated stores were closed as of Sept. 30.
Steak n Shake managed to stem much of the red ink in the three months ended Sept. 30, losing just $63,000 before taxes on $78.3 million in revenue. That compares with a pre-tax loss of $861,000 on $141.4 million in revenue in the same period a year ago.
Same-store traffic at the restaurants was off 54 percent in the latest quarter.
On ExpressNews.com: Has San Antonio’s Sardar Biglari lost his touch?
The restaurant chain, which posted a $12.1 million in pre-tax losses in the first nine months of this year, represents Biglari Holdings’ largest operating business. Other businesses owned by the company include men’s luxury lifestyle magazine Maxim, two insurance companies and an oil and gas company.
In a filing with the Securities and Exchange Commission, Biglari Holdings said its plan to convert Steak n Shake restaurants to a counter-service model from a dine-in eatery requires “significant investments in equipment.”
But the company added access to capital is “limited under its current debt agreement.” Steak n Shake has about $153 million outstanding on a term loan that’s due in March.
“Absent a resolution with the lenders, Steak n Shake may need to seek refinancing options, which may not be available,” according to the SEC filings. The pandemic may complicate those efforts.
At Biglari Holdings’ annual meeting at the Majestic Theatre in June, Chairman and CEO Sardar Biglari wouldn’t address whether bankruptcy loomed for Steak n Shake.
“We’re not going to discuss what exactly we’re doing with the lenders,” Sardar Biglari said. “We must do what is in the best interest of Biglari Holdings.” Biglari Holdings has no plans to provide a loan guarantee to the lenders.
Sardar Biglari didn’t immediately respond to a request for comment.
SA Inc.: Get the best of business news sent directly to your inbox
Steak n Shake also closed dining rooms during the pandemic, contributing to $3.7 million in impairment charges in the third quarter and $18.1 million during the first nine months of the year.
Franchise royalties and fees fell by $2.2 million, or a third, to $4.4 million in the latest quarter from a year ago. The chain recorded allowances for doubtful accounts — receivables it doesn’t expect to collect — in connection with franchisees whose stores closed during the pandemic. The chain had 199 traditional franchise locations as of Sept. 30, down from 213 at the end of last year.
Overall, Biglari Holdings earned $21.1 million, or $60.07 on its Class A shares, on $101.8 million in revenue in the third quarter. By comparison, the company lost $17,000, or 5 cents a share, on $160.2 million in revenue in the same period last year.
Nearly $27.6 million in investment gains propelled the company’s latest results. The company had said its businesses are best analyzed before the effect of its investments.
Biglari Holdings holds investments in two partnerships called the Lion Funds. The biggest investment is an 8.7 percent stake in Cracker Barrel Old Country Stores Inc. Biglari Holdings is waging another proxy fight with Cracker Barrel, seeking to get a representative elected to the Tennessee company’s board.
On ExpressNews.com: Cracker Barrel CEO punches back at San Antoio investor Biglari
Maxim magazine, which hasn’t produced much in the way of positive results for Biglari Holdings since it acquired the publication in 2014, had a decent third quarter.
Maxim earned $885,000 on $1.7 million in revenue in the three months ended Sept. 30. It earned $281,000 on $924,000 in revenue in the same period last year.
First Guard Insurance Co., a regularly solid performer for Biglari Holdings, posted a slight drop in pre-tax earnings. It earned almost $2.2 million before taxes on $7.9 million in revenue in the latest quarter, versus nearly $2.3 million in pre-tax earnings on $7.7 million in revenue in the same period last year.
The pandemic has curtailed demand for oil, affecting Southern Oil Co.’s results. The company, which primarily operates oil and natural gas properties offshore in the shallow waters of the Gulf of Mexico, earned about $389,000 on about $6 million in revenue in the third quarter. Southern earned about $1.1 million on $6.5 million in the same period last year.
Biglari Holdings’ Class A shares rose $11.96 to close at $471.95 Friday, while its Class B shares fell 7 cents to close at $85.90.
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 LonkNovember 09, 2020 at 01:00PM
https://ift.tt/2Ic4jbT
Losses shrink at struggling restaurant chain Steak n Shake - San Antonio Express-News
https://ift.tt/38fhwJ2
Steak
No comments:
Post a Comment