Steak ‘n Shake emerged out of the Great Recession as one of the industry’s steadiest performers. After same-store sales plummeted 7.1 percent in 2008, the brand put together seven straight years of positive gains, including a 7.5 percent run in 2010 that stacked on a 4.1 percent increase the year before.

If you track back to when present management took over on August 5, 2008, Steak ‘n Shake was losing $100,000 per day. By the end of 2009, it was generating $100,000 per day, the company said. Over the next nine years, its aggregate pre-tax earnings were about $185 million and those earnings translated into an even greater sum of distributable cash.

Accelerate to the present, and the comeback story has lost its rosy undertone. Sardar Biglari, CEO of Biglari Holdings, wrote in a letter to shareholders, signed February 22: “The decade of control under current management ended much like it started—with heavy losses.”

Steak ‘n Shake’s same-store sales declined 5.1 percent in 2018, Biglari revealed. That marked three straight years of negative results following a 0.4 percent drop in 2016 and a 1.8 percent decline in 2017. Additionally, the number of customers has steadily fallen, going from 116 million to 111 million to 103 million—Steak ‘n Shake’s lowest in eight years. For the first time since 2008, restaurants took a loss in operating earnings at $25.8 (in dollars in 000s). As a company, the figure was negative $10,657. It was negative $30,754 in 2008 before trending positive year-over-year until 2018.

Steak ‘n Shake’s average-unit volumes have been on the decline, too. The company posted AUVs of $1,839.51 (in thousands) in 2017 and had total systemwide sales of $939.99 (in millions). The year before it reported AUVs of $1.9 million and systemwide sales of $1,027 (in millions).

“Ever since we took control of Steak n Shake, we have been steadfast in our formula for success: providing the highest quality burgers and shakes at the lowest possible profit per customer from an ever-increasing number of customers,” Biglari wrote.

Where did the 86-year-old, 600-unit (413 company-run) burger brand go wrong? Biglari says the company “erroneously” stayed with equipment and kitchen design that was ill-suited for volume production. What resulted was high-cost, labor-intensive slow service.

“We failed customers by not being fast and friendly,” he said.

Biglari said Steak ‘n Shake’s philosophy, borrowed from Henry Ford, of lower price, higher volume, fell flat since the company failed to implement Ford’s highly efficiently assembly line methods.

“To be a market leader in the fast food business, we should have paid greater heed to becoming, well, fast,” he wrote.

Biglari said Steak ‘n Shake is in the process of addressing the misstep. It’s overhauling and streamlining production by developing a “sophisticated operating and delivery system … in order to gain volume through speed.”

In the past decade, Steak ‘n Shake’s drive-thru and take-out revenue jumped 51.5 percent. The first 10 years were defined by an aggressive pricing formula. Now, the company is determined to implement advanced production techniques, Biglari said.

He noted that Steak ‘n Shake is “developing a tailor-made system designed to speed up service, deliver consistency, and reduce labor while safeguarding our customers’ love affair with the craftsmanship behind our handmade, homemade creations. Our aim is to change not our products but the process by which we create our delicious Steakburgers and milkshakes."