Steak 'N Shake Hopeful Signature Will Drive Franchise Growth

Steak 'n Shake officials expect the brand's highly publicized Signature prototype to maintain the positive momentum it generated in its opening week, helping to pave the way for franchise growth in 2012.

The Indianapolis-based chain debuted the inaugural Steak 'n Shake Signature location in New York on Jan. 12, adjacent to the Ed Sullivan Theater, home to "The Late Show with David Letterman." The brand's new quick-service concept differs from "classic" Steak 'n Shake locations chiefly in its counter-service-only format and limited menu of the chain's staples, like steakburgers, fries and milk shakes. The New York Signature operation also serves beer and wine.

Senior vice president of marketing Jim Flaniken noted that only the Signature unit in New York and future franchised Signature locations would feature the Signature Steakburger, a 6-ounce burger made from 100-percent USDA-certified organic beef.

While Flaniken would not disclose sales information about the item, he said the Signature Steakburger "has been received very favorably." Flaniken declined to disclose sales and traffic results for the first Signature location, but said the response from customers and New York media in the first week of operations was "tremendous".

The Signature prototype opening benefited from high-profile publicity, including a video segment on "The Late Show with David Letterman" and long lines out the door the first day.

In addition to a smaller footprint, the unit also featured a new look for Steak 'n Shake.

"From an architectural standpoint, the design is sleek, modern, exotic and inviting, but also still approachable," Flaniken said. "It's suitable for everyone's enjoyment." The new restaurant format will complement, rather than replace, the classic Steak 'n Shake model, he added.

"Because the Signature concept is a vastly different concept than the classic restaurant and has less square footage, we'll be putting these [locations] mainly into strip centers," Flaniken said.

"As we embark upon this franchising growth, it provides prospective franchisees another option to franchise a restaurant with that smaller footprint and more simplified operation," he said.

Because franchising will be "integral" to Steak 'n Shake's growth, the brand is moving forward with plans to open more Signature and classic locations, and now can use the most appropriate building model depending upon real estates available to franchisees, Flaniken said.

"Steak 'n Shake Signature will be going into a lot of markets where we don't have Steak 'n Shake right now, but that could be said about our classic restaurants as well," he said. "We just opened our first classic Steak 'n Shakes in Colorado, Louisiana, and earlier in Virginia and Nevada, and collectively they are performing tremendously. But Signature provides some opportunities for further growth because it's able to fit the real estate." Earlier this year, Steak 'n Shake announced it would freeze its menu prices. Flaniken was not able to tie that announcement and an accompanying Orange Freeze promotion to sales and traffic figures, but he did note that the brand has had "a fabulous response to that announcement." "We're receiving very favorable responses from patrons coming in to our restaurants, as well as commenting online," Flaniken said.

Steak 'n Shake operates or franchises nearly 500 restaurants.

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