Steak ‘n Shake Franchise Costs: Estimated Initial Investment (Item 7, 2022 FDD)

In-Line Quick Service Format

1.  Franchise Fee:  $25,000

• The Franchise Fee is nonrefundable unless you identify a location within 70 days of executing the Franchise Agreement and you and Steak ‘n Shake fail to agree on a location for your Restaurant within 135 days of the execution of the Franchise Agreement.

• In that event, Steak ‘n Shake will refund you 75% of the Franchise Fee paid, it will retain the remaining 25% as compensation for services provided, and the Franchise Agreement will terminate.

2.  Real Estate/Rent:  Not Included

• In-line quick service locations are typically leased premises. Rent costs vary significantly depending on various factors including demand for locations in a particular market, the property location, accessibility, and area demographics.

• Additionally, rent credit or allowances for tenant improvements provided by the landlord may also impact the rent you will pay.

3.  Construction Management Fee:  $0 to $4,000

4.  Site Improvements:  $0 to $21,000

5.  Building or Leasehold Improvements:  $80,000 to $727,000

• Building improvements must strictly conform to Steak ‘n Shake’s brand specifications unless otherwise noted in writing. If the premises are leased, the lessor’s contribution toward the cost of construction, if any, may be a factor in your subsequent rental rate.

• These costs will further vary based on building size, configuration and condition of premises, material construction and labor costs, logistical considerations, location, as well as any requirements and restrictions imposed by government agencies and landlord.

• Steak ‘n Shake’s estimates are based on actual costs to construct 1,860 to 3,400 square feet quick-service locations pursuant to its franchisees’ most recent Restaurant openings. Rent credits or tenant improvement allowances, if any, provided by a landlord will impact the rent you pay.

6.  Furniture, Fixtures, Equipment, and Signage:  $307,000 to $374,000

• Furniture, Fixtures, and Equipment (including IT & Signage) costs may vary significantly based upon the size of the Restaurant, possible reuse of existing equipment, labor and material costs, installation costs, geographic location, requirements imposed by local government agencies, and shipping from suppliers.

• Steak ‘n Shake assists with the purchase of most IT equipment so you benefit from its volume discount.

• These estimates also include the initial fees paid to Steak ‘n Shake and expenses paid directly to third-party vendors for the following: menu board and order confirmation board, headsets, in-store music, and installation services.

7.  Pre-Opening Expenses:  $5,000 to $10,000

• These figures are estimates only for the following expenses you will incur prior to your opening: uniforms, advertisements for recruiting, and food costs during training.

• Due to wide variances, these estimates exclude the following: labor, benefits and payroll costs associated with your management and hourly employees’ time in training or during the period prior to your Restaurant opening; health insurance, property insurance, general liability insurance, and worker’s compensation insurance premiums; security deposits for a lease; utility deposits; and sales tax bonds (may be required by taxing authorities).

8.  Additional Funds for 3 Months:  $15,000 to $20,000

• This range includes certain on-going monthly expenses you may incur during the first 3 months of operation, including fees paid to Steak ‘n Shake and third parties after the Restaurant opens for surveillance cameras, broadband internet service, software and music licensing fees, IT support center, hardware maintenance and repair, and drive-thru headset maintenance and repair.

• These figures are estimates, and Steak ‘n Shake cannot guarantee that you will not have greater expenses. These amounts do not include rent, any estimates for debt service on loans that you obtain to finance your business, payroll, inventory expenses, or additional working capital.

9.  Inventory and Supplies for Opening:  $6,000 to $15,000

10.  Training Expenses (travel, meals, and lodging only; wages excluded):  $16,000 to $55,000

• Steak ‘n Shake does not charge you for the initial standard training it provides. These expenses do not include the salary and payroll expenses for your management and hourly staff or franchise owners.

• These estimates are based on the travel, meals, and lodging you will incur while your managers are in training. Your cost may vary depending upon how many individuals you train and the distance you and your employees must travel to the certified training restaurant Steak ‘n Shake designates.

• The low end assumes that you are located in very close proximity to Steak ‘n Shake’s certified training restaurant and no airfare meals or lodging will be required for management training other than your general manager and restaurant manager attending a new restaurant opening and traveling to Steak ‘n Shake’s San Antonio or Indianapolis office for a portion of the training.

• The high end range assumes that your management will be traveling to a certified training restaurant and includes the estimated cost for airfare, transportation, meals, and lodging.

11.  Architectural, Civil Engineering, and Other Professional Fees and Permits:  $0 to $85,000

• These expenses may vary depending on your experience and your individual need for advice from architects, engineers, and related development professionals and depending on the duration and complexity of developing your location and negotiations to finalize a lease or purchase.

• These expenses do not include any costs you may incur for financing.

• The high end of the range includes the $1,000 Plan Review Fee that Steak ‘n Shake charges for its or its affiliate’s review of site specific modifications made to its prototype plans.

• The cost of a permit to sell beer and wine applies only to quick-service locations where such service is sought and will vary significantly by location.

• Prior to acquiring a site, you should research the legal requirements and design criteria as may be required by public ordinance or private covenants limiting or restricting such items as building design, colors and finishes, exterior lighting, signage, site design, and similar leasehold or fee improvements.

• The low end of the range for a quick-service location assumes that beer and wine will not be sold so a permit will not be required.

12.  Impact and Tap Fees:  $0 to $10,000

• Impact, tap, and similar infrastructure or impact type fees vary significantly by area and site. You are strongly encouraged to consult with a local civil engineer or real estate attorney to accurately assess and determine all such costs applicable to any particular location.

13.  Grand Opening Marketing Expenses:  $0 to $15,000

• In connection with the grand opening of the Restaurant, you may, but are not required to, conduct a grand opening marketing and advertising campaign in accordance with a plan approved by Steak ‘n Shake.

• Grand opening expenditures which Steak ‘n Shake approves will be credited towards the local portion of your Marketing Fee to be paid during the first year following your Restaurant opening.

14.  Extension Fee:  $0 to $10,000

• The Extension Fee only applies if you will miss the Required Opening Date established by your Franchise Agreement and you seek to extend that deadline.

• By paying an Extension Fee of $5,000, you may extend the Required Opening Date for a period of 90 days. You are only entitled to 2 extensions of the Required Opening Date.

15.  Total:  $454,000 to $1,371,000

• These figures are estimates based upon Steak ‘n Shake’s franchisees’ reported costs, quotes from vendors, and Steak ‘n Shake’s experience in building and opening restaurants, and Steak ‘n Shake cannot guarantee that you will not have additional expenses starting the business.

Freestanding Quick Service Format

• Total:  $1,480,895 to $1,720,895
  

Non-Traditional

• Total:  $316,000 to $715,000

Roadside Format

• Total:  $705,000 to $1,199,497