Web Exclusive | January 2012 | By Danielle Beurteaux

Steak ‘n Shake Hits Broadway

Company introduces new prototype in its Big Apple debut.

Steak ‘n Shake opened its first New York City restaurant on January 12, and the chain used the opportunity to debut its new Steak ‘n Shake Signature counter-service prototype.

The new design is a leaner outfit that does away with the all-night schedule, some menu items, and table service. Customers will instead find a small, 22-seat, counter-service-only Steak ‘n Shake that offers a new organic beef hamburger, a high-tech drink machine, hand-cut fries, and beer and wine.

“The time was right [to open in New York],” says Jim Flaniken, senior vice president of marketing at Indianapolis-based Steak ‘n Shake, which is owned by San Antonio–based Biglari Holdings. “It’s the first of hopefully many to come in New York.”

Just north of Times Square on Broadway, next door to the famed Ed Sullivan Theater, the new unit is bright and sleek, with the company’s signature red as the dominant color. Bold graphic elements and dramatic lighting, including a yellow strip light that runs across the ceiling and down one wall, complement the décor.

The interior, which gives off a ’50s-hamburger-joint effect, is the brainchild of president and CEO Sardar Biglari, says vice president of operations Richard Scanlan. “This was really the CEO’s vision,” he says.

The Steak ‘n Shake Signature was designed for retail environments like strip centers, Flaniken says, not as stand-alone stores like the company’s classic outlets. It also comes with a lower point of entry for potential franchisees, at a base of $460,000.

“New concepts allow us to have franchisees come in with a lower investment,” he says. “This allows us to get into real estate we might not otherwise get into.”

Flaniken says the location of the first Signature will help make up for that fact that it does not include a drive thru like many traditional outlets.

“It’s a great area in terms of foot traffic,” Flaniken says.

“New concepts allow us to have franchisees come in with a lower investment. This allows us to get into real estate we might not otherwise get into.”

New Yorkers won’t be able to enjoy some of the Steak ‘n Shake menu items that are available for customers in other markets. Missing from the store’s menu are breakfast, salads, and sandwiches. Instead, the minimal menu focuses on the company’s core products: steakburgers and milkshakes. The leaner menu was designed with simple and speedy in mind and also to meet Americans’ increasing demand for organic options. The new Signature Steakburger is made from 6 ounces of 100 percent USDA-certified organic beef.

Customers will also have access to the Coca-Cola Freestyle machine, along with a selection of wine and bottled beer, plus a local brew, Brooklyn Lager, on tap.

Although New York is notorious for its high prices, the Signature’s prices are the same as at Steak ‘n Shake outlets across the country. Biglari made a commitment to keep menu prices as they are across the system in 2012.

“When you’re pushing a new concept, it’s pretty important to start with a lower price point, and ultimately you may see those increasing over time,” says Darren Tristano, executive vice president of food industry consultant Technomic. “But price will determine who uses the brand, and then ultimately execution and quality determines whether they come back.”

David Kincheloe, president of Golden, Colorado–based National Restaurant Consultants, says he’s not surprised Steak ‘n Shake is taking the opportunity in New York to launch a new prototype. Consumers expect change, Kincheloe says, and are always looking for something new to try along with familiar comfort food menu items.

“We encourage even successful clients to reinvent and improve their concepts,” he says. “Every four to seven years is prime.”

The timing on the new market and new prototype may especially be strong for Steak ‘n Shake, Tristano says, because the economy is rebounding and customers are increasingly interested in higher quality fast food.

“Considering their history, positioning, and price point, they’ve got as good a chance as any to succeed in the New York market,” he says.

While there has been plenty of interest in the new concept, Flaniken says, there are no firm plans for the next Steak ‘n Shake Signature. But the company sees the prototype as an opportunity to expand not just in New York, but also in markets across the country.

“We will be building Signatures in areas with classical Steak ‘n Shakes,” Flaniken says.

For a photo tour of the new store, click here.