Parsad Posted February 6, 2010 Share Posted February 6, 2010 Not a particularly favorable piece by IBJ. Cheers! http://www.ibj.com/steak-n-shake-hq-changing-its-name-moving-to-texas/PARAMS/article/16244 Link to comment Share on other sites More sharing options...
Nnejad Posted February 6, 2010 Share Posted February 6, 2010 The name change, moving HQ (from its biggest market!). . . It's a lot of unfavorable press, it may potentially detract some customers, and all for what reason??? Although to be fair, the HQ move is probably just a change on an SEC form, and not any actual change in operations or personnel. Still, people read it, and nothing good comes of it. Link to comment Share on other sites More sharing options...
valuecfa Posted February 7, 2010 Share Posted February 7, 2010 This is turning into an SNL skit ::): As if the name change from Steak N Shake to Biglari Holdings wasn't self-centered enough... Moving the HQ from Indianapolis to San Antonio. (It's cold up there in Indianapolis, why not just move everyone down to my hometown instead) A photo and greeting from Biglari now welcomes guests at each of Steak n Shake’s 486 locations in 21 states. (This one is really the cherry on top. Not that he is an unattractive guy, but come on...Seeing Biglari's mug at every Steak N Shake doesn't exactly fit the usual image of a theme restaurant. And he has been associated with the company for how many years now to warrant his picture in every restaurant? Usually, the company brands a fun/fictional Ronald Mcdonald, a Wendy's Girl with pig tails, a creepy Burger King guy, a talking chihuahua, etc. I hope he at least managed to smile for the photograph.) Look out for menu changes, like, Sardar Strawberry Milkshakes. Anyone want to bet we will soon see a dual share class structure in the next 12 months? Link to comment Share on other sites More sharing options...
Redskin212 Posted February 7, 2010 Share Posted February 7, 2010 I thought this comment was quite funny: Big Lari Indy ObserverFebruary 6, 2010 11:31 AM Any truth to the rumor that the Steakburger is being renamed the Big Lari Burger? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted February 7, 2010 Share Posted February 7, 2010 Usually, the company brands a fun/fictional Ronald Mcdonald, a Wendy's Girl with pig tails, a creepy Burger King guy, a talking chihuahua, etc. I hope he at least managed to smile for the photograph.) There is Dave from Wendy's. Link to comment Share on other sites More sharing options...
valuecfa Posted February 7, 2010 Share Posted February 7, 2010 Usually, the company brands a fun/fictional Ronald Mcdonald, a Wendy's Girl with pig tails, a creepy Burger King guy, a talking chihuahua, etc. I hope he at least managed to smile for the photograph.) There is Dave from Wendy's. Dave founded Wendy's, and at one time was very associated/connected to the brand i think he has earned the right to have his image associated with the brand in a major way. Although, i don't recall seeing a picture of Dave when visiting a Wendy's, only the red haired girl in pigtails. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted February 7, 2010 Share Posted February 7, 2010 A photo and greeting from Biglari now welcomes guests at each of Steak n Shake’s 486 locations in 21 states. (This one is really the cherry on top. Not that he is an unattractive guy, but come on...Seeing Biglari's mug at every Steak N Shake doesn't exactly fit the usual image of a theme restaurant. And he has been associated with the company for how many years now to warrant his picture in every restaurant? Usually, the company brands a fun/fictional Ronald Mcdonald, a Wendy's Girl with pig tails, a creepy Burger King guy, a talking chihuahua, etc. I hope he at least managed to smile for the photograph.) I was at my local SNS a few days ago and there was no picture of Sardar. I don't know that it is necessarily a bad thing. As Farnamstreet has said, having his name attached to the company will make him care about it more. I would also argue, that having his picture in the restaurants would make him care more to the level of service and repair that they are in; which might set some fears to rest of the company not spending enough on cap-ex. Link to comment Share on other sites More sharing options...
Parsad Posted February 7, 2010 Author Share Posted February 7, 2010 I don't know that it is necessarily a bad thing. As Farnamstreet has said, having his name attached to the company will make him care about it more. I would also argue, that having his picture in the restaurants would make him care more to the level of service and repair that they are in; which might set some fears to rest of the company not spending enough on cap-ex. This would only mean that I'm dealing with the wrong type of manager if this is true. What example would this set for the other executives, office staff or employees...only if my name is associated with the company will I do the best job possible? If employees are encouraged to own company stock, feel like they have a say in the operation of the company, and do their best work possible, why would this not be enough incentive for the CEO, since he is already the largest shareholder and highest paid employee? We can come to any justification we want for renaming the company Biglari Holdings...the truth, and I'm one of Sardar's biggest fans from day one (seven years ago when I first interviewed him, to today where SNS is our largest position)...is that this was not a prudent move and it contradicts everything Buffett tried to imprint on his managers, employees, friends, family and shareholders for the last 50 years. Cheers! Link to comment Share on other sites More sharing options...
shalab Posted February 7, 2010 Share Posted February 7, 2010 I dont know if putting Sardar's picture in every restaurant is true, didnt hear something like that happening in WEST. I dont think of it as an incentive, didnt see the politicians who put up their election sticks care about the roads where they were put up. It is put up for a different purpose. >:( Link to comment Share on other sites More sharing options...
SharperDingaan Posted February 7, 2010 Share Posted February 7, 2010 Most folks would wonder if there isn't just a little too much Hubris here. Agreed that while it can be a very effective strategy it can also come back to haunt, & the evidence isn't pretty. While we wish you all a success, it wouldn't hurt to consider how you might hedge some of this. SD Link to comment Share on other sites More sharing options...
goldfinger Posted February 7, 2010 Share Posted February 7, 2010 Sanjeev, I agree with your position on the name change: the name itself brings the wrong message to everyone. However, the way I explain this decision and the next steps is: - operational fixes are in the process of succeeding and operational management is in place. Now is the time for Sardar to focus on investing/capital allocation decisions. From San Antonio he can continue to drive WEST acquisition, Steak and Shake operational strategy, holdings - capital allocation - investment decisions, etc... while having a family life. - He is NOT the majority shareholder and the board needed to associate his name to the company more strongly. Moreover Sardar is now focused on holding type of management and needs no obstacle on his way. So while this detail is a mistake, doesn't the whole thing really make sense overall ? Link to comment Share on other sites More sharing options...
Parsad Posted February 7, 2010 Author Share Posted February 7, 2010 So while this detail is a mistake, doesn't the whole thing really make sense overall ? No, not at all. He is the Chairman & CEO of the company...what more authority is required to guide the direction of the company. Even if you rename the company Biglari Holdings, that doesn't give him any more authority or control then shareholders have already granted him. Someone can swoop in, buy a large stake of 15%+ and challenge Sardar for control. Having his name on the company isn't going to change that at all, nor the perception by anyone who tries to. The only thing that can give Sardar full control of the company is to have at least 51% of shareholders on his side. Sardar and the board have done a remarkable job in turning around Steak'n Shake. Shareholders were indebted to him for saving the company. At that point, no one could come in and win enough votes to steal control from him, since most shareholders felt he was doing a fabulous job. But stuff like the increased salary, reverse stock split, and name change are slowly going to turn some shareholders away...that means votes that he had locked up, may decide to vote against him if the time ever came when somebody wanted to challenge him for control. Cheers! Link to comment Share on other sites More sharing options...
goldfinger Posted February 7, 2010 Share Posted February 7, 2010 I cannot disagree with what you are saying. I have the same thoughts on the stock split, salary change and name change together. I am wondering what's next? I am not considering to sell yet, but I am watching much more carefully now as I feel less comfortable. Are you still optimistic and engaged or are you getting cold feet? Link to comment Share on other sites More sharing options...
valuecfa Posted February 7, 2010 Share Posted February 7, 2010 I cannot disagree with what you are saying. I have the same thoughts on the stock split, salary change and name change together. I am wondering what's next? I am not considering to sell yet, but I am watching much more carefully now as I feel less comfortable. Are you still optimistic and engaged or are you getting cold feet? I think it goes without saying that all this has nothing to do with his capital allocation talents. However, I think all this has revealed his youth and certain personality traits, and perhaps might portend to future management flaws that hint of a self-serving bias. (The last part may be a stretch, but time will tell). It's not a good thing for an activist investor to develop a reputation for a self serving/egotistical bias, as that may deter the management/shareholders of future target companies. Yet, one thing that stands out the most to me is the BOD's willingness to go along with everything, including the name change. This might demonstrate a lack of true independence or willingness to voice an opinion. Link to comment Share on other sites More sharing options...
goldfinger Posted February 7, 2010 Share Posted February 7, 2010 I think it goes without saying that all this has nothing to do with his capital allocation talents. However, I think all this has revealed his youth and certain personality traits, and perhaps might portend to future management flaws that hint of a self-serving bias. (The last part may be a stretch, but time will tell) Exactly my conclusions. Link to comment Share on other sites More sharing options...
Guest Bronco Posted February 7, 2010 Share Posted February 7, 2010 I believe these concerns (name change, salary) are legit. I believe Buffett took a low salary since inception for the following reasons: 1) Serious about not screwing s/h's 2) Was already a millionaire 3) Believe money left in Berkshire Hathaway would be worth more than taken as salary. I believe Buffett was a 100% shareholder guy. I don't see that with Biglari. SB better have great capital allocation skills (followed by great decisions). Otherwise, he will receive a lot of criticism. Having a small position with this eginima, I hope he does well. Link to comment Share on other sites More sharing options...
Myth465 Posted February 8, 2010 Share Posted February 8, 2010 Sanjeev, I agree with your position on the name change: the name itself brings the wrong message to everyone. However, the way I explain this decision and the next steps is: - operational fixes are in the process of succeeding and operational management is in place. Now is the time for Sardar to focus on investing/capital allocation decisions. From San Antonio he can continue to drive WEST acquisition, Steak and Shake operational strategy, holdings - capital allocation - investment decisions, etc... while having a family life. - He is NOT the majority shareholder and the board needed to associate his name to the company more strongly. Moreover Sardar is now focused on holding type of management and needs no obstacle on his way. So while this detail is a mistake, doesn't the whole thing really make sense overall ? By this logic we should be changing the name of every company when a new CEO comes in. Right? I think ego explains it, and I think saying its the wrong move says enough. Occam's razor - "When you have two competing theories that make exactly the same predictions, the simpler one is the better." Link to comment Share on other sites More sharing options...
goldfinger Posted February 8, 2010 Share Posted February 8, 2010 By this logic we should be changing the name of every company when a new CEO comes in. Right? I think ego explains it, and I think saying its the wrong move says enough. Again, I agree that it is a mistake and that it shows certain traits of character that make me want to re-assess my willingness to be partner with him for the long run... Link to comment Share on other sites More sharing options...
ragnarisapirate Posted February 8, 2010 Share Posted February 8, 2010 Threads like this are making me look forward to the annual meeting more and more... :D Link to comment Share on other sites More sharing options...
Parsad Posted February 8, 2010 Author Share Posted February 8, 2010 I am not considering to sell yet, but I am watching much more carefully now as I feel less comfortable. Are you still optimistic and engaged or are you getting cold feet? No, not at all...we have no plans on selling our shares. We don't invest in companies solely on management. We do like it when there is quality management in place, with a similar vision for a business, but we don't give any economic value to the manager themselves. They are the icing on the cake! Steak'n Shake is in better shape today, than in anytime in its history. It is an absolutely superb business that will do very well for years to come, as long as management and the board are willing to question each other's decisions...to feel free to critique, advise and consult with one another. If the board becomes too collegial, and they forgo their obligation to advise the CEO and he their guidance, then you may have issues in decisions that they make. That is where the owners of the business, the shareholders, need to make their voices heard. So far, the concerns have been minor...elevated salary, reverse split, name change...but they indicate the CEO's thought process. On the actual operations side, the decisions have been near perfect. So our job as shareholders, is to help steer the board and CEO when their interaction seems to have failed or produced less than an ideal outcome. Cheers! Link to comment Share on other sites More sharing options...
Guest dealraker Posted February 8, 2010 Share Posted February 8, 2010 One of these days I'd like someone on the board here to clue me in to the SNS interest as I can't quite grasp it all. No disrespect intended either. Link to comment Share on other sites More sharing options...
txlaw Posted February 8, 2010 Share Posted February 8, 2010 Boy, Biglari really should have just changed the name to SNS Holdings (or Western Holdings) or not at all. While I do not have the same worries as some shareholders about whether this name change demonstrates that he is shareholder unfriendly (see a couple of SNS threads back), it was definitely a tone deaf move on his and the board's part to do so at this time. One thing is for sure. He's gotta stop maintaining radio silence on this issue -- he needs to explain his rationale for the name change. Otherwise, people will naturally think that it was all about his ego. Also, I gotta quote a famous picante sauce company commercial . . . "New York City?!" Link to comment Share on other sites More sharing options...
Guest Bronco Posted February 8, 2010 Share Posted February 8, 2010 Txlaw - at what point do you walk around the chocolate factory before you recognize Mr. Wonka is a strange bird? SB is a little off. Link to comment Share on other sites More sharing options...
Parsad Posted February 8, 2010 Author Share Posted February 8, 2010 Txlaw - at what point do you walk around the chocolate factory before you recognize Mr. Wonka is a strange bird? SB is a little off. I don't agree with that statement at all. I believe it has more to do with immaturity and a young guy who has had enormous success to this point. It's easy to become a bit complacent when things have worked out very nicely for some time. Cheers! Link to comment Share on other sites More sharing options...
ragnarisapirate Posted February 8, 2010 Share Posted February 8, 2010 Also, I gotta quote a famous picante sauce company commercial . . . "New York City?!" When talking to Jonathan Dash (director of WEST, and shareholder of both WEST and SNS) at the WEST annual meeting last year, I asked him where he thought that the SNS annuals would be (I figured it would be Indy of NYC). He said that he thought the shareholder list would be looked at, with the meeting taking place in the city where there was the least economic impact on shareholder's pocketbooks. Link to comment Share on other sites More sharing options...
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