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Steak N' Shake Surprises With a Fiscal Q2 Profit


bablu

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Well, it certainly doesn't look like this ship is going to get sunk.  Where's Tiddman?  I'm three for three with him now! 

 

Sardar told me shortly after the sales numbers were released a couple of weeks ago, that the positive improvements in sales and customer traffic is only the beginning.  They've got much more work to do to get it to where it was a few years ago.  Those are things you like to hear from a CEO.  Cheers!

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Well, it certainly doesn't look like this ship is going to get sunk.  Where's Tiddman?  I'm three for three with him now!

 

This was an excellent quarterly report.  I'll admit that I was wrong about this one.  In addition to the return to profitability, SNS also met its fixed charge coverage ratio covenant for the first time in over a year.

 

Perhaps Sardar is a managerial "two-fer" -- as Buffett used to say about Tom Murphy at Cap Cities/ABC -- both a good capital allocator and excellent operational manager.

 

Congrats Sanjeev and to all the other longs in this name.  Well done.

 

wabuffo

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This was an excellent quarterly report.  I'll admit that I was wrong about this one.

 

well, whether it be as an sns bull, bear, or agnostic, i hope we continue to hear your thoughts going forward on this & other co's, wabuffo.

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Sardar's vacation is actually to be at work.  If he goes on vacation, all he'll be doing is reading.  I remember John Linnartz telling me this story of how all these people were playing in the hotel pool last year.  John walks over to Sardar and sees him sitting in a tracksuit on the lounger reading.  "Money never sleeps" is Sardar's favorite saying!  I don't think he does either.  Cheers!

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The Indianapolis Star had a short article about the AGM:

 

http://www.indystar.com/article/20090425/BUSINESS04/904250424/1279/BUSINESS04

 

What I actually liked were a couple of the comments made by readers:

 

Whether they want to admit it or not, the key to their turnaround has been the 4 Meals for $4 and the Mon-Fri Happy Hours with half price drinks. I can't tell you the number of hand-dipped milkshakes I have consumed since this special has started. What used to cost nearly $4 per shake now costs me $1.74. I have also been eating there more now that I don't have to pay $10 plus a tip to walk through the door. See you can have reasonable prices and still make a profit.

 

I think this is a very important comment.  Burger restaurants succeed based on their overall execution, but price and value play an enormous role.  The biggest difference between Sardar running the company and the previous management, is that Steak'n Shake food is actually incredibly competitive now with other burger chains, let alone sit-down burger restaurants.  Previous management had priced themselves out of the market because their operating costs had gotten completely out of whack.  Sardar can sell cheaper food because operations have gotten significantly more competitive.

 

Please open up a store in the airport

 

When I come into Omaha, one of the first things and last things I always see at Eppley is the Omaha Steaks cart at the airport.  Whether I buy anything or not, I completely associate that brand with steaks and Omaha.  If someone asked me to name a city for great beef, my first answers would always be Omaha and Kobe.  Not because the beef is necessarily better than other cities, but because those names are so ingrained in my head.  Why doesn't Indianapolis' airport have a Steak'n Shake restaurant?  Now with SNS' retail business, why can't they put a cheap cart somewhere near one of the terminals where people would start to associate with the brand?  Cheers!

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No need for recriminations Wabuffo. If I recall correctly, your criticisms were fair and accurate. The key to the turnaround was Biglari's realistic appraisal of the financial situation and his aggressive efforts to improve short-term cash flows.

 

Just imagine where the company would be if the previous management had managed to stay in place.

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