Steak n Shake started focusing on quality and its sales took off. | Photo: Shutterstock.
This is from the weekly restaurant finance newsletter The Bottom Line. To get this in your inbox every Monday morning, click here.
Steak n Shake, which went several years without reporting same-store sales, started doing again two years after its numbers showed positive results. That includes a 10.2% increase for the full year in 2025.
Longtime observers may be surprised, but they shouldn’t. The chain has started doing actual marketing, largely through social media and aimed at the MAGA crowd. But the real reason for its recent success is that the focus of its marketing is based on quality and not price. Spending most of your time about quality, at least between odd shots at chains your boss is targeting as an activist is generally a good thing.
That’s a real difference. The chain’s low-price-above-all marketing strategy, used for several years, nearly bankrupted the chain and drove a lot of franchisees out of the business. But ultimately customers want quality when they dine out. This stuff isn’t that hard, really.
A lot more restaurant chains are figuring this out, too. The first step Kevin Hochman took when he took over Chili’s, besides ditching robots, was to start improving menu items. Burger King is doing that this year and started with the Whopper. A big part of Domino’s recent success is rooted in CEO Russell Weiner’s decision to shift the company’s marketing focus to the quality of its food.
To be sure, customers do want value. But survey data tells us that consumers don’t want cheap food, either. They want quality food at a price they consider fair. And they want to feel good about what they are eating.
Restaurant chains that focus so much on discounts to get customers in the door cheapen the perception of their product. And then it gets that much more difficult to get them to pay higher prices for whatever premium products are on the menu, particularly when chains discount said products.
This week’s financial news
Pretty sure that 100% of the population has done a video in response to Chris Kempczinski’s Big Arch tasting. That said, I think the whole thing will ultimately be good for the entire fast-food sector, for the reasons stated above. It gets customers thinking about something other than price.
What the hell is Luckin Coffee up to?
Checked out Dutch Bros’ first Los Angeles location and came away thinking about the chain’s true growth potential.
Cracker Barrel sees the light at the end of what’s been a pretty dark tunnel.
I’m beginning to think that the sale to Jack in the Box was not good for Del Taco.
Speaking of Jack in the Box, it beat Sardar Biglari. And then named a new chairman.
Black Rock Coffee Bar is adjusting to life as a publicly traded restaurant chain. It’s not as easy as it seems, kids.
Hope that Starbucks’ supply chain staff enjoys hot chicken.
Restaurant Brands International is a cash-generating growth machine and investors don’t appreciate it enough. At least that’s what Patrick Doyle thinks.
Number of the week
Sweetgreen once had a $6 billion valuation. It does not have a $6 billion valuation any longer.
Quote of the week
“I already put my money in.” -Patrick Doyle, who invested in Restaurant Brands International when he took the executive chairman gig, imploring investors to buy the company’s stock.
On the blog
I wrote about winners and losers, Luckin Coffee and Black Rock Coffee Bar. Check out all my blog posts on The Bottom Line.
On the podcasts
On A Deeper Dive I spoke with Jim Bitticks, newly minted CEO of Dave’s Hot Chicken. On The Week in Restaurants we talked about Sweetgreen, burgers and coffee.
For questions, comments or story ideas, send me an email at jonathan.maze@informa.com. And follow me on Twitter at @jonathanmaze. And also LinkedIn. And TikTok.
