When most companies report bad numbers in a tough economy, they're quick to blame their woes on the macro picture.This bothers me because it's pretty hypocritical: I have never once seen a company report good numbers in a good economy and tell investors in the press release that 'We're getting bailed out by the economy right now. We haven't made good strategic decisions, but hey, in a market like this, Richard Wagoner could make money! I can't believe how much we get paid for this!'
But when Steak n' Shake (NYSE: SNS) reported a loss of $9.8 million for the third quarter vs. break-even last year, the company's newly-installed CEO Sardar Biglari didn't blame high gas prices and low consumer confidence. Here's his statement from the press release:
In my view, our poor performance is not the result of poor economic conditions. Much of our operating shortfall, I believe, is the result of our own lack of execution. As a company that began in the midst of the Great Depression, we have a deep heritage from one of the great American brands and are fortunate to have attracted committed and passionate employees, benefits that we believe will allow us once again to become a thriving chain.
Granted, Biglari is in a different situation than most CEOs. He won control of the board of directors in a proxy fight after accumulating a large stake on the open market and immediately set about getting rid of the old regime that had led a campaign of massive value destruction.
Now Biglari has a chance to turn things around, but for what it's worth, I'm skeptical about whether his plans to reduce capital expenditures to nothing but maintenance will turn this company around long term. At least he's candid.
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Reader Comments (Page 1 of 1)
8-12-2008 @ 3:02PM
Bill Dollar said...
We haven't made good strategic decisions, but hey, in a market like this, Richard Wagoner could make money! I can't believe how much we get paid for this!'
Too bad this guy cannot replace the disasterous Rick Wagoner who since 2000 has been destroying General Motors Corporation.
8-12-2008 @ 3:46PM
gary said...
There burgers are great, but the prices are to high for everything they sell. Either increase the size of the burgers or lower the prices.
8-12-2008 @ 4:17PM
nfi said...
http://www.noisefreeinvesting.com/blog/ has a lot of posts on Steak n Shake.
Our most recent post talks about where the cash is going: http://www.noisefreeinvesting.com/blog/?p=353
8-13-2008 @ 11:43AM
Iridium said...
Once again the problem is not with Steak n' Shake's food but with terrible managers and substandard employees.
The last time I has there the waitress creeped me out so bad I don't think I am ever going back. Waiting 30 minutes for a milkshake didn't help. And there was the time that they used rancid whipped cream.
If you take care in hiring your workers then you will have a fine running restaurant. If you hire complete trash, you are going out of business.
8-15-2008 @ 5:15PM
Richard Irish said...
I happen to enjoy the burgers and fries at Steak N Shake as well as their shakes. They are tasty and hit the spot. However I don't enjoy the way quite a few of their stores are operated, and I certainly don't enjoy going to eat at near empty stores. The company's management has run this chain into the ground and it will be a tall order for Biglari or anyone else to try to revive the dismal state Steak N Shake is in.