Shares of The Steak n Shake Company (NYSE: SNS) are up about 5% today on an analyst report that hedge fund manager turned shareholder activist turned Steak n' Shake CEO Sardar Biglari is "making quick strides" toward a turnaround at the company.Biglari became chairman of the company back in June after a proxy contest that kicked out a regime that had underperformed for years, and became CEO earlier this month after the board spent a few months looking to bring someone in from the outside.
Biglari certainly qualifies as investor-friendly but he looks like could be overexposed in a role that involves turning around a restaurant chain. He's currently CEO of the much smaller Western Sizzlin Corporation (NASDAQ: WEST) chain, but his prior experience in the restaurant industry is pretty much limited to an investment in Friendly's that culminated in a sale to a private equity firm at a price that, in retrospect, appears to have been too high.
Stifel Nicolaus analyst Steve West said that Biglari appears to be laying the groundwork for a 2009 rebound but added that "the strategic plan will take time to implement and the consumer remains strained."
I'm skeptical about Biglari's chances at turning around Steak n' Shake, based on his lack of operating experience and inability to find an experienced outsider to take on the role of CEO. He's a smart guy, but I'd feel a lot more comfortable with Biglari as chairman and an industry veteran in the CEO's office.
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