Compounding Machines

Selling Steakburgers: The Growth of a Corporate Culture

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A few weeks ago I purchased a book detailing the history of what is today a 490-store, $175-million market-cap company named Steak n Shake (SNS). My interest in the company stems from the fact that the Chairman and CEO of SNS, Sardar Biglari, is also the Chairman, President, etc. of Western Sizzlin’ (a company discussed in a separate post). I think exciting things are in store for the company as Biglari improves store-level profitability and eventually initiates a growth through franchising program. Oh, and they have top-notch chicken strips, french fries and Genuine Chili….check it out for yourself.  

The book, written in 2000, is only 110 pages. I hope fellow SNS owners find these notes useful in understanding the values that Gus Belt instilled in the organization that made the company what it is today.


The author, Bob Cronin, served as the company’s President from 1971 to 1981 and Chairman from 1971 until 1984. He oversaw the company’s growth from 57 stores in four states to 150 stores in seven states during the 1970s.

From the inside cover:

            No one is better suited to tell the story of Steak n Shake in its early years than Bob Cronin. He became president of the company in 1971, only two years after the founding Belt family had sold its interest. The pioneers who knew and worked with Gus Belt, the legendary man who opened the first Steak n Shake in 1934 in Normal, Illinois, where still active in operations.

            Cronin has recorded literally hundreds of memories of Belt’s life and methods in creating a unique American institution based on the steakburger. He has analyzed what it took to create a culture which today has thousands of adherents who would not eat anywhere else. Then he has told the story of the rapid and interesting growth of the company in the seventies, when the original dream in Illinois, Missouri, Indiana, and         Florida reached out across all of mid-America to form the basis of what is a phenomenon in both the business and pop culture history of America.

            This is not a “corporate history.” It is the personal story of the founding and rapid growth years of one of America’s best-loved eating establishments, told by the people     who lived it.

Here are my notes and various “fun facts” from Chapters 1-4 (notes from the rest of the book to follow soon):

  • After unsuccessful stints as a tire salesman among other things, Gus Belt acquired a Shell Oil station on Route 66 in Normal, Illinois
  • Gus Belt, founder of SNS, is described as “one of those men who grab and hold you, figuratively, by the force of their characters and their strong, individualistic personalities.”
  • “Fill ‘em up outside, then fill ‘em up inside” was Belt’s motto as his Shell station would offer chicken, fries and coleslaw (all for $.45) and beer for $.09
  • Belt came to realize that even though hamburgers and hot dogs had become American staples by the turn of the century, no one had really invented the perfect hamburger. Belt decided he would offer the highest quality hamburger for $.10, which in those days was twice what everyone else was charging.
  • In 1934, Belt took out the gas pumps and the Shell station became the first drive-in SNS.  The interior was, as it is today, white and black which was meant to symbolize “cleanliness and sanitation.”
  • The store achieved early success mostly on word-of-mouth advertising.
  • The second SNS location was opened in Bloomington, IL in 1936 (financed partly by an advance from Mrs. Belt) with 11 stools and about 50 parking spots
  • “In Sight It Must Be Right” – One of the first SNS slogans…it came from the fact that Belt believed in grinding the meat for steakburgers in open view so the customers could see how their burger is made (this was during the days when Board of Health standards were spotty at best)
  • Belt recognized the importance of quick service – pushed the cooking line time down to five minutes
  • With a limited budget in his first few restaurants – Belt made his own ice cream to use in shakes…(funny story how he obtained his first freezer to store the ice cream….Belt became an ice cream freezer salesman, used his first commission as a down payment for a freezer to be used at SNS, quit salesman position soon after)
  • By 1939, there were 8 SNS locations (Normal, two in Bloomington, two in Champaign, one in E. Peoria, one in Decatur and one in Danville)
  • 80% of sales were from curb service – the exterior of the stores were designed to have a “carnival feeling…which brought a little happiness into the dark Depression time.”
  • By 1943 there were 15 stores
  • Belt made all decisions on who would own or manage a SNS….reluctant to franchise, “wanting to own all the stores himself to reduce complications and increase his own revenues”
  • In the early years of development, Belt would undertake sale/leaseback transactions to finance his expansion plans….this method of “off balance sheet” financing still used by the company today albeit for less appealing reasons
  • In 1941-2, WWII posed a large threat for SNS…due to government rationing, SNS was short of beef so Belt got a 600-acre farm, bought his own cows and essentially bootlegged beef for SNS.
  • Built the first St. Louis store in 1948…9 more would be built there in Belt’s lifetime…would become one of the most successful markets for SNS
  • Sold stock in 1948 to fund growth…paid a dividend (as much as 50-60% of earnings) every year until late 70s
  • Early reason for success: “Gus appreciated his people, and they stayed with him. One reason was that management in the actual stores was so sound, so founded on practicality and excellence of performance.”
  • Belt used to look through the trash and plates returned from table service to see what people weren’t eating






Written by sdinvest

January 13, 2009 at 12:20 am

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