Steak 'n Shake is one of the most recognizable names in American fast-casual dining. Founded in 1934, the brand built its reputation on steakburgers and hand-dipped milkshakes, and today it operates hundreds of locations across the United States and internationally. For entrepreneurs who want to enter the restaurant franchise space, Steak 'n Shake offers an unusual and potentially lucrative model -- but understanding the full cost picture is essential before committing capital.
This guide breaks down every major cost component of opening a Steak 'n Shake franchise, explains the financing options available, and outlines how Crestmont Capital can help you structure funding to match your investment plan.
Steak 'n Shake operates under Biglari Holdings and has undergone a significant strategic pivot in recent years. The brand shifted from a traditional franchise model to a licensing model that places operators -- called "partners" -- in a profit-sharing arrangement. This makes it structurally different from most QSR franchises and requires careful analysis before you invest.
The chain serves burgers, fries, and milkshakes at a price point that competes directly with Five Guys, Shake Shack, and traditional fast-food brands. It has a loyal regional customer base, particularly in the Midwest and Southeast. As of 2024, the brand operates more than 300 corporate and partner-operated locations in the U.S.
Understanding how Steak 'n Shake differs from a standard franchise is the starting point for any capital planning conversation.
Steak 'n Shake's licensing model changes the cost structure compared to traditional franchises. Here is a detailed breakdown of what operators can expect to pay.
Under the partner program, Steak 'n Shake charges an initial license fee. This fee has been reported in the range of $10,000 to $175,000 depending on the agreement structure and location. Corporate-owned locations that are converted to partner-operated stores may carry different fee schedules than newly built units.
For new construction or a converted partner store, total startup investment typically falls between $1.1 million and $2.5 million. This range covers:
Partner-operated stores converted from corporate locations may have lower startup costs since equipment and buildout are already in place. However, operators still need working capital and may need to fund initial inventory and training.
Unlike traditional franchises that charge royalties as a percentage of gross sales, Steak 'n Shake's partner program operates on a profit-sharing model. Partners receive roughly 50% of the store's pre-tax profit after Steak 'n Shake takes its share. This means operators are not paying a fixed percentage of revenue -- they share net profits after costs.
This structure can be highly favorable in high-volume locations but requires careful cash flow management since the partner's take depends on profitability, not sales volume.
Partners contribute to national marketing funds and technology systems. These fees vary but are typically included in the profit-sharing structure rather than charged as a separate line item at the royalty level.
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Apply Now - No ObligationSteak 'n Shake's partner program is fundamentally different from traditional QSR franchising. Understanding this distinction is critical for financing purposes, because lenders evaluate these deals differently.
Rather than selling franchise rights outright, Steak 'n Shake licenses its brand to individual operators who manage day-to-day store operations. The company retains ownership of the physical assets in converted corporate locations, while the partner invests primarily in working capital, staffing, and inventory. For new builds, the partner or a developer bears construction costs.
Partners are responsible for hiring, scheduling, quality control, and customer experience. In exchange, they receive approximately half of the store's net operating profit. This creates strong incentives to run a tight, profitable operation.
Traditional SBA lenders are familiar with standard franchise disclosure documents (FDDs). The Steak 'n Shake partner program operates under a licensing agreement that may require additional lender due diligence. Some SBA lenders have approved loans for partner-program operators, but others require the brand to be on the SBA's approved franchisor registry. Working with a lender experienced in non-traditional franchise financing -- like Crestmont Capital -- matters here.
According to the U.S. Small Business Administration, SBA loans can be used to finance franchise and licensing agreements, but the structure of the agreement affects loan eligibility and terms.
There are several financing routes available for operators entering the Steak 'n Shake partner program or building a new location. Each has different qualification requirements, terms, and use cases.
The SBA 7(a) loan is the most widely used financing tool for franchise investments. Loan amounts go up to $5 million, with repayment terms of up to 10 years for working capital and up to 25 years for real estate. Interest rates are tied to the prime rate plus a lender spread, making them competitive.
The SBA loan program requires a personal guarantee, a minimum 10-20% equity injection from the borrower, and typically a 680+ credit score. The full application process -- from pre-approval to funding -- can take 60-120 days.
For operators building new locations or purchasing commercial real estate, the SBA 504 is a strong option. It combines a bank loan covering 50% of the project with an SBA-backed debenture covering 40%, leaving the borrower to inject 10%. This allows operators to preserve capital while acquiring long-term fixed assets at below-market rates.
Kitchen equipment, refrigeration units, milkshake machines, and POS systems represent a significant portion of the startup budget. Equipment financing allows operators to spread these costs over 36-84 months while using the equipment itself as collateral. Approval is faster than SBA loans -- often 24-72 hours -- and operators can preserve working capital for other startup expenses.
A business line of credit provides flexible access to capital for managing cash flow gaps, covering payroll during slow periods, or funding seasonal inventory. Lines of credit are revolving -- you draw what you need and repay it, then draw again. For a restaurant concept with seasonal or day-of-week volume fluctuations, a line of credit is a valuable safety net.
For operators who need capital quickly or who don't meet SBA requirements, traditional term loans from alternative lenders offer faster underwriting and more flexible qualification criteria. Interest rates are higher than SBA, but approval timelines are measured in days rather than months.
Unsecured working capital loans require no collateral and can fund in as little as 24-48 hours. These are useful for covering the first few months of operating expenses while the store builds revenue. Amounts typically range from $25,000 to $500,000 depending on business financials.
Crestmont Capital also offers restaurant business loans designed specifically for food service operators. These products are structured around the cash flow patterns of restaurant businesses, including revenue seasonality and high initial build-out costs.
From SBA loans to equipment financing to lines of credit -- we match you with the right product for your Steak 'n Shake investment.
Get Your Financing OptionsCrestmont Capital works directly with franchise and licensing operators to structure financing that fits the deal. Unlike a bank that evaluates your application against a rigid credit matrix, Crestmont's team understands the restaurant industry and has experience with partner-model operators.
Crestmont Capital's network includes SBA-approved lenders, equipment finance companies, and alternative capital providers. Rather than applying to one bank and waiting 90 days, operators work with a single advisor who shops the deal across multiple sources simultaneously. This produces faster decisions and better terms.
Most restaurant operators don't fund their entire investment with a single loan. A typical financing stack might combine an SBA 7(a) for leasehold improvements and franchise fees, equipment financing for kitchen assets, and a working capital line of credit for operations. Crestmont structures these layers to minimize monthly payments while ensuring sufficient liquidity.
For a deeper look at broader small business financing strategies, Crestmont's resource library covers the full range of options available to operators.
Steak 'n Shake partner opportunities sometimes move quickly -- particularly when corporate is converting existing locations. Crestmont's alternative lending products can approve and fund in 24-72 hours, ensuring operators don't lose a deal due to financing delays. SBA products take longer but are available for operators with longer lead times.
According to Forbes, alternative lenders have become increasingly important for franchise financing as traditional bank approval rates for small business loans remain below 30%.
The following scenarios illustrate how different operators might structure financing for a Steak 'n Shake investment. These are hypothetical examples for educational purposes.
Maria has 12 years of restaurant management experience and qualifies for the Steak 'n Shake partner program to operate a converted corporate store in Indianapolis. The upfront costs are primarily working capital ($120,000), initial inventory ($20,000), and a license fee ($50,000). Total need: $190,000.
She uses a combination of an unsecured working capital loan ($100,000) and a business line of credit ($90,000) to cover startup expenses without tying up her personal savings. Monthly payments total approximately $3,800, manageable on projected monthly revenue of $80,000+ once the store reaches break-even.
James and his business partner are building a new Steak 'n Shake location in a high-traffic suburban corridor in Tennessee. Total project cost: $1.9 million, including land, construction, equipment, and working capital.
They structure the deal with an SBA 504 loan covering $950,000 in real estate and construction, an equipment financing package of $350,000 for kitchen buildout, and a $100,000 working capital line. Their equity injection is $500,000 (approximately 26%), which exceeds SBA minimums and qualifies them for a better interest rate. Total monthly debt service: approximately $14,200.
David already operates two fast-casual locations and wants to add a Steak 'n Shake partner store to his portfolio. Because he has documented business revenue and clean business credit, he qualifies for an SBA 7(a) loan of $850,000 to cover leasehold improvements, equipment, and working capital at a partner-converted site. His existing business cash flow supports the new obligation, and approval takes 75 days from application to funding.
Angela is entering the restaurant industry for the first time but has $300,000 in liquid assets and a 740 credit score. She uses $200,000 as an equity injection into an SBA 7(a) loan of $700,000 to build out her location. Her strong personal financial profile and adequate equity injection help offset the lack of restaurant operating history. She also secures a $75,000 business line of credit for working capital flexibility.
Robert is offered a partner-conversion opportunity on a Steak 'n Shake location that needs to be finalized within 30 days. A traditional SBA loan timeline won't work. Crestmont Capital arranges a $175,000 traditional term loan funded in 10 business days, giving Robert enough capital to close the deal and begin operating. He refinances into an SBA product six months later once the business has established a revenue track record.
Patricia operates a profitable Steak 'n Shake partner store and wants to open a second location. She uses the revenue and business credit history from her first store to qualify for a commercial financing product that funds $500,000 in expansion costs. Her first-store profitability serves as the primary underwriting basis, allowing her to expand without diluting equity.
Steak 'n Shake's partner program has its own approval criteria, separate from lender requirements. Understanding both sets of qualifications helps you prepare a stronger application for each.
The brand looks for operators with:
The partner program is structured around owner-operators -- not absentee investors. Steak 'n Shake wants managers who will work in the store daily, not passive investors who will hire a general manager and step back.
For SBA loans, typical minimum qualifications include:
For alternative and non-SBA products, qualification requirements are more flexible. Crestmont Capital can work with operators who have credit scores as low as 580, depending on the product and collateral available.
The SBA's guidance on business credit recommends that prospective borrowers check and strengthen their business credit profile at least 90 days before applying for franchise financing.
For comparison with other franchise financing deals, see how operators structured funding for similar concepts in the Crestmont Capital blog on burger franchise business loans and the complete guide to Sonic Drive-In franchise financing.
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Apply Now - Free ConsultationDisclaimer: The information provided in this article is for general educational purposes only and is not financial, legal, or tax advice. Funding terms, qualifications, and product availability may vary and are subject to change without notice. Crestmont Capital does not guarantee approval, rates, or specific outcomes. For personalized information about your business funding options, contact our team directly.