Despite a loyal following, 24-hour burger chain Steak n Shake (NYSE:SNS) still isn't seeing decent sales growth shake down to its bottom line.

To put it bluntly, its third-quarter results, released Thursday after the market closed, stunk. Total sales growth increased 2.1% as negative same-store sales of 4.3% offset any benefit of new store openings. Management's strategy of closing underperforming stores could help stem the unfavorable sales environment, but is not a very positive long-term sign. On the other hand, targeting store sales to outside groups could free up capital and lead to lucrative franchise revenue.

One quarter doesn't make a trend, but Steak n Shake is falling below its five-year trend of top-line growth in the high single digits. Earnings trends aren't looking so hot, either, as the company only eked out an earnings gain, thanks to store closing expenses and "higher commodity costs and minimum wage increases." To further turn off investors, management lowered its full-year earnings guidance to $0.40 to $0.48 from $0.53 to $0.67 as it continues to close underperforming stores and spend on the "evolution of the organization and completion of major IT projects."

Also, solid operating cash flow is being eaten up entirely by capital spending. To me, the recent challenging trends suggest that management is spending too much to maintain existing stores, open new ones, and find ways to stem the negative comparable-store trends. At the very least, it isn't spending wisely, because so far things haven't turned around.

If management can't find compelling ways to invest in its business, perhaps it should consider shifting capital to stock buybacks and dividends to benefit its shareholders. It could also look to realize the value of the real estate for  the 155 company-owned stores, or franchise existing locations, which is apparently one of IHOP's (NYSE:IHP) primary motivations in acquiring Applebee's (NASDAQ:APPB).

Investors are hoping that HBK Investments, which recently took a sizable stake in Steak n Shake, will find ways to help the burger chain improve its decisions about capital allocation. But until a potential catalyst appears, the company will remain on my watch list of stale restaurant concepts, along with CBRL Group (NASDAQ:CBRL), owner of the Cracker Barrel Old Country Stores; Ruby Tuesday (NYSE:RT); CEC Entertainment (NYSE:CEC), owner of Chuck E. Cheese; and Wendy's (NYSE:WEN) in the fast-food burger space.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.