Last night after the market's close, Indianapolis-based casual dining chain Steak 'n Shake (NYSE:SNS) reported fiscal first-quarter financial results. An eighth consecutive quarter of same-store sales growth, in this case driven in part by holiday milkshakes (yum), helped the company overcome some challenges on the cost side and turn in 11% net income growth on a similar jump in sales. Not bad.
Rather than focus on the numbers, however -- though I do have to chide the company for including only a limited balance sheet and no cash flow statement -- I wanted to take a closer look at comments from CEO Peter Dunn, who said the goal this fiscal year is to "focus on the fundamentals of the Virtuous Cycle."
This isn't a new concept at the company, but it's one worth highlighting because of the way it underlies Steak 'n Shake's approach to business. Thankfully, it's explained in the recently filed 10-K.
The company focuses on five goals, and management believes that all good things, such as same-store sales, earnings, and store growth, emanate from them. The goals: developing strong leaders in the field, improving the satisfaction and training of store-level employees, getting more folks in the door, widening margins, and building the brand.
Why not just say, "Our goals are to grow same-store sales and earnings and add more stores"? Because that's not leadership; that's barely even direction. By identifying the things management believes are most important to the company's success, it not only helps its employees understand how to dedicate their time and expertise -- it shows them how not to.
Got a neat idea that doesn't fit above? Reconsider it. Got one that does? Let's hear it. Anyone who has ever sat in on a planning meeting knows how easily an organization can be pulled off track in an attempt to "do everything." (If you've got examples from your own experience, share 'em!)
In the meantime, Steak 'n Shake has made very clear just how important employee performance and capabilities are to its bottom line. Now, that may not seem like a surprising concept, given that the company works in a service industry. But think about it: Isn't it even more surprising that many companies have no clue how to find ways to measure the performance of their people?
That Steak 'n Shake puts personnel matters among its top five strategic priorities should please its employees. Sure. But the emphasis should also please its customers -- not to mention its investors, who've had plenty of reasons to be happy with Steak 'n Shake over the years.
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Fool contributor Dave Marino-Nachison doesn't own shares of Steak 'n Shake.
