In its television ads, Steak n Shake
Unfortunately, after watching Steak n Shake's stock close 11% lower Thursday after a horrendous second-quarter report, maybe the company should look into rolling out hamburgers and shake machines.
Yes, it was that bad. Revenue fell by 6% to $190.5 million, weighed down by a 6.3% slide in same-store sales, or comps. Margins were slammed, with the company swinging to a net loss of $0.10 a share this time around from last year's profit of $0.21 a share.
The numbers are laughably disappointing when compared with chains like Burger King
The grim news on Steak n Shake is that comps could have been worse. Like most eateries these days, Steak n Shake is down to offering steep promotions to win over the hungry. The deals included a popular promotion in February offering double steakburgers with fries for $2.99 in a dozen core markets. Like Sonic
The deals may sound great to you as a penny-pinching diner, but they're margin killers when you consider rising food costs.
The company also teamed up with Seattle's Best Coffee to drum up breakfast sales at its 24-hour restaurants, offering items like bagel sandwiches and breakfast smoothies. It was a hit, with breakfast sales up 17% during the typically moribund morning hours, but breakfast items still account for just 4% of overall sales.
So just imagine how bad the comps would have turned out if it weren't for the breakfast initiatives and the margin-munching promotional pushes. Yes, Steak n Shake has problems.
Longtime Fool contributor Rick Munarriz lives in Burger King's hometown of Miami and hits "the BK lounge" often. He does not own shares in any of the companies in this story. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.