Biglari Holdings Inc. · NYSE:BH
Biglari — Steak & Shake — Proxy Contest (February 2008)
27 slides from Biglari's proxy contest presentation, Feb 21, 2008
Slide 1: Steak 'n Shake Management Presentation
Exhibit 99.1 Steak ‘n Shake Management Presentation February 2008 0
Slide 2: Forward-looking Statement
Forward-looking Statement Certain statements contained in this presentation represent forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In general, forward-looking statements include estimates of future revenues, cash flows, capital expenditures o
Slide 3: Executive Summary
m Steak n Shake has a long history of growth and profitability = Currently facing operating challenges that we believe are primarily related to brand execution and the macro economic environment m Management is focused on executing key initiatives critical to reversing the current trends = Board of
Slide 4: Steak 'n Shake Overview
Steak ‘n Shake Overview ■ 74 year heritage of quality, service and value ■ Iconic restaurant brand with passionate customer following ■ Menu features superior cooked-to-order Steakburgers™ and hand- dipped milk shakes ■ Unique restaurant concept ► High quality food ► Full table service ► Served on r
Slide 5: The Steak 'n Shake Concept
The Steak ‘n Shake Concept Superior Cooked-to-Order Food Friendly Drive-thru / Take-out Dining Service Room Service Attractive Value Proposition 4
Slide 6: Current Geographic Footprint
Current Geographic Footprint Company Owned Franchise ■ 435 company owned restaurants and 56 franchised restaurants in 21 states ■ Historical focus on Midwest and Southeast ■ “Cult-like” following in ■ existing geographies Brand recognition well beyond its current borders 5
Slide 7: Historical Perspective
Historical Perspective Number of Stores ■ 1992-2003: Period of accelerated growth ► Aggressive roll-out of stores - company- owned and franchise 413 ► Increase in sales and profit growth ■ 2003-2007: Investments intended to drive future 120 growth ► Less focus on store level execution ► Advertising
Slide 8: Executive Summary
m Steak n Shake has a long history of growth and profitability = Currently facing operating challenges that we believe are primarily related to brand execution and the macro economic environment m Management is focused on executing key initiatives critical to reversing the current trends = Board of
Slide 9: Challenging Operating Environment
Challenging Operating Environment ■ Fiscal 2007 same store sales declined 3.8% ■ Difficult operating environment we believe to be primarily the result of two key factors: ► Internal issues related to execution of the Steak ‘n Shake brand promise ► Impact of consumer economic issues creating signific
Slide 10: Primary Drivers of Same Store Sales Challenge
Primary Drivers of Same Store Sales Challenge Difficult External Consumer Store Level Brand Environment Execution ■ Gas prices ■ Increased store level complexity ■ Housing related issues ■ Diluted core equity advertising ■ Increasingly competitive message promotion environment ■ Pricing out of line
Slide 11: Challenges Reflected in Recent Performance
Challenges Reflected in Recent Performance Same Store Sales Revenues Y-o-Y ($mm) Growth Restaurant Operating Costs ($mm) ($mm) Net % of Sales Income (1) (1) 2007 Net Income includes a $3.3 million (net of tax) non cash impairment charge related to 14 underperforming restaurants and $1.2 million (net
Slide 12: Executive Summary
m Steak n Shake has a long history of growth and profitability = Currently facing operating challenges that we believe are primarily related to brand execution and the macro economic environment m Management is focused on executing key initiatives critical to reversing the current trends = Board of
Slide 13: Focus on Four Core Initiatives
Focus on Four Core Initiatives Management is focused on four core initiatives to address the current store sales issues and prepare for profitable future expansion ■ Simplifying all business initiatives ■ Intensifying focus on store level execution ■ Critically reviewing the Company’s cost structure
Slide 14: Simplifying all business initiatives
Simplifying all business initiatives Includes focused combination of initiatives aimed at increasing guest traffic and improving store execution: ■ Strategic marketing programs: ► Focused on promoting core steakburgers™ & milk shakes ► More aggressive on price promotion - current $2.99 double Steakb
Slide 15: Simplifying all business initiatives - con't
Simplifying all business initiatives - con’t ■ Menu simplification: ► Continuously evaluating all menu items for relevance, sales potential and enhancing store level execution ► 10-12 menu items identified for deletion with next menu printing in June ■ Store level process changes: ► Continue testing
Slide 16: Intensifying focus on store level execution
Intensifying focus on store level execution ■ Implementing an integrated store level execution plan: ► Leading from the front - emphasizing manager visibility in the ► dining Enhancedroomsuccess to insure guest satisfacton routines for general managers and district managers including simplified stor
Slide 17: Critically reviewing the Company's cost structure
Critically reviewing the Company’s cost structure ■ Actions already taken to reduce General & Administrative spending by $8.1 million annually ■ Continuing to critically review all aspects of infrastructure costs for potential further cost reductions ■ Executing supply chain savings initiatives for
Slide 18: Evolving the new unit prototype
Evolving the new unit prototype ■ New store prototype is evolution of current design with several objectives: ► Meet consumers desire for updated restaurants ► Increase average unit sales; ► Reduce the cost of new units; ► Provide economic remodel option; ► Improve return on capital; ► Enhances fran
Slide 19: Executive Summary
m Steak n Shake has a long history of growth and profitability = Currently facing operating challenges that we believe are primarily related to brand execution and the macro economic environment m Management is focused on executing key initiatives critical to reversing the current trends = Board of
Slide 20: Board of Directors in Place to Steward Change
Board of Directors in Place to Steward Change Current Board of Directors has the mix of skills and experience necessary to see the Company through current challenges: ■ 7 of 9 Directors are Independent under NYSE and SEC definitions (one is an “affiliated outsider” under ISS definitions); ■ Board is
Slide 21: Board Special Committee
Board Special Committee ■ Special Committee of the Board formed in mid-August to review all strategic opportunities available to the Company; hired Merrill Lynch as financial advisor. ► In October 2007, the Special Committee instituted a process to determine if shareholder value could be enhanced th
Slide 22: Special Committee Continued
Special Committee Continued ■ The Committee continues to receive inquiries from interested parties. ► Uncertain whether these inquiries will result in an offer that the Committee and Board could recommend to the shareholders. ■ We continue to focus our attention on continuing our turnaround plan and
Slide 23: Profile of Board Members
Profile of Board Members ■ Alan B. Gilman - Served since 1992. Mr. Gilman has a long ■ J. Fred Risk - Served since 1971. Mr. Risk has an history of senior leadership positions with Steak n Shake, extensive background with Steak n Shake, having worked with its including his current service as Chairma
Slide 24: Executive Summary
m Steak n Shake has a long history of growth and profitability = Currently facing operating challenges that we believe are primarily related to brand execution and the macro economic environment m Management is focused on executing key initiatives critical to reversing the current trends = Board of
Slide 25: Lion Fund Objectives
Lion Fund Objectives Company believes Lion Fund’s aggressive proxy fight, desire to take control of Company and some objectives are NOT in best interests of shareholders or Company: ■ Lion Fund has publicly stated intent to gain control of Company without paying any control premium to shareholders;
Slide 26: Lion Fund Objectives (Continued)
Lion Fund Objectives (Continued) ■ Lion Fund strategy to re-franchise all existing Company owned stores is not viable at present time because of two significant impediments: ► Current unit-level economics; ► Soft real estate markets. ■ Company supports logical re-franchising work when viable. ■ Seve
Slide 27: Executive Summary
Executive Summary ■ Steak n Shake has a long history of growth and profitability ■ Currently facing operating challenges that we believe are primarily related to brand execution and the macro economic environment ■ Management is focused on executing key initiatives critical to reversing the current