The Steak n Shake Company Reports Fiscal Second Quarter 2007 Results

INDIANAPOLIS, May 9  /PRNewswire-FirstCall/ -- The Steak n Shake Company (NYSE:SNS) today announced its revenues and earnings for the second quarter 2007 ended April 11, 2007.

  (Logo:  http://www.newscom.com/cgi-bin/prnh/20000606/STEAKLOGO )

  Highlights of the fiscal second quarter include:
  -- Total revenues increased 2.3% to $202.2 million
  -- Net earnings were $6.0 million
  -- Diluted earnings per share were $0.21

  Fiscal Second Quarter 2007 Results


Total revenues for the fiscal second quarter 2007 grew 2.3% to $202.2 million compared to the same quarter last year.  Same-store sales declined 4.7% with approximately 1.7% of the decline related to adverse weather in February and March that impacted much of Steak n Shake's Midwest market.

Net earnings for the fiscal second quarter 2007 were $6.0 million, or $0.21 per diluted share, compared to $8.5 million, or $0.30 per diluted share, in the prior year period.

Peter Dunn, President and Chief Executive Officer commented, "While we continue to make progress on key operating fundamentals, it has not been enough to offset economic challenges.  During the quarter we experienced the impact of adverse weather in our core markets as well as consumer reaction to rising gas prices and higher interest rates.  In addition, our Southeastern markets have been further impacted by regional economic factors.

"While fiscal 2007 continues to be a very challenging year, we are determined to shape our future by enhancing the design and execution of the Steak n Shake business model based on recently completed research called the 'Guest Winning Promise' and related projects.  This research provides powerful insights on how to optimize critical dimensions of the business including the design of our service model, food offerings as well as building interior and exterior design.  We believe these insights have the potential to drive same store sales and enhance the economics of Steak n Shake over time."

As of April 11, 2007, there were 490 Steak n Shake restaurants operating in 20 states, including 439 Company-owned restaurants and 51 franchised units. During the quarter, the Company opened 6 new restaurants in four states and one franchise unit.

Fiscal 2007 Guidance

Given the difficult economic environment outlined above, the Company is revising the full year diluted earnings per share guidance for fiscal year 2007 to a range of $0.53 to $0.67.  This includes a non-cash charge of $0.14 to $0.17 of fully diluted earnings per share related to the anticipated closure of 10 to 15 underperforming units during the remainder of fiscal 2007, and $0.04 to $0.05 of diluted earnings per share of non operating expenses related to evolution of the organization and completion of major IT projects. These expenses will be incurred in the back half of the 2007 fiscal year. This compares to the previous range of $0.90 to $1.00.

The revised guidance is based on expected same store sales of down 2% to 4%, which is being revised from the previous same store sales guidance range of positive 1% to down 3%.

The Company also reaffirmed the opening of approximately 15 Company-owned restaurants and at least 7 franchise units during fiscal 2007.

New Board of Directors Member

The Company is also pleased to announce that Geoffrey Ballotti recently joined its Board of Directors.  Mr. Ballotti is a graduate of Colby College and Harvard Business School.  He is a senior executive with Starwood Hotels & Resorts Worldwide and currently serves as the President of its North American division.  Mr. Ballotti will serve on the Company's Audit, Nominating/Corporate Governance and Personnel/Benefits Committees.

Investor Conference Call and Webcast

The Steak n Shake Company will broadcast its investor conference call live over the Internet at 5:00 p.m. Eastern Time, 4:00 p.m. Central Time today. Hosting the call will be Peter Dunn, President and Chief Executive Officer, and Jeffrey A. Blade, Senior Vice President and Chief Financial Officer.

Interested investors and other parties may listen to a simultaneous webcast of the conference call by logging onto the Company's website at http://www.steaknshake.com/.  The on-line replay will be available for a limited time immediately following the call.

The call can also be accessed live over the phone by dialing [phone], or for international callers, [phone].  A replay will be available one hour after the call and can be accessed by dialing [phone], or for international callers, [phone].  The passcode for the replay is 6374264.  The replay will be available until May 16, 2007.

About Steak n Shake

Steak n Shake is a full service, casual dining restaurant serving a core menu of its famous STEAKBURGER(TM) sandwiches, thin 'n crispy french fries, old fashioned hand-dipped milk shakes, chili, home style soups, fresh salads, a variety of desserts and breakfast.  All of the food is prepared to the guest's order and served by friendly, well-trained associates.  Steak n Shake restaurants feature full-service dining areas, counter service and drive-thru windows and are open 24 hours a day, seven days a week.

This press release contains forward-looking information.  In general, forward-looking statements include estimates of future revenues, cash flows, capital expenditures, or other financial items, and assumptions underlying any of the foregoing.  Forward-looking statements reflect management's current expectations regarding future events and use words such as "anticipate", "believe", "expect", "may", "will", and other similar terminology.  These statements speak only as of the date they were made and involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed in forward-looking statements.  Several factors, many beyond our control, could cause actual results to differ significantly from our expectations, such as the following: effectiveness of operating initiatives; changes in economic conditions; effectiveness of advertising and marketing initiatives; harsh weather conditions, primarily in the first and second quarters; availability and cost of qualified restaurant personnel; changes in consumer tastes; changes in consumer behavior based on publicity or concerns relating to food safety or food-borne illnesses; effectiveness of our expansion plans; changes in minimum wage rates; changes in food commodity prices; completion of merger or acquisitions and successful integration of those transactions; and changes in applicable accounting policies and practices.  The foregoing list of important factors is not intended to be all- inclusive as other general market, industry, economic, and political factors may also impact our operations.  Readers are cautioned not to place undue reliance on our forward-looking statements, as we assume no obligation to update forward-looking statements.

                        THE STEAK N SHAKE COMPANY
              CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

                                                   SIXTEEN
                                                 WEEKS ENDED
                                        4/11/2007           4/12/2006
  (Amounts in $000's,                  (UNAUDITED)         (UNAUDITED)
   except share and per share data)
  Revenues
      Net sales                        $201,055   99.5%    $196,520   99.4%
      Franchise fees                      1,096    0.5%       1,137    0.6%
                                        202,151  100.0%     197,657  100.0%

  Costs and Expenses
      Cost of sales(1)                   46,188   23.0%      44,601   22.7%
      Restaurant operating costs(1)     101,783   50.6%      98,283   50.0%
      General and administrative         17,551    8.7%      16,303    8.2%
      Depreciation and amortization       9,825    4.9%       8,715    4.4%
      Marketing                           9,148    4.5%       9,154    4.6%
      Interest                            4,242    2.1%       3,106    1.6%
      Rent                                4,255    2.1%       3,873    2.0%
      Pre-opening costs                     812    0.4%         977    0.5%
      Provision for store closings         (127)  -0.1%        (103)  -0.1%
      Other income, net                    (539)  -0.3%        (438)  -0.2%
                                        193,138   95.5%     184,471   93.3%

  Earnings Before Income Taxes            9,013    4.5%      13,186    6.7%

  Income Taxes                            3,021    1.5%       4,655    2.4%


  Net Earnings                           $5,992    3.0%      $8,531    4.3%

  Net Earnings Per Common and
   Common Equivalent Share:
      Basic                               $0.21               $0.31
      Diluted                             $0.21               $0.30

  Weighted Average Shares
   and Equivalents:
      Basic                          28,025,019          27,730,596
      Diluted                        28,230,461          28,077,224

  (1) Cost of sales and restaurant operating costs are expressed as a
      percentage of net sales.



                        THE STEAK N SHAKE COMPANY
              CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

                                                 TWENTY-EIGHT
                                                  WEEKS ENDED
                                        4/11/2007           4/12/2006
  (Amounts in $000's,                   (UNAUDITED)         (UNAUDITED)
   except share and per share data)
  Revenues
      Net sales                        $347,513   99.5%    $334,372   99.4%
      Franchise fees                      1,904    0.5%       2,026    0.6%
                                        349,417  100.0%     336,398  100.0%

  Costs and Expenses
      Cost of sales(1)                   79,258   22.8%      76,121   22.8%
      Restaurant operating costs(1)     177,251   51.0%     168,074   50.3%
      General and administrative         31,106    8.9%      28,775    8.6%
      Depreciation and amortization      17,051    4.9%      15,112    4.5%
      Marketing                          15,574    4.5%      15,006    4.5%
      Interest                            7,375    2.1%       5,893    1.8%
      Rent                                7,303    2.1%       6,407    1.9%
      Pre-opening costs                   1,746    0.5%       2,156    0.6%
      Provision for store closings         (193)  -0.1%        (103)   0.0%
      Other income, net                    (944)  -0.3%      (1,094)  -0.3%
                                        335,527   96.0%     316,347   94.0%

  Earnings Before Income Taxes           13,890    4.0%      20,051    6.0%

  Income Taxes                            3,733    1.1%       6,861    2.0%


  Net Earnings                          $10,157    2.9%     $13,190    3.9%

  Net Earnings Per Common and
   Common Equivalent Share:
      Basic                               $0.36               $0.48
      Diluted                             $0.36               $0.47

  Weighted Average Shares
   and Equivalents:
      Basic                          27,974,493          27,689,806
      Diluted                        28,191,845          28,019,211

  (1) Cost of sales and restaurant operating costs are expressed as a
      percentage of net sales.



         CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


                                       4/11/2007               9/27/2006
  (Amounts in $000's)                 (UNAUDITED)             (UNAUDITED)
  Assets
      Current assets                     $29,775                $30,920
      Property and equipment - net       508,312                490,142
      Other assets                        24,542                 21,459

      Total assets                      $562,629               $542,521

  Liabilities and Shareholders' Equity
      Current liabilities                $91,781                $83,083
      Deferred income taxes and credits    9,707                  9,605
      Obligations under capital leases   142,220                143,996
      Senior note                         17,761                 18,802
      Shareholders' equity               301,160                287,035

      Total liabilities and
       shareholders' equity             $562,629               $542,521



             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                             Twenty-Eight Weeks Ended
                                           4/11/2007           4/12/2006
                                          (UNAUDITED)          (UNAUDITED)

  (Amounts in $000's)
  Net cash provided by operating
   activities                                 19,710              39,547
  Net cash used in investing activities      (35,774)            (46,143)
  Net cash provided by (used in)
   financing activities                       13,555               8,008

  Increase (Decrease) in Cash and Cash
   Equivalents                                (2,509)              1,412


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DATASOURCE: The Steak n Shake Company



CONTACT:  Jeffrey A. Blade of The Steak n Shake Company, [phone],





Web site:  http://www.steaknshake.com/

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