Last week, a judge ordered Steak 'n Shake to pay up $7.7 million. The Biglari Holdings Inc.-owned chain became embroiled in legal drama after 286 store managers claimed they had worked 50- to 70-hour weeks without overtime pay.
On Friday, U.S. District Judge John A. Ross granted a $6 million award and demanded the company pay $1.6 million in attorney fees and $40,000 for "costs." According to the lawsuit, the St. Louis-based employees argued that Steak 'n Shake incorrectly classified them as exempt, while still requiring 50-plus-hour work weeks. They were also asked to simultaneously complete "non-managerial" tasks due to understaffing.
Trouble has been brewing elsewhere in the company, as well. In March, execs temporarily shut down 44 restaurants as sales continued to decline. "We close them to prepare them for franchise partners," franchise operations CFO Thomas Murray said in an email to Restaurant Business: "Some of the units have a franchise in process of taking over the unit. We have some new equipment as well."
"Same-store sales" have also reportedly fallen for 10 straight quarters, resulting in millions of dollars in losses.
Their legal woes are also far from over. Steak 'n Shake is currently battling a similar lawsuit brought on by 1,300 other managers. Meanwhile, the company is in mediation with the original plaintiffs, San Antonio Express-News reports, but according to a Securities and Exchange Commission filing from May 3, Biglari Holdings Inc. will appeal the verdict.
Any way you slice it, things are not looking good. Rumors have continued to swirl on Steak 'n Shake's future. Is the end in sight?
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