Steak n Shake Operations Inc., a wholly-owned subsidiary of
Biglari Holdings Inc. (
, recently announced that it has inked its first international
development agreement with the Saleh Bin Lahej Group to spread its
footprints outside the U.S. As per the agreement, the company is
set to open around 40 restaurants across the United Arab Emirates
(UAE), with the first unit to come up in Dubai in 2013.
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The Saleh Bin Lahej Group owns and operates a chain of fast food
American restaurants brands in the Middle East. The company holds
franchise rights of well known brands such as − Chili's of
Brinker International, Inc. (
, Black Canyon Asian Cuisine, El Chico Mexican Restaurant, Macaroni
Grill, Cantina Laredo and The Pizza Company.
Dubai, one of the seven emirates within the UAE, is a famous
tourist hub and well-known for its cosmopolitan cuisines. Dubai has
a flourishing and competitive restaurant industry, which reported a
13.9% growth in 2011. The emerging restaurant industry coupled with
seamless amalgamation of a huge array of world cultures spurred
Steak n Shake to choose Dubai to launch its first restaurant
outside the U.S.
The UAE, often referred as high-income developing economy, offers
many cosmopolitan entertainment attractions, shopping centers, fine
dining and quality hotels. The table-service restaurants in the UAE
produce around $600 million annually, which is expected to grow by
30% to $780 million by 2015, dominated by American fast food
brands. Moreover, The GCC forecasts that the fast food industry in
the Saudi Arabian and UAE markets are expected to maintain a
compound annual growth rate (CAGR) of 5% in sales from 2010 to
However, Steak n Shake should be wary of its competitors. Some of
the top American fast food restaurateurs such as
Dunkin' Brands Group, Inc. (
Ruby Tuesday, Inc. (
Starbucks Corporation (
- already have a strong presence in the UAE.
San Antonio, Texas-based, Biglari Holdings was previously known as
The Steak n Shake Company. The company primarily owns, operates,
and franchises restaurants in the U.S. under the name 'Steak n
Shake'. Established in 1934, Steak n Shake is a leader in serving
finest burgers and shakes. Currently, Steak n Shake establishes and
operates around 500 restaurants units across the U.S.
Biglari Holdings is expected to release its third-quarter 2012
results on December 12. The Zacks Consensus Estimate for the third
quarter is currently pegged at $6.36 per share.
We currently have a long-term Neutral recommendation on the stock.
However, it carries a short-term Zacks #5 Rank (Strong Sell).