Steak 'n Shake

The Steak 'n Shake restaurant, at 4002 Montana Sapphire Drive near Shiloh Crossing, has closed. The owner felt the never-profitable diner lacked community support.

LARRY MAYER/Gazette Staff

Montana’s only Steak ‘n Shake restaurant has closed on Billings' West End after nearly three years of operation.

Owner Spencer Erwin said Monday that he had struggled to keep employees since he opened in December 2013, and he felt the restaurant at 4002 Montana Sapphire Drive lacked community support.

The restaurant was never profitable, and Erwin estimated he hired 275 different people during his short tenure — a rate of six to 10 a month to maintain a staff of about 25.

“You just can’t get any traction with the customers, the community, when you’re constantly taking one step forward and two steps back,” said Erwin, a Gallatin Gateway resident.

The 3,500-square-foot facility in the Montana Sapphire subdivision was custom-built for Steak ‘n Shake, with an open space, 1950s diner concept and drive-through window.

It’s owned by a Gallatin County limited liability company, Silvertip Holdings, which lists Erwin’s wife, Mary Erwin, as the registered owner, according to the Montana Secretary of State Linda McCulloch’s office.

County appraisers value the building and land at $1.3 million.

George Warmer, the broker for the Montana Sapphire subdivision, said he’s looking to sell or lease the building, and he’s “confident” it could support another restaurant.

Illinois-based Steak ‘n Shake was founded in 1934 and has a strong presence in the Midwest and South. It has more than 500 quick-service restaurants nationwide but little presence in Western states.

Steak 'n Shake is owned by Biglari Holdings, a San Antonio, Texas-based investment firm.

The restaurant chain is known for fresh burgers and shakes and two dozen choices under $4. Steak ‘n Shake is known as a “quick service” store, an industry term meant to identify something between fast-food and a sit-down café or full-service restaurant.

According to the company’s website, a Steak ‘n Shake franchisee must prove a net worth of $1.5 million and have $500,000 in liquid cash to open a new restaurant.

The initial investment ranges between $1.375 million and $2.135 million to open the full restaurant, according to Steak ‘n Shake.

Erwin said harsh reviews on social media hurt his Billings restaurant, particularly because it’s the only Steak ‘n Shake for 600 miles, and he felt the quick-service concept didn’t catch on in a town with many fast-food options.

“I sort of understand now why there’s nine McDonald’s in Billings,” Erwin said.

(For the record, it's Yellowstone County that has nine McDonald’s: seven in Billings and one each in Lockwood and Laurel.)

Erwin said he tried to pay competitive wages on thin margins but still struggled to find quality workers.

Servers made minimum wage, $8.05 in Montana, and tips. Back-end cooks made between $9.50 and $11 an hour.

A low unemployment rate in Yellowstone County has created worker shortages, particularly for low-skill service jobs. Several fast-food restaurants in town have taken to advertising wages on their reader boards to attract workers. 

Yellowstone County's unemployment rate is about 3 percent, a full point below the statewide average and one of the lowest for a county in Montana. 

Erwin said that he had found developed solid employees toward the end, but he had been losing money for too long.

“I just would like to thank the loyal customers we did have, the people that did get it, what restaurant owners are faced with in Billings,” he said.

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Business reporter for The Billings Gazette.