ST. LOUIS — The Steak ’n Shake chain of restaurants owes St. Louis-area managers and their lawyers $7.7 million after a federal judge’s order earlier this month, and it is facing a demand of millions of dollars more for managers around the country.
On May 10, U.S. District Judge John Ross ordered the company to pay more than $6 million in back pay to managers and over $1.6 million in attorneys’ fees and costs.
The award came in a 2014 suit filed on behalf of St. Louis-area managers who said they were not being compensated for the overtime hours they worked. Brendan Donelon, one of their lawyers, said the “managers” were paid a salary but did the same type of work that the hourly employees were doing and did not have the type of managerial duties that would make them exempt from overtime rules.
Donelon said Ross’ May 10 judgment doubled a March jury award, as required under state and federal wage and hour laws.
He also said jury trials are rare in such cases. “Like a lot of class actions, there’s a lot on the line,” he said. But Donelon said jurors were unanimous, and quick, in returning a verdict for the managers and giving “us everything we wanted.”
The company can appeal. Lawyers for the chain did not return emails Monday seeking comment.
A second suit, filed in 2017 by an Illinois woman who said she routinely worked 55 hours a week, seeks to represent managers in markets outside of St. Louis.
In a May 8 court filing, lawyers on both sides said that a June 11 mediation could affect both cases.
Steak ’n Shake’s headquarters are in Indianapolis. The company is owned by Biglari Holdings in San Antonio, which also owns the Western Sizzlin chain, First Guard Insurance Company and Maxim magazine.
Biglari’s 2018 annual report says Steak ’n Shake has 626 locations, 413 of which are company-operated.
Steak ’n Shake lost $30.8 million in 2008, the year Biglari took over, on $610 million in revenue from 85 million customers. Customer counts peaked in 2015 with 118 million, and operating earnings of $39.7 million.
But by last year, customer counts had dropped by 15 million from 2015, and the company lost $10.7 million on net revenue of $760.6 million.
Same-store sales dropped 5.1 percent in 2018, and customer traffic dropped by 7 percent, said the annual report, which called the year a “significant disappointment.”
The chain temporarily closed restaurants in St. Ann and Ballwin in March. Eight other area stores closed temporarily in January.
The company website on Monday showed at least 12 of 43 St. Louis area restaurants have been temporarily closed. Other cities have had some locations shuttered as well. The website shows three of nine restaurants in Louisville, Ky., as temporarily closed, and 13 of 20 in Cincinnati. All of the company-operated locations are now being offered to franchisees through a program that requires an investment of $10,000, a full-time commitment to the restaurant and extensive training. The company takes 15 percent of sales and 50 percent of profits, the annual report says.