S&P changes Steak n Shake to negative

S&P said it revised the outlook on Steak n Shake Inc. to negative from stable and affirmed its B- corporate credit rating.

The agency also affirmed the B issue-level rating to the company's senior secured credit facility. The recovery rating is 2, indicating an expectation for substantial (70% to 90%; rounded estimate: 75%) recovery for lenders in the event of default or bankruptcy.

S&P said the outlook revision reflects its expectation for continued weak customer traffic trends and elevated operating costs (including commodity and labor costs) to lead to lower overall sales and EBITDA.

The agency believes a significant turnaround in comparable restaurant sales and customer traffic is unlikely over the next 12 to 18 months amid weakness in the restaurant industry that is offsetting new restaurant and sales growth in Steak n Shake's franchise business.

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