S&P lowers Steak n Shake

S&P said it lowered its corporate credit rating on Steak n Shake Inc. to CCC+ from B-.

The outlook is negative.

At the same time, the agency lowered the issue-level rating on the company's secured credit facility to CCC+ from B. The recovery rating is 3, indicating an expectation for meaningful (50% to 70%; rounded estimate: 60%) recovery for lenders in the event of payment default or bankruptcy.

“The downgrade reflects our view of Steak n Shake's capital structure as potentially unsustainable, driven by its weak operating performance and our view that increased restaurant industry competition will further pressure profitability and cash flow generation,” S&P said in a news release.

“Despite the company's low-price menu mix that has historically appealed to value-conscious customers, we think customer traffic in 2017 has remained negative because of competition, a trend we think will continue.”

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