Biglari Holdings Inc. (BH): Business Model Canvas [11-2024 Updated]

In the dynamic landscape of business, understanding the framework that drives a company is crucial for investors and analysts alike. Biglari Holdings Inc. (BH) presents a fascinating case with its diverse operations spanning restaurants, insurance, and energy. This blog post delves into the intricacies of Biglari's Business Model Canvas, highlighting its key partnerships, activities, resources, and more. Discover how this multifaceted company navigates its various markets and sustains its competitive edge.

Biglari Holdings Inc. (BH) - Business Model: Key Partnerships

Franchise partners for restaurant operations

Biglari Holdings Inc. maintains a network of franchise partners primarily through its Steak n Shake brand. As of September 30, 2024, there were 177 franchise partner units, a slight decrease from 181 units in the previous year. Franchise partner fees totaled $17,157,000 for the third quarter of 2024, down from $17,622,000 in the same period of 2023. For the first nine months of 2024, franchise partner fees reached $53,064,000, compared to $54,604,000 in 2023. The decrease in franchise royalties and fees is attributed to a reduction in the number of traditional units, which fell from 134 to 116 during the same period.

Insurance companies for underwriting and reinsurance

Biglari Holdings has established partnerships with various insurance companies, including its own subsidiaries like First Guard and Southern Pioneer. For the first nine months of 2024, the total premiums written amounted to $50,265,000, up from $47,715,000 in 2023. The underwriting gain for these operations was $2,910,000 for the first nine months of 2024, compared to $5,254,000 in 2023. The company's insurance operations also reported a net underwriting gain of $1,800,000 in the third quarter of 2024, reflecting strong performance despite competitive pressures.

Suppliers for food and beverage procurement

Biglari Holdings sources food and beverage supplies primarily for its restaurant operations. The cost of food at company-operated units during the third quarter of 2024 was $12,218,000, which represented 30.8% of net sales. This was an increase from $11,888,000 or 30.3% of net sales in the third quarter of 2023. For the first nine months of 2024, the cost of food was $35,549,000, 29.8% of net sales, compared to $34,038,000 or 29.4% in the previous year. The company has focused on maintaining strong relationships with suppliers to ensure quality and cost-effectiveness in its procurement processes.

Investment partnerships for capital allocation

Biglari Holdings engages in investment partnerships for capital allocation, primarily through its general partner, Biglari Capital Corp. As of September 30, 2024, the fair value of the interest in investment partnerships was $491,589,000, up from $472,772,000 at the end of 2023. The company's investment partnerships generated gains of $35,314,000 in the third quarter of 2024, a significant recovery from a loss of $89,599,000 in the same quarter of the previous year. These partnerships are critical for diversifying revenue streams and managing investment risks.

Biglari Holdings Inc. (BH) - Business Model: Key Activities

Managing and operating restaurant chains (Steak n Shake, Western Sizzlin)

Biglari Holdings operates several restaurant chains, primarily Steak n Shake and Western Sizzlin. In the third quarter of 2024, Steak n Shake reported net sales of $62,384 thousand, reflecting an increase from $61,886 thousand in the same quarter of 2023. For the first nine months of 2024, total revenues from restaurant operations reached $188,855 thousand, compared to $187,506 thousand in the prior year.

Steak n Shake’s same-store sales increased by 5.4% during the third quarter of 2024, contributing to the overall growth in revenue. The company operated 116 traditional franchise units as of September 30, 2024, down from 134 units a year prior. Franchise partner fees totaled $17,157 thousand for the third quarter of 2024, compared to $17,622 thousand for the same period in 2023.

Metrics	Q3 2024	Q3 2023	YTD 2024	YTD 2023
Net Sales (thousands)	$62,384	$61,886	$188,855	$187,506
Franchise Units	116	134	177	181
Franchise Partner Fees (thousands)	$17,157	$17,622	$53,064	$54,604

Underwriting and managing insurance policies

Biglari Holdings operates insurance businesses through Biglari Reinsurance, First Guard, and Southern Pioneer. The underwriting gain for First Guard in Q3 2024 was $1,366 thousand, down from $2,362 thousand in Q3 2023. Southern Pioneer reported a pre-tax underwriting gain of $912 thousand in Q3 2024, a recovery from a loss of $166 thousand in Q3 2023. The overall pre-tax underwriting gain for the insurance segment in Q3 2024 was $2,278 thousand, slightly up from $2,196 thousand in the same quarter of 2023.

Insurance Metrics	Q3 2024	Q3 2023	YTD 2024	YTD 2023
First Guard Underwriting Gain (thousands)	$1,366	$2,362	$3,497	$7,379
Southern Pioneer Underwriting Gain (thousands)	$912	$(166)	$186	$(728)
Total Pre-tax Underwriting Gain (thousands)	$2,278	$2,196	$3,683	$6,651

Conducting oil and gas exploration and production

Biglari Holdings has engaged in oil and gas exploration primarily through Abraxas Petroleum. In Q3 2024, oil and gas revenues totaled $9,574 thousand, a decrease from $12,159 thousand in Q3 2023. The total production costs for oil and gas in Q3 2024 were $4,425 thousand compared to $3,771 thousand in Q3 2023. Overall, the oil and gas segment reported revenues of $27,755 thousand in the first nine months of 2024, down from $35,123 thousand in the same period of 2023.

Oil and Gas Metrics	Q3 2024	Q3 2023	YTD 2024	YTD 2023
Oil and Gas Revenues (thousands)	$9,574	$12,159	$27,755	$35,123
Production Costs (thousands)	$4,425	$3,771	$13,206	$12,754

Engaging in brand licensing and media activities

Biglari Holdings is involved in brand licensing and media through its subsidiary Maxim. In Q3 2024, licensing and media revenues were $202 thousand, down from $268 thousand in Q3 2023. For the first nine months of 2024, revenues totaled $715 thousand compared to $1,624 thousand in the same period of 2023.

Licensing and Media Metrics	Q3 2024	Q3 2023	YTD 2024	YTD 2023
Licensing Revenues (thousands)	$202	$268	$715	$1,624

Biglari Holdings Inc. (BH) - Business Model: Key Resources

Established restaurant brands and franchise network

Biglari Holdings operates notable brands such as Steak n Shake and Western Sizzlin. As of September 30, 2024, there were 177 franchise partner units for Steak n Shake, down from 181 units a year earlier. The franchise royalties and fees generated by the traditional franchising business were $3,442 during the third quarter of 2024, compared to $4,073 during the same period in 2023.

The financial performance of company-operated units reflects a net sales increase of 1.2% to $39,660 for Q3 2024, driven by a 5.4% rise in same-store sales for Steak n Shake.

Skilled workforce across various business segments

Biglari Holdings employs a skilled workforce essential for its restaurant operations and insurance business. In the third quarter of 2024, labor costs at company-operated restaurants accounted for 33.2% of net sales, an increase from 31.1% in Q3 2023. This increase correlates with a rise in store-level managers to enhance operational efficiency.

Financial assets from investment partnerships

Biglari Holdings has significant financial assets through its investment partnerships. As of September 30, 2024, the fair value of interest in investment partnerships was $491,589, up from $472,772 at the end of 2023. The company reported investment partnership gains of $35,314 in Q3 2024, compared to losses of $89,599 in Q3 2023.

The total assets of these partnerships were $372,605 for Lion Fund and $382,895 for Lion Fund II.

Infrastructure for restaurant and insurance operations

Biglari Holdings has a robust infrastructure to support its restaurant and insurance operations. As of September 30, 2024, total property and equipment was valued at $380,622, showing slight growth from $380,491 at the end of 2023. The company also reported $29,891 in cash and cash equivalents, alongside investments totaling $102,902.

Lease obligations for the company stood at $91,989 as of September 30, 2024. The total lease liabilities amounted to $36,026, indicating a structured approach to managing operational costs.

Biglari Holdings Inc. (BH) - Business Model: Value Propositions

Diverse portfolio of businesses reducing risk exposure

Biglari Holdings Inc. operates a diverse portfolio that includes restaurant operations, insurance, and investment partnerships. As of September 30, 2024, the company had total assets of $371,365,000. This diversification helps mitigate risks associated with individual sectors, ensuring that downturns in one area can be offset by stability or growth in another. The company's restaurant division, primarily through Steak n Shake and Western Sizzlin, operates 468 locations. Furthermore, the investment partnerships under Biglari Holdings have shown fluctuations in performance but provide an additional revenue stream that can stabilize overall earnings.

Strong brand recognition in the restaurant industry

Biglari Holdings has established strong brand recognition, particularly through its Steak n Shake chain. As of September 30, 2024, net sales for the restaurant operations were reported at $119,210,000 for the first nine months of the year, reflecting a growth of 3.1% from the previous year. The brand's commitment to quality and customer service has contributed to its reputation, with same-store sales increasing by 5.4% in Q3 2024 compared to Q3 2023. This strong brand equity allows Biglari Holdings to maintain customer loyalty and attract new patrons, which is crucial in a competitive market.

Competitive insurance products with a focus on customer service

Biglari Holdings also operates insurance companies, including First Guard and Southern Pioneer, which offer competitive products in the market. In the third quarter of 2024, First Guard reported premiums written of $9,394,000, with an underwriting gain of $1,366,000. The focus on customer service is evident in the operational performance of these companies, which aim to provide tailored solutions for clients. This emphasis on customer satisfaction not only drives client retention but also enhances the company's reputation in the insurance sector.

Investment opportunities that aim for high returns

Biglari Holdings is also heavily involved in investment partnerships, which have shown significant variability in returns. For the third quarter of 2024, investment partnership gains were reported at $35,314,000, a stark contrast to losses of $89,599,000 in the same quarter of 2023. The company's strategic focus on high-return investments has allowed it to capitalize on market opportunities, thereby enhancing its overall financial performance. This approach to investments is not just about immediate gains but is also aimed at long-term value creation for shareholders.

Category	Q3 2024	Q3 2023	First 9 Months 2024	First 9 Months 2023
Net Sales (Restaurants)	$39,660,000	$39,195,000	$119,210,000	$115,613,000
Franchise Partner Fees	$17,157,000	$17,622,000	$53,064,000	$54,604,000
Investment Partnership Gains	$35,314,000	($89,599,000)	($22,591,000)	($24,507,000)
Insurance Premiums Written	$9,394,000	$9,351,000	$28,198,000	$27,465,000

Biglari Holdings Inc. (BH) - Business Model: Customer Relationships

Direct engagement through company-operated restaurants

Biglari Holdings operates a total of 143 company-operated restaurants as of September 30, 2024. This includes 11 closures from the previous year, reflecting a strategic shift in management. The net sales from these company-operated units were reported at $39,660 for the third quarter of 2024, representing a slight increase from $39,195 in the same quarter of 2023.

Support for franchise partners to ensure operational success

The franchise model is critical for Biglari Holdings, with 177 franchise partner units active as of September 30, 2024. Franchise partner fees were recorded at $17,157 during the third quarter of 2024, down from $17,622 in 2023. Over the first nine months of 2024, these fees totaled $53,064, a decline from $54,604 in the same period of the previous year.

The decrease in fees is attributed to higher food and labor costs faced by franchise partners, which impacted profitability. The company also supports its franchisees through rental income, which amounted to $5,780 in the third quarter of 2024.

Customer loyalty programs in restaurants

Biglari Holdings has implemented loyalty initiatives aimed at enhancing customer retention. Although specific metrics for the loyalty program's performance are not disclosed, the increase in same-store sales of 5.4% during the third quarter of 2024 indicates potential effectiveness in customer engagement.

Year	Same-store Sales Increase (%)	Customer Loyalty Program Engagement
2024 (Q3)	5.4	Increased participation
2023 (Q3)	N/A	Baseline established

Personalized service in insurance offerings

Biglari Holdings, through its insurance subsidiary, has focused on providing personalized service to its clients. For the first nine months of 2024, insurance premiums earned reached $53,674, up from $50,400 during the same period in 2023. Insurance losses and underwriting expenses were recorded at $45,205, reflecting a strong underwriting performance despite increased claims.

The underwriting gain for the first nine months of 2024 was $3,497, showcasing the effectiveness of personalized service in insurance offerings.

Biglari Holdings Inc. (BH) - Business Model: Channels

Company-operated and franchise locations for restaurant sales

As of September 30, 2024, Biglari Holdings operates a total of 143 company-operated Steak n Shake restaurants and 177 franchise partner units, alongside 116 traditional franchise units of Steak n Shake. In total, the company has 468 restaurant locations, which include both company-operated and franchise units.

During the first nine months of 2024, the revenue from restaurant operations reached $188,855,000, showing an increase from $187,506,000 in the same period of 2023. Franchise partner fees generated during this period were $53,064,000, while franchise royalties and fees amounted to $10,534,000.

Online platforms for marketing and customer engagement

Biglari Holdings utilizes digital marketing strategies to enhance customer engagement and brand visibility. The company employs online platforms to drive traffic to its restaurant brands, particularly Steak n Shake. The cost of marketing in the third quarter of 2024 was $3,182,000, representing 5.1% of total revenue.

Through these online platforms, Biglari Holdings can promote offers, receive customer feedback, and drive online orders, which are increasingly important in the competitive restaurant landscape.

Insurance agents and brokers for policy distribution

Biglari Holdings operates in the insurance sector through subsidiaries like First Guard and Southern Pioneer. The insurance premiums written for the first nine months of 2024 amounted to $50,265,000, up from $47,715,000 in the same period of 2023. The underwriting gain from these operations was $2,910,000 for the first nine months of 2024.

These insurance products are marketed primarily through agents and brokers, allowing the company to reach a wider audience effectively. The insurance segment remains a critical channel through which Biglari Holdings delivers its value proposition to customers.

Investment platforms for managing capital allocations

Biglari Holdings actively manages its capital through investment partnerships, which hold significant equity positions. As of September 30, 2024, the fair value of interests in these investment partnerships was approximately $491,589,000. The company uses these platforms to allocate capital strategically, enhancing shareholder value through investments in various sectors, including equities and real estate.

During the third quarter of 2024, the company reported investment gains of $4,740,000, reflecting the performance of its capital allocation strategies.

Channel Type	Details	Financial Metrics (2024)
Company-operated and Franchise Locations	Total of 468 locations including Steak n Shake and Western Sizzlin	Revenue: $188,855,000
Online Platforms	Digital marketing for customer engagement	Marketing Cost: $3,182,000
Insurance Distribution	Utilizing agents and brokers for policy sales	Premiums Written: $50,265,000
Investment Platforms	Strategic capital allocation through partnerships	Fair Value of Interests: $491,589,000

Biglari Holdings Inc. (BH) - Business Model: Customer Segments

Restaurant patrons seeking casual dining experiences

Biglari Holdings operates restaurants primarily through its Steak n Shake and Western Sizzlin brands. As of September 30, 2024, there were 143 company-operated Steak n Shake locations and 29 Western Sizzlin locations, contributing to a casual dining experience aimed at families and individuals seeking affordable meals. Net sales from these restaurant operations for the first nine months of 2024 totaled $119,210, reflecting a 3.1% increase compared to the same period in 2023.

Franchisees looking for established brand partnerships

Biglari Holdings also serves franchise partners, with 177 franchise partner units for Steak n Shake as of September 30, 2024. Franchise partner fees for the third quarter of 2024 were $17,157, down from $17,622 in the same quarter of 2023. The decrease was attributed to higher food and labor expenses for franchise partners.

Year	Franchise Partner Fees (Q3)	Franchise Partner Units
2024	$17,157	177
2023	$17,622	181

Individuals and businesses needing insurance coverage

Biglari Holdings operates insurance businesses, including Biglari Reinsurance, First Guard, and Southern Pioneer. For the first nine months of 2024, premiums written amounted to $28,198, compared to $27,465 in 2023. Underwriting gain from First Guard was $3,497, down from $7,379 in the same period of 2023, indicating a focus on individuals and businesses seeking comprehensive insurance solutions.

Investors interested in diversified business opportunities

Biglari Holdings attracts investors by offering diversified business opportunities through its various business segments, including restaurant operations, insurance, and investment partnerships. The company reported net earnings of $6,514 for the first nine months of 2024, compared to $10,899 in the same period of 2023. Furthermore, the carrying value of the investment partnerships as of September 30, 2024, was $201,591.

Year	Net Earnings	Carrying Value of Investment Partnerships
2024	$6,514	$201,591
2023	$10,899	$199,103

Biglari Holdings Inc. (BH) - Business Model: Cost Structure

Operational costs for restaurant management

The operational costs for restaurant management at Biglari Holdings primarily include costs of food and labor. During the third quarter of 2024, the cost of food at company-operated units was $12,218, representing 30.8% of net sales. For the first nine months of 2024, the cost of food totaled $35,549 or 29.8% of net sales. Labor costs for the same period were $13,158, accounting for 33.2% of net sales in the third quarter, and $38,694 or 32.5% during the first nine months. Below is a summary of the operational costs associated with restaurant management:

Cost Type	Q3 2024 Amount (in thousands)	Q3 2023 Amount (in thousands)	9M 2024 Amount (in thousands)	9M 2023 Amount (in thousands)
Cost of Food	$12,218	$11,888	$35,549	$34,038
Labor Costs	$13,158	$12,192	$38,694	$36,077

Insurance underwriting and claims expenses

Biglari Holdings' insurance operations, which involve underwriting, reported a pre-tax underwriting gain of $2,278 during the third quarter of 2024, compared to $2,196 in the same period of 2023. The net underwriting gain for the first nine months of 2024 was $2,910, down from $5,254 in 2023. The underwriting expenses for insurance operations were $14,397 in Q3 2024 and $12,964 in Q3 2023, with total insurance losses and underwriting expenses for the first nine months of 2024 reaching $45,205. Specifically:

Expense Type	Q3 2024 Amount (in thousands)	Q3 2023 Amount (in thousands)	9M 2024 Amount (in thousands)	9M 2023 Amount (in thousands)
Insurance Underwriting Expenses	$14,397	$12,964	$45,205	$39,244

Marketing and promotional expenditures

Marketing expenditures for Biglari Holdings during the third quarter of 2024 totaled $3,182, which represented 5.1% of total revenue, compared to $2,629 or 4.2% in the prior year’s third quarter. For the first nine months of 2024, marketing costs were $8,984, approximately 4.8% of total revenue, compared to $8,876 or 4.7% in the same period of 2023. The following table summarizes marketing expenditures:

Expenditure Type	Q3 2024 Amount (in thousands)	Q3 2023 Amount (in thousands)	9M 2024 Amount (in thousands)	9M 2023 Amount (in thousands)
Marketing Expenditures	$3,182	$2,629	$8,984	$8,876

Administrative and overhead costs across business segments

Administrative and overhead costs for Biglari Holdings amounted to $10,355 in Q3 2024, which was 16.6% of total revenue, compared to $10,720 or 17.3% in Q3 2023. For the first nine months, these costs were $35,101, making up 18.6% of total revenue, versus $31,973 or 17.1% in the same period of 2023. Below is a breakdown of administrative and overhead costs:

Cost Type	Q3 2024 Amount (in thousands)	Q3 2023 Amount (in thousands)	9M 2024 Amount (in thousands)	9M 2023 Amount (in thousands)
General and Administrative Costs	$10,355	$10,720	$35,101	$31,973

Biglari Holdings Inc. (BH) - Business Model: Revenue Streams

Restaurant sales from company-operated and franchise locations

In the third quarter of 2024, Biglari Holdings reported net sales of $39,660,000 from company-operated restaurants, compared to $39,195,000 in the same period of 2023. For the first nine months of 2024, net sales amounted to $119,210,000, up from $115,613,000 in 2023. The overall revenue from restaurant operations, including franchise partner fees and royalties, totaled $62,384,000 for the third quarter and $188,855,000 for the first nine months of 2024.

Franchise partner fees and royalties

Franchise partner fees were reported at $17,157,000 during the third quarter of 2024, slightly down from $17,622,000 in 2023. For the first nine months of 2024, these fees totaled $53,064,000, compared to $54,604,000 in the previous year. The company also earned franchise royalties and fees amounting to $3,442,000 in Q3 2024, down from $4,073,000 in Q3 2023, and $10,534,000 for the first nine months of 2024, compared to $12,456,000 in 2023.

Insurance premiums and investment income

Biglari Holdings generated insurance premiums and other related income of $18,247,000 in the third quarter of 2024, up from $16,624,000 in 2023. For the first nine months, this figure reached $53,674,000, an increase from $50,400,000 in the previous year. The underwriting gain attributable to the insurance operations was $1,800,000 for Q3 2024, reflecting a slight increase from $1,735,000 in 2023.

Oil and gas revenues from production and sales

In the oil and gas segment, Biglari Holdings reported revenues of $9,574,000 in the third quarter of 2024, a decrease from $12,159,000 in 2023. For the first nine months of 2024, oil and gas revenues totaled $27,755,000, down from $35,123,000 in the same period of 2023. The production costs associated with oil and gas were $4,425,000 for Q3 2024, compared to $3,771,000 in 2023.

Revenue Stream	Q3 2024	Q3 2023	First 9 Months 2024	First 9 Months 2023
Restaurant Sales (Company-Operated)	$39,660,000	$39,195,000	$119,210,000	$115,613,000
Franchise Partner Fees	$17,157,000	$17,622,000	$53,064,000	$54,604,000
Franchise Royalties	$3,442,000	$4,073,000	$10,534,000	$12,456,000
Insurance Premiums	$18,247,000	$16,624,000	$53,674,000	$50,400,000
Oil and Gas Revenues	$9,574,000	$12,159,000	$27,755,000	$35,123,000

Updated on 16 Nov 2024

Resources:

1. Biglari Holdings Inc. (BH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Biglari Holdings Inc. (BH)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Biglari Holdings Inc. (BH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.