IU Scoops Marketing Presentation February 12, 2004

1. IU ScoopsMarketing PresentationFebruary 12, 2004

2. The Steak n Shake Story

3. AnnualReportCover

4. The Steak n Shake Story • Uniquely positioned 413 unit* restaurant chain operating in 19 states. • Founded in 1934, one of the oldest and proudest restaurant chains in the United States. • Full service, conveniently located, 24 hour restaurant with full menu (core product focus of Steakburgers and Milkshakes) delivered to your table or provided for take out and almost all units have a drive-thru * (of which 57 are franchised)

5. 50’s SNS

6. Restaurant

7. In-store

8. Customers

9. Overview The Emerging Strategic Direction An Introduction to the Steak n Shake Story

10. Steak n Shake is an institution with a strong heritage of successful execution with the opportunity to strengthen our foundation and expand our reach • Steak n Shake will continue to build on the values and economic engines that have fueled our progress • We will strengthen the foundation by improving leadership, guest service, associate satisfaction and margins, and then leverage this foundation into increased expansion • We are optimistic that these opportunities can translate into substantial earnings growth over time

11. The virtuous cycle on which we focus is based on the HBS Value Profit Chain, which may be the best demonstrated practice for service company leadership

12. We will be best in the world at … Guest Mission We are dedicated to becoming the BEST in the world at providing our guests a genuine, classic community diner experience with Steakburgers and hand-dipped Milk Shakes served fast by friendly and attentive associates whose mission is to create always more enthusiastic and loyal guests.

13. We recognize that our primary financial responsibility is to provide shareholders with strong returns and growth The Steak n Shake Shareholder Mission We are committed to serving our shareholders well by providing a financial return which exceeds the cost of capital on every investment, made possible through a constant focus on building and operating each Steak n Shake restaurant well, and by being a long-term source of growth by bringing our restaurants to an ever-expanding circle of raving fans.

14. Steak n Shake store economics provide an excellent return on investment Typical Unit Economics $ Development Cost Land $ 600,000 Site Improvements $ 300,000 Building $ 450,000 Equipment $ 400,000 $1,750,000 Pre-Opening Cost $ 130,000 $1,880,000 Net Sales $1,700,000 +/- 300,000 Cash Flow From $ 475,000 +/- 150,000 Restaurant Operations ROI 18-28%

15. We have continued to grow the number of stores in our system 413 404 284

16. Steak n Shake has many opportunities to back-fill in existing DMAs and expand to new DMAs in the future

17. Steak n Shake has been a public company since 1945, is traded on the NYSE, and has a strong cash flow that can be used to support future growth • Strong Balance Sheet • Cash Flow from operations of $51 million in fiscal 2003 • Capital expenditures of $31 million in Fiscal 2003 - mostly on store expansion • Excess cash was used to repurchase nearly 99,000 shares of the Company’s stock bringing repurchased shares to 3.4 million or 84% of the 4 million shares authorized • Borrowing capacity of $105M in place

18. Steak n Shake has clear economic engines that drive our success We recognize that our economic engine consists of: Stores which have the economies of scale to serve guests and associates well, (typically $1.4 + million dollar stores) while providing more than enough profits to pay for the cost of capital DMAs (marketing areas that support television) with more than enough operating contribution to provide the critical mass of marketing and overhead to support quality leadership, growing guest counts, and provide returns that exceed the cost of capital Expert Steak n Shake franchisees with a stake who use dedication, great service, and local marketing to make their stores successful to the point that they provide enough profits that they exceed the opportunity cost of Steak n Shake managing these stores

19. Based on a careful review of DMAs a winning formula has emerged that we will bring to each DMA • Good leadership with high operating standards • Plus • Solid locations • Plus • A critical mass of stores in DMA • Plus • Television • Equals • Almost Universal Success for Steak n Shake

20. The result of this outstanding business model has been the source of major value creation • Steak n Shake has steadily grown sales and earnings Systemwide Sales – Steak n Shake Adjusted Net Earnings (Non-GAAP)

21. Adjusted net earnings is a non-GAAP measure that excludes the provision for restaurant closings. • Net earnings in accordance with GAAP is adjusted for the $5.2 million ($3.4 million after tax or $.13 per diluted share) provision for restaurant closings recorded in the fourth quarter of fiscal year 2003. • Steak n Shake believes the provision is unusual in nature and would not be indicative of ongoing operating results. • A reconciliation of net earnings in accordance with GAAP to adjusted net earnings is as follows:

22. In the reporting of Fiscal 2003 results, we announced the decision to record provision for nine restaurant closures of $5.2M ($3.36M net of taxes - or $.13 per Diluted Share). • During 2003 we completed a review of all restaurants, identified problem stores and identified actions to maximize value from each store. • We determined that the best way to maximize shareholder value was to exit nine locations and secure the value from the sale of the property. • Most of these locations were in remote areas without the local critical mass of support to succeed. We have changed our real estate investment practices to address the underlying lessons learned. • By facing these issues, we have improved cash flow, future earnings and management focus on stores with true potential.

23. Earnings improved consistently over the last 3 years with growing momentum Diluted Earnings Per Share (adjusted)

24. FY 2004 Update First Quarter % Chance Net Earnings $4,590,141 +35% EPS $0.17 +31% System-wide Sales $136,299,158 +12.3% Revenues $114,,472,813 +12.2% Same Store Sales +11.2%

25. As a result of this performance Steak n Shake has received national recognition From 1997 to October 2002 - Forbes Best 200 Small Companies

26. Steak n Shake is an institution with a strong heritage of successful execution with the opportunity to strengthen our foundation and expand our reach • Steak n Shake will continue to build on the values and economic engines that have fueled our progress • We will strengthen the foundation by improving leadership, guest service, associate satisfaction and margins, and then leverage this foundation into increased expansion • We are optimistic that these opportunities can translate into substantial earnings growth over time

27. We will continue to build on the strong foundation of Steak n Shake which has proven to be successful since 1934 Expanding Our Reach Steak n Shake Heritage Steak n Shake Heritage Base Building a Stronger Foundation

28. We will strengthen that foundation by building on the four key elements of the virtuous cycle

29. We can build and strengthen the company by developing leaders who are capable of energizing associates in service of guests and shareholders • Reducing management turnover can provide savings of $1-2 million/year • Building GM bench strength will enable future expansion Reaching more people with stores and franchises Expanding Our Reach Steak n Shake Heritage Effective, empowering leaders - energizing associates Creating Greater associate satisfaction and growth... … Creating more, satisfied guests …with enhanced margins and profits for shareholders Steak n Shake Heritage Base Base Base Base Base Building a Stronger Foundation

30. The field management staffing level at the end of Period 13 has improved to 102%, exceeding the Goal of 100%.

31. We have made progress reducing management turnover

32. We can build and strengthen the company by improving associate satisfaction and reducing turnover • Reducing associate turnover can provide savings of $2-4 million/year • Longer retention and better training results in more satisfied guests Reaching more people with stores and franchises Expanding Our Reach Steak n Shake Heritage Steak n Shake Heritage Base Effective, empowering leaders - energizing associates Base Creating Greater associate satisfaction and growth... Base … Creating more, satisfied guests Base …with enhanced margins and profits for shareholders Base Building a Stronger Foundation

33. We have made some progress but crew turnover is still a large opportunity. It will be a major focus in 2004. .

34. Company-wide EYW scores have improved to over 90%

35. We are focused on bringing more guests to our stores and having them leave more satisfied • Improving same store sales by 3% annually through fast ‘n friendly service, value and innovation can drive $4-6 million more profits each year • Bringing more guests to our our stores, especially in struggling DMAs which can drive at least $3-4 million of profit Reaching more people with stores and franchises Expanding Our Reach Steak n Shake Heritage Steak n Shake Heritage Base Effective, empowering leaders - energizing associates Base Creating Greater associate satisfaction and growth... Base … Creating more, satisfied guests Base …with enhanced margins and profits for shareholders Base Building a Stronger Foundation

36. The acceptance of credit cards at all Steak n Shake restaurants has helped improve sales trends with larger guest checks and is also likely to support growing guest counts

37. We have recently proven that putting new markets on television provides significant upside potential

38. Television Penetration

39. We have created a new officer level position as VP of Consumer Insight & Innovation, initiated extensive consumer research and introduced 3 new shakes in June

40. In November, we introduced the new Takhomacard, our branded gift card, to all locations to help our guests purchase the two new Holiday Milk Shakes - Chocolate Mint and Eggnog.

41. We have also created a cause-related marketing event with America’s Second Harvest to encourage people to purchase larger dollar amounts on their gift cards

42. As a result of the shake promotion in June, shake sales increased 32.5% from prior year and 45.9% from the previous period.

43. Guest satisfaction continue to improve as measured by Mystery Shops Mystery Shop ScoresOverall Performance 86.0 83.5 81.2

44. After a difficult period ending in Q1 of ‘03, and in spite of negative industry trends same store sales trends have improved substantially

45. Comparable Gross Sales Percent Change During Non-Coupon Weeks '03 14 12 10 8 6 4 2 0 -2 -4 10/7 - 12/27 2/8 - 3/16 4/19 - 6/8 7/13 - 8/9 9/21-11/5 During non-coupon weeks same store sales have grown and each time have increased at a greater rate. Comparable Gross Sales +12.03 +11.7 Change verses prior year +4.9 +0.8 -2.21 = Coupon Period

46. We intend to translate growing sales into improved margins, driven also by becoming more efficient • Purchasing efficiencies, labor optimization, pricing and G&A improvements can drive another $3-5 million of profit over time Reaching more people with stores and franchises Expanding Our Reach Steak n Shake Heritage Steak n Shake Heritage Base Effective, empowering leaders - energizing associates Base Creating Greater associate satisfaction and growth... Base … Creating more, satisfied guests Base …with enhanced margins and profits for shareholders Base Building a Stronger Foundation

47. Revenue trends have been strong and are accelerating

48. Labor has also begun to improve vs. last year based on stronger volume and increased focus on the Labor Scheduling System

49. A combination of favorable markets and effective negotiations has resulted in an improvement in food cost, which is reversing in late ‘03 and early ‘04

50. Steak n Shake has delivered strong earnings improvement in the past three quarters