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Biglari Wants to Make You Money

NEW YORK (TheStreet) -- "I'm here to make everyone some damn money," said Biglari Holdings (BH) CEO Sardar Biglari at yesterday's shareholder meeting in New York. As I reported last month, I consider the BH annual meeting to be a must-attend event. I was not disappointed.

Biglari is a walking sound bite. That's not a negative, it's an observation. He is also a walking encyclopedia, quoting from Benjamin Graham's Intelligent Investor and Adam's Smith's Wealth of Nations; and not just the sentiments of each author, but also the exact page numbers where each was found. (I did not verify that he was actually correct with the page numbers, or was just blowing smoke, but am sure that someone who attended the meeting will.)


Many shareholder meetings are certainly not as well attended, or informative as the BH meeting, and there was much to be learned yesterday. For one, the company has not abandoned the notion of adopting a dual share class structure; one that would create a second class of shares with minimal voting rights, and a lower stock price that the current shares.

But there is also a $50 million rights offering on the horizon. While there was a registration statement released on this back in February, there were no details as to the terms, and it seemed as though the mention of the rights offering caught many at the meeting by surprise.

The company has big plans for its Steak 'n Shake business; including expansion, "beautifying" all current units, and expanding both domestically and internationally. Biglari also floated the notion of a new type of Steak 'n Shake unit, "Roadside," which would have no inside seating, and would require just $450,000 in capital per unit. The company will also be rolling out a new menu promotion in May, featuring four meals under $4.


On the subject of the Affordable Care Act (ACA) that has many restaurants scaling back employees' hours, Biglari called it a "non-event," and that his bigger worries include an increase in the minimum wage and the price of beef. He was about as animated on this issue as I've seen him. Biglari stated that the ACA at most would cost the company $5.6 million, while an increase in the minimum wage to $9 an hour would cost $12 million, and a move to $10 an hour $27 million.

On the subject of Cracker Barrel (CRBL) -- of which Biglari Holdings owns 20% and has sought and failed to obtain board seats -- Biglari is not giving up. He likened the experience of owning CBRL to going on vacation, and coming home to find that the maid has changed the locks. "Who owns this damn place anyway?" said Biglari, expressing his frustration, in a somewhat rare show of emotion.

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