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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

Commission file number 0-8445

THE STEAK N SHAKE COMPANY
(Exact name of registrant as specified in its charter)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý        No  o

        Number of shares of Common Stock outstanding at August 2, 2002: 27,484,736

THE STEAK N SHAKE COMPANY
INDEX

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The Steak n Shake Company
Consolidated Statements of Financial Position

See accompanying notes.

3

The Steak n Shake Company
Consolidated Statements of Earnings
(Unaudited)

See accompanying notes.

4

The Steak n Shake Company
Consolidated Statements of Cash Flows
(Unaudited)

See accompanying notes.

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The Steak n Shake Company
Notes to Consolidated Financial Statements
(Unaudited)

Basis of Presentation

        The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements.

        In the opinion of the Company, all adjustments (consisting of only normal recurring accruals) considered necessary to present fairly the consolidated financial position as of July 3, 2002, the consolidated statements of earnings for the twelve and forty weeks ended July 3, 2002 and July 4, 2001 and the consolidated statements of cash flows for the forty weeks ended July 3, 2002 and July 4, 2001 have been included.

        The consolidated statements of earnings for the twelve and forty weeks ended July 3, 2002 and July 4, 2001 are not necessarily indicative of the consolidated statements of earnings for the entire year. For further information, refer to the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended September 26, 2001.

Seasonal Aspects

        The Company has substantial fixed costs which do not decline as a result of a decline in sales. The Company's first and second fiscal quarters, which include the winter months, usually reflect lower average weekly unit volumes. Sales in these quarters can be adversely affected by severe winter weather.

Discontinued Operations

        The material components of the reserve for Discontinued Operations included in the consolidated statements of financial position were as follows:

        To date, the Company has disposed of ten of the eleven specialty restaurants operated by its subsidiary, Consolidated Specialty Restaurants, Inc. (CSR), including two specialty restaurants were leased or subleased to a third party, along with a license agreement entitling the lessee to operate the restaurants as Colorado Steakhouses. As of August 2002, the Company is negotiating to sell the last remaining specialty restaurant location.

Financial Instruments

        The fair value of cash and cash equivalents and short term investments approximate their carrying value due to their short-term maturities. Long-term investments consist principally of government debt securities that management has the intent and ability to hold until maturity. These securities, which mature in five years, are carried at amortized cost, which approximates fair market value.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        In the following discussion, the term "same store sales" refers to the sales of only those units open eighteen months as of the beginning of the current fiscal period being discussed and which remained open through the end of the fiscal period.

Results of Operations

        The following table sets forth the percentage relationship to total revenues, unless otherwise indicated, of items included in the Company's consolidated statements of earnings for the periods indicated:

(1)

Cost of sales and restaurant operating costs are expressed as a percentage of net sales.

Comparison of Twelve Weeks Ended July 3, 2002 to Twelve Weeks Ended July 4, 2001

Revenues

        Net sales increased $2,724,000 to $107,514,000, or 2.6%, due to a 4.9% increase in the number of Company-operated Steak n Shake restaurants. Same store sales decreased 1.9% due to a 4.4% decrease in customer counts somewhat offset by a 2.5% increase in check average. The increase in check average is primarily the result of a 1.9% weighted average menu price increase. The number of Company-operated Steak n Shake restaurants increased to 343 at July 3, 2002 as compared to 326 at July 4, 2001.

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Costs and Expenses

        Cost of sales decreased $141,000, or 0.6%. As a percentage of net sales, cost of sales decreased to 23.1% from 23.8%, primarily as a result of the menu price increases and decreases in dairy, potato, pork and chicken costs, somewhat offset by increased beef and produce costs.

        Restaurant operating costs increased $88,000, or 0.2%, primarily from the increased sales volume. Restaurant operating costs, as a percentage of net sales, decreased to 47.8% from 49.0% because of lower wage rates and reduced employee turnover, resulting from the softening in the labor market and improved employee recruitment and retention programs and a reduction in repair costs as compared to the prior year period.

        General and administrative expenses increased $502,000, or 6.7%. As a percentage of revenues, general and administrative expenses increased to 7.3% from 7.0%. The increase is primarily due to additional personnel and technology supporting human resources, payroll, and a sales forecasting and labor scheduling system and a field reorganization that added new field offices to better support key core markets like St. Louis and Chicago and to serve and support new markets.

        Rent expense increased $752,000, or 16.8%, primarily as a result of the completion of the sale and leaseback of eighteen Company-owned properties since the beginning of the fourth quarter of fiscal 2001.

        The $301,000, or 7.4%, increase in depreciation and amortization expense was attributable to the net depreciable capital additions since the beginning of fiscal 2001.

        Marketing expense decreased $57,000, or 1.5%. As a percentage of revenues, marketing expense decreased to 3.4% from 3.6%.

        Pre-opening costs decreased $139,000, or 26.6%, due to timing of new store openings in the third quarter of 2002 compared to the third quarter of 2001.

        Interest expense decreased $114,000, or 22.4%, due to decreased average net borrowings under the Company's senior note agreement and the revolving line of credit.

Income Taxes

        The Company's effective income tax rate increased to 36.3% from 35.8% for the quarter ended July 3, 2002. The increase in the effective rate is primarily due to increasing the state income tax accrual. A valuation allowance against gross deferred tax assets has not been provided based upon the expectation of future taxable income.

Net Earnings

        Net earnings were $6,768,000 ($.24 per diluted share), an increase of 12.6% compared to the prior year quarter, primarily as a result of an increase in operating margins of 190 basis points.

Comparison of Forty Weeks Ended July 3, 2002 to Forty Weeks Ended July 4, 2001

Revenues

        Net sales increased $12,769,000 to $346,640,000, or 3.8%, due to a 5.6% increase in the number of Company-operated Steak n Shake restaurants. Same store sales were flat which was attributable to a 2.2% decrease in customer counts somewhat offset by a 2.2% increase in check average. The increase in check average is primarily the result of a 2.3% weighted average menu price increase. The number of Company-operated Steak n Shake restaurants increased to 343 at July 3, 2002 as compared to 326 at July 4, 2001.

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Costs and Expenses

        Cost of sales increased $1,654,000, or 2.1%, primarily as a result of sales increases. As a percentage of net sales, cost of sales decreased to 23.2% from 23.6%, primarily as a result of menu price increases.

        Restaurant operating costs increased $2,178,000, or 1.3%, primarily due to the increased sales volume. Restaurant operating costs, as a percentage of net sales, decreased to 48.8% from 50.0% because of lower wage rates and reduced employee turnover, resulting from the softening in the labor market and improved employee recruitment and retention programs, and a reduction in gas heating costs as compared to the prior year period.

        General and administrative expenses increased $1,751,000, or 7.1%. As a percentage of revenues, general and administrative expenses increased to 7.5% from 7.3%. The increase is primarily due to additional personnel and technology supporting human resources, payroll and a sales forecasting and labor scheduling system and a field reorganization that added new field offices to better support key core markets like St. Louis and Chicago and to serve and support new markets.

        Rent expense increased $2,622,000, or 18.3%, as a result of the completion of the sale and leaseback of thirty-one Company-owned properties since the beginning of fiscal 2001.

        The $1,224,000 increase in depreciation and amortization expense was attributable to the net depreciable capital additions since the beginning of fiscal 2001.

        Marketing expense increased $375,000, or 3.2%. As a percentage of revenues, marketing expense remained constant at 3.5%. Marketing expenses increased primarily due to the commencement of television advertising in the Nashville and Grand Rapids markets in the second quarter of last year, the utilization of radio advertising and increased television production costs.

        Pre-opening costs decreased $608,000, or 29.0%, due to timing of new store openings.

        Interest expense decreased $431,000 due to decreased average net borrowings under the Company's senior note agreement and the revolving line of credit.

Income Taxes

        The Company's effective income tax rate increased to 36.2% from 35.8% for the forty weeks ended July 3, 2002. The increase in the effective rate is primarily due to increasing the state income tax accrual. A valuation allowance against gross deferred tax assets has not been provided based upon the expectation of future taxable income.

Net Earnings

        Net earnings were $17,911,000, ($.64 per share), and increase of 11.9% compared to the prior year due primarily to an increase in operating margins of 160 basis points.

Liquidity and Capital Resources

        Eleven Steak n Shake restaurants, including one franchised Steak n Shake restaurant, were opened during the forty weeks ended July 3, 2002. In addition, the Company completed the purchase of one franchised Steak n Shake restaurant in May of 2002. Eight Steak n Shake restaurants are currently under construction. For the forty weeks ended July 3, 2002, capital expenditures totaled $27,687,000 as compared to $28,325,000 for the comparable prior year period.

        The Company expects to open 17 Steak n Shake restaurants in fiscal year 2002. This level of expansion allows management to continue its focus on improving each and every guest experience through hospitality initiatives, especially in newer markets; to improve the quality and depth of the field

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organization through improved recruitment, enhanced training and staff development; and to aggressively market the brand through unique differentiation marketing. This development plan allows management to seek more highly productive new sites that will yield above average results. The average cost of a new Company-operated Steak n Shake restaurant, including land, site improvements, building and equipment approximates $1,650,000. The Company intends to fund capital expenditures, its stock repurchase program and meet working capital needs using existing resources and anticipated cash flows from operations.

        During the forty weeks ended July 3, 2002, cash provided by operations totaled $39,911,000, while cash generated by sale and leaseback transactions and other disposals of property totaled $14,880,000. In addition, proceeds from the sale of short term investments contributed $3,500,000. The Company also purchased $10,000,000 of five-year government bonds in the current year. During the forty weeks ended July 4, 2001, cash provided by operations totaled $28,788,000, while cash generated by sale and leaseback transactions and other disposals of property totaled $15,633,000.

        Net cash used in financing activities for the forty weeks ended July 3, 2002, totaled $11,115,000 compared to $11,038,000 in the comparable prior period.

        As of July 3, 2002, the Company had outstanding borrowings of $30,522,000 under its $75,000,000 Senior Note Agreement and Private Shelf Facility (the "Senior Note Agreement"). Borrowings under the Senior Note bear interest at an average fixed rate of 7.6%. On June 11, 2002, the Company and its lender agreed in principal to amend and restate the terms of the Senior Note Agreement to provide for $75,000,000 in new borrowings. The principal terms of the Senior Note Agreement are substantially the same but extend the issuance period to August 2005.

        There were no borrowings under the Company's $30,000,000 Revolving Credit Agreement (the "Revolving Credit Agreement") on July 3, 2002 and $1,000,000 in borrowings were outstanding on July 4, 2001. The Company's Revolving Credit Agreement bears interest based on LIBOR plus 75 basis points, or the prime rate, at the election of the Company. The Revolving Credit Agreement matures in January 2005. The Company's debt agreements contain restrictions, which among other things, require the Company to maintain certain financial ratios.

        The Company has a stock repurchase program that allows the purchase of up to 4,000,000 shares of its outstanding common stock. During the forty weeks ended July 3, 2002, the Company repurchased a total of 795,029 shares at a cost of $10,076,000. The repurchased shares will be used in part to fund the Company's Stock Option Plan, Capital Appreciation Plan and Employees' Stock Purchase Plan.

Effects of Governmental Regulations and Inflation

        Since most of the Company's employees are paid hourly rates related to federal and state minimum wage laws, increases in the legal minimum wage directly increase the Company's operating costs. Inflation in food, labor and other operating costs directly affects the Company's operations.

Impact of Recently Issued Accounting Standards

        With respect to goodwill and intangible assets acquired prior to July 1, 2001, companies are required to adopt SFAS No. 142 in its fiscal year beginning after December 15, 2001. The Company currently believes that the adoption of SFAS No. 142 will not have a material effect on the Company's results of operations.

Risks Associated with Forward-Looking Statements

        Certain forward-looking statements are contained in this Report and may be made by Company spokespersons based on current expectations of management. Those statements include, but may not be limited to, the discussions of the Company's expansion strategy, expectations concerning its future

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profitability, capital sources and needs, marketing plans and franchising programs. Investors in the Common Stock are cautioned that reliance on any forward-looking statement involves risks and uncertainties. Those risks and uncertainties include, but are not limited to, changes in competitive, economic or legal factors, changes in the tax laws and changes in accounting standards, as well as changes in internal factors such as changes in business strategies and the impact of restructurings and business conditions. Although the Company believes that the assumptions on which its forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements could be incorrect. In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company's plans and objectives will be achieved.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Company's primary market risk exposure with regard to financial instruments is to changes in interest rates. Pursuant to the terms of the Senior Note Agreement, the Company may from time to time issue notes in increments of at least $5,000,000. The interest rate on the notes is based upon market rates at the time of the borrowing. Once the interest rate is established at the time of the initial borrowing, the interest rate remains fixed over the term of the underlying note. The Revolving Credit Agreement bears interest at a rate based upon LIBOR plus 75 basis points or the prime rate, at the election of the Company. Historically, the Company has not used derivative financial instruments to manage exposure to interest rate changes. At July 3, 2002, a hypothetical 100 basis point increase in short-term interest rates would have had an immaterial impact on the Company's earnings.

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PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)

Exhibits

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(b)

Reports on Form 8-K.

No reports on Form 8-K were filed during the period covered by this report.

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SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 15, 2002.

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QuickLinks

ITEM 1. FINANCIAL STATEMENTS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K