Biglari Swings to $1.014 Million Q3 Profit as Revenue Rises

Biglari Holdings announced in its November 6, 2026 earnings release that it earned $1.014 million in the third quarter ended September 30, 2026, reversing a $5.291 million loss a year earlier. The Form 10-Q reported total revenue of $112.070 million, up from $99.738 million, with stronger restaurant and oil-and-gas results and a smaller investment loss helping to offset higher borrowing costs.

Pre-tax operating earnings, Biglari’s non-GAAP measure that excludes investment gains and losses, increased to $9.874 million from $6.854 million. Investment losses nevertheless reduced the quarterly result by $8.472 million, although the drag was smaller than the prior-year loss of $14.406 million. The 2026 investment figure comprised a $9.119 million loss from investment partnerships and $647,000 of other investment gains.

Earnings before income taxes were $1.402 million, and income tax expense was $388,000. Operating improvement did not translate fully into bottom-line earnings because partnership losses still absorbed much of the operating profit.

Franchise Fees Drive Restaurant Growth

Restaurant revenue increased to $76.820 million from $71.741 million, while restaurant earnings before income taxes rose to $10.721 million from $7.645 million. Steak n Shake reported an 18.2% increase in third-quarter same-store sales across domestic company-operated and franchise-partner-operated restaurants; the separate figures were 15.5% for domestic company-operated restaurants and 19.1% for franchise-partner restaurants.

Company-operated restaurant net sales edged down to $47.045 million from $47.462 million, a decline Biglari attributed to fewer company-operated units, while franchise-partner fees increased to $24.095 million from $19.166 million. Franchise-partner fees can include up to 15% of sales and 50% of profits, and most of that revenue comes from Biglari’s share of partner profits. The model therefore differs from a conventional sales-only royalty because partner profitability directly affects Biglari’s revenue.

The restaurant system had 426 company-operated and franchise restaurants at September 30, 2026, versus 441 a year earlier. Steak n Shake company-operated units declined to 123 from 141, while franchise-partner units increased to 186 from 173. Restaurant revenue growth therefore came mainly from the partner-fee stream even as Biglari operated fewer locations itself.

Oil and Gas Gains Meet Higher Interest Costs

Oil and gas revenue increased to $12.320 million from $7.372 million, and segment earnings before income taxes rose to $5.218 million from $666,000. Insurance moved in the opposite direction, with pre-tax earnings declining to $4.397 million from $5.247 million.

Those operating gains met a much larger interest bill. Interest expense on notes payable and other borrowings increased to $5.291 million from $829,000, absorbing a substantial part of the improvement in operating-segment earnings. The borrowing-cost comparison follows Steak n Shake’s September 30, 2025 five-year loan of $225 million, which carries a fixed interest rate of 8.8% and is secured by Steak n Shake real estate.

Nine-Month Earnings Benefit From Investment Gains

For the first nine months, net earnings increased to $26.409 million from $12.365 million, with investment gains of $22.132 million contrasting with investment losses of $4.154 million a year earlier. The operating measure moved in the opposite direction: pre-tax operating earnings fell to $12.007 million from $20.521 million. Operating-segment earnings before tax rose to $45.297 million from $36.668 million, but unallocated interest expense increased to $16.474 million from $2.581 million and corporate-and-other costs rose to $16.816 million from $13.566 million.

Operating cash flow declined to $38.488 million from $89.188 million. Management attributed the $50.700 million decrease to lower returns on partnership investments, which were $13.020 million versus $54.000 million in the first nine months of 2025.

The results leave a clear tension: restaurant and oil-and-gas performance improved, but higher financing costs limited the quarterly profit, while nine-month earnings growth was aided by investment gains as operating cash flow weakened. Whether cash generation catches up with the operating businesses’ improvement is a central question for subsequent results.