Editor's note: This story is updated to correct the first name of Vice President Mike Richman. A previous story referenced Mark Richman who left Debo's Diners in 2000.
The Steak 'n Shake in Hixson has shut down after operating for more than a quarter century at 5118 Hixson Pike.
Mike Richman, vice president and chief financial officer for the local Steak 'n Shake franchisee Debo's Diners, said the Hixson restaurant closed this week but his company will continue to operate a half dozen other Steak 'n Shake outlets in the Chattanooga and Knoxville markets.
"Current market conditions and future projections indicated that it was no longer viable to operate that location and provide the best experience for our associates and guests," Richman said in a statement Wednesday. "We had an incredible group of people working at this location. All of our hourly team members were offered positions at other area locations in addition to being paid severance."
Debo's Diners, a family-owned business that has been headquartered in Chattanooga since it began in 1995, will continue to own and operate other Steak 'n Shake locations in East Brainerd, Cleveland, Fort Oglethorpe and Dalton, Georgia, as well as two locations in the Knoxville area.
"We have no plans to close any other locations, and in fact, we have already begun renovations at our location in Dalton, including new awnings, new digital signage, and a new beverage station among other things," Richman said. "We plan to continue these renovations into 2023 to ensure we are giving our guests the best experience possible while they enjoy our signature Steakburgers and milkshakes."
Nationwide, the Indianapolis-based Steak 'n Shake operates more than 600 corporate and franchised units.
Many of the Steak 'n Shake units once offered table service 24 hours a day, but labor shortage and the pandemic limited operations at many of the restaurants, including the Hixson site, which was open only 11 a.m. to 9 p.m. prior to its permanent closing.
Like many restaurants, Steak 'n Shake has recently struggled to maintain staffing with unemployment near historic lows and many employers trying to fill holiday-related jobs. The restaurant trade publication QSR reported that "the economics of the chain's full-service setup -- high-quality, low-priced burgers and shakes created to generate volume -- did not work in the modern era."
During the pandemic, many Steak 'n Shake locations switched to drive-through only or kiosk service inside.
The 3,652-square-foot Steak 'n Shake in Hixson was built in 1996 and is owned by Austin Rentals, according to Hamilton County property records.
The Steak 'n Shake restaurant is the second fast-food restaurant on Hixson Pike to close this fall. In September, Bojangles closed its restaurant at 4701 Hixon Pike, which was the first Bojangles in the Chattanooga market. Also just down the street on Hixson Pike from the newly shuttered Steak 'n Shake, O'Charley's shut down its Hixson restaurant earlier this year and put the building up for sale.
The area where the Hixson Steak 'n Shake is located still has plenty of eateries, however, with more than a half dozen other restaurants in the same block, including Five Guys, J. Gumbo's, Ankar's, Central Park, Chicken Salad Chick, Captain D's and Ichiban.
Steak 'n Shake and other restaurants are having to cope not only with labor shortages but also rising food prices and an uncertain economic outlook for the coming year as interest rates rise and the economy softens.
A survey of Tennessee restaurants this summer by the state's restaurant association known as HospitaltyTN found that 62% said the business conditions for their restaurant were worsening and most Tennessee restaurant operators do not expect a return to normal business conditions any time soon, according to HospitaltyTN President Sara Beth Urban.