San Antonio Express-News (Sunday)
Has San Antonio’s Sardar Biglari lost his touch?
Sardar Biglari entered stage right at the dimly lit Majestic Theatre in San Antonio to greet a sparse audience there for his company’s shareholders meeting.
The annual event drew about three dozen people June 25, far fewer than in years past when investors, money managers and other Wall Street types flocked to see Biglari hold court at the ritzy St. Regis Hotel in New York.
Biglari Holdings Inc. meetings often are five-hour affairs where Biglari answers a myriad of questions, from those dealing with its restaurant subsidiary Steak n Shake to its stake in Cracker Barrel Old Country Store Inc. to how he spends his free time.
This year’s meeting had been set for April at the St. Regis for the 11th consecutive year. But amid the pandemic, Biglari scrapped that plan and arranged for the meeting to be held in his hometown for the first time.
And even as Texas’ governor urged residents to stay home to prevent the spread of the coronavirus, Biglari issued a news release the day before the meeting to let investors know it would still take place.
The pandemic assuredly depressed attendance. But one regular at the meetings wondered whether other issues dogging Biglari Holdings — its stock trading in the doldrums, its questionable use of capital, corporate governance deemed unfriendly to shareholders and the struggles of its biggest subsidiary — signal that Biglari has lost his edge and alienated his base of followers.
Biglari, the cocksure but enigmatic chairman and CEO who arrived at the Majestic behind the wheel of a black Ferrari, largely dismisses such criticism. Holding majority control, he runs Biglari Holdings as he sees fit, without heeding outside advice. He likens his management style to ruthless industrialists who built massive fortunes in the 19th century (but used aggressive tactics to drive competitors out of business).
“We are old-fashioned. Our whole modus operandi is oldfashioned,” Biglari told the audience. “Can you imagine an Andrew Carnegie or a Cornelius Vanderbilt seeking a cadre of consultants on whether they should buy a steel mill or buy a railroad?”
He added, “We’re telling you the way it is, and that sometimes scares people because they don’t want to hear it in such a forthright manner. If that’s emulating businessmen of a different era, so be it. We’re much more aligned with their line of thinking than the modern way.”
San Antonio-based Biglari Holdings owns six companies in an assortment of industries — restaurants, media and licensing, property and casualty insurance, and oil and gas.
Biglari hyped the companies, which include restaurant chains Steak n Shake and Western Sizzlin, Maxim magazine and First Guard Insurance Co., describing them in a letter to shareholders this year as the “economic equivalents of Renoirs, Cézannes, and Rembrandts.”
“Our economic museum enables us to assemble the best pieces, just as an art collector selects masterworks,” he boasted.
While Biglari considers the holdings “diverse,” the two restaurants accounted for more than 90 percent of the operating businesses’ revenue in the first quarter.
Biglari Holdings also makes investments through two partnerships known collectively as the Lion Funds. The partnerships’ general partner is Biglari Capital Corp., which Biglari solely owns. It makes investments in publicly traded companies, including a big bet in Cracker Barrel that has paid off handsomely.
Biglari, 42, apparently knew from a young age that he would make his mark in the business world.
He was an infant in 1978 when revolution erupted in his native Iran. His father, Ken Biglari, was a military officer under the Shah of Iran and later was imprisoned.
Biglari and his mother, a friend of the deposed royal family, were held under house arrest for years before bribing guards to let Ken out of prison and escaping in 1984.
The family settled in San Antonio where Ken had taken air force training. At age 13, Biglari began working in the family’s rug shop.
In 1996, while still a teenager, Biglari and a friend started an internet service provider with $15,000. They withheld their ages while interviewing older job candidates.
Biglari ran the company while attending Trinity University, where he forged a bond with his business professor, Philip Cooley. Biglari helped manage $500,000 of Trinity’s endowment fund as part of Cooley’s class. Cooley serves as Biglari Holdings’ vice chairman and flanks his former pupil on stage at the annual meetings.
Biglari later sold the internet business, reportedly becoming a millionaire in the process. He used the proceeds from the sale to start the first Lion Fund in 2000.
The Lion Fund invested in underperforming restaurant chains Friendly Ice Cream Corp., Western Sizzlin Corp. and Steak n Shake Co. Biglari, as an activist investor, pressured those companies to make changes.