Biglari Holdings Inc.

Dear fellow shareholders:

Incredibly, Steak ‘n Shake doesn’t discloseany animal welfare policy, raising concerns about whether the Board recognizes (let alone adequately manages) this socially and materially consequential issue.

Consider that virtually every other major restaurant chain has published animal welfare standards and/or goals. Just ashort list includes Bloomin’ Brands; Brinker; Cheesecake Factory; Chipotle; Cracker Barrel; Darden; Denny’s; Dine Brands; First Watch; Inspire (Arby’s, Dunkin’, Jimmy Johns, Sonic); Jack in the Box; McDonald’s; Noodles & Co.; Panera; Red Robin; Restaurant Brands (Burger King, Tim Hortons, Firehouse, Popeyes); Shake Shack; Starbucks; Subway; Wendy’s; and Yum! Brands.

This makes sense, since (in addition to its substantial ethical implications), animal welfare has long been recognized as posing risks that may jeopardize the delivery of durable financial returns.

For example, Citigroup called “concerns over animal cruelty” a “headline risk” imperiling restaurant companies. And the World Bank’s International Finance Corporation reported, “In the case of animal welfare, failure to keep pace…could put companies and their investors at a competitive disadvantage.”

In fact, Walmart found 77% of shoppers would increase their trust in a retailer practicing humane treatment. And a 2023 Merck study found that for 66% of consumers, both “transparency in animal proteins” and “animal care/treatment” itself are “extremely or very important.”

Thus, it’s unsurprising that many companies identify animal welfare risks in their securities filings. For example, “[We] could be impacted by changes in customer preferences related to…animal welfare” warn Jack in the Box’s 10-Ks, cautioning that this issue “can have a material adverse effect on our financial results.” And Denny’s recent 10-K says “consumer trust in our brand may suffer” if it doesn’t adequately address “increasing public focus by investors” about animal welfare.

As well, Glass Lewis says, it’s “prudent for management to assess potential exposure to regulatory, legal and reputational risks associated with…animal welfare.” (An indeed, states are increasingly regulating this issue, as seen, for example, at CageFreeLaws.com).

And ISS says it’ll support animal welfare proposals, except, for example, if a company already has standards (which Biglari doesn’t), the standards are comparable to peers’ (which Biglari’s aren’t, as it doesn’thave any), and the company hasn’t faced animal welfare controversy (which Biglari does, as seen at SteaknShakeCruelty.com).

Looking ahead, establishing an animal welfare policy would be entirely consistent with the practices of the company’s peers and the development of related regulations. Thus, we believe support for this proposal is warranted and very much needed. Thank you.

Contact:

BH@TABholdings.org