----

UNITED      STATES

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

| INDIANA                                          | 37-0684070                         |
|--------------------------------------------------|------------------------------------|
| (State                or other jurisdiction      | (I.R.S.                Employer    |
| of                incorporation or organization) | Identification                No.) |

| 36                S. Pennsylvania Street, Suite 500     |                      |
|---------------------------------------------------------|---------------------------|
| Indianapolis,                Indiana                    | 46204                     |
| (Address                of principal executive offices) | (Zip                code) |

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THE      STEAK N      SHAKE COMPANY

| PART I.                  FINANCIAL                  INFORMATION |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   | Page   |
|----------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |
|                                                                 | ITEM                  1. FINANCIAL                  STATEMENTS                                                                                         |                                                                                                                                                                                        |   |   |   |   |   |
|                                                                 |                                                                                                                                                   | Condensed                  Consolidated Statements of Financial Position (Unaudited) as of July                  2, 2008 and September 26, 2007                                        | 3      |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                 |                                                                                                                                                   | Condensed                  Consolidated Statements of Operations (Unaudited) for the Twelve and                  Forty Weeks Ended July 2, 2008 and July 4,                  2007 | 4      |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                 |                                                                                                                                                   | Condensed                  Consolidated Statements of Cash Flows (Unaudited) for the Forty                  Weeks                  Ended July 2, 2008 and July 4, 2007            | 5      |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                 |                                                                                                                                                   | Notes                  to                  Condensed Consolidated Financial Statements                  (Unaudited)                                                                         |   |   | 6      |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                 | ITEM                  2.                  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS | 16                                                                                                                                                                                          |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                 | ITEM                  3.                  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET                  RISK                                  | 27                                                                                                                                                                                          |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                 | ITEM                  4. CONTROLS                  AND PROCEDURES                                                                                      |                                                                                                                                                                                        |   |   |   | 27     |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| PART                  II. OTHER                  INFORMATION         |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |
|                                                                 | ITEM                  5. OTHER                  INFORMATION                                                                                            |                                                                                                                                                                                        |   |   |   |   | 28 |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                 | ITEM                  6.                  EXHIBITS                                                                                                     |                                                                                                                                                                                        |   |   |   |   |   | 28 |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                 |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| SIGNATURES                                                           |                                                                                                                                                   |                                                                                                                                                                                        |   |   |   |   |   | 29 |

----

PART  I.FINANCIAL      INFORMATION

ITEM      1. FINANCIAL      STATEMENTS

| Condensed                Consolidated Statements                of Financial Position                                                                                           |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| The                Steak n Shake                Company                                                                                                                         |   |
| (Amounts                in $000s except share and                per share data)                                                                                                |   |
|                                                                                                                                                                            |   | July                2, |   |   | September                26, |   |
|                                                                                                                                                                            |   | 2008 |   |   | 2007 |   |
| Assets:                                                                                                                                                                         |   |   |   |   |   |   |
| Current                Assets                                                                                                                                                   |   |   |   |   |   |   |
| Cash                and cash                equivalents                                                                                                                         |   | $ | 1,621 |   |   | $ | 1,497 |   |
| Receivables,                net                                                                                                                                                 |   |   | 4,484 |   |   |   | 6,289 |   |
| Inventories                                                                                                                                                                     |   |   | 7,276 |   |   |   | 7,226 |   |
| Deferred                income                taxes                                                                                                                             |   |   | 3,449 |   |   |   | 3,616 |   |
| Assets                held for                sale                                                                                                                              |   |   | 21,742 |   |   |   | 18,571 |   |
| Other                current                assets                                                                                                                              |   |   | 13,950 |   |   |   | 10,998 |   |
| Total                current                assets                                                                                                                              |   |   | 52,522 |   |   |   | 48,197 |   |
| Net                property and                equipment                                                                                                                        |   |   | 450,446 |   |   |   | 492,610 |   |
| Goodwill                                                                                                                                                                        |   |   | 14,503 |   |   |   | 14,503 |   |
| Other                intangible assets,                net                                                                                                                      |   |   | 1,809 |   |   |   | 1,959 |   |
| Deferred                income                taxes                                                                                                                             |   |   | 123 |   |   |   | — |   |
| Other                assets                                                                                                                                                     |   |   | 9,500 |   |   |   | 7,945 |   |
| Total                assets                                                                                                                                                     |   | $ | 528,903 |   |   | $ | 565,214 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Liabilities                and Shareholders'                Equity:                                                                                                             |   |   |   |   |   |   |   |   |
| Current                Liabilities                                                                                                                                              |   |   |   |   |   |   |   |   |
| Accounts                payable                                                                                                                                                 |   | $ | 29,538 |   |   | $ | 28,195 |   |
| Accrued                expenses                                                                                                                                                 |   |   | 31,528 |   |   |   | 32,624 |   |
| Current                portion of long-term                debt                                                                                                                 |   |   | 1,330 |   |   |   | 2,390 |   |
| Line                of                credit                                                                                                                                    |   |   | 9,180 |   |   |   | 27,185 |   |
| Current                portion of obligations                under leases                                                                                                       |   |   | 3,980 |   |   |   | 4,180 |   |
| Total                current                liabilities                                                                                                                         |   |   | 75,556 |   |   |   | 94,574 |   |
| Deferred                income                taxes                                                                                                                             |   |   | — |   |   |   | 5,060 |   |
| Other                long-term                liabilities                                                                                                                       |   |   | 7,514 |   |   |   | 5,701 |   |
| Obligations                under                leases                                                                                                                          |   |   | 136,357 |   |   |   | 139,493 |   |
| Long-term                debt                                                                                                                                                   |   |   | 16,502 |   |   |   | 16,522 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Commitments                and                Contingencies                                                                                                                     |   |   |   |   |   |   |   |   |
| Shareholders'                Equity:                                                                                                                                            |   |   |   |   |   |   |   |   |
| Common                stock - $0.50 stated value,                50,000,000 shares authorized -  shares                issued:                30,332,839              |   |   | 15,166 |   |   |   | 15,166 |   |
| Additional                paid-in                capital                                                                                                                        |   |   | 127,213 |   |   |   | 126,415 |   |
| Retained                earnings                                                                                                                                                |   |   | 170,918 |   |   |   | 185,024 |   |
| Treasury                stock - at cost:                1,632,246 shares as of July 2,  2008;                1,959,931 shares                as of September 26, 2007 |   |   | (20,323 | ) |   |   | (22,741 | ) |
| Total                shareholders'                equity                                                                                                                        |   |   | 292,974 |   |   |   | 303,864 |   |
| Total                liabilities and                shareholders' equity                                                                                                        |   | $ | 528,903 |   |   | $ | 565,214 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| See                accompanying                notes.                                                                                                                           |   |   |   |   |   |   |   |   |

----

| Condensed                  Consolidated Statements                  of Operations                                                             |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| The                  Steak n Shake                  Company                                                                                   |   |
| (Amounts                  in $000s except share and                  per share data)                                                          |   |
|                                                                                                                                          |   | Twelve                  Weeks                  Ended |   |   | Forty                  Weeks                  Ended |   |
|                                                                                                                                          |   | July                  2, |   |   | July                  4, |   |   | July                  2, |   |   | July                  4, |   |
|                                                                                                                                          |   | 2008 |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
|                                                                                                                                          |   | (Unaudited) |   |   | (Unaudited) |   |   | (Unaudited) |   |   | (Unaudited) |   |
| Revenues:                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  sales                                                                                                                    |   | $ | 143,303 |   |   | $ | 152,700 |   |   | $ | 468,071 |   |   | $ | 500,213 |   |
| Franchise                  fees                                                                                                               |   |   | 990 |   |   |   | 886 |   |   |   | 3,105 |   |   |   | 2,790 |   |
| Total                  revenues                                                                                                               |   |   | 144,293 |   |   |   | 153,586 |   |   |   | 471,176 |   |   |   | 503,003 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Costs                  and                  Expenses:                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                  of                  sales                                                                                               |   |   | 35,527 |   |   |   | 35,318 |   |   |   | 115,658 |   |   |   | 114,576 |   |
| Restaurant                  operating                  costs                                                                                  |   |   | 79,241 |   |   |   | 79,882 |   |   |   | 259,090 |   |   |   | 257,133 |   |
| General                  and                  administrative                                                                                  |   |   | 10,671 |   |   |   | 12,697 |   |   |   | 35,174 |   |   |   | 43,803 |   |
| Depreciation                  and                  amortization                                                                               |   |   | 7,812 |   |   |   | 7,577 |   |   |   | 25,925 |   |   |   | 24,628 |   |
| Marketing                                                                                                                                     |   |   | 6,666 |   |   |   | 7,054 |   |   |   | 23,043 |   |   |   | 22,628 |   |
| Interest                                                                                                                                      |   |   | 3,263 |   |   |   | 3,314 |   |   |   | 10,816 |   |   |   | 10,689 |   |
| Rent                                                                                                                                          |   |   | 3,379 |   |   |   | 3,309 |   |   |   | 11,107 |   |   |   | 10,612 |   |
| Pre-opening                  costs                                                                                                            |   |   | 112 |   |   |   | 581 |   |   |   | 1,243 |   |   |   | 2,327 |   |
| Asset                  impairments and provision                  for  restaurant                  closings                         |   |   | 14,089 |   |   |   | 5,369 |   |   |   | 14,089 |   |   |   | 5,176 |   |
| Other                  income,                  net                                                                                           |   |   | (288 | ) |   |   | (668 | ) |   |   | (1,263 | ) |   |   | (1,612 | ) |
| Total                  costs and                  expenses                                                                                    |   |   | 160,472 |   |   |   | 154,433 |   |   |   | 494,882 |   |   |   | 489,960 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)                  Earnings Before Income                  Taxes                                                                         |   |   | (16,179 | ) |   |   | (847 | ) |   |   | (23,706 | ) |   |   | 13,043 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  Taxes                                                                                                                 |   |   | (6,382 | ) |   |   | (971 | ) |   |   | (9,912 | ) |   |   | 2,762 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  (Loss)                  Earnings                                                                                         |   | $ | (9,797 | ) |   | $ | 124 |   |   | $ | (13,794 | ) |   | $ | 10,281 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  (Loss) Earnings Per Common                  and  Common                  Equivalent                  Share   |   | $ | (0.35 | ) |   | $ | 0.00 |   |   | $ | (0.49 | ) |   | $ | 0.37 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                  (Loss) Earnings Per Common                  and  Common                  Equivalent                  Share |   | $ | (0.35 | ) |   | $ | 0.00 |   |   | $ | (0.49 | ) |   | $ | 0.36 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  Average Shares and                  Equivalents:                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                         |   |   | 28,288,330 |   |   |   | 28,067,417 |   |   |   | 28,274,193 |   |   |   | 28,002,370 |   |
| Diluted                                                                                                                                       |   |   | 28,288,330 |   |   |   | 28,255,645 |   |   |   | 28,274,193 |   |   |   | 28,217,828 |   |
|                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See                  accompanying                  notes.                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Condensed                  Consolidated Statements                  of Cash Flows                                                                                         |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| The                  Steak n Shake                  Company                                                                                                               |   |
| (Amounts                  in                  $000s)                                                                                                                      |   |
|                                                                                                                                                                      |   | Forty                  Weeks                  Ended |   |
|                                                                                                                                                                      |   | July                  2, |   |   | July                  4, |   |
|                                                                                                                                                                      |   | 2008 |   |   | 2007 |   |
|                                                                                                                                                                      |   | (Unaudited) |   |   | (Unaudited) |   |
| Operating                  Activities:                                                                                                                                    |   |   |   |   |   |   |
| Net                  (loss)                  earnings                                                                                                                     |   | $ | (13,794 | ) |   | $ | 10,281 |   |
| Adjustments                  to reconcile net                  (loss) earnings  to                  net cash provided                  by operating activities: |   |   |   |   |   |   |   |   |
| Depreciation                  and                  amortization                                                                                                           |   |   | 25,925 |   |   |   | 24,628 |   |
| Provision                  for deferred income                  taxes                                                                                                     |   |   | (4,714 | ) |   |   | (1,621 | ) |
| Asset                  impairments and provision                  for restaurant closings                                                                                 |   |   | 14,089 |   |   |   | 5,176 |   |
| Non-cash                  expense for stock-based                  compensation  and                  deferred                  rent                            |   |   | 2,676 |   |   |   | 3,535 |   |
| (Gain)                  loss on disposal of                  property                                                                                                     |   |   | (372 | ) |   |   | 498 |   |
| Changes                  in receivables and                  inventories                                                                                                  |   |   | 1,720 |   |   |   | (1,524 | ) |
| Changes                  in other                  assets                                                                                                                 |   |   | (3,299 | ) |   |   | (5,260 | ) |
| Changes                  in accounts payable and                  accrued expenses                                                                                        |   |   | 1,340 |   |   |   | 750 |   |
| Net                  cash provided by operating                  activities                                                                                               |   |   | 23,571 |   |   |   | 36,463 |   |
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Investing                  Activities:                                                                                                                                    |   |   |   |   |   |   |   |   |
| Additions                  of property and                  equipment                                                                                                     |   |   | (28,512 | ) |   |   | (56,193 | ) |
| Proceeds                  from property and                  equipment disposals                                                                                          |   |   | 11,531 |   |   |   | 5,956 |   |
| Net                  cash used in investing                  activities                                                                                                   |   |   | (16,981 | ) |   |   | (50,237 | ) |
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Financing                  Activities:                                                                                                                                    |   |   |   |   |   |   |   |   |
| Net                  payments on line of credit                  facility                                                                                                 |   |   | (18,005 | ) |   |   | (1,465 | ) |
| Proceeds                  from issuance of                  long-term debt                                                                                                |   |   | — |   |   |   | 15,000 |   |
| Principal                  payments on long-term                  debt                                                                                                    |   |   | (1,080 | ) |   |   | (1,062 | ) |
| Proceeds                  from equipment and                  property sale-leasebacks                                                                                    |   |   | 14,817 |   |   |   | 800 |   |
| Principal                  payments on direct                  financing lease obligations                                                                                |   |   | (3,336 | ) |   |   | (2,401 | ) |
| Proceeds                  from exercise of stock                  options                                                                                                 |   |   | 132 |   |   |   | 660 |   |
| Excess                  tax benefits from                  stock-based awards                                                                                             |   |   | 10 |   |   |   | 62 |   |
| Repurchase                  of employee shares for                  tax withholding                                                                                       |   |   | (8 | ) |   |   | — |   |
| Proceeds                  from employee stock                  purchase plan                                                                                              |   |   | 1,004 |   |   |   | 1,234 |   |
| Net                  cash (used in) provided by                  financing activities                                                                                     |   |   | (6,466 | ) |   |   | 12,828 |   |
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Increase                  (decrease) in Cash and                  Cash Equivalents                                                                                        |   |   | 124 |   |   |   | (946 | ) |
| Cash                  and Cash Equivalents at                  Beginning of Period                                                                                        |   |   | 1,497 |   |   |   | 4,820 |   |
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Cash                  and Cash Equivalents at End                  of Period                                                                                              |   | $ | 1,621 |   |   | $ | 3,874 |   |
|                                                                                                                                                                      |   |   |   |   |   |   |   |   |
| See                  accompanying                  notes.                                                                                                                 |   |   |   |   |   |   |   |   |

----

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | Twelve                Weeks                Ended |       |   | Forty                Weeks                Ended |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|--------|-------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | July                2,                           |       |   | July                4,                          |   |   | July                2, |   |   | July                4, |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 2008                                             |       |   | 2007                                            |   |   | 2008 |   |   | 2007 |   |
| Basic                (loss) earnings per                share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                             |       |   |                                            |   |   |   |   |   |   |   |
| Weighted                average common                shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                             | 28,288,330 |   |                                            |   | 28,067,417 |   |   |   | 28,274,193 |   |   |   | 28,002,370 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                             |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                (loss) earnings per                share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                             |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                average common                shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                             | 28,288,330 |   |                                            |   | 28,067,417 |   |   |   | 28,274,193 |   |   |   | 28,002,370 |   |
| Dilutive                effect of stock                options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                             | —    |   |                                            |   | 188,228 |   |   |   | — |   |   |   | 215,458 |   |
| Weighted                average common and                incremental shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                             | 28,288,330 |   |                                            |   | 28,255,645 |   |   |   | 28,274,193 |   |   |   | 28,217,828 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                             |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
| Number                of share-based awards                excluded from the calculation                of                diluted (loss) earnings per                share  because                the awards'                exercise                prices were greater                 than                the average market                price of the                Company's  common                stock, or because                they were  antidilutive                due to                the Company's net loss for the  twelve                and                forty                weeks ended July 2,                2008 |   |                                             | 1,947,310  |   |                                            |   | 1,482,954 |   |   |   | 1,576,327 |   |   |   | 1,308,218 |   |

----

|                                                                             |   | July                  2, |     |   | September                  26, |   |
|----------------------------------------------------------------------------------|--------|--------------------------|----------|--------|--------------------------------|--------|
|                                                                             |   | 2008                     |     |   | 2007                           |   |
| Land                                                                             |   | $                        | 158,279  |   |                           | $      | 171,631 |   |
| Buildings                                                                        |   |                     | 157,104  |   |                           |   | 166,982 |   |
| Land                  and leasehold                  improvements                |   |                     | 157,321  |   |                           |   | 156,687 |   |
| Equipment                                                                        |   |                     | 203,395  |   |                           |   | 200,775 |   |
| Construction                  in                  progress                       |   |                     | 11,934   |   |                           |   | 16,555 |   |
|                                                                             |   |                     | 688,033  |   |                           |   | 712,630 |   |
| Less                  accumulated depreciation and                  amortization |   |                     | (237,587 | )      |                           |   | (220,020 | ) |
| Net                  property and                  equipment                     |   | $                        | 450,446  |   |                           | $      | 492,610 |   |

----

|                                                                  |   | July                    2, |   |   | September                    26, |   |
|-----------------------------------------------------------------------|--------|----------------------------|--------|--------|----------------------------------|--------|
|                                                                  |   | 2008                       |   |   | 2007                             |   |
| Land                    and                    buildings              |   | $                          | 20,736 |   |                             | $      | 17,494 |   |
| Land                    and leasehold                    improvements |   |                       | 592    |   |                             |   | 592 |   |
| Equipment                                                             |   |                       | 414    |   |                             |   | 485 |   |
| Total                    assets held for                    sale      |   | $                          | 21,742 |   |                             | $      | 18,571 |   |

----

|                                                                                           |   | July                    2, |   |   | September                    26, |   |
|------------------------------------------------------------------------------------------------|--------|----------------------------|--------|--------|----------------------------------|--------|
|                                                                                           |   | 2008                       |   |   | 2007                             |   |
| Gross                    value of intangible assets                    subject to amortization |   | $                          | 2,291  |   |                             | $      | 2,291 |   |
| Accumulated                    amortization                                                    |   |                       | (982   | )      |                             |   | (832 | ) |
| Intangible                    assets subject to                    amortization, net           |   |                       | 1,309  |   |                             |   | 1,459 |   |
| Intangible                    assets with indefinite                    lives                  |   |                       | 500    |   |                             |   | 500 |   |
| Total                    intangible                    assets                                  |   | $                          | 1,809  |   |                             | $      | 1,959 |   |

----

----

----

| Initial                      accrual                      balance            |   | $      | 2,221  |   |
|------------------------------------------------------------------------------|--------|--------|--------|--------|
| 4th                      quarter 2007                      payments          |   |   | (46    | )      |
| September                      26, 2007 accrual                      balance |   | $      | 2,175  |   |
| Year-to-date                      fiscal 2008                      accruals  |   |   | 287    |   |
| Year-to-date                      fiscal 2008                      payments  |   |   | (1,992 | )      |
| July                      2, 2008 accrual                      balance       |   | $      | 470    |   |

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| ●   | Closing                      underperforming locations |
|---------------------|--------------------------------------------------------|

| ●   | Reducing                      General and administrative expenses                      further |
|---------------------|------------------------------------------------------------------------------------------------|

| ●   | Shortening                      hours of operation in many                      locations |
|---------------------|-------------------------------------------------------------------------------------------|

| ●                        | Tax                      planning to recover a substantial amount of taxes paid in fiscal                      2006 |
|-------------------------------------|---------------------------------------------------------------------------------------------------------------------|

| ●                        | Limiting                      capital spending at the store level to maintenance —  no new                      Company store openings |
|-------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                                                              |   | Twelve                        Weeks                        Ended |   |                     | Forty                        Weeks                        Ended |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|--------------------------|-----------------------------------------------------------------|--------|
|                                                                                                                                                              |   | July                        2,                                   |   |                     | July                        4,                                  |   |   | July                        2, |   |   | July                        4, |   |
|                                                                                                                                                              |   | 2008                                                             |   |                     | 2007                                                            |   |   | 2008 |   |   | 2007 |   |
| Revenues:                                                                                                                                                         |   |                                                             |   |                     |                                                            |   |   |   |   |   |   |   |
| Net                        sales                                                                                                                                  |   |                                                             | 99.3   | %                        |                                                            |   | 99.4 | % |   |   | 99.3 | % |   |   | 99.4 | % |
| Franchise                        fees                                                                                                                             |   |                                                             | 0.7    | %                        |                                                            |   | 0.6 | % |   |   | 0.7 | % |   |   | 0.6 | % |
| Total                        revenues                                                                                                                             |   |                                                             | 100.0  | %                        |                                                            |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |
|                                                                                                                                                              |   |                                                             |   |                     |                                                            |   |   |   |   |   |   |   |   |   |   |   |
| Costs                        and                        Expenses:                                                                                                 |   |                                                             |   |                     |                                                            |   |   |   |   |   |   |   |   |   |   |   |
| Cost                        of                        sales  (1)                                                                                        |   |                                                             | 24.8   | %                        |                                                            |   | 23.1 | % |   |   | 24.7 | % |   |   | 22.9 | % |
| Restaurant                        operating costs                        (1)                                                                                      |   |                                                             | 55.3   | %                        |                                                            |   | 52.3 | % |   |   | 55.4 | % |   |   | 51.4 | % |
| General                        and                        administrative                                                                                          |   |                                                             | 7.4    | %                        |                                                            |   | 8.3 | % |   |   | 7.5 | % |   |   | 8.7 | % |
| Depreciation                        and                        amortization                                                                                       |   |                                                             | 5.4    | %                        |                                                            |   | 4.9 | % |   |   | 5.5 | % |   |   | 4.9 | % |
| Marketing                                                                                                                                                         |   |                                                             | 4.6    | %                        |                                                            |   | 4.6 | % |   |   | 4.9 | % |   |   | 4.5 | % |
| Interest                                                                                                                                                          |   |                                                             | 2.3    | %                        |                                                            |   | 2.2 | % |   |   | 2.3 | % |   |   | 2.1 | % |
| Rent                                                                                                                                                              |   |                                                             | 2.3    | %                        |                                                            |   | 2.2 | % |   |   | 2.4 | % |   |   | 2.1 | % |
| Pre-opening                        costs                                                                                                                          |   |                                                             | 0.1    | %                        |                                                            |   | 0.4 | % |   |   | 0.3 | % |   |   | 0.5 | % |
| Asset                        impairments and provision                        for  restaurant                        closings                           |   |                                                             | 9.8    | %                        |                                                            |   | 3.5 | % |   |   | 3.0 | % |   |   | 1.0 | % |
| Other                        income,                        net                                                                                                   |   |                                                             | (0.2   | )                      % |                                                            |   | (0.4 | )                      % |   |   | (0.3 | )                      % |   |   | (0.3 | )                      % |
|                                                                                                                                                              |   |                                                             |   |                     |                                                            |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)                        Earnings Before Income                        Taxes                                                                                 |   |                                                             | (11.2  | )                      % |                                                            |   | (0.6 | )                      % |   |   | (5.0 | )                      % |   |   | 2.6 | % |
|                                                                                                                                                              |   |                                                             |   |                     |                                                            |   |   |   |   |   |   |   |   |   |   |   |
| Income                        Taxes                                                                                                                               |   |                                                             | (4.4   | )                      % |                                                            |   | (0.6 | )                      % |   |   | (2.1 | )                      % |   |   | 0.5 | % |
|                                                                                                                                                              |   |                                                             |   |                     |                                                            |   |   |   |   |   |   |   |   |   |   |   |
| Net                        (Loss)                        Earnings                                                                                                 |   |                                                             | (6.8   | )                      % |                                                            |   | 0.1 | % |   |   | (2.9 | )                      % |   |   | 2.0 | % |
|                                                                                                                                                              |   |                                                             |   |                     |                                                            |   |   |   |   |   |   |   |   |   |   |   |
| (1)                        Cost of sales and restaurant                        operating costs are expressed as a percentage of net                        sales. |   |                                                             |   |                     |                                                            |   |   |   |   |

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| ·   | the                      poor performance or closing of                      even a small number of                      restaurants; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                      ability to attract and retain                      guests; |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | the                      ability of our franchisees to                      operate profitable                      restaurants; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes                      in guest preferences,                      tastes and dietary habits; |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | changes                      in minimum wage                      rates; |
|--------------------|--------------------------------------------------------------------------|

| ·   | the                      availability and cost of                      qualified personnel; |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | fluctuations                      in food commodity                      prices and the availability of food                      commodities; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | harsh                      weather                      conditions; |
|--------------------|---------------------------------------------------------------------|

| ·   | unfavorable                      publicity relating to                      food safety or food borne                      illness; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                      ability to comply with the                      restrictions and covenants to                      our debt                      agreements; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                      ability to renegotiate our                      debt agreements and refinance our current debt at similar                      rates; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                      ability to effectively                      negotiate sale-leaseback                      transactions; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                      ability to comply with                      existing and future governmental                      regulations; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                      ability to adequately protect                      our trademarks, service marks and other components of our brand;                      and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | other                      risks                      identified in the periodic reports we file with the Securities                      and                      Exchange Commission. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ITEM            3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET            RISK

Based            on an evaluation of our disclosure controls and procedures (as defined            in            Exchange Act Rules 13a-15(e) and 15d-15(c)), our Chief Executive Officer            andInterim Chief            Financial Officer have concluded            that our disclosure controls and procedures were effective as of July 2,            2008.

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| Exhibit                      Number |   | Description                                                                                                                                                                                                                                                                                                                  |
|-------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.01                                |   | Restated                      By-laws as amended June                      19, 2008 (incorporated herein by reference to the Registrant's                      Current                      Report on Form 8-K filed June 24, 2008)                                                                                          |
|                                |   |                                                                                                                                                                                                                                                                                                                         |
| 4.01                                |   | Ninth                      Amendment to Credit                      Agreement by and between The Steak n Shake Company and Fifth                      Third Bank,                      Indiana (Central) dated August 6, 2008                                                                                                |
|                                |   |                                                                                                                                                                                                                                                                                                                         |
| 4.02                                |   | Amendment                      No. 8 to the Amended and                      Restated Note Purchase and Private Shelf Agreement dated August                      11,                      2008                                                                                                                              |
|                                |   |                                                                                                                                                                                                                                                                                                                         |
| 10.01                               |   | First                      Amendment dated April 22,                      2008 to Change in Control Agreement dated November 7, 2007                      (incorporated                      herein by reference to the Registrant's Current Report on Form                      8-K filed                      May 9, 2008) |
|                                |   |                                                                                                                                                                                                                                                                                                                         |
| 31.01                               |   | Rule                      13(a)-14(a)/15d-14(a)                      Certification of Chief Executive Officer                                                                                                                                                                                                                |
|                                |   |                                                                                                                                                                                                                                                                                                                         |
| 31.02                               |   | Rule                      13(a)-14(a)/15d-14(a)                      Certification of Chief Financial Officer                                                                                                                                                                                                                |
|                                |   |                                                                                                                                                                                                                                                                                                                         |
| 32.01                               |   | Section                      1350                      Certifications                                                                                                                                                                                                                                                        |

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